The Federal Reserve Hiked Short-Term Rates Again as Expected, Signaled Four Increases in 2018

By | Economy, Shopfloor Economics, Shopfloor Main | No Comments

As expected, the Federal Open Market Committee (FOMC) ended its June 12–13 meeting by hiking short-term rates by 25 basis points. This action—the second increase so far in 2018—was widely expected, with markets already pricing it in. More importantly, the Federal Reserve’s economic projections signal that there could be four hikes in the federal funds rate this year, up from a consensus estimate of around three. With the Federal Reserve’s action, the target range for the federal funds rate is now 1.75 to 2 percent. The projections show that range rising to 2.4 percent by the end of 2018 and 3.1 percent in 2019. The latter would indicate three hikes next year. With that said, the FOMC will hinge future interest rate increases on incoming data. Read More

ISM: Manufacturing Activity Rebounded in May, with Continued Strength in Demand

By | Economy, Shopfloor Economics, Shopfloor Main | No Comments

The Institute for Supply Management (ISM) reported that manufacturing activity rebounded in May, with continued strength in demand. The ISM Manufacturing Purchasing Managers’ Index rose from 57.3 in April to 58.7 in May. The underlying data increased, including new orders (up from 61.2 to 63.7), production (up from 57.2 to 61.5) and employment (up from 54.2 to 56.3). The index for new orders has now been 60 or greater for 13 straight months, illustrating the robustness of sales in the sector across the past year. The sample comments tend to echo that finding, with respondents noting healthy growth in activity and a promising outlook, even as they cite some trade worries. Along those lines, exports eased a bit (down from 57.7 to 55.6), but expanded modestly overall. Read More

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