Dallas Fed: Manufacturers Continued to Express Expanding Activity

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The Dallas Federal Reserve Bank reported that manufacturing activity expanded in April for the seventh straight month, mostly sustaining the pace seen in March. The composite index of general business conditions edged down from 16.9 in March to 16.8 in April. While the headline number eased ever-so-slightly, the composite index has averaged 18.4 over the past six reports, which would indicate significant progress from contracting conditions as recently as September. The recent gains in business confidence can largely be attributed to better energy commodity prices and from a post-election boost in optimism, especially as it relates to expectations regarding pro-growth policies. Nonetheless, the sample comments suggest that the improvements have not been as broad-based as we might prefer, with some firms seeing large gains in activity while others continue to struggle, at least for now. Read More

Markit: Eurozone Manufacturing Activity Rose Again in April to another Six-Year High

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The Markit Flash Eurozone Manufacturing PMI rose from 56.2 in March to 56.8 in April, its fastest rate since April 2011. While there continues to be a lot of political uncertainty on the continent, survey respondents in the sector have mostly brushed aside such concerns. Instead, they have focused on the fact that the Eurozone economy has trended generally in the right direction in recent months, with activity accelerating at a modest rate, and the headline PMI has trended higher since bottoming out at 51.2 in February 2016. Despite an election in France this weekend that could be quite consequential, depending on the results, manufacturing activity in that country (up from 53.3 to 55.1) accelerated to its fastest rate since April 2011, helping to lift the Eurozone data. At the same time, Germany (down from 58.3 to 58.2) edged slightly lower from its six-year high in April, but remained quite strong. Read More

Philly Fed: Manufacturing Continues to Expand Strongly Despite some Easing in April

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The Federal Reserve Bank of Philadelphia reported that manufacturing activity remained strong in April, even as headline growth has continued to pull back from February’s pace, which was the best reading since November 1983. The composite index of general business activity has decreased from 43.3 in February, to 32.8 in March, to 22.0 in April. Despite the easing in the composite and many of the underlying measures, the data continued to signal a healthy expansion in the district, including new orders (down from 38.6 to 27.4), shipments (down from 32.9 to 23.4), employment (up from 17.5 to 19.9) and the average workweek (up from 18.5 to 18.9). The rate of hiring growth was the fastest since May 2011. On the downside, there have been rising pricing pressures of late (down from 40.7 to 33.7), even as the index for prices paid decelerated somewhat from its highest level in nearly six years. Read More

Manufacturing Production Pulled Back in March, Ending Six Straight Monthly Gains

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The Federal Reserve reported that manufacturing production pulled back in March, ending six straight monthly gains. Output in the sector declined 0.4 percent, pulled lower by a sharp reduction in motor vehicles and parts production, down 3.0 percent, among others. Yet, even with the reduced figures in March, the data continue to reflect improvements in the manufacturing sector, with activity turning a corner after struggling for much of the past two years due to a number of economic headwinds. Indeed, manufacturing production has increased 0.8 percent over the past 12 months, down from 1.0 percent in the prior release but with progress from declining year-over-year rates as recently as October. Similarly, manufacturing capacity utilization decreased from 75.6 percent—a 13-month high—to 75.3 percent. In general, the utilization rate has trended higher since bottoming out at 74.7 percent in August. Read More

Housing Starts Pulled Back in March but Have Exceeded 1.2 Million in Five of the Past Six Months

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The Census Bureau and the U.S. Department of Housing and Urban Development said that new housing starts declined 6.8 percent in March. New residential construction activity fell from an annualized 1,303,000 in February to 1,215,000 in March. More importantly, it has exceeded 1.2 million in five of the past six months – a psychological threshold that we appear to have finally sustained. That suggests that the housing market continues to show some strength, even with some notable easing in the latest data. Along those lines, both single-family (down from 875,000 to 821,000) and multifamily (down from 428,000 to 394,000) starts were lower in March, with single-family activity decelerating from a pace not seen since October 2007. Read More

