The Richmond Federal Reserve Bank said that manufacturing activity expanded for the second straight month in April. The composite index of general business activity declined from 22 in March to 14 in April. More importantly, the relatively strong data seen in this report are consistent with some stabilization in activity following significant softness over the course of the past year. For instance, new orders (down from 24 to 18) and shipments (down from 27 to 14) each expanded strongly in April despite some easing in the pace of growth in this latest report. Capacity utilization (up from 17 to 18) accelerated slightly in April, its highest point since December 2010. In addition, the labor market variables continued to grow modestly, with some pullback for the month, including hiring (down from 11 to 8) and the average workweek (down from 16 to 9). Read More
The Census Bureau said that new durable goods orders increased by 0.8 percent in March, rebounding somewhat after the 3.1 percent decline seen in February. This was weaker-than-expected, with a consensus expecting a gain of 1.8 percent. Sales of new durable goods orders rose from $228.9 billion in February to $230.7 billion in March. Overall, demand remains quite soft, with the sector challenged by global headwinds and lingering anxieties in the economic outlook. Order volumes have been highly volatile from month-to-month over the course of the past year, with sales trending lower since peaking in 2015 at $241.0 billion in July. On a year-over-year basis, new durable goods orders have fallen 2.5 percent, down from $236.7 billion in March 2015. Even with transportation equipment sales excluded, year-over-year growth declined by 1.4 percent, with orders down 0.2 percent for the month, highlighting the broad-based softness of demand for durable goods over the past 12 months. Read More
The Dallas Federal Reserve Bank reported mixed news on Texas manufacturing activity in April. The composite index of general business conditions remained mired in negative territory, down from -13.6 in March to -13.9 in April. It was the 16th straight month with respondents having a negative outlook about the current economic environment. The sample comments mostly echoed these sentiments, highlighting ongoing challenges in the market. Yet, beyond the headline number, the data were more encouraging, suggesting some stabilization in activity in April. Indeed, measures for new orders (up from -4.8 to 6.2), production (up from 3.3 to 5.8), shipments (up from 0.3 to 7.1), capacity utilization (up from 3.3 to 8.2) and capital expenditures (up from -0.9 to 1.6) each accelerated for the month. To illustrate this progress, 30.1 percent of respondents cited increased new orders in April, up from 23.8 percent saying the same thing in March. Read More
U.S. manufacturing activity grew at the slowest pace since September 2009, according to preliminary figures from Markit. The Markit Flash U.S. Manufacturing PMI decreased from 51.5 in March to 50.8 in April. In general, the strong dollar and weaknesses abroad have dampened international demand and overall sentiment over the course of the past year. Manufacturing activity has decelerated significantly over the past 12 months, with the main PMI number down from 54.2 in April 2015. In this report, output (down from 51.4 to 50.3) and hiring (down from 52.1 to 50.2) each pulled back to a near-standstill, with exports (down from 50.0 to 48.5) contracting for the second time in the past three months. On the other hand, new orders (down from 52.8 to 52.0) continued to expand modestly, but with some easing for the month.
As such, this report stands in sharp contrast to the better-than-expected sentiment seen in the competing data from the Institute for Supply Management (ISM). In that release, new orders and output each grew surprisingly strong in March, lifting its manufacturing PMI value above 50 for the first time since August. It provided some encouragement after months of softness, even as other economic data – including this one from Markit – continue to suggest ongoing challenges. Read More
The Federal Reserve Bank of Philadelphia said that manufacturing activity declined again after rebounding in March. The composite index of general business activity fell from 12.4 in March to -1.6 in April. As such, the headline number has now been negative in seven of the past eight months, suggesting that manufacturers continue to struggle from recent economic weaknesses. In April, that was most evident in the new orders (down from 15.7 to zero) and shipments (down from 22.1 to -10.8) data, with demand stagnating and shipments plunging. Indeed, the percentage of respondents saying that their orders had increased in the month decreased from 36.7 percent in March to 22.9 percent in April, illustrating the shift in this month’s report. Read More
The Census Bureau and the U.S. Department of Housing and Urban Development said that new housing starts fell 8.8 percent, down from an annualized 1,194,000 in February to 1,089,000 in March. This was a surprising drop, with the consensus estimate calling for roughly 1,180,000 units being started for the month. Both single-family (down from 841,000 to 764,000) and multifamily (down from 353,000 to 325,000) starts were lower for the month, with declines in every region except for the Northeast. Single-family activity slowed to a five-month low, whereas the highly volatile multifamily component decreased to its slowest pace in 13 months.
With that said, residential construction has been one of the better aspects in the U.S. economy over the past year, and even with the sharp decline in this report, housing starts rose by 14.2 percent year-over-year, up from 954,000 in March 2015. The bulk of that growth stemmed from the single-family segment, which has increased 22.6 percent year-over-year. Read More
The National Association for Business Economics (NABE) said that sales growth fell to its lowest level in seven years. In the latest Business Conditions Survey, the net rising index for sales dropped sharply from 32 in January to 4 in the latest survey, its smallest reading since April 2009. The percentage of respondents suggesting that their sales had fallen over the past three months rose from 15 percent in the last report to 25 percent this time, with 41 percent of goods-producing firms citing reduced sales. As a result, the net percentage saying that their profits were rising dropped from zero in January to -5 percent in April. With that said, businesses were cautiously optimistic about activity improving over the next three months, with 46 percent anticipating rising sales and 31 percent predicting improved profit margins. Read More
Much of the recent data regarding manufacturing output and demand has reflected improvements, with signs of possible stabilization in the market. This included better data in this morning’s Empire State Manufacturing Survey, mirroring other sentiment reports. That makes the latest data on manufacturing production even more disappointing. The consensus expectation had been for a slight gain of 0.1 percent in March for manufacturing output; instead, production in the sector declined by 0.3 percent. In addition, February’s data were revised lower, down from the prior estimate of an increase of 0.2 percent to a decline of 0.1 percent. (The Federal Reserve conducted a new annual revision to reflect seasonal adjustments, and all of the data were revised with this release.) The bottom line was that manufacturing production grew just 0.4 percent over the past 12 months in March, down from 0.8 percent in February. Manufacturing capacity utilization was also lower, down from 75.4 percent to 75.1 percent, its lowest level in nearly two years. Read More
The Bureau of Labor Statistics said that producer prices for final goods and services decreased by 0.1 percent in March, falling for the second straight month. The March decrease, however, stemmed mainly from services. The producer prices for final demand goods rose by 0.2 percent in March, increasing for the first time since June. Energy costs jumped 1.8 percent for the month on higher crude oil prices, which was enough to offset a decline of 0.9 percent on food prices. The decline for food costs in March for producers came largely from sharp drops in prices for eggs and fresh fruits and vegetables, along with lower prices for coffee, pork, poultry and shortening and cooking oils. Food costs have trended lower over the past 12 months, down 2.5 percent, with energy prices off 13.8 percent year-over-year. Read More
The Census Bureau said that retail sales declined by 0.3 percent in March, declining for the second time in the past three months. As a result, retail spending decreased by 0.6 percent in the first quarter of 2016, down from $449.7 billion in December to $446.9 billion in March. This suggests that consumer spending will not be the boost to real GDP that we saw in the fourth quarter, and it is yet another sign that Americans might be holding back a little in their purchases in light of recent economic anxieties. Along those lines, the year-over-year growth rate for retail sales fell from 3.7 percent in February to 1.7 percent in March. Read More