All Posts By

Chad Moutray


Manufacturing Employment Rose in December, but Down 45,000 for 2016 as a Whole

By | Economy, Shopfloor Economics | No Comments

The Bureau of Labor Statistics said that manufacturing employment rose by 17,000 in December, its first monthly increase since July. That is hopefully a sign of better hiring numbers moving forward, which would be consistent with some of the improved sentiment and activity data of late. Nonetheless, it does not reverse the disappointing trend seen for 2016 as a whole, which saw manufacturing hiring down by 45,000 workers on net for the sector. Indeed, for most of last year, manufacturing leaders were quite cautious in their hiring in light of disappointing demand and production data and persistent economic uncertainties and headwinds. Read More

U.S. Trade Deficit Rose to a Nine-Month High in November

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The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit rose to a 9-month high, up from $42.36 billion in October to $45.24 billion in November. For the year as a whole, the monthly data were quite volatile, ranging from $36.17 billion in September to $45.26 billion in February. In 2016, the trade deficit averaged $41.27 billion, which was not far from the $41.70 billion average in 2015. The November increase stemmed from reduced goods exports (down from $123.07 billion to $122.35 billion) that corresponded with higher goods imports (up from $186.30 billion to $188.98 billion). The goods imports pace was the largest since August 2015. Read More

ADP: Manufacturing Employment Growth Continued to Disappoint in December

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ADP said that manufacturing employment growth continued to disappoint, with hiring down by 9,000 in December. For the year as a whole, employment in the sector fell by 51,000 in 2016, with manufacturers wary about adding to their workforces given ongoing global headwinds and economic uncertainties. Hopefully, that begins to turn around moving forward into 2017 with improved signs of activity seen in other measures. Indeed, job openings have remained elevated in recent months, suggesting that manufacturers are prepared to accelerate hiring and be less cautious with better demand and production figures.

Meanwhile, nonfarm payroll employment rose by 153,000 in December, weaker than the consensus estimate of around 170,000. In 2016, nonfarm payrolls increased by 174,450 per month on average, a decent pace but down from the 209,000 average per month in 2015. For the month, goods-producing employment was lower across-the-board, including mining (down 5,000) and construction (down 2,000) in addition to manufacturing. The information sector also lost workers in December, down by 6,000. The largest job gains were in trade, transportation and utilities (up 82,000), education and health services (up 29,000), professional and business services (up 24,000) and financial activities (up 10,000).

Small and medium-sized businesses (e.g., those with less than 500 employees) accounted for more than 58.2 percent of all net new workers in the month.

Tomorrow, we will get new jobs data from the Bureau of Labor Statistics (BLS) for December, and the consensus estimate is also for around 170,000 new nonfarm payroll jobs for the month. Manufacturing employment is expected to remain soft, hopefully near zero or with a slight increase.


Manufacturing Construction Remained Weak in November

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The Census Bureau said that private manufacturing construction spending remained weak in November, falling to an 11-month low. The value of construction put in place in the sector declined from $73.53 billion in October to $72.71 billion in November, down 1.1 percent for the month. While manufacturing construction has largely trended higher over the past few years, activity has stalled more recently as the sector has grappled with sluggish growth and economic and political anxieties. Along those lines, construction activity in the manufacturing sector has pulled sharply lower since achieving the all-time high of $82.15 billion in September 2015. Over the past 12 months, manufacturing construction spending has fallen 8.0 percent. Read More


ISM: Manufacturing Activity Accelerated to a Two-Year High in December

By | Economy, Shopfloor Economics, Shopfloor Main | No Comments

The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) accelerated to a two-year high in December. The composite index rose from 53.2 in November to 54.7 in December, its highest level since December 2014. It was the second consecutive increase in the headline number, mirroring the jump in business confidence seen in other economic indicators since the election. Indeed, all of the sample comments provided by the ISM echoed the improvement in activity and outlook, with the comments of one plastics of rubber products manufacturer summing up the thoughts of many: “Our business remains strong, and we are seeing continued growth.” Along those lines, respondents also cited a tight labor market and a pickup in inflationary pressures, both of which would also be consistent with stronger demand and output.

Looking more closely at the data, the underlying figures were encouraging in December, including very healthy gains for new orders (up from 53.0 to 60.2) and production (up from 56.0 to 60.3). It was the first time both of these measures have exceeded 60—signifying strong expansions—in 25 months, or since November 2014. Growth in export sales (up from 52.0 to 56.0) and employment (up from 52.3 to 53.1) also improved for the month. Read More


Disappointing Drop in November Housing Starts, Largely from Multifamily Segment

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The Census Bureau and the U.S. Department of Housing and Urban Development said that new housing starts declined 18.7 percent in November. This was disappointing following the 27.4 percent surge seen in October. New residential construction dropped from an annualized 1,340,000 in October, its fastest monthly pace since July 2007, to 1,090,000 in November. The jump in starts appears to be an outlier, largely from volatility in the multifamily segment. Indeed, here are the multifamily starts data for the last four reports: August (440,000), September (271,000), October (477,000) and November (262,000). Multifamily residential construction starts have averaged 381,455 units year-to-date in 2016, down from 395,333 in all of 2015.

