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economic outlook

jobs

January Jobs Numbers Offer Bit of Encouragement for Manufacturers

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The latest data on manufacturing employment provides a bit of encouragement for manufacturers that have been beleaguered by the global slowdown and pullbacks in the energy sector. The Bureau of Labor Statistics said that manufacturing employment rose by 29,000 in January, much stronger than expected at the start of the new year. It was the fourth consecutive monthly job gain and the strongest since November 2014, when manufacturing demand and production were growing more robustly than seen today. There are currently 12.36 million workers in the sector, with manufactures adding 903,000 more employees since the Great Recession. At the same time, it is important to note that employment growth has been quite soft for much of the past year, with the sector adding just 33,000 workers in 2015. Read More

ism

ISM: Manufacturing Sentiment Negative for the Fourth Straight Month

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The Institute for Supply Management (ISM) said that manufacturing sentiment remained somewhat negative in January. The purchasing managers’ index for the sector edged marginally higher, up from 48.0 in December to 48.2 in January. It was the fourth straight month with the headline PMI under 50, which would suggest contracting sentiment among manufacturers over that time frame. This mainly reflected deteriorating employment (down from 48.0 to 45.9) and inventories (unchanged at 43.5), with the decline in hiring at its lowest level since June 2009, the last official month of the Great Recession. Indeed, manufacturers continue to worry about the impact of the global slowdown as we start the new year. This can be seen in export growth (down from 51.0 to 47.0). The exports index has contracted in seven of the past eight months on the strong dollar and soft growth abroad. Read More

GDP

The U.S. Economy Slowed to Just 0.7 Percent Growth in the Fourth Quarter

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The Bureau of Economic Analysis said that the U.S. economy grew just 0.7 percent in the fourth quarter at the annual rate, decelerating from 3.9 percent and 2.0 percent growth in the prior two quarters, respectively. For the year as a whole, real GDP increased 2.4 percent in 2015, the same pace as observed in 2014. The preliminary data were pulled lower by weak business investment, inventory spending and net export figures, with consumer spending being one of the larger bright spots in the report. With that said, personal consumption expenditures rose an annualized 2.2 percent in the fourth quarter, easing from 3.0 percent growth in the third quarter. Consumer spending added 2.1 percent to real GDP in 2015, and in the fourth quarter, it added nearly 1.5 percentage points to the headline figure. This finding mostly mirrors decent but softer-than-desired retail spending activity seen at the end of the year, as Americans remain somewhat anxious about the economic outlook. Read More

Philly Fed: Manufacturing Activity Contracted for the Fifth Straight Month in January

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The Federal Reserve Bank of Philadelphia said that manufacturing activity contracted for the fifth straight month in January. The composite index of general business activity rose from -10.2 in December to -3.5 in January, and yet, the headline figure has now been in negative territory since September. (Note that prior data reflect an annual revision for seasonal adjustments.) The underlying data were mixed. The pace of decline for new orders (up from -11.1 to -1.4) slowed in this latest report. In contrast, labor market data worsened for the month, including hiring (down from 2.2 to -1.9) and the average workweek (down from 0.6 to -2.2). On the positive side, shipments (up from -2.1 to 9.6) picked up at a decent rate, expanding after three consecutive months of declines. Read More

ism

ISM: Manufacturing Activity Remained Negative in December for the Second Straight Month

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The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) remained negative for the second straight month. The composite index fell from 48.6 in November to 48.2 in December, its lowest level since June 2009. As such, manufacturers reported soft demand and production activity at the end of 2015, which represented a sharp contrast to the modest growth seen 12 months prior to that. Indeed, the ISM Manufacturing PMI was 55.1 one year ago, and it peaked last year at 58.1 in August 2014. The sector has struggled with sluggish growth abroad and lower commodity prices over much of the past year, dampening overall manufacturing activity. Along those lines, new orders (up from 48.9 to 49.2) and production (up from 49.2 to 49.8) continued to indicate weaknesses in the sector, even as each recorded some easing in the pace of decline in December. To be fair, however, the sample comments also noted some segments that were doing well at year’s end, particularly those aligned with the automotive sector. Read More

