Economy

ADP: Hiring in the Manufacturing Sector Slowed to 3,000 in February

ADP said that manufacturers added 3,000 net new workers in February, its slowest pace since January 2014. This suggests that the weaker demand and production data seen in other economic indicators has begun to negatively impact the pace of hiring. Still, employment has expanded for 13 straight months, averaging 14,275 per month over that time frame, according to ADP. Moreover, over the past six months, employment growth has been even stronger, averaging just over 17,580 each month. Hopefully, the weaker rate of hiring observed in February is just a respite to stronger gains in the months ahead. (continue reading…)

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Real GDP Growth Revised Down to 2.2 Percent in the Fourth Quarter

Real GDP grew 2.2 percent in the fourth quarter, according to the Bureau of Economic Analysis. This was down from the previous estimate of 2.6 percent growth. Slower growth in inventory replenishment and stronger import growth accounted for the bulk of the revision. For the year as a whole, real GDP rose 2.4 percent in 2014, only slightly better than the 2.3 percent and 2.2 percent rates seen in 2012 and 2013, respectively. Still, this was largely the result of a decline in activity in the first quarter due to weather and other factors, with real GDP growth averaging a quite-healthy 4.8 percent pace in the second and third quarters. As of right now, growth in the first quarter of 2015 (or the current one) should be roughly 2.8 percent, and I am still forecasting growth of around 3 percent for all of 2015. (continue reading…)

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Kansas City Fed: Manufacturing Activity Slowed to a Near Crawl in February

The Kansas City Federal Reserve Bank said that manufacturing activity slowed to a near crawl in February, mirroring the easing we have seen in other regions. The composite index of general business conditions dropped has declined from 8 in December to 3 in January to 1 in February. The silver lining, of course, is that activity in the sector continues to expand, albeit barely, as it has now for 14 straight months. Still, the weaker headline figure was pulled lower by contracting levels of new orders (down from -8 to -10), exports (down from -7 to -13) and employment (down from zero to -4). There were several reasons cited in the sample comments for the softness, including sluggish global growth, reduced crude oil prices and the West Coast ports slowdown. (continue reading…)

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Consumer Prices Fell Once Again on Lower Gasoline Costs

The Bureau of Labor Statistics said that the consumer price index (CPI) fell 0.7 percent in January. This mirrored producer price index (PPI) data released the week before. More importantly, consumer prices have decreased 0.2 percent over the past 12 months, the first negative year-over-year pace since October 2009. Of course, this downward shift in inflation has been spurred by lower gasoline prices, which fell 18.7 percent in January alone. Indeed, the average price of regular gasoline declined from $3.639 a gallon during the week of June 23 to $1.982 a gallon the week of January 26, according to the Energy Information Administration. (It has begun to rise a bit since then, with an average of $2.256 per gallon this week.) (continue reading…)

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New Durable Goods Orders Rebounded in January on Strong Aircraft Orders

The Census Bureau said that new durable goods orders rose 2.8 percent in January, rebounding from the 3.7 percent decline observed in December. It was the strongest increase in durable goods orders in six months, with demand off in four of the past five months. As such, manufacturing activity since July 2014 has been less-than-desired, providing a bit of a contrast with better demand and sentiment data elsewhere. The sluggish global economic environment has likely played a role in this softness. On a year-over-year basis, durable goods orders have risen 5.4 percent, but this strength is somewhat misleading, as it builds off of the significant weather-related slowdowns seen 12 months ago. (continue reading…)

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NAM Fights for Manufacturers’ Ability to Diffuse Activist Shareholders

More and more manufacturers are facing unreasonable proposals from activist shareholders. These small but powerful groups of investors are threatening major changes through the proxy voting process, in some cases even pressuring manufacturing companies that have been around for hundreds of years to break apart. The rise of these types of activist shareholder activities has a direct negative impact on the future growth of these manufacturing companies, and the NAM is fighting back against unreasonable activism. (continue reading…)

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Conference Board: Consumer Confidence Pulled Back in February

The Conference Board said that consumer sentiment fell sharply in February. The Consumer Confidence Index declined from a revised 103.8 in January to 96.4 in February. The January figure had been originally reported to be 102.9, and it was the highest point for this measure since August 2007. The decrease in attitudes in this report in February mirrored similar drops in perceptions in the most recent University of Michigan and National Federation of Independent Business surveys. Still, the depth of the pullback in February was larger than expected, and it suggests that the American public remains more anxious than desired. (continue reading…)

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Richmond Fed: Manufacturing Activity Stagnated in February

The Richmond Federal Reserve Bank said that manufacturing activity stagnated in February, ending 10 straight months of expansion in the district. The composite index of general business conditions declined from 6 in January to zero in February, its lowest level since contracting in March 2014. Indeed, many of the underlying measures slipped into negative territory in February. This included new orders (down from 4 to -2), shipments (down from 10 to -1), capacity utilization (down from 9 to -4) and the average workweek (down from 8 to -6). As such, manufacturers clearly pulled back in a number of areas for the month, likely due to global slowness, a stronger dollar and reduced commodity prices. (continue reading…)

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Markit: European Manufacturing Activity Improved in February Ever-So-Slightly

The Markit Flash Eurozone Manufacturing PMI edged ever-so-slightly higher, up from 51.0 in January to 51.1 in February. This suggests very modest growth in manufacturing activity in February, with better data for new orders (up from 50.6 to 50.9), output (up from 52.1 to 52.2) and exports (up from 50.7 to 51.8). Hiring in the Flash Eurozone Composite PMI, which includes all segments of the economy, rose to its highest level since August 2011, but this was primarily in the service sector. Indeed, for manufacturers, the pace of employment growth was unchanged in February at 50.6. (continue reading…)

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Philly Fed: Manufacturing Activity Expanded at a Slightly Slower Pace in February

The Federal Reserve Bank of Philadelphia said that manufacturing activity expanded at a slightly slower pace in February than in January. The composite index of general business activity declined from 6.3 to 5.2. Overall activity was softer in both January and February than in prior months, with the headline index averaging 21.5 over the 10-month period from March through December. Nonetheless, the Manufacturing Business Outlook Survey continues to reflect mostly positive attitudes about the economy, with 55.0 percent of respondents suggesting that demand had increased so far in 2015 relative to the last quarter of 2014. (continue reading…)

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