The Kansas City Federal Reserve Bank reported continued expansion of manufacturing activity in October, improving for the second straight month. The composite index of general business conditions was unchanged at 6 in October, its fastest pace of growth since December 2014. Indeed, manufacturers in the district have struggled over much of the past two years on global headwinds and reduced commodity prices, especially for crude oil. The underlying data in October reflected better growth for several of the key indicators, new orders (up from 12 to 14), production (up from 15 to 18) and shipments (up from 16 to 20). Exports (up from -4 to 3) were also slightly positive, increasing for the first time since January. Read More
The Richmond Federal Reserve Bank said that manufacturing activity in its district remained soft in October. The composite index of general business activity increased from -8 in September to -4 in October but contracted for the third straight month. The underlying data were mixed. On the positive side, both shipments (up from -4 to 2) and hiring (up from -13 to 3) expanded slightly in October, suggesting a degree of stabilization from recent weaknesses. Yet, several other indicators were in contraction territory, including new orders (down from -7 to -12), capacity utilization (up from -11 to -5) and the average workweek (down from 1 to -3). Overall, these findings show that manufacturers in the region continue to struggle from global headwinds and economic uncertainty. Read More
The Empire State Manufacturing Survey reported that manufacturing activity contracted for the third consecutive month in October. The composite index of general business conditions declined from -2.0 in September to -6.8 in October. Many of the underlying data points continued to reflect softness in the New York Federal Reserve Bank’s district, with negative readings once again despite some easing in the rate of decline, including new orders (up from -7.5 to -5.6), shipments (up from -9.4 to -0.6), employment (up from -14.3 to -4.7) and the average workweek (up from -11.6 to -10.4). Indeed, 32.3 percent of respondents said orders fell in October, compared to 26.7 percent noting increases. On the employment front, 65.1 percent of manufacturers were holding firm with hiring in October, with 15.1 percent adding more workers and 19.8 percent reducing the size of their workforce. Read More
The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) rebounded in September after unexpectedly contracting in August. The composite index rose from 49.4 in August to 51.5 in September, expanding for the sixth time in the past seven months. This was encouraging news, and a sign that the August reading were a bit of an outlier. Indeed, new orders (up from 49.1 to 55.1) recovered strongly, with modest growth in production (up from 49.6 to 52.8) and exports (down from 52.5 to 52.0). Despite the easing in exports, international demand has expanded for seven consecutive months. The sample comments also tended to echo the better data in September, even as respondents continued to cite ongoing challenges. Read More
The U.S. economy grew 1.4 percent at the annual rate in the second quarter, up from 1.1 percent in the prior estimate, according to the latest revision from the Bureau of Economic Analysis. The revision stemmed largely from better data for nonresidential fixed investment, up an annualized 1.0 percent for the quarter instead of a decline of 0.9 percent as noted in the previous release. With that said, there were still challenges related to nonresidential fixed investment, with businesses spending less for both structures (down 2.1 percent) and equipment (down 2.9 percent). In addition, there were large drags on headline growth from private inventories and residential activity, with the latter softer-than-desired after being a bright spot over much of the past two years. Gross private fixed investment alone subtracted 1.34 percentage points from real GDP growth in the second quarter. Read More
The Census Bureau said that new durable goods orders remained weak in August, continuing a trend that we have seen over the past year or so. New orders dropped from $227.0 billion in July to $226.9 billion in August, essentially unchanged for the month. Moreover, on a year-over-year basis, sales have decreased by 1.3 percent since August 2015. This highlights the ongoing challenges in the sector, including global headwinds and ongoing economic anxieties.
With that said, the headline number received a bit of a boost from transportation equipment orders in August, which were up 0.6 percent largely on stronger demand for autos and defense aircraft. Excluding transportation equipment, new orders for durable goods were down 0.4 percent in August and 1.1 percent year-over-year. This speaks to broader softness outside of transportation among durable goods manufacturers. So-called “core” capital goods orders (or nondefense capital goods excluding aircraft) were up 0.6 percent in August. That might be more encouraging, however, if demand for core capital goods did not decline 3.1 percent year-over-year. Read More
The Conference Board said that consumer sentiment jumped strongly in September. The Consumer Confidence Index rose from 101.8 in August to 104.1 in September, its highest level since August 2007. This represented a significant improvement in Americans’ assessments of the economy since May’s dismal 92.4 reading. The strong gains in the headline number were buoyed by better perceptions about current (up from 125.3 to 128.5) and future (up from 86.1 to 87.8) conditions. With that said, this measure has been extremely volatile over the past two years, with the current reading surpassing the prior post-recession high of 103.8 in January 2015. That peak was soon followed by lingering doubts about economic growth, and this survey still reflects some of those persistent anxieties despite notable improvements. Read More
The Richmond Federal Reserve Bank said that manufacturing activity in its district remained weak in September. The composite index of general business activity increased from -11 in August to -8 in September but contracted for the second straight month. Several of the underlying data points eased in the rate of decline in this report, including new orders (up from -20 to -7), shipments (up from -14 to -4) and capacity utilization (up from -19 to -11). At the same time, the labor market data were mixed. Hiring (down from 7 to -13) turned negative for the first time in three years; whereas, the average workweek (up from -4 to 1) expanded ever-so-barely in this release after narrowing in August. These findings show that manufacturers in the region continue to struggle from global headwinds and economic uncertainty. Read More
The Dallas Federal Reserve Bank said that manufacturing activity in its Texas district improved in September, even as sentiment has now contracted for 21 straight months. The composite index of general business conditions increased from -6.2 in August to -3.7 in September, bringing this measure closer to neutral territory. Despite the negative figure in the composite measure, most of the underlying data points reflected strengthening levels of growth in September. This included production (up from 4.5 to 16.7), shipments (up from 9.9 to 20.1) and capacity utilization (up from 0.9 to 13.5). On the other hand, new orders (down from 5.3 to -2.9) shrank once again in September, falling for the eighth time in the past 10 months. Read More
Manufacturing activity rebounded in the Kansas City Federal Reserve Bank’s district in September, expanding after two months of declines. The composite index of general business conditions increased from -4 in August to 6 in September, its fastest pace of growth since December 2014. Indeed, there were rather strong gains seen for new orders (up from -7 to 12), production (up from -7 to 15) and shipments (up from -4 to 16) to support the improved sentiment seen in this survey’s headline number. To be fair, though, the sector also continues to have a number of challenges. Most notably, that includes exports (up from -10 to -4), which contracted for the eighth consecutive month. Manufacturers in the Kansas City region – not unlike their peers in other districts – have had to grapple with a strong U.S. dollar and weaknesses abroad, both of which have dampened international demand.
The labor market data were mixed. On the one hand, hiring activity (up from -10 to -3) remains soft, even with some easing in the rate of decline in September. The index for the number of employees has been negative now for 21 straight months. At the same time, employers appear to be expanding hours worked (up from 4 to 5), with that measure positive for the fourth consecutive report. Sample comments tended to highlight challenges with attracting new talent, highlighting the skills gap seen in the sector.
Meanwhile, manufacturers continue to be somewhat upbeat about the next six months. The forward-looking composite index edged down from 11 to 10, but it has now been positive each month since April. At least 40 percent of respondents expect sales and output to grow moving forward, which is somewhat promising. Yet, those completing the survey were also less hopeful for hiring, capital spending and export growth over the next six months, showing how cautious business leaders are right now, with expected growth remaining negative.