General

Monday Economic Report – March 2, 2015

Here is the summary for this week’s Monday Economic Report: 

While manufacturers remain mostly optimistic in their outlook, we have seen softness in a number of recent economic indicators. Slower economic growth internationally, a stronger U.S. dollar, reduced crude oil prices and the West Coast ports slowdown have been cited as reasons for this weaker-than-desired performance. Along those lines, real GDP growth in the fourth quarter was revised lower, down from 2.6 percent to 2.2 percent. In addition, surveys from the Dallas, Kansas City and Richmond Federal Reserve Banks all reflected decelerated levels of new orders and exports. Most notably, Texas manufacturers have been adversely impacted by the sharp drop in petroleum prices, dampening demand throughout the energy supply chain and for the larger regional economy. Yet, even in the Dallas report, respondents continued to be more positive than negative in their expectations for sales, production, employment and capital spending over the next six months.

Meanwhile, the latest data on new durable goods orders brought mixed news. On the positive side, orders rose 2.8 percent in January, rebounding from the 3.7 percent decline in December. This was largely due to a sharp increase in nondefense aircraft orders. Still, if you exclude transportation equipment, new durable goods orders increased just 0.3 percent, well below the growth seen in the headline figure. Moreover, growth in durable goods orders and shipments has been less than desired over the past six months—a trend that we hope starts to reverse with January’s increase. On a year-over-year basis, durable goods orders have risen 5.4 percent, but that strength is somewhat misleading, as it builds off of the significant weather-related slowdowns seen at the beginning of last year.

Last week, the Energy Information Administration said that the average price of regular gasoline was $2.256 per gallon. This ticked up from $1.982 a gallon at the end of January, but remained well below the $3.639 per gallon average observed during the week of June 23, 2014, just eight months ago. As noted, this has had negative ripple effects for many manufacturers. Nonetheless, it has also helped to reduce inflationary pressures in the economy. The consumer price index, for example, has decreased 0.2 percent over the past 12 months, the first negative year-over-year pace since October 2009. This mirrored producer price index (PPI) data released earlier.

Both consumer and small business sentiment hit pre-recessionary peaks over the past few months, and yet, in each case, this was followed by a slight pullback in confidence. For instance, the Conference Board’s measure of consumer confidence declined from 103.8 in January, its highest level since August 2007, to 96.4 in February. Those taking this survey were more pessimistic in their responses about the future, particularly regarding job growth and expected income. The decrease in attitudes in this report mirrored similar drops in perceptions in the most recent University of Michigan and National Federation of Independent Business surveys. At the same time, each of these reports continue to show upward movement in perceptions overall, with Americans more optimistic today than one year ago.

In other news, the housing market has started 2015 with some weakness. Significant snowfalls in the Midwest and Northeast have likely contributed to slower activity. The National Association of Realtors® reported that existing home sales fell to their lowest levels in nine months. Moreover, the weather likely contributed to a decline in supplies of homes for sale as well. These findings were also noted in data on new home sales from the Census Bureau and the U.S. Department of Housing and Urban Development, which dipped marginally from the month before. Over a longer time horizon, however, new home sales of single-family residences have continued to inch higher. In addition, the outlook for the coming months remains encouraging.

This morning, the Institute for Supply Management will release its latest manufacturing Purchasing Managers’ Index (PMI), providing the latest glimpse of activity nationally. Markit will also provide final PMI numbers for a number of global economies, including China, which improved slightly in February’s preliminary figures after contracting for two straight months. In addition, this week, we will learn about vehicle sales on Tuesday and overall durable goods orders on Thursday. The biggest highlight of the week will come on Friday, with new jobs numbers for February. Other economic indicators coming out next week include the latest data on construction spending, labor productivity, international trade and personal income and spending.

Chad Moutray is the chief economist, National Association of Manufacturers. 

consumer prices - mar2015

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Three Facts Apologists for Foreign Mistreatment of U.S. Manufacturers Should at Least Acknowledge

There are lots of different views on trade and investment within Washington and across the country but opponents of investor-state dispute settlement (ISDS) continue to ignore and blatantly misstate objective and basic facts. This anti-ISDS campaign seeks to deny job creators in the United States with the basic enforcement tools needed to ensure fair treatment and a more level playing field overseas. (continue reading…)

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We Hate to Say “We Told You So…”

Last summer, the NAM released a study, conducted in partnership with NERA Economic Consulting, regarding the economic impacts of an ozone standard tightened to 60 parts per billion (ppb). We found that the rule, which at the time had not yet been proposed, would amount to the costliest rule in American history if advanced. (continue reading…)

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McCarthy Comments Show EPA Disconnect on Ozone

