All Posts By

Chad Moutray

Reduced Energy Costs Helped to Push Consumer Prices Lower in March

By | Economy, Shopfloor Economics | No Comments

The Bureau of Labor Statistics said that consumer prices decreased 0.3 percent in March, its first decline in 13 months. The reduced figure stemmed from a reduction in energy costs, down 3.2 percent, including a 6.0 percent decline in gasoline prices. With that said, gasoline costs have jumped nearly 20 percent over the past 12 months. At the same time, food prices increased by 0.3 percent in March, its highest monthly rate since June 2015. Overall, the consumer price index increased 2.4 percent year-over-year in March, down from 2.8 percent in February but up from 0.9 percent one year ago.

Core consumer prices, which exclude food and energy costs, edged down 0.1 percent in March. There were higher prices for medical care and transportation services in this release, but those were offset by reduced costs for apparel, household furnishings and new and used vehicles. Excluding food and energy costs, consumer prices have increased 2.0 percent over the past 12 months, pulling back a little from 2.2 percent in the prior report. Even though core consumer price inflation has equaled or exceeded the Federal Reserve’s stated goal of 2 percent for 17 consecutive months, overall prices pressures remain modest and under control for now.

Retail Sales Edged Slightly Lower in March for the Second Straight Month

By | Economy, Shopfloor Economics | No Comments

The Census Bureau said that retail sales edged slightly lower in March for the second straight month, down 0.2 percent. Softer automotive sales help to explain at least part of this weakness, with spending at motor vehicle and parts dealers down 1.2 percent for the month. Excluding autos, retail sales were unchanged in March. Despite the reduced headline number in the latest release, the data continue to reflect an American consumer that has been more willing to open to open his/her pocketbook, especially when compared to this time last year. Along those lines, retail spending has risen 5.2 percent over the past 12 months, with the year-over-year rate down from January’s 5.9 percent pace but well above the more-hesitant rate of 1.7 percent seen in March 2016. Excluding motor vehicles and parts sales, the year-over-year rate was 5.0 percent. Read More

Producer Prices Eased in March but Were Up 2.3 Percent Year-Over-Year, Highest in Five Years

By | Economy, Shopfloor Economics | No Comments

The Bureau of Labor Statistics said that producer prices for final demand goods and services edged down 0.1 percent in March, falling for the first time in seven months. For manufacturers, producer prices for final demand goods were also off by 0.1 percent, led lower by reduced energy costs, down 2.9 percent for the month. Still, on a year-over-year basis, final demand energy prices have risen 15.3 percent. At the same time, food prices jumped 0.9 percent in March, its strongest monthly gain since December. Higher costs for cooking oils, eggs, fruits, meats and vegetables were enough to offset lower prices for coffee, dairy products, grains, milled rice and oilseeds. Since March 2016, food prices have inched up 0.3 percent, its first positive year-over-year gain since February 2015.

Excluding food and energy, final demand goods prices for producers increased by 0.4 percent in March. Overall, producer prices for final demand goods and services have risen 2.3 percent since March 2016, its highest year-over-year rate since March 2012. Moreover, it represents a notable pickup in inflationary pressures after being unchanged in August. Meanwhile, core producer prices – which exclude food, energy and trade services – grew 1.75 percent year-over-year in March, up slightly from 1.7 percent in February. That year-over-year pace was the fastest rate since August 2014.

Total Hires in Manufacturing in February Rose to Highest Level Since June 2008

By | Economy, Shopfloor Economics, Shopfloor Main | One Comment

The Bureau of Labor Statistics said that total hires in manufacturing in February rose to the highest level since June 2008. The sector hired edged up from 304,000 in January to 305,000 in February. This represented notable progress from just 268,000 six months ago. With that said, the underlying data were mixed in February, with nondurable goods hiring up from 139,000 to 149,000 but hiring for durable goods firms down from 165,000 to 156,000. At the same time, total separations – which include quits, layoffs and retirements – decreased from 304,000 to 292,000. Separations were lower for both durable (down from 163,000 to 155,000) and nondurable (down from 141,000 to 137,000) goods manufacturers. Overall, net hiring (or hires minus separations) improved from zero in February to 13,000 in March, its fastest pace in seven months. Read More

