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Monday Economic Report – May 18, 2015

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

One of the larger headlines of the past week was the renewed strength of the euro, which closed at $1.1449 on Friday. To put that exchange rate in perspective, the euro traded for $1.0582 on April 13, and Friday’s close was the highest level for the euro since February 2. To be fair, the U.S. dollar remains strong against the euro, up 17.8 percent since May 6, 2014. Yet, the recent weakness in the dollar (and strength in the euro) has been the result of weaker-than-expected economic data in the United States and better-than-anticipated numbers coming out of Europe. Many of the underlying long-term fundamentals in these two regions remain the same, but those manufacturers worried about the negative impact of a soaring dollar got some welcome relief last week in the recent easing of the greenback. (continue reading…)

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Industrial Production Unchanged in April

Manufacturing production was unchanged in April, slowing from the 0.3 percent gain experienced in March. Overall, output in the sector has been very soft for five straight months. Manufacturers have struggled with a number of significant headwinds in the U.S. and global economies, including challenges in growing exports, residual impacts from the West Coast ports slowdown, regional weather challenges and an anxious consumer. As a result, the year-over-year pace has slowed from 4.5 percent in November to 2.3 percent in April.  Similarly, capacity utilization in manufacturing has dropped from 79.8 percent five months ago to 78.2 percent today.

Durable goods production increased 0.1 percent in April, with output for nondurable goods firms off 0.1 percent. There were strong increases for manufacturing production for nonmetallic mineral products (up 1.4 percent), electrical equipment and appliances (up 1.3 percent), motor vehicles and parts (up 1.3 percent) and wood products (up 1.3 percent). However, these were offset by declining output in the machinery (down 0.9 percent), aerospace and miscellaneous transportation equipment (down 0.6 percent), and food, beverage and tobacco products (down 0.6 percent) sectors, among others. (continue reading…)

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Reduced Energy Costs Continue to Push Producer Prices Lower in April

The Bureau of Labor Statistics said that producer prices for final demand goods and services fell 0.4 percent in April, with prices for goods down 0.7 percent. Final demand goods prices have declined in nine of the past ten months, driven lower largely on reduced energy costs. Final demand energy goods were off 2.9 percent in April, or 24.3 percent since peaking 10 months ago in June. Producer prices for final demand food goods also declined in April, down 0.9 percent. Sharply lower egg prices helped push overall food costs down, along with chicken, cooking oils, oilseeds, pork, processed fruits and vegetables and roasted coffee. Through the first four months of 2015, food costs have declined 4.2 percent. (continue reading…)

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Consumers Remained Cautious in their Spending in April

Consumers remained cautious in their spending in April, according to the Census Bureau. Retail sales were unchanged for the month, softening from the rebound seen in March. Overall, spending has decelerated significantly over the past few months, down from a year-over-year rate of 4.7 percent in November to just 0.9 percent in April.

With that said, the longer-term view is perhaps more encouraging than the headline number might suggest. Total retail spending includes gasoline station sales, which have fallen 22.0 percent since April 2014 on lower prices. Excluding gasoline stations, retail sales grew 3.6 percent year-over-year. This suggests modest growth in the broader retail market over the past 12 months. Still, this figure has also eased recently, down from 5.8 percent year-over-year in November. (continue reading…)

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JOLTS: Manufacturing Net Hiring Was Negative in Both February and March

The Bureau of Labor Statistics said that net hiring in the manufacturing sector was negative in both February and March, according to the latest Job Openings and Labor Turnover Survey (JOLTS) release. This was the first declines in net hiring for the sector in nearly two years, a reflection of the recent headwinds seen in the economy so far this year.

Manufacturers hired 254,000 workers in April, down from 259,000 in March. At the same time, total separations – including layoffs, quits and retirements – were unchanged at 264,000. Therefore, net hiring (or hires minus separations) declined from -5,000 to -10,000. This represents a deterioration from the more-robust pace of net hiring growth seen in the second half of 2014, which averaged nearly 25,000 per month. Hopefully, we will see a rebound in net employment growth in the coming months. (continue reading…)

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NFIB: Small Business Optimism Ticked Somewhat Higher in April

The National Federation of Independent Business (NFIB) said that optimism rose somewhat in April, rebounding from a much softer March. The Small Business Optimism Index increased from 95.2 in March to 96.9 in April, but remained below the recent peak observed in December (100.4). The December level was the highest since October 2006, but sentiment has been weaker since then as a number of economic headwinds have dampened both activity and the overall outlook to a certain extent. Indeed, this report reflects lingering anxieties about the economy, even as small business owners indicate that they are more upbeat today than they have been in past years. (continue reading…)

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Monday Economic Report – May 11, 2015

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

Once again, there was evidence last week that significant headwinds have dampened activity in the manufacturing sector. The sector added just 1,000 net new workers in April, marking the third consecutive month with soft hiring. The data suggest that challenges from a strong dollar, slowing growth abroad, lower crude oil prices, residual effects from the West Coast ports slowdown, a cautious consumer and weather have combined to take their toll on the economy, at least for the time being. (continue reading…)

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BLS: Manufacturers Added 1,000 Workers in April

Manufacturers added 1,000 net new workers in April, according to the Bureau of Labor Statistics. This was an ever-so-slight improvement after being unchanged in March. Overall, though, it was the third consecutive month of hiring weakness in the manufacturing sector. There have been a number of significant headwinds buffeting the U.S. economy in the early months of 2015, including a strong dollar, slowing growth abroad, lower crude oil prices, residual effects from the West Coast ports slowdown, a cautious consumer and weather. Each of these challenges has dampened overall activity in the sector, including employment growth. (continue reading…)

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Manufacturing Productivity Declined for the Second Straight Quarter

The Bureau of Labor Statistics said that labor productivity in the manufacturing sector fell 1.1 percent in the first quarter, declining for the second straight quarter. This latest streak ended 11 consecutive quarters with positive productivity growth. The reduction in labor productivity in the sector in the first quarter stemmed from a 1.2 percent decrease in output, with the number of hours worked edging down 0.1 percent. As a result, unit labor costs increased 2.7 percent on higher real compensation costs. The year-over-year data were perhaps more encouraging, with labor productivity rising 1.4 percent, output up 3.8 percent and unit labor costs down 0.7 percent. (continue reading…)

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ADP: Hiring in the Manufacturing Sector Negative for the Second Straight Month

ADP said that manufacturing employment decreased by 10,000 workers in April. This was the second straight monthly decline, with March’s net employment loss of 3,000 employees. Overall, hiring in the sector has been very soft through the first four months of 2015, with employment growth essentially flat. This compares to roughly 18,850 workers added per month on average in the second half of 2014. The current softness has been the result of a number of headwinds in the economy. These challenges include the strong U.S. dollar, weakened export demand, lower crude oil prices, the West Coast ports slowdown, weather, and a cautious consumer. (continue reading…)

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