The Census Bureau and the U.S. Department of Housing and Urban Development said that new housing starts declined 0.8 percent in August. New residential construction edged down from 1,190,000 units at the annual rate in July to 1,180,000 in August. It is possible that there were some negative impacts from Hurricane Harvey in these data, much as seen in the home builder confidence numbers released yesterday. Outside of weather effects, housing starts have been softer than desired year-to-date, drifting lower since peaking at 1,288,000 units in February. With that said, starts have risen 1.4 percent over the past 12 months, up 1.4 percent since August 2016. Read More
Retail spending was down 0.2 percent in August, according to the Census Bureau, and it is likely that Hurricane Harvey might have negatively impacted those figures. Weather aside, retail sales have continued to increase modestly overall, helping to provide a boost to the U.S. economy. Along those lines, Americans had been more willing to open their pocketbooks more this year than last, especially than in the beginning months of 2016. Over the past 12 months, spending has risen by 3.2 percent. Still, there has been a bit more caution on the part of the American consumer in the past few months than we might have expected. The year-over-year rate has drifted lower since peaking at 5.6 percent in January, for instance. Excluding motor vehicles, retail sales increased 3.6 percent year-over-year in August, up from 2.4 percent in June but down from 5.4 percent in January. Read More
The Empire State Manufacturing Survey continued to reflect strong growth in the sector in September. The composite index of general business conditions remained highly elevated despite easing from 25.2 in August, its highest level in nearly three years, to 24.4 in September. Encouragingly, there were faster paces of expansions in September for new orders (up from 20.6 to 24.9), shipments (up from 12.4 to 16.2) and employment (up from 6.2 to 10.6). The shift for new orders stemmed mostly from a decline in the percentage of respondents saying that their sales had declined relative to the month before, down from 21.5 percent in August to 13.7 percent in September. In this release, 38.7 percent said that new orders had risen for the month, down from 42.0 percent. Beyond those measures, the average workweek (down from 10.9 to 5.7) increased at a softer rate in September, but pricing pressures (up from 31.0 to 35.8) accelerated.
Meanwhile, manufacturers in the New York Federal Reserve Bank’s district remained upbeat about the next six months despite most of the forward-looking gauge pulling back a little in this report. The expectations composite index decreased from 45.2 to 39.3 but continued to suggest strong growth for the months ahead. More than 55 percent of those completing the survey predict better new orders over the next six months, with 26.0 percent and 32.5 percent anticipating increased hiring and capital spending, respectively. Technology spending (up from 9.3 to 17.1) also picked up.
The Federal Reserve said that manufacturing production fell 0.3 percent in August, pulling back from being flat in July and declining for the first time since May. We have seen a lot of volatility in the output data for the manufacturing sector since the spring—essentially seesawing from month to month since March. This has meant that production has grown been less than we would have desired or expected, especially given the more-robust outlook seen in other data sources. In the August data, though, the main culprit was Hurricane Harvey, which the Federal Reserve estimates reduced production by 0.75 percent in August.
Yet, even with that weakness, the longer-term trend for output among manufacturers has been encouraging. Over the course of the past 12 months, manufacturing production has risen 1.5 percent. It was the tenth consecutive positive year-over-year reading for manufacturing output and definite progress from decline of 0.6 percent year-over-year seen in August 2016. Similarly, manufacturing capacity utilization decreased from 75.6 percent in July to 75.3 percent in August. Utilization rates have trended lower since peaking at 75.9 percent in April, but capacity continues to exceed the 74.7 percent rate seen at this time last year.
The Bureau of Labor Statistics said that consumer prices rose by 0.4 percent in August, the fastest monthly rate since January. The uptick stemmed largely from higher energy costs, which increased by 2.8 percent in August, ending three months of declines, with gasoline prices up 6.3 percent. (It is important to note that this run-up in energy prices pre-dates Hurricanes Harvey or Irma and their effects on the market.) At the same time, food prices edged up 0.1 percent, mostly from food purchased away from home. Since August 2016, food and energy costs have increased 1.1 percent and 6.4 percent, respectively.
Overall, the consumer price index (CPI) increased 1.9 percent year-over-year in August, up from 1.7 percent in July. Pricing pressures had accelerated over much of the past year, increasing from 1.1 percent year-over-year in August 2016 to 2.8 percent year-over-year in February. However, inflation has cooled since then, even with the more-recent increases in energy costs noted above. Read More
The Bureau of Labor Statistics said that producer prices for final demand goods and services rose by 0.2 percent in August, bouncing back from a decline of 0.1 percent in July. For manufacturers, producer prices for final demand goods were also up by 0.2 percent after being flat in the prior release. The gain in August stemmed largely from an acceleration in energy prices, up 3.3 percent, the first monthly increases since April. Those rises were enough to offset a 1.3 percent decrease in food prices for the month. On a year-over-year basis, final demand food and energy costs have risen 1.8 percent and 8.6 percent, respectively. Excluding food and energy, producer prices for final demand goods were also up by 0.2 percent. Read More
The Bureau of Labor Statistics said total manufacturing hires in July was the highest since December 2007, the first official month of the Great Recession. The sector hired 341,000 workers in July, up from 324,000 in June. Both durable (up from 190,000 to 196,000) and nondurable (up from 134,000 to 145,000) goods firms added employees in July, with the level of durable goods hiring at a 9½-year high. At the same time, total separations—including layoffs, quits and retirements—also increased, up from 315,000 to 321,000. The level of separations was the highest since June 2009, which coincidently was the last official month of the recession. As a result, net hiring (or hires minus separations) was 20,000 in July, up from 9,000 in June, its strongest monthly pace since December 2014. Read More
The Institute for Supply Management (ISM) reported that manufacturing activity grew robustly in August, expanding at its fastest pace since April 2011. The ISM Manufacturing Purchasing Managers’ Index (PMI) increased from 56.3 in July to 58.8 in August. The sample comments tended to echo the strong data, with mostly positive feedback from respondents on healthy gains in sales and an optimistic business outlook. Along those lines, the indices for new orders (down from 60.4 to 60.3) and production (up from 60.6 to 61.0) exceeded 60 for the third straight month (and seven of the past nine months), illustrating strong growth in demand and output in the sector overall. In contrast, one year ago, the manufacturing sector contracted slightly with the headline PMI at 49.4, and since then, we have seen tremendous progress. Read More
The Bureau of Labor Statistics said that manufacturers added 36,000 net new workers in August, its fastest monthly gain in five years and increasing for the third consecutive month. In addition, the June and July data were revised higher, increasing employment in the sector by a total of 19,000 more than originally estimated. As such, manufacturing was a bright spot in the latest jobs data—a sign that the sector has rebounded from global headwinds over the past two years.
Indeed, over the past nine months, manufacturing employment has risen by 155,000, averaging 17,222 per month. That is a definite improvement following the loss of 16,000 workers on net for 2016. Moreover, total manufacturing employment rose to 12.48 million, rising by 1.03 million since the Great Recession and its highest level since January 2009.
The Bureau of Economic Analysis reported that personal spending rose 0.3 percent in July, extending the 0.2 percent gains in both May and June. (The June increase was revised up from an earlier estimate of 0.1 percent.) Durable and nondurable goods spending both increased in July. Since the spring, we have seen consumer spending pull back from robust growth, even as purchases continued to rise at a modest pace overall. In this report, personal spending increased 4.2 percent year-over-year, up from 4.1 percent in the prior release. To put that number in perspective, it was higher than the 3.8 percent year-over-year rate in July 2016 but off from the healthy 5.1 percent pace in March. Read More