The University of Michigan and Thomson Reuters said that consumer confidence rose to its highest level since July 2007. Preliminary Consumer Sentiment Index data increased from 86.9 in October to 89.4 in November. This reflects continued improvement in Americans’ perceptions about the U.S. economy, with the headline figure rising from 75.1 in November 2013 (in the aftermath of the budget shutdown). Moreover, it mirrors similar data from the Conference Board, which also has reached a pre-recessionary high of late. (continue reading…)
The Census Bureau said that retail sales rose 0.3 percent in October, offsetting the 0.3 percent decline in September. This was slightly better than the consensus estimate of 0.2 percent growth for the month. Moreover, gasoline station sales fell 1.5 percent and have declined in four of the past five months. Of course, gasoline prices were largely behind this decrease, with the average price of regular gasoline dropping from $3.64 in late June to less than $2.91 last week. Excluding gasoline, spending would have risen 0.6 percent, suggesting better sales figures in the broader market. (continue reading…)
Here is this month’s Global Manufacturing Economic Update:
The global economy has seen its share of challenges this year. These include deflationary worries in Europe, decelerating growth in China and declining activity in South America, among others. Along those lines, the Bank of Japan announced on October 31 that it would increase the amount of its monthly asset purchases, stepping up its quantitative easing program in an effort to spur faster growth. As we noted in last month’s report, the United States fares pretty well in comparison. The International Monetary Fund slightly downgraded its global outlook, with world output now estimated to expand by 3.3 percent and 3.8 percent in 2014 and 2015, respectively. Yet, it raised its estimates for real GDP growth in the United States in 2014 from 1.7 percent to 2.2 percent. (continue reading…)
The Bureau of Labor Statistics said that manufacturers hired 280,000 workers in September, a sharp uptick after the soft 236,000 hires observed in August. The September figure was the fastest pace since November 2010, or nearly four years.
At the same time, the number of manufacturing separations – including layoffs, firings and retirements – also increased, rising from 237,000 to 268,000. Therefore, there were 12,000 net new hires (or hires minus separations) in September, an improvement from the net loss of 1,000 manufacturing employees in August. In addition, net hiring has averaged 15,600 per month over the past five months (May to September), progress from the 5,000 average over the five months prior to that (December to April). (continue reading…)
The Bureau of Economic Analysis said that manufacturers added 0.81 percentage points to real GDP growth in the second quarter. As reported earlier, real GDP rebounded strongly in the second quarter after weakness in the first quarter, expanding by 4.6 percent. Durable and nondurable goods sectors contributed 0.51 percent and 0.30 percent, respectively, to second quarter real GDP growth. Indeed, real value-added increased by 8.0 percent for durable goods firms, with 5.4 percent growth for nondurable goods manufacturers. (continue reading…)
The National Federation of Independent Business (NFIB) said that its Small Business Optimism Index rose from 95.3 in September to 96.1 in October, rebounding back to where it was in August. Small business leaders have become more confident as the year has evolved, with the index moving higher after bottoming out at 91.4 in February. Since the first quarter, the Optimism Index has averaged 95.7. At the same time, small business owners remain somewhat anxious, with the index remaining below the key threshold of 100, the level that would indicate strong growth for the sector. The index has now been below 100 since October 2006. (continue reading…)
Here is the summary for this week’s Monday Economic Report:
Last week, we received a number of encouraging reports on the state of the manufacturing sector and the U.S. economy. The Institute for Supply Management reported that its manufacturing Purchasing Managers’ Index (PMI) rebounded, up from 56.6 in September to 59.0 in October. This brought the index back up to where it was in August, with both readings at their highest levels since March 2011. This suggests that the manufacturing sector was making healthy gains as we began the fourth quarter, and as further evidence, demand and production were both higher in October. In fact, the new orders and output indices have now been 60 or greater for six straight months. Hiring also picked up. (continue reading…)
The Bureau of Labor Statistics said that manufacturers added 15,000 net new workers in October, an improvement after softer data in August and September. Speaking of those months, the August and September data were both revised higher, adding another 12,000 employees in total. Year-to-date, the manufacturing sector has generated 128,000 net new workers, or an average of 12,800 over those 10 months. Since the end of 2009, manufacturers have created 704,000 employees on net.
These data suggest that hiring in October returned to the monthly averages that we have seen over the past year. That is an encouraging sign that manufacturers are continuing to add workers consistent with recent increases in demand and output. In addition, manufacturing leaders remain mostly upbeat in their outlook, which should bode well for hiring moving forward in the sector.
At the same time, these numbers underscore the importance of pro-growth, pro-export policies over the coming months. As policymakers debate their next steps post-election, they need to focus on measures that will have an immediate positive impact on the economy such as enacting tax reform, passage of Trade Promotion Authority, reauthorizing the Export-Import Bank, adopting immigration reform, enhancing workforce development and finding long-term infrastructure spending solutions, and other priorities.
The Bureau of Labor Statistics said that productivity in the manufacturing sector rose 3.2 percent in the third quarter. Manufacturing labor productivity has exceeded 3 percent in each of the three quarters so far in 2014, which represents a nice bump-up from the 1.0 percent and 2.0 percent annual increases seen in 2012 and 2013, respectively.
Despite these solid figures, output measures for the sector have been more volatile, up just 1.6 percent in the soft first quarter and then rebounding with a 7.1 percent increase in the second quarter. In these latest third quarter numbers, manufacturing output rose a solid 4.1 percent, helping to push unit labor costs down 0.7 percent. Lower unit labor costs help to make the sector more competitive globally. Indeed, unit labor costs for the manufacturing sector have fallen 5.4 percent since the end of the Great Recession, with even steeper declines in the manufacturing sector. (continue reading…)
ADP said that manufacturers added 15,000 net new workers in October, less than the increase of 33,000 observed in September. The sector has expanded its workforce for nine straight months, rebounding after the winter-related softness in January. Over that nine-month period, manufacturers have hired an additional 12,000 employees per month on average, or 99,000 increased workers year-to-date in the sector. (continue reading…)