All Posts By

Chad Moutray


ISM: Manufacturing Activity Unexpectedly Contracted in August for First Time Since February

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

The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) unexpectedly contracted in August for the first time since February. The composite index dropped from 52.6 in July to 49.4 in August. A couple of the sample responses cited a “flat” business environment for the month. Indeed, new orders (down from 56.9 to 49.1) and production (down from 55.4 to 49.6) both shifted from decent growth in July to decreased activity in August, with employment (down from 49.4 to 48.3) remaining in negative territory for the second straight month.

Overall, this is a disappointing result, as it temporary suspends the narrative that manufacturing was beginning to stabilize after weaknesses seen earlier in the year. Yet, more than anything, this report shows that the sector’s challenges continue to linger even as other data have been more promising. One positive take way was exports (unchanged at 52.5), which have expanded now for six straight months. Read More

ADP: Manufacturing Employment Was Unchanged in August

By | Economy, Shopfloor Economics | No Comments

ADP said that manufacturing employment was unchanged in August after rising in July for the first time in six months. Overall, hiring in the sector has been challenged so far this year, with employment down by 33,000 workers through the first eight months of 2016. This suggests that manufacturers have been wary about adding to their workforce in light of ongoing global headwinds and sluggish growth in demand and production. Recent data have suggested some improvements in activity for U.S. manufacturers, and hopefully, this will translate into increased hiring moving forward for the sector. Read More

regional Fed

Dallas Fed: Manufacturing Conditions Mixed in August

By | Economy, Shopfloor Economics | No Comments

The Dallas Federal Reserve Bank said that manufacturing activity in the Texas district was mixed in August. The composite index of general business conditions pulled further lower, down from -1.3 in July to -6.2 to August. This measure has now been in contraction territory for 20 straight months, with the region continuing to be challenged by still-low crude oil prices and a strong U.S. dollar. With that said, several of the underlying data points were more encouraging, including new orders (up from -8.0 to 5.3), production (up from 0.4 to 4.5), capacity utilization (up from 0.3 to 0.9) and shipments (up from 0.1 to 9.9). Along those lines, the percentage of respondents saying that their sales had increased for the month rose from 22.4 percent in July to 28.9 percent in August, with roughly 48 percent noting no change.  Read More

personal spending

Personal Spending Rose for the Fourth Straight Month in July

By | Economy, Shopfloor Economics | No Comments

The Bureau of Economic Analysis said that personal spending increased by 0.3 percent in July, extending the 0.4 percent gain seen in June. More importantly, personal consumption expenditures rose for the fourth straight month. This suggests that Americans have begun to open their pocketbooks since the spring after being more cautious in their spending earlier in the year. Indeed, over the past 12 months, personal spending has increased by 3.8 percent, a healthy pace that makes consumption one of the bright spots in the economy. The savings rate edged slightly higher, up from 5.5 percent in June to 5.7 percent in July. Nonetheless, these data have largely been consistent with the recent pickup in spending, with the savings rate dropping from 6.1 percent in the first quarter of 2016 to 5.7 percent over the past four months. Read More


Retail Spending Cooled in July after Strong Gains in the Second Quarter

By | Economy, Shopfloor Economics | No Comments

The Census Bureau said that retail sales cooled in July after strong gains in the second quarter. Sales were unchanged in July, with Americans pausing in their consumer spending growth after jumping 0.8 percent in June. This suggests that the public was more cautious in July, likely on uncertainties in the global economy and some soft economic data. Retail sales have risen 2.3 percent over the past 12 months, a modest pace but down from 3.0 percent in the prior report. To be fair, gasoline station sales have fallen 11.0 percent year-over-year on reduced prices, pulling the headline number lower. Excluding gasoline, retail sales were up 3.5 percent year-over-year, suggesting that consumers have increased their purchases at a fairly decent pace over the past year. Read More


