All Posts By

Chad Moutray

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Producer Prices Rose at Fastest Pace in 13 Months in June

By | Economy, Shopfloor Economics | No Comments

The Bureau of Labor Statistics said that producer prices for final goods and services rose 0.5 percent in June, its fastest monthly pace in 13 months. At the same time, producer prices for final demand goods jumped 0.8 percent in June, extending the 0.7 percent gain seen in May. Food and energy prices were up 0.9 percent and 4.1 percent, respectively, for the month. Regarding energy, the price of West Texas Intermediate crude oil has risen from an average of $30.32 in February to $48.76 in June, its highest point since July 2015. Meanwhile, the rise in food prices in June for goods producers came largely from higher costs for beef, finfish and shellfish, fruits and melons, grains, oilseeds, pork and shortening and cooking oils. Despite the rises this month, food costs have trended lower over the past 12 months, down 2.3 percent, with energy prices off 11.3 percent year-over-year.

Producer prices for final demand goods and services have increased 0.3 percent since June 2015, up from being unchanged year-over-year in May. Core inflation also inched higher for the month, up from 1.2 percent year-over-year in May to 1.3 percent in June. That was the fastest pace for year-over-year core producer price growth since January 2015, and yet, overall pricing pressures remain under control for now. Indeed, core producer prices have remained below the Federal Reserve’s stated goal of 2 percent for 25 straight months. This frees the Federal Open Market Committee to continue pursuing stimulative monetary policies, albeit with a sense that prices are starting to accelerate somewhat.

jolts

Manufacturing Job Openings Pulled Back in May from an All-Time High in April

By | Economy, Shopfloor Economics | No Comments

The Bureau of Labor Statistics said that manufacturing job openings pulled back in May after achieving an all-time high in April. Postings in the sector declined from a revised 397,000 in April to 353,000 in May. That still represented progress from February’s pace of 320,000 job openings, and year-to-date in 2016, postings have averaged 349,000, up from 311,000 for 2015 as a whole. Reduced openings from durable (down from 208,000 to 185,000) and nondurable (down from 190,000 to 168,000) goods manufacturers pulled the headline number lower in May. The April data appear to be a bit of an outlier for both durable and durable goods firms, with the May numbers more consistent with recent trends. Still, positive upward movement for job openings over the course of the past year continue to provide some optimism for faster hiring growth moving forward. Read More

NFIB: Small Business Sentiment Edged Up to its Highest Point since December in June

By | Economy, Shopfloor Economics | No Comments

The National Federation of Independent Business (NFIB) said that sentiment among small business owners edged slightly higher in June. The Small Business Optimism Index increased from 93.8 in May to 94.5 in June, 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” inched down from 9 percent to 8 percent, with economic conditions and the political climate cited by those saying that it would not be a good time for expansion. Read More

jobs

The June Jobs Numbers Provided Mixed News on the Labor Market

By | Economy, Shopfloor Economics | No Comments

The June jobs numbers provided mixed news on the labor market, but more than anything, they suggest that the U.S. economy remains much weaker than desired, particularly for manufacturing. On the positive side, manufacturers added 14,000 workers in June, which was encouraging. Yet, the sector has lost 24,000 employees through the first six months of 2016 – a sign that business leaders remain cautious in light of global headwinds and soft demand and production growth.

Likewise, the strong nonfarm payroll number for June, up by 287,000, would be more promising if not for the downward revision to May, up by just 11,000 instead of the originally reported figure of 38,000. Indeed, it is clear that nonfarm payroll growth has eased year-to-date. The U.S. economy averaged 147,333 additional nonfarm payroll workers in the second quarter, slowing from the 282,000 and 195,667 average paces seen in the fourth quarter of 2015 and the first quarter of this year. Along those lines, the unemployment rate rose from 4.7 percent in May to 4.9 percent in June, largely on an uptick in the participation rate from 62.6 percent to 62.7 percent. Read More

ADP: Manufacturing Hiring Down by 21,000 in June, Off for Fifth Straight Month

By | Economy, Shopfloor Economics | No Comments

ADP said that manufacturing employment declined for the fifth straight month in June, with the sector losing 21,000 workers for the month and 44,000 employees on net year-to-date. Moreover, hiring rose in just four of the past 12 months, losing 41,000 workers in that time frame. This suggests that manufacturers remain 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, but that has not yet translated into more job creation. Read More

