The Bureau of Economic Analysis said that personal spending remained soft, up 0.1 percent in October, the same pace as seen in September. Spending on durable and nondurable goods increased by 0.2 percent and 0.1 percent, respectively, but these data were held back by weaker spending on food and beverages (down 0.8 percent), motor vehicles and parts (down 0.7 percent) and gasoline and other energy goods (down 0.3 percent). The latter was likely the result of lower gasoline prices. Overall, these data tend to show that Americans are holding back a little on their consumer purchases, with the year-over-year pace of personal spending down from 4.7 percent in October 2014 to 2.9 percent in this most recent report. On the positive side, this suggests positive growth, and yet, these data also indicate that the public is saving more. The savings rate rose to 5.6 percent, its highest rate of the year so far and up from 4.5 percent twelve months ago. It was also the highest level since December 2012, when the data were skewed by the possibility of the “fiscal cliff.” (continue reading…)
The Census Bureau said that new durable goods orders rose 3.0 percent in October, rebounding from declines in both August and September. With that said, much of the increase stemmed from strong nondefense aircraft sales for the month, up from $9.7 billion to $17.5 billion. Excluding transportation equipment, new orders were up by a more modest 0.5 percent pace. Overall, this past year has been a tough one for manufacturers, with a number of headwinds dampening demand and production. Since October 2014, new durable goods orders have risen just 0.5 percent, but when transportation equipment were excluded, year-over-year sales were actually down 2.4 percent. (continue reading…)
The Conference Board said that consumer sentiment fell to its lowest level of the year in November. The Consumer Confidence Index declined from a revised 99.1 in October to 90.4 in November, the weakest reading since September 2014. As such, consumer attitudes have downshifted dramatically over the past two months, down from 102.6 in September, which had been the second-highest level of the year. Indeed, consumer confidence has been highly volatile in 2015, but with perceptions generally lower since reaching a post-recessionary high in January (103.8). Much of that weakness has stemmed from worries about the economic outlook, but it is also possible that geopolitical events could be taking a toll on confidence, particularly in this latest survey. (continue reading…)
The Richmond Federal Reserve Bank said that manufacturing activity declined for the third straight month in November, highlighting recent challenges in the sector in the district. The composite index of general business activity declined from -1 in October to -3 in November. Manufacturers reported reduced growth in new orders (down from zero to -6), shipments (up from -4 to -2) and the average workweek (down from -5 to -3). Note that the pace of decline eased for both shipments and the workweek, and similarly, capacity utilization (up from -14 to zero) stabilized after falling sharply the month before. At the same time, employment continued to pull back from modest gains in prior months. Hiring (down from 3 to zero) stagnated in November, with wage growth (down from 17 to 6) slowing. (continue reading…)
The Bureau of Economic Analysis said that real GDP expanded by 2.1 percent at the annual rate in the third quarter, improving from the earlier estimate of 1.5 percent. The higher figure largely stemmed from better inventory spending than originally thought, when slow growth in businesses replenishing their stockpiles reduced real GDP by 1.44 percentage points. Instead, the easing in inventory spending was less severe, only subtracting 0.59 percentage points from the headline figure. Even with this revision, however, the U.S. economy decelerated from 3.9 percent growth in the second quarter, and output is likely to grow by 2.4 percent for 2015 as a whole. This essentially maintains the more-sluggish pace of growth experienced since the Great Recession, with modest growth hovering between 2.0 and 2.5 percent. The current outlook is for 2.5 percent growth in 2016. (continue reading…)
After rebounding somewhat in October, activity pulled back again in November, according the most recent Markit Flash U.S. Manufacturing PMI data. The composite measure declined from 54.1 in October to 52.6 in November, its lowest level since October 2013. The headline index peaked for the year at 55.7 in March, with activity decelerating since then. Exports (down from 51.6 to 49.5) returned to negative territory in November, a sign of just how much the stronger dollar and weaknesses abroad have dampened international demand and overall sentiment. Other indices reflected slower growth for the month, even as there continued to be modest expansions in activity. This included new orders (down from 55.5 to 53.1), output (down from 55.4 to 54.6) and employment (down from 52.9 to 51.9). (continue reading…)
The Federal Reserve Bank of Philadelphia said that manufacturing activity rebounded in November after contracting in the prior two months. The composite index of general business activity improved from -4.5 in October to 1.9 in November. With that said, manufacturers in the district were not fully out of the woods yet, with several key indicators continuing to decrease on net. This included new orders (up from -10.6 to -3.7), shipments (up from -6.1 to -2.5) and the average workweek (down from -7.3 to -16.2). The good news there was that the pace of decline for new orders and shipments eased for the month – a fact trumpeted by the Philly Fed in the press release noting “slight improvement” in November. Hiring (up from -1.7 to 2.6) also picked up a little, even as three-quarters of responses noted no change in employment. (continue reading…)
The index for manufacturing production increased .4% in October. The somewhat better production data in October was encouraging, particularly given the softness seen in the sector so far this year. Yet, manufacturers continue to grapple with challenges from the strong U.S. dollar and weak economic conditions to key export markets around the world – conditions that are not likely to improve much moving into the New Year.
With that in mind, policymakers should seek to enact measures that will increase manufacturing competitiveness including trade policies that help to open new markets for our products, as well as comprehensive tax reform and smarter regulatory policies.
The Empire State Manufacturing Survey reflected contracting levels of activity for the fourth straight month in November. The composite index of general business conditions improved slightly from -11.4 in October to -10.7 in November, even as this measure has been in solid negative territory since July. The underlying data were also negative across-the-board, even as there was some easing in the pace of decline for most of them. This included new orders (up from -18.9 to -11.8), with one-third of respondents saying that their sales had declined for the month, down from 37.2 percent who said the same thing in the prior report. At the same time, 21.4 percent of those completing the survey cited increased new orders in November, up from 18.3 percent in October. Data for shipments (up from -13.6 to -4.1) were similar. (continue reading…)
Retail sales rose 0.1 percent in October, improving ever-so-slightly from being unchanged in both August and September. As such, this report continues to reflect anxieties among consumers, with some hesitance for them to open their pocketbooks on recent economic weaknesses. Indeed, retail spending has grown just 1.7 percent over the past 12 months, a modest but less-than-ideal pace. (continue reading…)