Economy

NFIB: Small Business Optimism Increased a Little in July, with Owners Still Somewhat Anxious

The National Federation of Independent Business (NFIB) said that optimism increased a little in July, partially rebounding from the decline seen in June. The Small Business Optimism Index rose from 94.1 in June to 95.4 in July, but this figure remains below the 98.3 registered in May. As such, the data pointed to progress for the month, even as it continued to highlight nagging anxieties about the economy. Index values under 100 usually coincide with softer economic growth for small firms. On the positive side, the percentage of respondents saying that it was a “good time to expand” jumped from 9 percent to 12 percent for the month, which, while encouraging, remained somewhat below the 16 percent observed in December. 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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Manufacturing Productivity Rebounded Modestly in the Second Quarter

The Bureau of Labor Statistics said that manufacturing labor productivity increased 2.5 percent in the second quarter, rebounding modestly from the 0.6 percent decline seen in the first quarter. In the second quarter, output rose 1.5 percent, with hours worked decreasing by 1.0 percent. This resulted in unit labor costs falling by 2.3 percent, helping to make the sector more competitive globally and improving upon the weaker-than-desired performance seen at the beginning of the year.

Breaking the second quarter data down further, productivity for durable goods manufacturers grew 3.4 percent, more than outpacing the 1.2 percent gains experienced by nondurable goods firms. Durable goods businesses accomplished this feat with a 1.6 percent decline in hours worked, which reduced unit labor costs by 3.3 percent. For nondurable goods entities, unit labor costs declined by 0.6 percent, with output and hours worked up by 1.3 percent and 0.1 percent, respectively. (continue reading…)

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Manufacturers Added 15,000 Workers in July, the Fastest Pace Since January

The Bureau of Labor Statistics said that manufacturers added 15,000 net new workers in July, the fastest pace since January. This was an encouraging figure – one that is closer to the monthly average of last year when activity in the sector was growing more robustly. Yet, it is important to note that manufacturing employment growth in the sector was more spotty than we might prefer, suggesting that we are not out of the woods yet from recent weaknesses. Nondurable goods firms added 23,000 workers, led by food (up 9,100), plastics and rubber products (up 5,800), paper and paper products (up 2,500) and petroleum and coal products (up 1,400). In contrast, durable goods hiring remained challenged, down by 8,000. The largest declines were seen in the computer and electronic products (down 3,100), machinery (down 1,600), motor vehicles and parts (down 1,400) and primary metals (down 1,100). (continue reading…)

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Factory Orders Rose in June on Strong Aircraft Sales Growth

The Census Bureau said that new factory orders rose 1.8 percent in June, rebounding from declines in both April and May. Indeed, manufacturers’ new orders have decreased in 9 of the past 11 months, with a number of economic headwinds dampening overall demand. On a year-over-year basis, new orders have declined from $510.1 billion in June 2014 to $478.5 billion in this release, or a decrease of 6.2 percent. In June, the gain stemmed largely from strong aircraft sales growth, with transportation equipment sales up 9.3 percent following declines of 4.0 percent and 6.3 percent in April and May, respectively. Aircraft orders can be volatile from month to month, with sales often batched together around large trade shows, and this latest report reflects numbers from the Paris Air Show. If you were to exclude transportation, new factory orders would have risen by a more modest 0.5 percent. (continue reading…)

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Personal Spending Growth Eased Somewhat in June

The Bureau of Economic Analysis said that personal spending increased by 0.2 percent in June, easing somewhat from the 0.7 percent growth rate observed in May. This was the slowest pace since February, but on the positive side, spending has now risen for five straight months. On a year-over-year basis, real personal consumption expenditures have risen 2.9 percent since June 2014, down from 3.4 percent in May. Through the first half of 2015, year-over-year growth in personal spending has averaged 3.2 percent, representing modest growth. Still, the June data were challenged by weaker-than-desired growth in goods spending, particularly for durable goods. (continue reading…)

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ISM: Manufacturing Sentiment Edged Lower, but Domestic Sales and Output Growth Ticked Higher

The Institute for Supply Management’s manufacturing purchasing managers’ index (PMI) edged somewhat lower in July, bucking expectations for a slight gain. The headline PMI decreased from 53.5 in June to 52.7 in July. Yet, even with reduced sentiment for the month, the index averaged 53.0 over the past three months (May through July), up from 52.0 over the prior three months (February through April). While manufacturing activity has been weaker than what we saw at the end of last year – with the index averaging 56.9 in the fourth quarter of 2014 – these data continue to reflect a slight rebound in demand and output after softness earlier in the year. Along those lines, growth in both new orders (up from 56.0 to 56.5) and production (up from 54.0 to 56.0) ticked higher in July, expanding at a decent but still less-than-desired pace. (continue reading…)

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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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