Real GDP grew 1.4 percent in the first quarter, pulled lower by weak inventory spending and softer-than-desired consumer spending. At the same time, business investment was a bright spot in the report, and, according to new data from the Bureau of Economic Analysis, so was manufacturing. Real value added output rebounded in the first quarter, up 4.7 percent after falling by 2.9 percent in the fourth quarter. As a result, manufacturers contributed 0.54 percentage points to headline growth in the first quarter, a notable improvement from the 0.39 percentage point drag seen in the fourth quarter. Indeed, it was the largest industrial contributor to real GDP growth in the release. Read More
President Trump and Congress are tackling regulations like we haven’t seen in generations, bringing expansion, hiring and more investment opportunities for Manufacturers.
According to the NAM Manufacturers’ Outlook survey, 80 percent of manufacturers say the president’s actions on regulations are headed in the right direction, with more than half of respondents saying those actions will allow them to expand operations, increase investment and add more workers.
Manufacturers’ record-high optimism reported in the first quarter has carried into the second quarter of this year, marking the highest two-quarter average (91.4 percent) for manufacturing optimism in the survey’s 20-year history. In addition, 89.5 percent of respondents report a positive outlook for their company.
Read the Full Report Here
The Census Bureau and the Department of Housing and Urban Development reported that new housing starts rebounded in June after a soft spring. New residential construction rose from an annualized 1,122,000 units in May, an eight-month low, to 1,215,000 in June. Since reaching 1,288,000 units in February, housing starts have pulled back; however, on the positive side, this is the first time activity has exceeded 1.2 million since then, which is encouraging. Homebuilder optimism remains strong despite slipping once again, with respondents to that survey predicting healthy gains in activity over the next six months (see below). I am forecasting growth of 1.28 million starts by year’s end.
Looking at the June data, single-family (up from 799,000 to 849,000) and multifamily (up from 323,000 to 366,000) starts increased in the month, with both at their fastest rate since February, mirroring the headline number. The Midwest and Northeast saw the strongest growth, with only marginal gains in the West, whereas activity slipped in the South. On a year-over-year basis, housing starts rose 2.1 percent from June 2016’s pace of 1,190,000. Single-family starts have jumped 10.3 percent over the past 12 months, up from 770,000 one year ago. In contrast, multifamily starts, which can be highly volatile from month to month, have fallen 12.9 percent over that time frame.
The Federal Reserve reported that manufacturing production rebounded in June, up 0.2 percent, after falling in two of the three prior months. Overall, springtime production in the sector was choppier than we would have desired or expected, especially given the more robust outlook in other data sources. Yet, even with some disappointment in recent months, the longer-term trend for output among manufacturers has been quite positive. Across the past 12 months, manufacturing production has risen 1.2 percent. It was the eighth consecutive positive year-over-year reading for manufacturing output and progress from the 0.2 percent year-over-year gain in June 2016. Similarly, manufacturing capacity utilization inched up from 75.3 percent in May to 75.4 percent in June. For comparison purposes, utilization in the sector was 75.1 percent one year ago. Read More
The U.S. Export-Import (Ex-Im) Bank has operated for decades with a mission to support U.S. jobs through exports. Back in April, President Donald Trump confirmed his support for the export credit agency. In 2015, a bipartisan supermajority in Congress voted to reauthorize the agency through 2019. Who would want to stand in opposition to this small federal agency with an outsized, tangible benefit for the U.S. economy? Unfortunately, the former Congressman who has been nominated to lead the agency is just that person. Former New Jersey Rep. Scott Garrett, the nominee to lead the Ex-Im Bank, has been a vocal and dogged opponent of the Ex-Im Bank.
NAM President and CEO Jay Timmons, in an Op-Ed published today in the Wall Street Journal, outlined the negative impact for manufacturers if the Senate moves to confirm Mr. Garrett as the leader of the Ex-Im Bank.
As a Congressman, Mr. Garrett built a record of votes and statements that sought to dismantle the Ex-Im Bank. Mr. Garrett voted to close the agency at every opportunity. He voted against a reauthorization bill in October 2015 that passed the House with overwhelming bipartisan support. Before the vote, he took to the House floor to mischaracterize the agency as a “fund for corporate welfare” and urge his colleagues to “keep the Export-Import Bank out of business.”