At the same time, single-family starts also decreased in November, down from 863,000 to 828,000, but remain elevated relative to prior months. Through the first 11 months of this year, single-family starts have averaged 781,818 units, up from 712,833 for last year as a whole. In addition, starts in the single-family segment have risen 5.3 percent since November 2015, up from 786,000 units. As such, new residential construction data were perhaps more encouraging than the headline number suggests, especially for single-family activity. Read More

Consumer Prices Increased 1.7 Percent Year-Over-Year in November, the Highest in More Than Two Years

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The Bureau of Labor Statistics reported that consumer prices rose 0.2 percent in November, slowing from the 0.4 percent gain in October. It was the fourth straight monthly increase. The slight uptick in consumer inflation in November stemmed from higher energy costs, up 1.2 percent, with gasoline prices up 2.7 percent. Nonetheless, energy prices, which can be quite volatile from month to month, were up 1.1 percent over the past 12 months. At the same time, food prices were unchanged for the fifth consecutive month, with a decline of 0.3 percent since November 2015. Overall, the consumer price index increased 1.7 percent year-over-year in November, up from 0.9 percent in July and the highest level since September 2014. Read More


Markit: U.S. Manufacturing Output in December Grew at Strongest Rate Since March 2015

By | Economy, Shopfloor Economics, Shopfloor Main | No Comments

The Markit Flash U.S. Manufacturing PMI edged up from 54.1 in November to 54.2 in December, a 21-month high. This mostly mirrored assessments about new orders growth (up from 55.5 to 55.6), which also expanded at the fastest pace over that time frame. Other indicators were mixed but encouraging. Employment expanded at its highest rate in 18 months (up from 52.4 to 54.1), whereas output grew modestly but pulled back a little in December (down from 56.0 to 55.1). On a more disappointing note, exports slowed to a near crawl but were positive for the sixth time in the past seven months (down from 51.0 to 50.3). Softer international demand, however, should not be surprising given the strong U.S. dollar. Overall, this report provides some encouragement for manufacturers, many of whom have been rather cautious in their economic outlook for much of the past two years.

Meanwhile, it was a similar story at year’s end in Europe. The Markit Flash Eurozone Manufacturing PMI increased from 53.7 in November to 54.9 in December, a level not seen since April 2011. As such, the continent’s economy continues to move in the right direction, with activity accelerating at a decent rate. The headline PMI has trended higher since bottoming out at 51.2 in February. The underlying data were higher across the board in December, including new orders (up from 54.4 to 56.1), output (up from 54.1 to 56.1), exports (up from 54.1 to 54.7) and hiring (up from 53.4 to 53.7). In addition, manufacturers in France (up from 51.7 to 53.5) and Germany (up from 54.8 to 56.8) were also more upbeat. In particular, French manufacturing activity expanded at its fastest pace in 67 months, an impressive accomplishment given that the data were in contraction territory as recently as September.


Home Builder Confidence in December at Highest Level Since July 2005

By | Economy, Shopfloor Economics, Shopfloor Main | No Comments

The National Association of Home Builders (NAHB) and Wells Fargo reported that the Housing Market Index (HMI) rose strongly, up from 63 in November to 70 in December. It was the highest level of confidence since July 2005, reflecting strong optimism among homebuilders in their economic outlook after the election. Index values greater than 50 indicate builders are more confident in their outlook than not, with numbers greater than 60 suggesting strong expectations for activity. Respondents were more upbeat in every region.

Builders continue to report healthy assessments about single-family home sales over the next six months. The index for expected sales jumped from 69 in November to 78 in December. Still, NAHB Chief Economist Robert Dietz cautioned that “builders remain sensitive to rising mortgage rates and continue to deal with shortages of lots and labor.”

Philly Fed: Post-Election Manufacturing Sentiment at 25-Month High

By | Economy, Shopfloor Economics | No Comments

The Federal Reserve Bank of Philadelphia reported that manufacturing activity expanded at its fastest pace in 25 months, expressing post-election optimism in its latest survey. The composite index of general business activity soared from 7.6 in November to 21.5 in December, its highest level since November 2014. In addition, sentiment has now expanded for five consecutive months, improving from weaker data earlier in the year. With that said, the underlying data were mixed, but still encouraging. Growth in new orders eased somewhat (down from 18.6 to 13.9), whereas shipments accelerated (up from 19.5 to 22.0), with both variables expressing relatively strong expansions.   Read More