Richmond Fed: Manufacturers Reported Improved Activity in December, But Still Soft

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The Richmond Federal Reserve Bank reported improved activity in December, rebounding after three straight months of declines. The composite index of general business activity rose from -3 in November to 6 in December, its first positive reading since July. (The measure was zero in August.) As such, manufacturers in the district ended 2015 with better news, even as overall conditions remained relatively soft. The higher headline number stemmed largely from improvements in new orders (up from -6 to 8), capacity utilization (up from zero to 2), employment (up from zero to 12) and the average workweek (up from -3 to 7). At the same time, shipments (up from -2 to zero) and the backlog of orders (up from -16 to zero) stabilized for the month. Read More

U.S. Economy Grew 2.0 Percent in the Third Quarter

By | Economy, General, Shopfloor Economics, Shopfloor Main | No Comments

The Bureau of Economic Analysis said that the U.S. economy grew 2.0 percent in the third quarter. That is higher than the original estimate of 1.5 percent, but slightly lower than the 2.1 percent figure released last month. The largest variable in these three estimates was the impact of inventory spending, with businesses replenishing their stockpiles at a slower pace in this report than in the last one (but not as severe as originally thought). In the end, spending on private inventories subtracted 0.71 percentage points from real GDP growth in the third quarter. One upside to this, of course, is that a pickup in demand would necessitate additional production because of depleted inventory stockpiles. That could yield somewhat better growth moving forward.

For now, however, the current forecast is for real GDP to increase by 2.0 percent once again in the fourth quarter. The outlook for 2016 is for the economy to grow by 2.4 percent. Read More

Philly Fed: Manufacturing Activity Returned to Negative Territory in December

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The Federal Reserve Bank of Philadelphia said that manufacturing activity returned to negative territory in December, contracting for third time in the past four months. The composite index of general business activity declined from 1.9 in November to -5.9 in December. The decrease in the headline number was led lower by a worsening in new orders (down from -3.7 to -9.5). The percentage of respondents suggesting that sales had increased for the month dropped from 25.8 percent to 22.4 percent, with those noting decreasing orders up from 29.5 percent to 31.9 percent. This suggests that manufacturers in the Philly Fed region remain quite anxious about demand given global challenges and falling commodity prices, mirroring concerns seen nationally. Read More

NY Fed: Manufacturers Contracted for the 5th Straight Month in December, Albeit at a Slower Pace

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The Empire State Manufacturing Survey reflected contracting levels of activity for the fifth straight month in December, albeit at a slower pace. The composite index of general business conditions improved from -10.7 in November to -4.6 in December. It was the best reading of the headline index since July’s 3.9 figure. The improvement could be seen in growth of shipments (up from -4.1 to 5.5) for the month, which expanded for the first time since July, and a slower rate of decline for new orders (up from –11.8 to -5.1). Looking more closely at the new orders figures, the percentage of respondents saying that their sales had declined for the month has fallen from 37.2 percent in October to 30.6 percent in this latest report. That represents progress of some sort, but it must also be compared to the one-quarter of those completing the survey who had increased new orders. Read More

Conference Board: Consumer Confidence Fell to Its Lowest Level of the Year in November

By | General, Shopfloor Economics | No Comments

The Conference Board said that consumer sentiment fell to its lowest level of the year in November. The Consumer Confidence Index declined from a revised 99.1 in October to 90.4 in November, the weakest reading since September 2014. As such, consumer attitudes have downshifted dramatically over the past two months, down from 102.6 in September, which had been the second-highest level of the year. Indeed, consumer confidence has been highly volatile in 2015, but with perceptions generally lower since reaching a post-recessionary high in January (103.8). Much of that weakness has stemmed from worries about the economic outlook, but it is also possible that geopolitical events could be taking a toll on confidence, particularly in this latest survey. Read More