Shopfloor Economics

Markit: Eurozone Manufacturing Activity at an All-Time High in Survey’s 20-Year History

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Manufacturing activity in Europe expanded at its fastest pace since the survey was founded in June 1997, with the IHS Markit Flash Eurozone Manufacturing PMI rising from 60.1 in November to 60.6 in December. As such, this is yet another signal that the economy on the continent is trending in the right direction after sluggishness in recent years. New orders (up from 61.4 to 61.6), output (up from 61.0 to 62.0) and employment (up from 58.2 to 58.5) each accelerated in December, with hiring and production growth also at a record high. The pace of new orders was the best reading since April 2000. Exports (down from 60.7 to 60.6) eased ever-so-marginally in the latest data but continued to expand robustly. At the same time, the index for future output (up from 65.6 to 67.8) continued to expand at a very healthy pace, rising to its highest point since that measure was introduced in mid-2012. Read More

Producer Prices Rose by 0.4% in November for the Third Straight Month, or 3.0% Year-over-Year

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The Bureau of Labor Statistics said that producer prices for final demand goods and services rose by 0.4 percent in November for the third straight month. For manufacturers, producer prices for final demand goods jumped 1.0 percent in November, the fastest monthly pace since January. The gain in the latest data stemmed largely from a sharp acceleration in energy prices, up 4.6 percent in November after being unchanged in October. The increase in the spot price for West Texas intermediate crude oil over this time frame help to illustrate this rise, up from $50.59 on October 2 to $57.40 on November 30. Meanwhile, food prices were up by a more modest 0.3 percent in November. On a year-over-year basis, final demand food and energy costs have risen 3.5 percent and 12.4 percent, respectively. Excluding food and energy, producer prices for final demand goods were up by 0.3 percent in November, also for the third consecutive month.   Read More

NFIB: Small Business Optimism Not Far from the Record High Seen in July 1983

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The National Federation of Independent Business (NFIB) said that the Small Business Optimism Index jumped from 103.8 in October to 107.5 in November. This was the highest level since the monthly series began in 1986 and was not far from the record high seen in July 1983 (108.0). Note that readings above 100 are consistent with strong growth among small business owners, and the robust data seen for much of the past year would suggest a healthy outlook overall in the economy. Through the first 11 months of 2017, the headline index has averaged 104.8, up from 94.3 in the same time frame in 2016. In addition, the percentage of respondents suggesting that the next three months would be a “good time to expand” rose from 23 percent to 27 percent, and the net percentage feeling that sales would be higher over the next three months increased from 21 percent to 34 percent. Each of these figures are at their highest levels since the Great Recession. Read More

Manufacturing Job Openings Eased from 16-Year High but Exceeded 400,000 for 5th Straight Month

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The Bureau of Labor Statistics said that manufacturing job openings decreased from 435,000 in both August and September—each at their highest point since January 2001—to 402,000 in October. Overall, this data suggests that manufacturers are posting new jobs at a very strong rate, exceeding 400,000 for the fifth consecutive month. Indeed, as the manufacturing outlook has improved, job openings have turned higher—another sign that the labor market has tightened significantly. One year ago, for instance, there were 314,000 job openings in the sector. The underlying job openings data in October were both lower, but the decline was steeper for nondurable goods (down from 173,000 to 147,000) than for durable goods (down from 262,000 to 255,000).

Meanwhile, manufacturing hiring remained quite positive in October. The sector hired 345,000 workers in October, up from 329,000 in September and not far from August’s level of 359,000, which was nearly a 10-year high. Hiring increased for both durable (up from 189,000 to 201,000) and nondurable (up from 140,000 to 143,000) goods firms. At the same time, total separations—including layoffs, quits and retirements—inched down from 315,000 to 308,000. As a result, net hiring (or hires minus separations) rose from 14,000 in September to 37,000 in October. This implies average net hiring of 17,500 workers per month year-to-date, which is a relatively robust growth rate. Read More

Hurricanes Likely Reduced Manufacturing Output and Labor Productivity in the Third Quarter

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The Bureau of Labor Statistics reported that manufacturing labor productivity plummeted by 4.4 percent at the annual rate in the third quarter, its first decrease in one year and the largest quarterly decline since the Great Recession. On the positive side, it was originally estimated to be a decline of 5.0 percent, with the latest revision lessening the decrease somewhat from what was originally thought. Overall, though, the data continue to reflect the damage from recent hurricanes, with output down by 1.1 percent in the manufacturing sector. At the same time, hours worked and unit labor costs in manufacturing rose by 3.5 percent and 4.8 percent, respectively. The sectoral breakdowns were similar, with labor productivity for durable and nondurable goods firms off by 4.7 percent and 4.4 percent, respectively. Read More