When he voted against the agency’s reauthorization again later in 2015, he issued a statement explaining that he opposed the bill because it would “resurrect the most shameless example of crony capitalism Washington has ever concocted—the Export-Import Bank.” Prior to the 2015 reauthorization, Mr. Garrett voted against the Ex-Im Bank reauthorization in 2012 that was strongly approved by both the House and Senate. Mr. Garrett’s opposition to the Ex-Im Bank has been consistent, vocal and aimed at undermining the agency’s credibility.
Ex-Im Bank Benefits U.S. Manufacturers, Workers and Taxpayers
- American Workers and Their Families Benefit from Ex-Im: U.S. export sales supported by the Ex-Im Bank have directly supported 1.4 million jobs over the past seven years.
- Small Businesses: In FY2016, about 90 percent of Ex-Im’s transactions – more than 2,600 deals – directly supported small businesses. Tens of thousands of small business suppliers benefit from partnerships with large exporters that also utilize Ex-Im Bank.
- Taxpayers: Ex-Im has generated $7 billion for taxpayers in the past 20 years, mostly through fees collected from foreign customers. The agency is self-sustaining and covers its own operating costs. Eliminating Ex-Im would actually increase the U.S. deficit. The agency transferred $284 million in deficit-reducing receipts to the U.S. Treasury for FY 2016.
Mr. Garrett’s past statements are evidence of a fundamental misunderstanding of the Ex-Im Bank’s ability to level the playing field globally. In a competitive global landscape, the Ex-Im Bank is a much-needed counterweight to substantial foreign export financing. The agency recently reported that China continues to be the world’s largest provider of official export credit, providing more trade-related investment support than the rest of the world combined. Together, the BRICS countries (Brazil, Russia, India, China and South Africa) provided a combined total of more than $51 billion in medium- and long-term export credit in 2016 —nearly half of the total official export credit provided worldwide. Last year, without a quorum for its Board of Directors, the Ex-Im Bank was able to authorize just $5 billion. While the agency’s Board of Directors has lacked the necessary quorum to approve certaom deals, an estimated 40 deals worth more than $30 billion are stuck in the pipeline.
The Ex-Im Bank plays a targeted and critical role in securing and creating more American jobs. That is why the agency needs at its helm a leader who will ensure the agency is able to function at its full potential and promote U.S. exports in the face of substantial competition from manufacturers overseas supported by very active export credit agencies. Manufacturers are losing out on opportunities every day that the vacancies on the Ex-Im Bank Board of Directors are left unfilled, but Mr. Garrett – who said “Congress should put the Export-Import Bank out of business” just two years ago – is simply not a credible leader for this agency.
The Bureau of Labor Statistics reported that the rate of hiring in the manufacturing sector in May grew to its fastest pace since November 2007. According to the latest Job Openings and Labor Turnover Survey data, manufacturers hired 332,000 workers in May, up from 314,000 in April. Expressed as a percentage of the total manufacturing workforce, that meant the hiring rate in the sector jumped from 2.5 percent to 2.7 percent, or nearly a 10-year high. Hiring has trended upward across the past nine months since it bottomed out at 268,000 in August. With that said, total separations—including layoffs, quits and retirements—also rose, up from 317,000 to 327,000, with the separations rate unchanged at 2.6 percent. As a result, net hiring (or hires minus separations) increased by 5,000 in May, rebounding from a loss of 3,000 workers in April. Read More
Manufacturing employment edged up by 1,000 in June, stabilizing a little after declining by 2,000 in May. On the positive side, it was the sixth increase in net hiring in the past seven months, with the sector adding 71,000 workers over that time frame. That stands in sharp contrast to the loss of 16,000 workers for all of 2016, and overall, the data suggest an increased willingness among manufacturers to add new workers since November. Yet, job growth in May and June in the manufacturing sector has been underwhelming, especially when compared to sentiment surveys—such as the one from Institute for Supply Management released earlier in the week—that have indicated relatively healthy expansions in employment. With that in mind, I would continue to expect better job gains moving forward, particularly given the improved demand and production outlook and stronger economic growth globally.
