Here is the summary from this week’s Monday Economic Report:

The U.S. economy appears to be stabilizing, with several reports showing stronger-than-expected increases in activity, including the latest jobs numbers release on March 8. Nonfarm payrolls rose by 236,000 in February, well above the consensus estimate of around 155,000, and the unemployment rate dropped to 7.7 percent. Manufacturers hired an additional 14,000 workers for the month, which was in-line with the average monthly gain over the course of the past year. However, losses in several sectors offset some of the gains in manufacturing employment. Ideally, we could see stronger job growth, even as these numbers represent a good start. We need to see broad-based manufacturing hiring growth, with the sector creating an average of 20,000 jobs each month. This is consistent with the “20/20 vision” outlined by National Association of Manufacturers (NAM) President and CEO Jay Timmons in his Detroit Economic Club keynote speech last month.

The Federal Reserve Board’s Beige Book noted the “modest to moderate” pace of growth in the economy since its last report, citing strengths in housing and consumer spending in particular. Growth in manufacturing activity was more mixed, as we have seen in recent sentiment surveys from various regional Federal Reserve Banks. In addition to weaknesses in sales and production, respondents mentioned federal budget cutbacks, the regulatory environment and “the unknown effects of the Affordable Care Act” as roadblocks to their competitiveness. This suggests a degree of skittishness in hiring, which might be reducing the overall job growth numbers mentioned above. Nonetheless, the larger Beige Book findings suggest an economic environment that is improving, with wage and pricing pressures under control, at least for now. (continue reading…)

The Federal Reserve’s Beige Book said that “the economy continued to expand at a modest to moderate pace,” echoing comments made in previous months. This is particularly true for manufacturing, with improvements in various measures of activity in most of the regions of the U.S. In some regions there has been some easing of the rate of growth for production after a strong November, December and January.

Among the comments from manufacturers were concerns about rising energy prices and on the difficulties in hiring skilled workers. While the longer-term outlook remains positive, there were also signs that some respondents have become more cautious in their outlooks, particularly about the persistent challenges in Europe.

Looking at consumer spending, the report provided some optimism along with caution. Specifically, it said:

Reports on retail spending were positive, with the unusually warm weather being credited for boosting sales in several Districts. While the near-term outlook for household spending was encouraging, contacts in several Districts expressed concerns that rising gas prices could limit discretionary spending in the months to come. New-vehicle sales were reported as strong or strengthening across much of the United States.

Up to now, consumers have continued making purchases – even as consumer confidence has taken a slight hit – yet, some districts worry that prolonged periods of higher gasoline prices might begin to have an impact at some point.

With that said, overall inflation remains modest, both for prices and for wages. Manufacturing was one of the bright spots regarding employment, as we saw with the release of last week’s jobs numbers. Yet, even here, some employers are cautious about bringing on additional workers until they see “more robust growth,” with some of them filling the gap by bringing on temporary workers “to contain costs and retain flexibility.”

Chad Moutray is chief economist, National Association of Manufacturers.

 Two narratives dominated last week’s economic discussion. First, as the Beige Book from the Federal Reserve Board stated, the economy “continued to increase at a modest to moderate pace in January and early February.” In his congressional testimony, Chairman Ben Bernanke was also quick to cite the important role that manufacturing has played in the recent rebound, with higher levels of activity reported in most areas of the country. Indeed, regional surveys from the Dallas and Richmond Federal Reserve Banks observed greater production activity and increased optimism for the next six months.

This upbeat assessment is shared by business economists at the National Association for Business Economics, who see a stronger outlook. Their consensus estimates for real GDP growth for this year and next are 2.4 percent and 2.8 percent, respectively. Adding to this sentiment, the Bureau of Economic Analysis (BEA) revised its estimates for fourth quarter 2011 growth up from 2.8 percent to 3 percent, led by increased consumer spending and business inventory accumulation. BEA also reported modest growth in personal income and spending for January, with strong gains in durable goods purchasing. Consumers, too, are more confident, according to the Conference Board, with their sentiments about the current and future economy at their highest level since this time last year.

In contrast to the more positive tone of many of these studies, the second narrative of last week focused on a series of indicators that unexpectedly declined. Most of us were anticipating growth for the Institute for Supply Management’s purchasing managers index, but it declined from 54.1 in January to 52.4 in February. This was led by a slower pace of growth for new orders, with production and employment also easing. Likewise, the Census Bureau reported reduced durable goods orders and construction spending in January.

In each of these cases, the longer-term trend remains a positive one and is in line with the first narrative. November and December figures were sharply higher, and so it might be expected to have some easing afterwards. Growth should resume in the coming months, especially as industrial production should grow around 4 percent this year. Even with that said, it is also clear that manufacturers are closely watching the events of Europe, once-again resurgent energy and raw material prices, and policy actions stemming from Washington. They remain cautious that one of these headwinds might derail growth, even with higher optimism overall.

This week, everyone will be focused on Friday’s jobs numbers. With 82,000 net new jobs created in the past two months, I anticipate continued improvements in employment for the sector, but perhaps not as large as were seen in November and December. Other key indicators of note include the release of revised productivity data on Wednesday and international trade findings on Friday.

Chad Moutray is chief economist, National Association of Manufacturers.

In a report that mostly mirrors last month’s, the Federal Reserve Board’s Beige Book says that “overall economic activity continued to increase at a modest to moderate pace in January and early February.” Moreover, it highlights the recent uptick in manufacturing activity, with higher levels of new orders, shipments and production reported in many Districts. It specifically cites strength in the automotive and metal manufacturing sectors, with some weaknesses among chemical, paper product, household goods and building materials manufacturers.

A number of regions also expect increases in capital spending, coinciding with the more positive outlook. Yet, manufacturers “in the Boston, Philadelphia, and Cleveland Districts expressed concern about the risks posed by the situation in Europe.” Indeed, uncertainty about European sovereign debt crisis has been at the forefront of a lot of manufactures’’ minds lately.

Most of the responding Districts said that hiring was increasing, particularly among manufacturers. Finding skilled workers, though, remains a challenge for some of these Districts. Regarding inflation, the Federal Reserve feels that wage and final goods prices were “relatively stable.” With that said, there has been some recent pricing pressures among manufacturing with rising raw material prices and higher employee benefit costs, much of which cannot be passed along to the consumer right now. (continue reading…)