When EPA Administrator Gina McCarthy took to the Hill today to defend the Agency’s clean air agenda amid budget season, lawmakers asked some pointed questions regarding the wisdom of the EPA’s plan to revise ground-level ozone standards while existing standards are still being implemented. (continue reading…)

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Chinese Manufacturing Shifted to a Marginal Expansion in February

The HSBC Flash China Manufacturing PMI shifted to a marginal expansion in February, improving slightly after contracting for two straight months. The headline index increased from 49.7 in January to 50.1 in February. The underlying data were mixed. New orders (down from 50.8 to 50.4) and output (up from 50.1 to 50.8) grew slowly for the month, even as the pace of sales slipped a bit. At the same time, new export orders (down from 51.1 to 47.1) and employment (up from 49.1 to 49.3) declined on net. Export sales, in particularly, deteriorated to their lowest level since August 2013, which was disappointing. The index for hiring, which has contracted now for 24 consecutive months, increased to a 7-month high, with the pace of the decline decreasing. Final PMI data will be come out on Monday, March 2.    (continue reading…)

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Dallas Fed: Manufacturing Activity Contracted in February for Second Straight Month

The Dallas Federal Reserve Bank said that manufacturing activity contracted in its district for the second straight month. The composite index of general business conditions fell from -4.4 in January to -11.2 in February, its lowest level since April 2013. Reduced crude oil prices have had negative ripple effects throughout the Texas economy, and indeed, many of the sample comments reflected weaker demand throughout the energy supply chain. Beyond energy-related softness, other challenges noted in the comments included the West Coast ports slowdown, a stronger U.S. dollar, increased health insurance costs and regulatory burdens. (continue reading…)

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Monday Economic Report – February 23, 2015

Here is the summary for this week’s Monday Economic Report: 

In the minutes of its January 27–28 meeting, the Federal Open Market Committee (FOMC) provided a nuanced view of the economic outlook. Participants noted that “economic activity had been expanding at a solid pace,” and they were mostly optimistic about the “prospects for further improvement in 2015.” Yet, the FOMC also pointed to some significant headwinds in the U.S. economy, including sluggish global growth, a stronger U.S. dollar, federal government sequestration and reduced crude oil prices. Regarding the latter, the Federal Reserve said that it was concerned that “persistently low energy prices might prompt a larger retrenchment of employment [and capital investment] in these industries.” (continue reading…)

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Ex-Im Bank Fuels Alabama Exporters

Earlier today in Hope Hull, Ala., National Association of Manufacturers (NAM) President and CEO Jay Timmons Jay VT Miltopetoured the shopfloor at VT Miltope, a leading U.S. manufacturer of computers and computer peripheral equipment for military, industrial and commercial tactical and aviation applications.

Joined by VT Miltope Executive Vice President Brigadier- General Edward F. Crowell (USAF Retired) and Business Council of Alabama President and CEO Billy Canary, Timmons continued to emphasize the importance of securing a long-term reauthorization of the Export-Import Bank in Congress on one of the final legs of the State of Manufacturing tour.

“Suppliers like VT Miltope are the backbone of our nation’s manufacturing economy. A long-term reauthorization of the Export-Import Bank is a necessary step that this Congress needs to take action on immediately to support job-creators. The debate over the future of the Ex-Im Bank boils down to whether we want manufacturers in the United States to win overseas, or whether we want our foreign competitors and their workers to swoop in and seize these opportunities,” Timmons said. (continue reading…)

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State of Manufacturing: Manufacturing Plays Key Role in Texas Economy

This State of Manufacturing blog is authored by Greater Houston Partnership President and CEO Bob Harvey. To learn more about the 2015 State of Manufacturing Tour, visit http://www.nam.org/stateofmfg.

In the digital age, the latest app or gadget may get all the buzz, but the truth is manufacturing remains the lifeblood of any modern economy. That is certainly true here in Houston and across Texas, where a thriving manufacturing sector has helped lead a flourishing economy. As President and CEO of the Greater Houston Partnership, I am proud of the role we’ve played in building our dynamic and growing manufacturing base. (continue reading…)

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Monday Economic Report – February 17, 2015

Here is the summary for this week’s Monday Economic Report: 

Recently, much of the discussion has been about the strength of the United States relative to many of its trading partners. Indeed, that continues to be the case for the most part, as noted in the latest Global Manufacturing Economic Update. Yet, last week, there was a bit of a shift, with better-than-expected economic growth in Europe and disappointing consumer spending and sentiment in the United States. The data points do not change the underlying trends, with manufacturers continuing to be mostly upbeat about future demand and production. However, it does suggest that economic activity has been softer in some areas than we had hoped as we begin 2015.  (continue reading…)

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