All Posts By

Chad Moutray

ADP: Manufacturing Employment Declined Again in September

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ADP said that manufacturing employment declined again in September, with hiring in the sector down in seven of the past eight months. In September, there were 6,000 fewer workers on net for manufacturers, which continue to be challenged by global headwinds and economic anxieties. Overall, employment in the sector is down by 42,000 through the first nine months of 2016. This suggests that manufacturers remain wary about adding to their workforce, particularly with sluggish growth in demand and production. Yet, job openings have been more favorable of late, which could indicate better hiring growth moving forward when manufacturers become less cautious. Read More


Manufacturing Construction Declined by 1.4 Percent in August

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The Census Bureau said that private manufacturing construction spending declined by 1.4 percent in August, pulling a little after rebounding in July. The value of construction put in place in the sector fell from $75.57 billion in July to $74.49 billion in August. Activity in August, however, remained an improvement from June’s $72.81 billion pace, which was the slowest since January 2015. The bottom line of this data has been a mixed one, with strong gains over the long-term but with recent softness due to sluggish economic growth and a more-cautious outlook. For instance, construction activity in the manufacturing sector has pulled sharply lower since achieving the all-time high of $82.15 billion in September 2015. Yet, manufacturing construction spending has risen 28.2 percent over the past 24 months, boosted in particularly by increased investment in the chemical sector, which continues to benefit from cost advantages in the energy sector. Read More


ISM: Manufacturing Activity Rebounded in September

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

The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) rebounded in September after unexpectedly contracting in August. The composite index rose from 49.4 in August to 51.5 in September, expanding for the sixth time in the past seven months. This was encouraging news, and a sign that the August reading were a bit of an outlier. Indeed, new orders (up from 49.1 to 55.1) recovered strongly, with modest growth in production (up from 49.6 to 52.8) and exports (down from 52.5 to 52.0). Despite the easing in exports, international demand has expanded for seven consecutive months. The sample comments also tended to echo the better data in September, even as respondents continued to cite ongoing challenges. Read More


Real GDP Revised Up to 1.4 Percent in the Second Quarter

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

The U.S. economy grew 1.4 percent at the annual rate in the second quarter, up from 1.1 percent in the prior estimate, according to the latest revision from the Bureau of Economic Analysis. The revision stemmed largely from better data for nonresidential fixed investment, up an annualized 1.0 percent for the quarter instead of a decline of 0.9 percent as noted in the previous release. With that said, there were still challenges related to nonresidential fixed investment, with businesses spending less for both structures (down 2.1 percent) and equipment (down 2.9 percent). In addition, there were large drags on headline growth from private inventories and residential activity, with the latter softer-than-desired after being a bright spot over much of the past two years. Gross private fixed investment alone subtracted 1.34 percentage points from real GDP growth in the second quarter. Read More


New Durable Goods Orders Remained Weak in August

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The Census Bureau said that new durable goods orders remained weak in August, continuing a trend that we have seen over the past year or so. New orders dropped from $227.0 billion in July to $226.9 billion in August, essentially unchanged for the month. Moreover, on a year-over-year basis, sales have decreased by 1.3 percent since August 2015. This highlights the ongoing challenges in the sector, including global headwinds and ongoing economic anxieties.

With that said, the headline number received a bit of a boost from transportation equipment orders in August, which were up 0.6 percent largely on stronger demand for autos and defense aircraft. Excluding transportation equipment, new orders for durable goods were down 0.4 percent in August and 1.1 percent year-over-year. This speaks to broader softness outside of transportation among durable goods manufacturers. So-called “core” capital goods orders (or nondefense capital goods excluding aircraft) were up 0.6 percent in August. That might be more encouraging, however, if demand for core capital goods did not decline 3.1 percent year-over-year. Read More

Conference Board: Consumer Confidence Jumped Strongly in September to a Nine-Year High

