The Empire State Manufacturing Survey said that manufacturing activity continued to expand at a healthy pace, even as it pulled back in March from the fastest pace in 30 months in February. The composite index of general business conditions eased from 18.7 in February to 16.4 in March, expanding for the fifth straight month. In the latest data, there were signs that of notable improvements in activity in the district, including new orders (up from 13.5 to 21.3), employment (up from 2.0 to 8.8) and the average workweek (up from 4.1 to 15.0). The orders index was at its highest point since April 2011, with 39.4 percent of respondents indicating increased sales in March relative to February’s levels. Read More
The Bureau of Labor Statistics said that manufacturing employment rose for the third straight month, up by a healthy 28,000 in February. That was the strongest monthly growth in employment in 13 months and a definite sign of improvement given the cautious approach to hiring during much of last year. Manufacturers have added 57,000 workers in the past three months, with upward revisions totaling 13,000 for December and January. These numbers are consistent with increased demand, production and sentiment in the past few months in the sector. Indeed, manufacturers are more optimistic in their economic outlook and significantly less cautious about hiring than this time last year. This view is further supported by a belief that the new administration will help to usher in pro-growth policies that will accelerate activity in the U.S. economy and help to improve overall global competitiveness.
A strengthening labor market will also all but guarantee that the Federal Reserve will raise short-term interest rates at this week’s meeting—something that it has already implied. Along those lines, nonfarm payrolls increased by 235,000 in February, which was better than the consensus estimate of around 200,000, and the unemployment rate edged lower, down from 4.8 percent to 4.7 percent. In addition, the participation rate ticked up from 62.9 percent to 63.0 percent, its highest level since March 2016 and definite progress from 62.6 percent just four months ago. The so-called “real” unemployment rate, which includes those marginally attached to the workforce and those who are working part time for economic reasons, fell from 9.4 percent to 9.2 percent. That matched the level in December, which had been the lowest since April 2008. Read More
National Association of Manufacturers (NAM) President and CEO Jay Timmons issued the following statement on the February jobs numbers issued by the Bureau of Labor Statistics today:
“Today’s news is another strong indicator of the ‘Trump bump’ of positive economic activity. Across America, manufacturers’ confidence is high, and business optimism continues to soar, because of President Donald Trump’s laser focus on policies that will accelerate a jobs surge in America. To keep the momentum going, manufacturers have the solutions: regulatory reform, infrastructure investment and bold tax reform. We are ready to work with the president, Congress and anyone who cares about the manufacturing economy to get those priorities across the finish line and raise the standard of living of all Americans.”
Learn more about the NAM’s agenda for increasing manufacturing competitiveness and growing jobs here.
The Bureau of Labor Statistics reported that manufacturing labor productivity rose faster than originally estimated in the fourth quarter. Output per worker in the sector increased 2.0 percent in the fourth quarter, which was better than the 0.7 percent preliminary figure. It was the highest growth rate since the third quarter of 2015. Despite the better numbers in the fourth quarter, manufacturing productivity rose just 0.3 percent in 2016, continuing a trend of soft growth since the Great Recession. For instance, manufacturing output per worker increased at a paltry 0.2 percent from 2013 to 2016, well below the 5.2 percent pace experienced from 2002 to 2008. Over the longer term, manufacturers have benefited from being leaner, but the recent sluggishness in productivity and output growth has meant that unit labor costs have risen 11.2 percent since the end of 2011. Read More
ADP said that manufacturing employment grew strongly in February, with the sector hiring 32,000 workers for the month on net. It was the third straight monthly gain in manufacturing employment and the fastest monthly pace since March 2012. This was yet another sign that we have turned a corner in the labor market, with employers accelerating their hiring in light of stronger activity and sentiment. In contrast, firms were more cautious in 2016, with 39,000 fewer workers on net last year. Hopefully, the trend of stronger job growth is one that continues in the coming months. Read More
The Bureau of Economic Analysis and the Census Bureau reported that the U.S. trade deficit rose to its highest level since March 2012, increasing from $44.26 billion in December to $48.49 billion in January. The higher figure stemmed largely from a jump in goods imports, up from $192.56 billion to $197.64 billion, which was the most since March 2015. That was more than enough to offset the increase in goods exports, up from $126.85 billion to $127.95 billion, a level not seen since April 2015. At least some of that gain could be explained by higher petroleum imports, up from $14.26 billion to $16.87 billion, the highest level in two years. Meanwhile, the service-sector surplus slipped slightly lower, down from $21.44 billion to $21.19 billion. Read More
The Census Bureau said that new factory orders increased for the second straight month in January, up 1.2 percent. This was the highest level of new orders since July 2015. A large percentage of that gain stemmed from sizable growth in defense and nondefense aircraft sales, as noted in the earlier release of preliminary durable goods figures. In addition, manufactured goods orders increased 0.4 percent when transportation equipment orders were excluded. More importantly, new factory orders, which have struggled mightily over the past few years, have begun to move in the right direction, up 3.8 percent since January 2016. Excluding transportation, the gains were even larger, up 6.0 percent year-over-year. Read More
The Census Bureau said that private manufacturing construction spending picked up a little in January after falling to a 2-year low in December. The value of construction put in place in the sector rose from $69.06 billion in December to $69.47 billion in January. While manufacturing construction has largely trended higher over the past few years, activity has stalled more recently as the sector has grappled with sluggish growth and economic and political anxieties. Along those lines, construction activity in the manufacturing sector has pulled sharply lower since achieving the all-time high of $82.15 billion in September 2015. Over the past 12 months, manufacturing construction spending has fallen 6.8 percent. Read More
The Institute for Supply Management’s (ISM) Manufacturing PMI expanded at its fastest rate since August 2014. The composite index rose from 56.0 in January to 57.7 in February, and it marked the sixth straight monthly expansion in the headline number. Indeed, manufacturing sentiment has soared in recent months, buoyed by expectations that demand and output will benefit from possible pro-growth policies emanating from Washington. Indeed, all of the sample comments echoed this optimism, citing a “very positive outlook,” “solid” demand and “strong” growth. Along those lines, new orders (up from 60.4 to 65.1) and production (up from 61.4 to 62.9) both indicated healthy gains for the month, with sales growth at levels not seen since December 2013. In addition, exports (up from 54.5 to 55.0) also picked up a little, which was refreshing given the struggles with increasing international sales over the past couple years. Read More
The Bureau of Economic Analysis said that personal spending slowed in January after the strong gains in December. Personal consumption expenditures rose 0.2 percent in January, off from the more robust pace of 0.5 percent in December. In this latest report, weaker durable goods sales (down 0.3 percent), including motor vehicles, held back spending, whereas nondurable goods spending increased (up 1.0 percent). In general, Americans have been more willing to open their pocketbooks in recent months relative to a more cautious approach at this time last year. Along those lines, personal spending grew 4.7 percent year-over-year in January, its highest level since November 2014.
With the easing in spending, the savings rate edged higher, up from 5.4 percent in December to 5.5 percent in January. To illustrate the increased willingness to spend relative to one year ago, the savings rate was 6.2 percent in January 2016. Read More