All Posts By

Chad Moutray

Manufacturing Labor Productivity Rose Faster Than Originally Estimated in the Fourth Quarter

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The Bureau of Labor Statistics reported that manufacturing labor productivity rose faster than originally estimated in the fourth quarter. Output per worker in the sector increased 2.0 percent in the fourth quarter, which was better than the 0.7 percent preliminary figure. It was the highest growth rate since the third quarter of 2015. Despite the better numbers in the fourth quarter, manufacturing productivity rose just 0.3 percent in 2016, continuing a trend of soft growth since the Great Recession. For instance, manufacturing output per worker increased at a paltry 0.2 percent from 2013 to 2016, well below the 5.2 percent pace experienced from 2002 to 2008. Over the longer term, manufacturers have benefited from being leaner, but the recent sluggishness in productivity and output growth has meant that unit labor costs have risen 11.2 percent since the end of 2011. Read More

ADP: Fastest Monthly Manufacturing Job Growth in Nearly Five Years

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ADP said that manufacturing employment grew strongly in February, with the sector hiring 32,000 workers for the month on net. It was the third straight monthly gain in manufacturing employment and the fastest monthly pace since March 2012. This was yet another sign that we have turned a corner in the labor market, with employers accelerating their hiring in light of stronger activity and sentiment. In contrast, firms were more cautious in 2016, with 39,000 fewer workers on net last year. Hopefully, the trend of stronger job growth is one that continues in the coming months. Read More

U.S. Trade Deficit Rose to Its Highest Level Since March 2012

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The Bureau of Economic Analysis and the Census Bureau reported that the U.S. trade deficit rose to its highest level since March 2012, increasing from $44.26 billion in December to $48.49 billion in January. The higher figure stemmed largely from a jump in goods imports, up from $192.56 billion to $197.64 billion, which was the most since March 2015. That was more than enough to offset the increase in goods exports, up from $126.85 billion to $127.95 billion, a level not seen since April 2015. At least some of that gain could be explained by higher petroleum imports, up from $14.26 billion to $16.87 billion, the highest level in two years. Meanwhile, the service-sector surplus slipped slightly lower, down from $21.44 billion to $21.19 billion. Read More

Factory Orders Increased for the Second Straight Month in January to Highest Level in 18 Months

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The Census Bureau said that new factory orders increased for the second straight month in January, up 1.2 percent. This was the highest level of new orders since July 2015. A large percentage of that gain stemmed from sizable growth in defense and nondefense aircraft sales, as noted in the earlier release of preliminary durable goods figures. In addition, manufactured goods orders increased 0.4 percent when transportation equipment orders were excluded. More importantly, new factory orders, which have struggled mightily over the past few years, have begun to move in the right direction, up 3.8 percent since January 2016. Excluding transportation, the gains were even larger, up 6.0 percent year-over-year. Read More

Manufacturing Construction Picked Up a Little in January but Remained Soft

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The Census Bureau said that private manufacturing construction spending picked up a little in January after falling to a 2-year low in December. The value of construction put in place in the sector rose from $69.06 billion in December to $69.47 billion in January. 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 6.8 percent. Read More

ISM: Manufacturing Activity Expanded in February at Its Fastest Rate Since August 2014

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The Institute for Supply Management’s (ISM) Manufacturing PMI expanded at its fastest rate since August 2014. The composite index rose from 56.0 in January to 57.7 in February, and it marked the sixth straight monthly expansion in the headline number. Indeed, manufacturing sentiment has soared in recent months, buoyed by expectations that demand and output will benefit from possible pro-growth policies emanating from Washington. Indeed, all of the sample comments echoed this optimism, citing a “very positive outlook,” “solid” demand and “strong” growth. Along those lines, new orders (up from 60.4 to 65.1) and production (up from 61.4 to 62.9) both indicated healthy gains for the month, with sales growth at levels not seen since December 2013. In addition, exports (up from 54.5 to 55.0) also picked up a little, which was refreshing given the struggles with increasing international sales over the past couple years. Read More

Personal Spending Slowed in January after the Strong Gains Seen in December

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The Bureau of Economic Analysis said that personal spending slowed in January after the strong gains in December. Personal consumption expenditures rose 0.2 percent in January, off from the more robust pace of 0.5 percent in December. In this latest report, weaker durable goods sales (down 0.3 percent), including motor vehicles, held back spending, whereas nondurable goods spending increased (up 1.0 percent). In general, Americans have been more willing to open their pocketbooks in recent months relative to a more cautious approach at this time last year. Along those lines, personal spending grew 4.7 percent year-over-year in January, its highest level since November 2014.

With the easing in spending, the savings rate edged higher, up from 5.4 percent in December to 5.5 percent in January. To illustrate the increased willingness to spend relative to one year ago, the savings rate was 6.2 percent in January 2016. Read More

Conference Board: Consumer Confidence at Highest Level Since July 2001

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The Conference Board said that consumer confidence rose again, with sentiment now at its highest level since July 2001. The Consumer Confidence Index increased from 111.6 in January to 114.8 in February. This continued to represent a mostly positive assessment of the economy relative to perceptions just a few months ago. For instance, the index stood at 96.7 as recently as July 2016. Better perceptions about both current (up from 130.0 to 133.4) and future (up from 99.3 to 102.4) conditions in February boosted the headline index. The acceleration in confidence in this report came from a lessoning in those respondents saying that business conditions were “bad,” down from 15.9 percent to 13.2 percent. Those suggesting conditions were “good” eased slightly, down from 29.0 to 28.7. Nonetheless, Americans were mostly upbeat in their outlook.

Along those lines, the percentage of those completing the survey expecting their incomes to increase edged up from 18.1 percent to 18.3 percent, with the percentage feeling that their incomes would fall in the months ahead dropping from 9.4 percent to 8.2 percent. This view extended to the labor market. In this release, the percent feeling that jobs were “hard to get” declined from 21.1 percent to 20.3 percent. Yet, the data also expressed some lingering anxieties, with the percentage saying that jobs were “plentiful” also pulling back somewhat, down from 27.1 percent to 26.2 percent.

Richmond Fed: Expected Manufacturing New Orders Rose to Highest Point in Survey’s 23-Year History

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The Richmond Federal Reserve Bank said that manufacturing activity in its district expanded at its fastest rate in 11 months. The composite index of general business activity increased from 12 in January to 17 in February, marking the fourth straight monthly expansion in the mid-Atlantic region. Indeed, new orders (up from 15 to 24), shipments (up from 13 to 16), capacity utilization (up from 8 to 15), employment (up from 8 to 10) and the average workweek (up from 5 to 16) each accelerated in the latest survey. New orders grew at the briskest pace since April 2010, which should bode well for activity moving forward, particularly if it can be sustained. Read More

4th Quarter GDP Revision: Better Consumer Spending Offset by Weaker (but Still Positive) Business Investment

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The Bureau of Economic Analysis said that the U.S. economy grew 1.9 percent at the annual rate in the fourth quarter, unchanged from an earlier estimate. This was slightly less than the consensus estimate for 2.2 percent, and it was slower than the 3.5 percent increase seen in the third quarter. In this revision, better consumer spending were offset by weaker (but still positive) investment. Nonetheless, the underlying trends were mostly the same. Real GDP growth was buoyed by modest growth in consumer and government spending, but net exports served as a drag on the headline number. Overall, the U.S. economy expanded 1.6 percent in 2016, down from its 2.2 percent post-recessionary average. Moving forward, I would expect 2.6 percent growth in real GDP in 2017 – a figure that will likely be assisted by pro-growth policies emanating from Washington. Read More