In June, the underlying manufacturing data were mixed. Employment among durable goods firms rose by 9,000 for the month, but this was nearly offset by a decline of 8,000 jobs for nondurable goods businesses. It was the second straight month with declines in nondurable goods employment growth, led by weaknesses in food manufacturing (down 3,300), paper and paper products (down 2,800) and apparel (down 1,000) in this release. In addition, motor vehicles and parts (down 1,300) has also continued to struggle on softer-than-desired sales year to date. Perhaps notably, employment in the food sector rose in non-seasonally adjusted data, so perhaps its decline could reflect those seasonal adjustments. Indeed, over the past 12 months, food manufacturing notched the fastest job growth in the sector, adding 28,300 since June 2016. Read More
The Institute for Supply Management (ISM) reported that manufacturing activity jumped to nearly a three-year high in June. The ISM Manufacturing Purchasing Managers’ Index increased from 54.9 in May to 57.8 in June, its strongest reading since August 2014. As such, the latest survey continued to reflect healthy gains in both demand and output, with improvements in the global economy and a more upbeat outlook helping to lift manufacturing performance in the United States. It was the 10th straight month of manufacturing growth in this report.
In June, most of the key indicators rose sharply, bouncing back from some easing in the springtime months, including new orders (up from 59.5 to 63.5), production (up from 57.1 to 62.4), exports (up from 57.5 to 59.5) and employment (up from 53.5 to 57.2). The pace of hiring in June rose to a 15-month high, and growth of export orders remained encouraging, especially given the strength of the U.S. dollar and a number of global challenges over the past two years.
Later today, I’ll join President Donald Trump, Energy Secretary Rick Perry, Interior Secretary Ryan Zinke and Environmental Protection Agency Administrator Scott Pruitt for an “Energy Week” event at the Department of Energy headquarters here in Washington, D.C.
President Trump is expected to give a speech on American energy independence and “dominance.” This is the kind of leadership manufacturers want to see.
Access to affordable, reliable and diverse energy sources is essential to growing manufacturing in the United States. It’s about more than keeping the lights on; it’s about powering the heart of the American economy.
Manufacturing accounts for roughly one-third of all the energy consumed in the United States. If you make energy more abundant, you make it easier for companies of all sizes to expand their operations in the United States—and to hire more workers. There is a direct line between American energy access—or “dominance,” as the president puts it—and creating new jobs for Americans.
Over the years, manufacturers have produced the innovative new technologies that have allowed us to harness new sources of energy—and to improve our sustainability and make our energy use more efficient. Today’s access to affordable and diverse energy was unthinkable 20 or even 10 years ago. Now it’s time to build on that success.
Across this country, voters and elected leaders want to see the growth of manufacturing in the United States. If you support manufacturing, then you should support the continued development of American energy. Manufacturers use all forms of energy—oil, natural gas, coal, nuclear and renewables. America should lead the world in the development and deployment of all these energy forms.
Learn more about manufacturers’ energy agenda here.
The Bureau of Economic Analysis reported that the U.S. economy grew an annualized 1.4 percent in the first quarter in newly revised figures, up from 1.2 percent in its prior estimate. The increase stemmed largely from better consumer spending and export data in this revision. Personal consumption expenditures rose 1.1 percent at the annual rate in the first quarter, which was an improvement from the prior estimate of 0.6 percent but still weaker than desired. Durable goods spending declined 1.6 percent in this report, pulled lower by a sharp decrease in motor vehicles and parts. Nonetheless, consumer spending added 0.75 percentage points to headline GDP growth, up from 0.44 percent in the estimate released last month.
At the same time, goods exports increased 10.5 percent at the annual rate, an improvement from the 8.4 percent gain in the prior report. In addition, the decline in goods imports shifted from 4.5 percent to 4.4 percent in this release. As a result, the contribution to GDP growth from net exports rose from 0.13 percent in the earlier estimate to 0.23 percent. After a large drag on growth in the fourth quarter of 2016 from net exports, this was a sign that international activity had stabilized somewhat in the early months of 2017.