The Empire State Manufacturing Survey contracted in August at the steepest rate since the Great Recession. The composite index of general business conditions from the New York Federal Reserve Bank declined sharply from 3.9 in July to -14.9 in August, the lowest level since April 2009. With that said, the Empire State survey’s headline figure has bounced around a lot over the past five months, up one month and then down the next. It was contracted three times in that time frame. Overall, it is safe to suggest that manufacturers in the New York Fed region continue to report softness in the current economic environment, led by reduced demand and shipments, even as they remain cautiously upbeat moving forward. (continue reading…)
Manufacturing production rebounded strongly in July, up 0.8 percent, but those gains came from a June figure that was revised lower, down 0.3 percent. Output in the sector was originally estimated to be flat in June. (Note that the data were also updated with a new base year, changing it from 2007=100 to 2012=100.) Capacity utilization for manufacturers increased from 75.7 percent to 76.2 percent. On a year-over-year basis, manufacturing production increased 1.5 percent in July, up from 1.4 percent in June. This represented a sharp deceleration in output from the quite-robust 6.0 percent year-over-year pace observed in January, and it reflects a number of significant headwinds facing manufacturers so far this year. This includes a stronger U.S. dollar, lower crude oil prices and weaknesses abroad. (continue reading…)
The Bureau of Labor Statistics said that producer prices for final demand goods and services rose 0.2 percent in July, slowing from the 0.4 percent growth rate seen in June. At the same time, producer prices for final demand goods declined 0.1 percent, with reduced energy and food costs pulling the index lower. It was the first decrease in the goods index since April. Looking specifically at energy costs, final demand energy goods fell 0.6 percent for the month, ending two months of significant gains. Indeed, the average price of West Texas intermediate crude oil fell from $59.82 per gallon in June to $50.90 in July. (It has fallen further since then, closing at $42.23 a gallon on August 13 – its lowest level since March 2009.) To be fair, final demand energy goods costs were 17.7 percent lower in July than 12 months ago. (continue reading…)
The Census Bureau said that retail sales increased 0.6 percent in July, bouncing back from being unchanged in June. The prior month’s softness had been unexpected, making the rebound in July more welcome. The year-over-year pace improved from a disappointing 1.3 percent pace in April to 2.4 percent in July. Needless to say, even that modest rate of consumer spending suggests that the public remains somewhat cautious in their willingness to open their pocketbooks. As an illustration of that point, retail sales growth was 4.7 percent year-over-year in November, or almost double the current pace. (continue reading…)
The Bureau of Labor Statistics said that manufacturing job openings pulled back somewhat in June. The Job Openings and Labor Turnover Survey (JOLTS) said that job postings in the sector declined from 333,000 in May to 308,000 in June. The May pace had been the highest since July 2007 (even as it was revised down from the original estimate of 347,000). Despite the easing, this continues an upward trend for openings for manufacturers, with an average of 326,000 through the first six months of 2015, up from an average of 290,000 for all of 2014. More importantly, the increased rate of job openings should bode well for stronger hiring activity moving forward. (continue reading…)
The U.S. Census Bureau and the Bureau of Economic Analysis said that the U.S. trade deficit widened somewhat in June. The trade deficit rose from $40.94 billion in May to $43.84 billion in June, its highest level in three months. This was largely the result of an increase in goods imports, up from $188.40 billion to $191.06 billion. Goods exports were marginally lower, down from $127.79 billion to $127.56 billion. With that said, despite shifts from month-to-month, the U.S. trade deficit has not changed much over the past year and a half. It averaged $42.62 billion in the first half of 2015, which is only slightly higher than the $42.36 billion average observed in all of 2014. (continue reading…)
As I travel the country, I hear from manufacturers the challenge they face in attracting and retaining talent. For many manufacturers, the skills gap is very real. It means passing up a major order because the skilled talent just isn’t there. The Manufacturing Institute’s own skills gap data, published with Deloitte, documents that over the next decade, nearly 3.5 million manufacturing jobs likely will need to be filled. The skills gap, however, is expected to leave 2 million of those jobs unfilled.
For decades, manufacturers have relied on strategies that include referrals and leveraging staffing agencies. To remain competitive, manufacturers must do more. They must deploy new strategies to attract, retain and grow the manufacturing workforce. (continue reading…)
Today, the National Association of Manufacturers launched a TV advertising campaign highlighting the costly and unworkable ozone mandates coming out of Washington, D.C.
Not even the nation’s pristine wilderness areas can comply, according to a TV spot hitting the airwaves today in the nation’s capital. Ask yourself: If iconic national parks like Yosemite, Grand Canyon and Zion are found in violation of federal ozone standards, what does that mean for cities and towns where people actually live and work?
When people think of Hawaii, they tend to think about warm sunny beaches, palm trees and volcanoes. What they may not realize is the presence of manufacturing in the state and what a huge generator it is for the state’s economy. Manufacturers employed 13,500 workers in Hawaii in May. In addition, manufacturing activity continues to accelerate, with output in the sector growing from $1.3 billion in 2010 to $1.5 billion in 2014. That represents roughly two percent of overall gross state product – a ratio that we anticipate will grow moving forward. (continue reading…)
Here is the summary for this week’s Monday Economic Report:
Last week, there were several reminders that the manufacturing sector has not recovered fully from economic weaknesses earlier in the year, even as business leaders remain cautiously optimistic about activity in the coming months. Durable goods orders declined 1.8 percent in May, extending April’s 1.5 percent decrease. Much of this softness stemmed from reduced aircraft sales, with orders excluding transportation modestly higher. Nonetheless, durable goods demand has been quite weak for much of the past year. On the positive side, we would expect stronger durable goods orders in the June data, with the recent Paris Air Show lifting aircraft sales, and the broader measure, which excludes transportation, has edged marginally higher over the past three months. We hope that this is the start of a rebound. (continue reading…)