The Consumer Confidence Index from the Conference Board rose from 61.9 in March to 68.1 in April. This brings the index essentially back to where it was in February, when it stood at 68.0, but it is below the 73.1 reading observed in October. In short, sentiment appears to have improved of late, even as it is not quite where we would like for it to be. This is largely consistent with a similar survey from the University of Michigan and Thomson Reuters, which was released last week.

Noting this month’s improvement, Lynn Franco, the Director of Economic Indicators at the Conference Board, cautioned that “… consumers’ confidence has been challenged several times over the past few months by such events as the fiscal cliff, the payroll tax hike and the sequester. Thus, while expectations appear to have bounced back, it is too soon to tell if confidence is actually on the mend.”

Specifically, the Conference Board noted that opinions about the current and future economy have advanced in April, with the largest gain seen in the forward-looking measure. The expectations component of the index rose from 63.7 to 73.3 for the month, above the level seen in February (72.4). With that said, Americans remain largely frustrated with the labor market, with a net increase in the percentage of those who feel that jobs are hard to get.

The importance of these types of surveys, of course, is how they translate into consumer spending patterns. Yesterday, we learned that retail sales growth eased in March, with higher payroll taxes and persistent anxieties slowing purchases. The Conference Board’s survey found that some of this uneasiness continued into its respondents’ buying plans. The percentage of those planning to purchase autos and appliances were down slightly; whereas, home buying intentions were unchanged.

Chad Moutray is the chief economist, National Association of Manufacturers.

The Conference Board said that its Leading Economic Index rose 0.5 percent in January, the same pace as in January. This was the third consecutive month of decent growth in the index and the fifth increase in the past six months. As such, it tends to support the view that the U.S. economy has been improving of late, with rising levels of activity. Ken Goldstein, an economist with the Board noted, “The U.S. economy is growing slowly now, and with this reading increases hope that it may pick up some momentum in the second half of the year. However, this latest report does not yet capture the recent effects of sequestration, which could dampen the pickup in GDP.”

Looking specifically at the components of the Leading Economic Index, the increased value in February stemmed mainly from improvements in the average workweek for production workers, higher building permits, and measures of credit conditions. After providing a drag on the index in January, new orders for manufactured goods were more mixed in February, with the decline in core capital goods orders outweighing strengths elsewhere. Sub-par consumer confidence also lowered the index.

Meanwhile, the Coincident Economic Index – which measures the current climate – increased 0.2 percent in February, partially reversing the 1.0 percent decline in January. The previous month’s decrease resulted from a sharp decline in personal income in January, with the impending fiscal cliff shifting some payouts into December. February’s data, on the other hand, had all four of its component data measures go higher. The largest contributions came from strong industrial production and nonfarm payrolls for the month.

Chad Moutray is chief economist, National Association of Manufacturers.

The Conference Board reported that its Consumer Confidence Index rose from 58.4 in January to 69.6 in February. This increase stops a three-month skid, and the rebound is consistent with the similar rise in confidence observed in the University of Michigan survey. A large part of the steep decline in January could be explained by the increase in payroll taxes. Even with this month’s gain, though, the Conference Board index remains below the optimism level observed in October (73.1).

Looking specifically at the Conference Board data, the increase occurred because respondents were more positive in their assessments of the current and future economic environments. These types of sentiment surveys tend to respond to pocketbook issues. There were marginal gains in the belief that jobs were more plentiful and in income expectations. Still, it remains true that unemployment and income are challenges, with each measure a net negative overall.

(continue reading…)

The Conference Board reported that its Leading Economic Index rose 0.2 percent in October, building on the 0.5 percent gain in September. The primary drivers of the increase, though, were credit and interest rates. The other positive contribution to the index came from improvements in initial weekly unemployment claims. Manufacturing provided an essentially neutral contribution, with stalled production, new orders and employment yielding a cumulative contribution of -0.01. Other negative contributors to the index were reduced building permits, lessened consumer confidence, and a slightly lower stock market.

Meanwhile, the Coincident Economic Index – which measures the current climate – increased 0.1 percent. The largest driver of the higher figure was strengthened manufacturing and trade sales, with higher nonfarm payrolls and personal income also making positive contributions. Industrial production, which declined 1.4 percent in October, was the lone negative contributor to the Coincident Index.

Overall, these numbers reflect an economy that is growing modestly, but still showing persistent weaknesses. Manufacturing activity, in particular, remains soft, with headwinds from slowing global sales and anxieties about the resolution of the fiscal cliff having an impact. If policymakers were able to avert the cliff, that would lift at least one of the uncertainties that are hampering growth in the sector.

Chad Moutray is the 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.

The Federal Reserve Bank of Richmond reported that manufacturers in its region were more optimistic about the current business environment. The composite general business index rose to 20 in February, up from 3 in December and 12 in January.

Improvements were seen across-the-board in a number of production indicators. For instance, the index for new orders rose from 14 to 21 for the month, with similar increases seen for shipments, capacity utilization, the number of employees and the average workweek. Wages and raw material inventories continued to expand, but at a slower rate than reported in January.

Looking at pricing trends, respondents said that the prices paid for raw materials rose at an annual rate of 2.25 percent, down from their 2.53 percent gain cited in January but above the 1.55 stated in December. With that said, manufacturers expect modest inflation in the months ahead, with the expected increases for raw materials averaging 1.58 percent, at the annual rate, over the next six months. This would suggest some easing from prior months.

Manufacturing activity in the coming months is also expected to be strong. While some of the measures declined slightly from January, they continue to show an upbeat mood. Higher levels of shipments, new orders, employment and capital expenditures are anticipated over the next six months. Overall, these figures show a region which has rebounded nicely from the weaknesses that it experienced in mid-2011.

Meanwhile, the Conference Board reported that consumers are also more positive about their current economic situation. Their Consumer Confidence Index rose from 61.5 in January to 70.8 in February. This is a sizable improvement from the 45.2 registered in August.  This was the highest level since last February.

Americans, in general, are more positive about both the present and future economy, with the indices for both up. As this measure often turns on pocketbook issues, the respondents cited improvements in the labor market as one of the reasons. Still, nearly 39 percent of those taking the survey said that jobs were “hard to get” (although this is down from almost 50 percent who said the same thing just five months ago).

Consumer intentions for future purchases were mixed. There were a slightly higher percentage of individuals saying the planned to purchase new autos, but a modest decline for those suggesting a home or appliance purchase.

Chad Moutray is chief economist, National Association of Manufacturers.