The National Association for Business Economics (NABE) said that activity slowed somewhat from earlier in the year, mirroring other indicators. In the latest Business Conditions Survey, respondents noted slightly weaker conditions than in prior reports, and yet, they also remained mostly upbeat about the second half of 2015. The net rising index for sales, for instance, has declined from 45 in July 2014 to 28 in this survey, with the percentage of those completing the survey observing rising sales dropping from 57 percent one year ago to 49 percent in April to 46 percent in July. Despite the drop in demand growth, this release continues to show sales growth that is more favorable than not, with just 18 percent of respondents citing declining sales in July. Along those lines, 59 percent of industry economists anticipate sales increases over the next three months. (continue reading…)
The Institute for Supply Management’s manufacturing purchasing managers’ index picked up a little in June. The headline PMI increased from 52.8 in May to 53.5 in June, returning to a level last seen in January. As such, this report indicates that manufacturing activity has begun to recover from the softer demand, output and hiring levels experienced earlier in the year, with a number of economic headlines challenging the sector. Still, that does not mean that manufacturers are out of the woods yet, with activity expanding at a slower pace than desired. To illustrate this point, the manufacturing PMI averaged 56.9 in the second half of 2014, but has averaged 52.6 through the first six months of 2015. (continue reading…)
The Conference Board said that consumer sentiment jumped higher in June. The Consumer Confidence Index increased from 94.6 in May to 101.4 in June, matching its level of March and coming after two months of softness in the data. Sentiment continues to remain below the post-recessionary peak observed in January (103.8), but overall, this report suggests that Americans’ attitudes have rebounded from weaknesses earlier in the year. In addition, confidence has risen from one year ago when the index was 86.4. Despite these improvements, the public continues to remain somewhat anxious about labor and income growth. (continue reading…)
The Institute for Supply Management’s (ISM) manufacturing purchasing managers’ index (PMI) was unchanged at 51.5 in April. On the positive side, manufacturing activity has continued to expand very modestly, and yet, these data reflect softness in the market seen over the past few months. Six months ago, for instance, the PMI value was 57.9, and this headline number has trended lower since then. Demand and output have shifted into a lower gear on challenges from a stronger U.S. dollar, reduced crude oil prices, residual impacts from the West Coast ports slowdown, and other factors. The sample comments note that these headwinds were top-of-mind for survey respondents in this report. (continue reading…)
The HSBC Flash China Manufacturing PMI reflected reduced activity again, down from 50.7 in February to 49.2 in March. It has contracted in three of the past four months now, reflecting a decelerated rate of growth in China. China has reduced its target real GDP growth rate for 2015 to 7 percent. New orders (down from 50.4 to 49.3), exports (up from 47.1 to 49.0) and employment (down from 49.3 to 47.0) were all below 50 in March – the threshold signifying growth. It was the reduction in demand that pushed the headline index lower. On the positive side, output (unchanged at 50.8) continues to expand very modestly for the month, and the decrease in input prices (up from 42.2 to 44.7) have helped manufacturers in terms of costs, even as the rate of decline was less in March. (continue reading…)
The National Federation of Independent Business (NFIB) said that optimism rose marginally in February. The Small Business Optimism Index increased from 97.9 in January to 98.0 in February, but remained below the peak observed in December (100.4). The December level was the highest since October 2006. The good news was that the headline index has trended higher, up from 91.4 in February 2014. With that said, there continue to be some lingering anxieties about the economic outlook, with some of the underlying data points easing a bit in February. (continue reading…)
The Institute for Supply Management (ISM) said that growth in manufacturing activity has continued to slow over the past few months, starting 2015 off on a weaker note. The headline purchasing managers’ index (PMI) has fallen from 57.9 in October to 52.9 in February, its slowest pace since January 2014, when severe winter storms dampened activity across-the-board. The sample comments suggest that the West Coast ports slowdown and falling energy prices were top-of-mind for many of the respondents, helping to explain much of this easing. At the same time, the stronger U.S. dollar and sluggish growth abroad were also likely factors, with export orders (down from 49.5 to 48.5) declining for the second straight month. (continue reading…)
The Chinese economy continues to slow, with the HSBC Flash China Manufacturing Purchasing Managers’ Index (PMI) contracting for the first time since May. The headline index declined from 50.0 in November to 49.5 in December. New orders (down from 51.3 to 49.6), output (up from 49.6 to 49.7) and employment (up from 48.7 to 48.9) were below 50 – the threshold signifying reduced activity – in December, with production declining for the second straight month. On the positive side, new export orders (up from 51.1 to 51.7) were still growing somewhat modestly. As such, this report suggests that the Chinese economy is ending 2014 much as it began it, with softness in the manufacturing sector. (continue reading…)
The Institute for Supply Management’s (ISM) manufacturing purchasing managers’ index (PMI) grew strongly in October, rebounding after a disappointing headline figure in September. The main index rose from 56.6 in September to 59.0 in October, back to where it had been in August. As such, the August and October readings were both the highest levels since March 2011, suggesting healthy gains in the sector as we move into the fourth quarter. (continue reading…)
Economists with the National Association for Business Economics (NABE) expect steady growth for the rest of this year and for next year. Respondents predict real GDP growth of 3.0 percent in the third quarter of 2014, 3.1 percent in the fourth quarter, and 3.0 percent for all of 2015. As such, it suggests that business economists feel that we have made significant progress in growth since weaknesses in the first quarter of this year.
You can see this rebound in the manufacturing figures, with panelists predicting 4.0 percent and 3.6 percent industrial production growth in 2014 and 2015, respectively. Each figure was marginally higher than in the June survey. These results are consistent with the mostly upbeat data seen in the latest NAM/IndustryWeek Survey of Manufacturers, which had sales, capital spending and hiring expectations at two-year highs. In terms of auto production, light vehicle sales should rise from an average of 15.5 million annualized units in 2013 to 16.3 million and 16.7 million in 2014 and 2015, respectively.
Meanwhile, housing starts should continue to move higher, up from an annualized 1.00 million in 2014 to 1.17 million in 2015, according to the panelists. Note that this reflects some easing in growth rates for the housing sector, as the June survey had predicted 1.27 million units by the end of 2015. The inability of business to obtain credit was the biggest factor for recent softness in the housing market, cited by 65 percent of those taking the survey. Yet, the longer-term trend remains positive.
The forecast was also encouraging in other areas. For instance, capital spending should continue to improve, with healthy gains for fixed investments in nonresidential structures, equipment and software, and intellectual property products. In terms of jobs, nonfarm payrolls should average 228,000 per month in 2014 and 211,000 in 2015. Business economists also expect the unemployment rate to drop to 5.7 percent by the end of 2015, down from 6.1 percent right now.
Regarding the Federal Reserve, nearly 70 percent of all respondents felt that the Fed would start raising short-term interest rates in either the second or third quarters of 2015.
Chad Moutray is the chief economist, National Association of Manufacturers.