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ADP: Hiring in the Manufacturing Sector Slowed to 3,000 in February

ADP said that manufacturers added 3,000 net new workers in February, its slowest pace since January 2014. This suggests that the weaker demand and production data seen in other economic indicators has begun to negatively impact the pace of hiring. Still, employment has expanded for 13 straight months, averaging 14,275 per month over that time frame, according to ADP. Moreover, over the past six months, employment growth has been even stronger, averaging just over 17,580 each month. Hopefully, the weaker rate of hiring observed in February is just a respite to stronger gains in the months ahead. (continue reading…)

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ISM: Manufacturing Activity Weakened in February on West Coast Ports, Reduced Energy Prices

The Institute for Supply Management (ISM) said that growth in manufacturing activity has continued to slow over the past few months, starting 2015 off on a weaker note. The headline purchasing managers’ index (PMI) has fallen from 57.9 in October to 52.9 in February, it slowest pace since January 2014, when severe winter storms dampened activity across-the-board. The sample comments suggest that the West Coast ports slowdown and falling energy prices were top-of-mind for many of the respondents, helping to explain much of this easing. At the same time, the stronger U.S. dollar and sluggish growth abroad were also likely factors, with export orders (down from 49.5 to 48.5) declining for the second straight month.  (continue reading…)

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Personal Spending Fell in January for the Second Straight Month

The Bureau of Economic Analysis said that personal spending decreased by 0.2 percent in January, falling for the second straight month. Durable and nondurable goods spending were also lower in both December and January, and these data suggest that Americans remain cautious in their spending. Of course, there could also be other factors at play, such as lower gasoline prices and heavy snow storms in some regions of the country. Still, on a year-over-year basis, personal spending has increased 3.6 percent, a fairly decent growth rate. (continue reading…)

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Monday Economic Report – March 2, 2015

Here is the summary for this week’s Monday Economic Report: 

While manufacturers remain mostly optimistic in their outlook, we have seen softness in a number of recent economic indicators. Slower economic growth internationally, a stronger U.S. dollar, reduced crude oil prices and the West Coast ports slowdown have been cited as reasons for this weaker-than-desired performance. Along those lines, real GDP growth in the fourth quarter was revised lower, down from 2.6 percent to 2.2 percent. In addition, surveys from the Dallas, Kansas City and Richmond Federal Reserve Banks all reflected decelerated levels of new orders and exports. Most notably, Texas manufacturers have been adversely impacted by the sharp drop in petroleum prices, dampening demand throughout the energy supply chain and for the larger regional economy. Yet, even in the Dallas report, respondents continued to be more positive than negative in their expectations for sales, production, employment and capital spending over the next six months. (continue reading…)

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Real GDP Growth Revised Down to 2.2 Percent in the Fourth Quarter

Real GDP grew 2.2 percent in the fourth quarter, according to the Bureau of Economic Analysis. This was down from the previous estimate of 2.6 percent growth. Slower growth in inventory replenishment and stronger import growth accounted for the bulk of the revision. For the year as a whole, real GDP rose 2.4 percent in 2014, only slightly better than the 2.3 percent and 2.2 percent rates seen in 2012 and 2013, respectively. Still, this was largely the result of a decline in activity in the first quarter due to weather and other factors, with real GDP growth averaging a quite-healthy 4.8 percent pace in the second and third quarters. As of right now, growth in the first quarter of 2015 (or the current one) should be roughly 2.8 percent, and I am still forecasting growth of around 3 percent for all of 2015. (continue reading…)

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Kansas City Fed: Manufacturing Activity Slowed to a Near Crawl in February

The Kansas City Federal Reserve Bank said that manufacturing activity slowed to a near crawl in February, mirroring the easing we have seen in other regions. The composite index of general business conditions dropped has declined from 8 in December to 3 in January to 1 in February. The silver lining, of course, is that activity in the sector continues to expand, albeit barely, as it has now for 14 straight months. Still, the weaker headline figure was pulled lower by contracting levels of new orders (down from -8 to -10), exports (down from -7 to -13) and employment (down from zero to -4). There were several reasons cited in the sample comments for the softness, including sluggish global growth, reduced crude oil prices and the West Coast ports slowdown. (continue reading…)

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Consumer Prices Fell Once Again on Lower Gasoline Costs

The Bureau of Labor Statistics said that the consumer price index (CPI) fell 0.7 percent in January. This mirrored producer price index (PPI) data released the week before. More importantly, consumer prices have decreased 0.2 percent over the past 12 months, the first negative year-over-year pace since October 2009. Of course, this downward shift in inflation has been spurred by lower gasoline prices, which fell 18.7 percent in January alone. Indeed, the average price of regular gasoline declined from $3.639 a gallon during the week of June 23 to $1.982 a gallon the week of January 26, according to the Energy Information Administration. (It has begun to rise a bit since then, with an average of $2.256 per gallon this week.) (continue reading…)

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New Durable Goods Orders Rebounded in January on Strong Aircraft Orders

The Census Bureau said that new durable goods orders rose 2.8 percent in January, rebounding from the 3.7 percent decline observed in December. It was the strongest increase in durable goods orders in six months, with demand off in four of the past five months. As such, manufacturing activity since July 2014 has been less-than-desired, providing a bit of a contrast with better demand and sentiment data elsewhere. The sluggish global economic environment has likely played a role in this softness. On a year-over-year basis, durable goods orders have risen 5.4 percent, but this strength is somewhat misleading, as it builds off of the significant weather-related slowdowns seen 12 months ago. (continue reading…)

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Chinese Manufacturing Shifted to a Marginal Expansion in February

The HSBC Flash China Manufacturing PMI shifted to a marginal expansion in February, improving slightly after contracting for two straight months. The headline index increased from 49.7 in January to 50.1 in February. The underlying data were mixed. New orders (down from 50.8 to 50.4) and output (up from 50.1 to 50.8) grew slowly for the month, even as the pace of sales slipped a bit. At the same time, new export orders (down from 51.1 to 47.1) and employment (up from 49.1 to 49.3) declined on net. Export sales, in particularly, deteriorated to their lowest level since August 2013, which was disappointing. The index for hiring, which has contracted now for 24 consecutive months, increased to a 7-month high, with the pace of the decline decreasing. Final PMI data will be come out on Monday, March 2.    (continue reading…)

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Conference Board: Consumer Confidence Pulled Back in February

The Conference Board said that consumer sentiment fell sharply in February. The Consumer Confidence Index declined from a revised 103.8 in January to 96.4 in February. The January figure had been originally reported to be 102.9, and it was the highest point for this measure since August 2007. The decrease in attitudes in this report in February mirrored similar drops in perceptions in the most recent University of Michigan and National Federation of Independent Business surveys. Still, the depth of the pullback in February was larger than expected, and it suggests that the American public remains more anxious than desired. (continue reading…)

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