Economy

Markit: Chinese Manufacturing Activity Slipped Further into Negative Territory in July

The Caixin Flash China General Manufacturing PMI dropped from 49.4 in June to 48.2 in July, its lowest level since April 2014. Chinese manufacturing activity has now contracted in 7 of the past 8 months, continuing a deceleration trend in that nation’s economy. Indeed, all of the PMI subcomponents were in negative territory in July, with most of them slipping further. This included new orders (down from 50.3 to 48.1), output (down from 49.7 to 47.3) and exports (down from 50.3 to 46.6), with domestic and foreign demand declining once again after stabilizing slightly in June. Employment (up from 46.6 to 47.4) fell at a slower pace for the month, and yet, hiring has now decreased in 27 of the past 28 months. These data are consistent with recent economic indicators from China, which have reflected slower growth, particularly relative to the rates experienced at the end of last year or earlier. (continue reading…)

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Kansas City Fed: Manufacturing Activity Declined for the Fifth Straight Month in July

The Kansas City Federal Reserve Bank said that manufacturing activity declined for the fifth straight month in July, albeit at a slower pace than in either May or June. The composite index of general business conditions increased from -13 in May to -9 in June to -7 in July. Overall, manufacturers continue to report contracting levels of activity, with reduced crude oil prices, the strong dollar and weaknesses abroad pressuring the sector’s performance. Indeed, various measures of activity were negative across-the-board, even with some of them showing a slower rate of decline for the month. This included new orders (down from -3 to -6), production (up from -21 to -5), shipments (up from -15 to -2) and exports (down from -5 to -10). Exports have now declined for seven consecutive months. (continue reading…)

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Business Economists Noted Slower Growth in Sales in July than Earlier in the Year

The National Association for Business Economics (NABE) said that activity slowed somewhat from earlier in the year, mirroring other indicators. In the latest Business Conditions Survey, respondents noted slightly weaker conditions than in prior reports, and yet, they also remained mostly upbeat about the second half of 2015. The net rising index for sales, for instance, has declined from 45 in July 2014 to 28 in this survey, with the percentage of those completing the survey observing rising sales dropping from 57 percent one year ago to 49 percent in April to 46 percent in July. Despite the drop in demand growth, this release continues to show sales growth that is more favorable than not, with just 18 percent of respondents citing declining sales in July. Along those lines, 59 percent of industry economists anticipate sales increases over the next three months. (continue reading…)

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Housing Starts and Permits Rose Sharply in June on Strong Multi-Family Gains

The Census Bureau and the U.S. Department of Housing and Urban Development said that new housing starts and permits each rose sharply in June. New housing starts increased from 1,069,000 units at the annual rate in May to 1,174,000 in June. This was the fastest pace of housing starts growth since November 2007, the month preceding the start of the Great Recession. This was stronger than the consensus estimate of roughly 1.1 million starts for the month, and it was an encouraging sign that the market has gained some momentum after the springtime lull in activity seen earlier in the year. (continue reading…)

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Home Builder Confidence Rose to Nearly a 10-Year High

The National Association of Home Builders (NAHB) and Wells Fargo said that the Housing Market Index (HMI) rose to its highest level since November 2005. Home builder confidence was unchanged in July at 60. (Note that June was originally estimated to be 59 but was upwardly revised to 60.) This represents progress after bottoming out in the spring at 52 in March. Numbers over 50 indicate that more home builders were positive in their outlook than were negative, and this was the 13th consecutive month meeting that threshold. In July, sentiment was higher in all regions of the country except for the South, which edged marginally lower for the month (but remained relatively strong at 62). (continue reading…)

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Philly Fed: Growth in Manufacturing Activity Slowed Somewhat in July

The Federal Reserve Bank of Philadelphia said that growth in the manufacturing sector in its district slowed somewhat in July. The composite index of general business activity decreased from 15.2 in June, its highest level so far in 2015, to 6.7 in July. This suggests some deceleration in the expansion rate, leading more respondents to indicate declines in several key underlying data points. For instance, the percentage of manufacturers suggesting that their new orders had decreased in the month rose from 19.7 percent in June to 24.7 percent in July. This corresponded to the percentage of respondents citing increased new orders dropping from 35.0 percent to 31.7 percent. As such, the new orders index dropped from 15.2 to 7.1 – a reading that suggests a modest expansion in demand in June, even as the growth rate eased from a more-robust pace in July. (continue reading…)

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NY Fed: Manufacturing Activity Rebounded Somewhat in July

The Empire State Manufacturing Survey said that activity rebounded somewhat in July. The composite index of general business conditions from the New York Federal Reserve Bank improved from -2.0 in June to 3.9 in July, indicating a slight expansion in activity for the month. Nonetheless, even with better data in July, the year-to-date average for this composite measure was just 4.1, suggesting only modest growth for the sector. This compared to an average of 13.8 in the second half of 2014, showing a deceleration in the overall growth rate as a number of economic headwinds have dampened activity in the New York Fed’s district. (continue reading…)

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Manufacturing Production Was Unchanged for the Second Straight Month in June

Manufacturing production was unchanged in both May and June, suggesting that output in the sector remains sluggish. On the positive side, the May figure was revised higher, as it was originally estimated to be a decline of 0.2 percent. Yet, it is clear that manufacturers continue to grapple with a number of economic headwinds, including a stronger U.S. dollar, lower crude oil prices and weaknesses abroad. The year-over-year pace reflects this softness, shifting from a more-robust pace of 4.5 percent in November to just 1.8 percent today. Capacity utilization for manufacturers has also eased over that time frame, down from 78.1 percent in November to 77.2 percent in June.   (continue reading…)

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Producer Prices Were Higher in June, Extending the Gains Seen in May

The Bureau of Labor Statistics said that producer prices for final demand goods and services rose 0.4 percent in June, extending the 0.5 percent increase seen in May. The gains for the goods sector were even stronger. Indeed, producer prices for final demand goods jumped 1.3 percent and 0.7 percent, respectively, in May and June, with each month spurred higher by rising energy and food costs. On the energy front, energy goods were 5.9 percent and 2.4 percent more expensive in those two months, respectively. This was consistent with the rise in West Texas intermediate crude oil prices, up from an average of $54.45 per barrel in April to $59.82 a barrel in June. At the same time, final demand energy goods costs remain 17.9 percent lower today than 12 months ago. (continue reading…)

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NFIB: Small Business Optimism Dipped in June after Rebounding in Prior Two Months

The National Federation of Independent Business (NFIB) said that optimism dipped in June after rebounding in the prior two months. The Small Business Optimism Index declined from 98.3 in May to 94.1 in June, its lowest level in 15 months. As such, it suggests that sentiment has once again moved in the wrong direction, reversing signs of progress in April and May. In addition, it remained below the peak observed in December (100.4), which was the highest level since October 2006. The percentage of respondents suggesting that the next three months would be a “good time to expand” dropped from 14 percent to 9 percent, with economic conditions and the political climate cited as the top concerns for those suggesting that was not the right time for expansion. (continue reading…)

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