U.S. Trade Deficit Widened in May

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 $37.39 billion in April to $41.14 billion in May, its highest level since February. The data have been quite volatile through the first five months of 2016, averaging $40.08 billion. That was lower than the $41.70 billion average for 2015 as a whole. The higher figure in May’s report stemmed from an increase in goods imports (up from $178.62 billion to $182.06 billion) which coincided with a slight decline in goods exports (down from $120.04 billion to $119.82 billion).

Even with the pickup, it is worth noting that goods exports and imports have each decreased over the course of the past year, down from $127.61 billion and $189.95 billion in May 2015, respectively. That suggests that trade volumes have fallen overall; although, part of that reduction could be lower petroleum prices. Indeed, the May petroleum deficit of $2.89 billion was the lowest since February 1999. Read More

Factory Orders Fell 1 Percent in May

By | Economy, Shopfloor Economics | No Comments

The Census Bureau said that new factory orders fell 1.0 percent in May, ending two straight monthly gains. Excluding transportation, sales eked out a small increase, up 0.1 percent. Defense aircraft fell sharply in May, but the data can often be quite volatile from month to month. New orders for manufactured goods have been relatively weak over the past 12 months, with a year-over-year decline of 1.2 percent. Excluding transportation, new factory orders have declined 3.4 percent since May 2015. This suggests broader softness for manufacturers in terms of demand, perhaps highlighting why business leaders in the sector continue to be so cautious. Read More

construction

Manufacturing Construction Slipped Again in May

By | Economy, Shopfloor Economics | No Comments

The Census Bureau said that private manufacturing construction spending declined once again in May. The value of construction put in place declined from $74.54 billion in April to $73.16 billion in May, down 1.9 percent for the month and slipping to its lowest level since December. Since achieving the all-time high of $82.15 billion in September 2015, construction activity in the manufacturing sector has ebbed somewhat. On a year-over-year basis, manufacturing construction spending has fallen 6.9 percent, down from $78.60 billion in May 2015.

Yet, the longer-term trend has been a positive one, boosted in particular by increased investments in the chemical sector, which continues to benefit from cost advantages in the energy sector. To illustrate this growth, manufacturing construction has risen by 41.7 percent over the past 24 months. Read More

ISM

ISM: Manufacturing Activity Expanded at Fastest Pace in 16 Months in June

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

The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) said that manufacturing activity grew at its fastest pace in 14 months. The composite index rose from 51.3 in May to 53.2 in June. Strong growth in new orders (up from 55.7 to 57.0) and production (up from 52.6 to 54.7) helped to boost the headline number by more than expected. Notably, exports (up from 52.5 to 53.5) also improved in this report, which was encouraging given recent struggles in increasing demand abroad. More importantly, this was the fourth consecutive month with manufacturing activity expanding, signaling some stabilization in the sector after five months in contraction in the months prior to that. Read More

Personal Income and Spending Growth Slowed a Bit in May after Strong Gains in April

By | Economy, Shopfloor Economics | No Comments

The Bureau of Economic Analysis said that personal income grew 0.2 percent in May, slowing a bit from the strong gain of 0.5 percent increase seen in April. Yet, personal incomes have grown 4.0 percent over the past 12 months. This continued to be a relatively decent year-over-year pace, albeit one that was down from 4.6 percent in March and 4.4 percent in April. At the same time, total manufacturing wages and salaries edged up slightly from $835.5 billion in April to $838.3 billion in May. This continues a steady increase over the longer-trend trend, up from the $780.9 billion and $804.9 billion averages of 2014 and 2015, respectively.

Meanwhile, personal spending also eased, with the growth rate down from 1.1 percent in April to 0.4 percent in May. To be fair, the April jump in personal spending following a stagnant March, making the April data something of an outlier. On a year-over-year basis, personal spending rose 3.6 percent, a modest pace that was marginally better than the 3.5 percent average seen over the past 12 months. In the May data, durable and nondurable goods spending was up 0.3 percent and 0.6 percent, respectively. Read More