NFIB: Small Business Owners Remained Very Upbeat in March

By | Economy, Shopfloor Economics | No Comments

The National Federation of Independent Business (NFIB) said that sentiment among small business owners in March remained near the 12-year high seen in January even as it has eased a little since then. The Small Business Optimism Index edged down from 105.3 in February to 104.7 in March, which was not far from the 105.9 reading recorded in January. Over the past four months, the headline index has averaged 105.4, illustrating the sizable uptick in confidence observed since the election. One year ago, the index was 92.6. Along those lines, the percentage of respondents suggesting that the next three months would be a “good time to expand” was unchanged at 22 percent in March. This was down from 25 percent in January but well above the 6 percent who said the same thing in March 2016. Read More

Manufacturing Employment Increased for the Fourth Straight Month

By | Economy, Shopfloor Economics | No Comments

The Bureau of Labor Statistics said that manufacturing employment increased for the fourth straight month, with the sector adding 11,000 workers in March. This was an encouraging sign that the recent uptick in optimism in the sector has begun to translate into better job growth, especially when contrasted with the declines in employment seen as recently as last autumn. Indeed, manufacturers lost 16,000 workers on net in 2016 as a whole, the first annual decline since the Great Recession. In contrast to that, manufacturing employment has averaged 16,750 per month since December. NAM President and CEO Jay Timmons spoke about the shift in attitudes in his statement about the jobs numbers, stating that manufacturers are upbeat that “positive change is coming,” largely on expectations about pro-growth policies from the new Trump Administration. Read More

Manufacturing Construction Remained Soft in February

By | Economy, Shopfloor Economics | No Comments

The Census Bureau reported that private manufacturing construction spending fell to its lowest point since September 2014. The value of construction put in place in the sector declined from $67.91 billion in January to $66.77 billion in February. While manufacturing construction has largely trended higher over the past few years, activity has stalled since achieving the all-time high of $82.15 billion in September 2015. More than anything, this speaks to the numerous challenges in the sector since then, including global headwinds and economic uncertainties. Indeed, over the past 12 months, manufacturing construction has fallen 9.8 percent. With that said, sentiment has shifted in recent months with business leaders more upbeat in their outlook, including in the NAM’s latest survey. With manufacturers more positive about growth in demand and production, we would expect a turnaround in construction activity in the coming months. Read More

ISM: Manufacturing Activity Expanded Rather Strongly in March Despite a Slight Easing

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

The Institute for Supply Management’s (ISM) Manufacturing PMI expanded rather strongly in March despite a slight easing in the pace from February’s 2½-year high reading. The composite index declined from 57.7 in February, its fastest rate since August 2014, to 57.2 in March. More importantly, it was the seventh straight monthly expansion in the headline number, recognizing definite progress after two years of notable challenges in the sector. Indeed, the sample comments tended to echo improvements in manufacturing activity, citing the better economic conditions and robust sales. This finding also mirrors the most recent NAM Manufacturers’ Outlook Survey, which found confidence rising to its highest point in the survey’s nearly 20-year history. Read More

Personal Spending Slowed in February, with Modest Growth in Income

By | Economy, Shopfloor Economics | No Comments

The Bureau of Economic Analysis said that personal spending slowed in February, even as it expanded for the 25th straight month. Personal consumption expenditures rose 0.1 percent in February, down from gains of 0.6 percent and 0.2 percent in December and January, respectively. Reduced spending on goods helped to explain much of this easing, with slight declines for both durable and nondurable goods. Despite the somewhat weaker figures in February, Americans have been more willing to open their pocketbooks in recent months relative to a more-cautious approach seen at this time last year. Along those lines, personal spending grew 4.8 percent year-over-year in this release, down from 5.0 percent in January but up from 3.4 percent in February 2016. With the easing in spending, the savings rate edged higher, up from 5.4 percent in January to 5.6 percent in February. Read More

Real GDP Growth in the Fourth Quarter Increased to 2.1 Percent

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

The Bureau of Economic Analysis said that the U.S. economy grew 2.1 percent at the annual rate in the fourth quarter, up from earlier estimates of 1.9 percent. The upward revision stemmed from better data on private inventories and spending on nondurable goods and services. This was somewhat offset, though, by a larger decline than previously reported from net exports and slightly weaker contributions from nonresidential fixed investments.

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 2.1 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