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The Conference Board said that consumer sentiment jumped strongly in September. The Consumer Confidence Index rose from 101.8 in August to 104.1 in September, its highest level since August 2007. This represented a significant improvement in Americans’ assessments of the economy since May’s dismal 92.4 reading. The strong gains in the headline number were buoyed by better perceptions about current (up from 125.3 to 128.5) and future (up from 86.1 to 87.8) conditions. With that said, this measure has been extremely volatile over the past two years, with the current reading surpassing the prior post-recession high of 103.8 in January 2015. That peak was soon followed by lingering doubts about economic growth, and this survey still reflects some of those persistent anxieties despite notable improvements. Read More

Richmond Fed: Manufacturing Activity Remained Weak in September

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The Richmond Federal Reserve Bank said that manufacturing activity in its district remained weak in September. The composite index of general business activity increased from -11 in August to -8 in September but contracted for the second straight month. Several of the underlying data points eased in the rate of decline in this report, including new orders (up from -20 to -7), shipments (up from -14 to -4) and capacity utilization (up from -19 to -11). At the same time, the labor market data were mixed. Hiring (down from 7 to -13) turned negative for the first time in three years; whereas, the average workweek (up from -4 to 1) expanded ever-so-barely in this release after narrowing in August. These findings show that manufacturers in the region continue to struggle from global headwinds and economic uncertainty. Read More

Dallas Fed: Manufacturing Conditions Improved in September, but Continued to Contract

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The Dallas Federal Reserve Bank said that manufacturing activity in its Texas district improved in September, even as sentiment has now contracted for 21 straight months. The composite index of general business conditions increased from -6.2 in August to -3.7 in September, bringing this measure closer to neutral territory. Despite the negative figure in the composite measure, most of the underlying data points reflected strengthening levels of growth in September. This included production (up from 4.5 to 16.7), shipments (up from 9.9 to 20.1) and capacity utilization (up from 0.9 to 13.5). On the other hand, new orders (down from 5.3 to -2.9) shrank once again in September, falling for the eighth time in the past 10 months. Read More

Kansas City Fed: Manufacturing Activity Rebounded a Little in August

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Manufacturing activity rebounded in the Kansas City Federal Reserve Bank’s district in September, expanding after two months of declines. The composite index of general business conditions increased from -4 in August to 6 in September, its fastest pace of growth since December 2014. Indeed, there were rather strong gains seen for new orders (up from -7 to 12), production (up from -7 to 15) and shipments (up from -4 to 16) to support the improved sentiment seen in this survey’s headline number. To be fair, though, the sector also continues to have a number of challenges. Most notably, that includes exports (up from -10 to -4), which contracted for the eighth consecutive month. Manufacturers in the Kansas City region – not unlike their peers in other districts – have had to grapple with a strong U.S. dollar and weaknesses abroad, both of which have dampened international demand.

The labor market data were mixed. On the one hand, hiring activity (up from -10 to -3) remains soft, even with some easing in the rate of decline in September. The index for the number of employees has been negative now for 21 straight months. At the same time, employers appear to be expanding hours worked (up from 4 to 5), with that measure positive for the fourth consecutive report. Sample comments tended to highlight challenges with attracting new talent, highlighting the skills gap seen in the sector.

Meanwhile, manufacturers continue to be somewhat upbeat about the next six months. The forward-looking composite index edged down from 11 to 10, but it has now been positive each month since April. At least 40 percent of respondents expect sales and output to grow moving forward, which is somewhat promising. Yet, those completing the survey were also less hopeful for hiring, capital spending and export growth over the next six months, showing how cautious business leaders are right now, with expected growth remaining negative.

Federal Reserve Left Interest Rates Unchanged at Its September Meeting

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

The Federal Open Market Committee (FOMC) left short-term interest rates unchanged at the conclusion of its September 20–21 meeting, as expected. Indeed, in the latest NAM Manufacturers’ Outlook Survey, 45.5 percent of respondents felt that the Federal Reserve would wait until its December 13–14 meeting, mirroring consensus expectations. (The FOMC does have another meeting scheduled for November 1–2, but they are unlikely to act just a few days before the U.S. General Election.) The press release sets up a possible rate hike later this year, with the following language: “The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives.” Recent softness in a number of economic measures were enough for the FOMC to hit the pause button, at least for now. Read More