Manufacturing Job Openings Accelerated in June

By | Economy, Shopfloor Economics | No Comments

The Bureau of Labor Statistics said that manufacturing job openings accelerated in June after dipping somewhat in May. Postings in the sector jumped from 350,000 in May to 377,000 in June, even as it remained below the all-time high of 397,000 observed in April. In the first half of 2016, job openings have averaged 353,000 per month, up from 311,000 for 2015 as a whole. As such, we have continued to see relatively healthy gains in manufacturing job openings, which gives us optimism for faster hiring growth moving forward. In the June data, the increase in job openings stemmed from a pickup in activity for durable goods firms (up from 180,000 to 217,000); whereas, postings for nondurable goods entities (down from 170,000 to 160,000) declined for the second straight month. Both have trended higher over the past 12 months, however, with job openings for durable and nondurable goods manufacturers measuring 182,000 and 103,000 in June 2015, respectively. Read More

NFIB: Small Business Sentiment Ticked Higher Again in July

By | Economy, Shopfloor Economics | No Comments

The National Federation of Independent Business (NFIB) said that sentiment among small business owners ticked higher in in July. The Small Business Optimism Index rose marginally from 94.5 in June to 94.6 in July, its highest level since December. It marked some continued improvement from March’s two-year low in optimism, even as small firms continue to be concerned about the overall economic outlook. As a sign of this caution, the percentage suggesting that the next three months would be a “good time to expand” remained unchanged at 8 percent, down from 10 percent in January and 12 percent one year ago, with economic conditions and the political climate cited by those saying that it would not be a good time for expansion. Read More


Manufacturing Productivity Edged Lower in the Second Quarter on Reduced Output

By | Economy, Shopfloor Economics | No Comments

The Bureau of Labor Statistics said that manufacturing labor productivity edged lower in the second quarter, down 0.2 percent, on reduced output. This followed a 1.5 percent gain in the first quarter, but the larger story continues to be about sluggish growth in labor productivity in the sector, which has averaged just 0.6 percent annually from 2011 to 2015. From 2002 to 2008, output per worker in the sector averaged a more robust 5.2 percent annually. Over the long time, manufacturers have benefited from being leaner in recent years, but the recent sluggishness in productivity and output growth have meant that unit labor costs have risen 8.1 percent since the end of 2011. In this report, manufacturing output fell 0.8 percent and hours worked dropped 0.7 percent, but hourly compensation costs were 2.9 percent higher. As a result, unit labor costs jumped 3.1 percent. Read More

U.S. Trade Deficit Widened in June to a Four-Month High

By | Economy, Shopfloor Economics, Trade | No Comments

The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit rose from $40.96 billion in May to $44.51 billion in June, its highest level since February. The data have been quite volatile through the first half of 2016, averaging $40.79 billion. That was somewhat lower than the $41.70 billion average for 2015 as a whole. The higher figure in June’s report stemmed from an increase in goods imports (up from $182.05 billion to $186.41 billion) which was enough to offset a slight increase in goods exports (up from $119.83 billion to $120.37 billion).

A fair share of the jump in the trade deficit came from petroleum, with the petroleum trade deficit up from $2.89 billion in May – its lowest level since February 1999 – to $5.32 billion in June. Petroleum imports accelerated from $11.12 billion to $13.28 billion, but exports of petroleum edged down from $8.23 billion to $7.95 billion. Higher crude oil prices likely played a role in the increase in imports. Read More


The July Jobs Numbers Were Relatively Strong for the Second Straight Month

By | Economy, Shopfloor Economics | No Comments

For the second straight month, job numbers in the U.S. economy were relatively strong, with each above the consensus estimate. Nonfarm payrolls rose by 255,000 in July, extending the gain of 292,000 seen in June. As a result, the country has averaged 273,500 net new workers over the past two months, a decent jump over the 151,000 average seen over the first five months of 2016. This suggests that employers have begun to hire again despite continued cautiousness and lingering weaknesses in the global macroeconomy. The unemployment rate was unchanged at 4.9 percent. Yet, the so-called real unemployment rate – which includes discouraged workers, the underemployed and those working part-time for economic reasons – increased from 9.6 percent to 9.7 percent.

In the manufacturing sector, employers added 9,000 workers in July. This followed an increase of 15,000 in June, and like the nonfarm payroll numbers, it was an encouraging sign. With that said, manufacturing employment has declined by 15,000 on net year-to-date, suggesting that softness in demand and production in the sector have dampened hiring activity of late. Hopefully, employment growth for manufacturers continues to tick higher moving forward – something that is likely to happen if the sector continues to stabilize. Since the end of the Great Recession, manufacturers have added 852,000 workers. Read More