Manufacturing activity in the New York Federal Reserve Bank’s district eased a little in December but remained strong overall. In the latest Empire State Manufacturing Survey, the composite index of general business conditions declined from 19.4 in November to 18.0 in December. While this was the second straight deceleration in the headline index, off from the three-year high of 30.2 in October, the pace of expansion has remained robust, averaging 21.0 over the past seven months. The underlying indicators were somewhat mixed. On the positive side, shipments (up from 18.4 to 22.4) strengthened in December, with growth in new orders (down from 20.7 to 19.5) slowing slightly but still expanding at a healthy pace. Hiring (down from 11.5 to 5.1) also grew at its weakest rate since July, with the average employee workweek (up from -0.8 to zero) improving to neutral in this survey. Read More
Manufacturing activity in Europe expanded at the 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 record highs. The pace of new orders registered the best reading since April 2000. Exports eased ever so marginally in the latest data (down from 60.7 to 60.6) but continued to expand robustly. At the same time, the index for future output continued to grow at a very healthy pace (up from 65.6 to 67.8), rising to its highest point since that measure was introduced in mid-2012. Read More
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
The National Federation of Independent Business reported 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 not far from the record high 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 economic outlook overall. 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 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. Read More
The Bureau of Labor Statistics reported that manufacturing job openings decreased from 435,000 in both August and September—both at the highest point since January 2001—to 402,000 in October. Overall, the data suggest 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 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 for durable and nondurable goods decreased, but nondurable goods experienced a steeper decline (down from 173,000 to 147,000) than durable goods (down from 262,000 to 255,000).
Meanwhile, manufacturing hiring remained 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.