New York Fed: Manufacturing Activity Expansion Slowed in April

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The Empire State Manufacturing Survey said that manufacturing activity slowed in April, easing from the more robust paces seen in February and March. The composite index of general business conditions declined from 16.4 in March to 5.2 in April, its weakest reading since November. On the positive side, it was the sixth consecutive monthly expansion, continuing to improve from the softer economic environment seen at this point last year. The underlying data in April were mixed. Growth in both new orders (down from 21.3 to 7.0) and the average employee workweek (down from 15.0 to 8.8) decelerated somewhat for the month, mirroring the headline number. More encouragingly, shipments (up from 11.3 to 13.7) and hiring (up from 8.8 to 13.9) each accelerated in April, which was a good sign. Read More

Reduced Energy Costs Helped to Push Consumer Prices Lower in March

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The Bureau of Labor Statistics said that consumer prices decreased 0.3 percent in March, its first decline in 13 months. The reduced figure stemmed from a reduction in energy costs, down 3.2 percent, including a 6.0 percent decline in gasoline prices. With that said, gasoline costs have jumped nearly 20 percent over the past 12 months. At the same time, food prices increased by 0.3 percent in March, its highest monthly rate since June 2015. Overall, the consumer price index increased 2.4 percent year-over-year in March, down from 2.8 percent in February but up from 0.9 percent one year ago.

Core consumer prices, which exclude food and energy costs, edged down 0.1 percent in March. There were higher prices for medical care and transportation services in this release, but those were offset by reduced costs for apparel, household furnishings and new and used vehicles. Excluding food and energy costs, consumer prices have increased 2.0 percent over the past 12 months, pulling back a little from 2.2 percent in the prior report. Even though core consumer price inflation has equaled or exceeded the Federal Reserve’s stated goal of 2 percent for 17 consecutive months, overall prices pressures remain modest and under control for now.

Retail Sales Edged Slightly Lower in March for the Second Straight Month

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The Census Bureau said that retail sales edged slightly lower in March for the second straight month, down 0.2 percent. Softer automotive sales help to explain at least part of this weakness, with spending at motor vehicle and parts dealers down 1.2 percent for the month. Excluding autos, retail sales were unchanged in March. Despite the reduced headline number in the latest release, the data continue to reflect an American consumer that has been more willing to open to open his/her pocketbook, especially when compared to this time last year. Along those lines, retail spending has risen 5.2 percent over the past 12 months, with the year-over-year rate down from January’s 5.9 percent pace but well above the more-hesitant rate of 1.7 percent seen in March 2016. Excluding motor vehicles and parts sales, the year-over-year rate was 5.0 percent. Read More

Producer Prices Eased in March but Were Up 2.3 Percent Year-Over-Year, Highest in Five Years

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The Bureau of Labor Statistics said that producer prices for final demand goods and services edged down 0.1 percent in March, falling for the first time in seven months. For manufacturers, producer prices for final demand goods were also off by 0.1 percent, led lower by reduced energy costs, down 2.9 percent for the month. Still, on a year-over-year basis, final demand energy prices have risen 15.3 percent. At the same time, food prices jumped 0.9 percent in March, its strongest monthly gain since December. Higher costs for cooking oils, eggs, fruits, meats and vegetables were enough to offset lower prices for coffee, dairy products, grains, milled rice and oilseeds. Since March 2016, food prices have inched up 0.3 percent, its first positive year-over-year gain since February 2015.

Excluding food and energy, final demand goods prices for producers increased by 0.4 percent in March. Overall, producer prices for final demand goods and services have risen 2.3 percent since March 2016, its highest year-over-year rate since March 2012. Moreover, it represents a notable pickup in inflationary pressures after being unchanged in August. Meanwhile, core producer prices – which exclude food, energy and trade services – grew 1.75 percent year-over-year in March, up slightly from 1.7 percent in February. That year-over-year pace was the fastest rate since August 2014.

Total Hires in Manufacturing in February Rose to Highest Level Since June 2008

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The Bureau of Labor Statistics said that total hires in manufacturing in February rose to the highest level since June 2008. The sector hired edged up from 304,000 in January to 305,000 in February. This represented notable progress from just 268,000 six months ago. With that said, the underlying data were mixed in February, with nondurable goods hiring up from 139,000 to 149,000 but hiring for durable goods firms down from 165,000 to 156,000. At the same time, total separations – which include quits, layoffs and retirements – decreased from 304,000 to 292,000. Separations were lower for both durable (down from 163,000 to 155,000) and nondurable (down from 141,000 to 137,000) goods manufacturers. Overall, net hiring (or hires minus separations) improved from zero in February to 13,000 in March, its fastest pace in seven months. Read More