Higher Energy Costs Pushed Consumer Prices Higher in January

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The Bureau of Labor Statistics said that consumer prices jumped 0.5 percent in January, its fastest pace in four months. The increase in consumer inflation was led by higher energy costs, which rose by 3.0 percent in January, with gasoline prices up 5.7 percent and fuel oil up 9.5 percent. This is largely consistent with data from the Energy Information Administration, which pegged the average price for regular conventional gasoline at $2.384 per gallon on December 25 but increasing to $2.516 a gallon on January 29. At the same time, food prices rose by 0.2 percent for the second straight month. Since January 2017, food and energy costs have increased 1.7 percent and 5.9 percent, respectively. Read More

U.S. Trade Deficit Rose to a 9-Year High, but Manufactured Goods Exports Rebounded in 2017, up 4.3 Percent

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The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit rose from $50.44 billion in November to $53.12 billion in December, its highest level since October 2008. While that headline will likely make news, it is important to note that overall trade volumes have risen significantly over the past couple months, with goods exports (up from $134.07 billion to $137.47 billion) and imports (up from $204.85 billion to $210.82 billion). In a similar way, service-sector exports (up from $65.74 billion to $65.88 billion) also rose to its highest level on record, even as the service-sector trade surplus edged down from $20.35 billion to $20.23 billion.

More importantly for manufacturers, exports rebounded strongly in 2017—a nice turnaround after global economic weaknesses in both 2015 and 2016. U.S.-manufactured goods exports totaled $1,094.73 billion in 2017, up 4.34 percent from $1,049.24 billion in 2016. This reflects better year-to-date figures to the top six markets for U.S.-manufactured goods: Canada (up from $266.80 billion to $282.39 billion), Mexico (up from $229.70 billion to $242.99 billion), China (up from $115.60 billion to $130.37 billion), Japan (up from $63.24 billion to $67.70 billion), the United Kingdom (down from $55.29 billion to $56.33 billion) and Germany (up from $49.36 billion to $53.49 billion). Read More

Manufacturing Construction Ended 2017 on a Down Note

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The Census Bureau said that private manufacturing construction spending pulled back once again in December, down 0.5 percent. The value of construction put in place in the sector declined from $60.87 billion in November to $60.60 billion in December, its lowest level since September 2014. Construction spending in the sector averaged $65.55 billion in 2017, down from the average of $74.61 billion in 2016. On a year-over-year basis, manufacturing construction dropped 11.7 percent. Indeed, activity has trended lower since achieving the all-time high of $82.13 billion in May 2015. Nonetheless, we would continue to expect a turnaround in construction activity in 2018, especially in light of the brighter manufacturing economic outlook. Read More

ADP: Manufacturers Added 12,000 Workers in January, Extending the Strong Job Gains Seen in the Sector in 2017

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ADP said that manufacturers added 12,000 workers in January, extending the strong job gains in the sector seen last year. It was the eighth straight month of employment growth. Manufacturing business leaders have hired at a robust rate over the course of the past year, with the labor market tightening on improved economic outlook and healthy growth in activity. The sector has hired an average of 18,290 per month in 2017—a significant turnaround from 2016’s more-sluggish pace. We expect continued strength in job growth moving forward. Read More