The Institute for Supply Management (ISM) said that manufacturing activity expanded robustly in October, even as it pulled back from September’s reading, which was the fastest pace since May 2004. The ISM Manufacturing Purchasing Managers’ Index (PMI) decreased from 60.8 in September to 58.7 in October. The sample comments suggest that negative impacts from recent hurricanes explain at least part of October’s weaker reading. Nonetheless, the larger story remains one of strength, with business activity continuing to grow at healthy rates. For instance, indices for new orders (down from 64.6 to 63.4) and production (down from 62.2 to 61.0) exceeded 60—a threshold which would signify a vigorous expansion in demand and output in the sector—for the fifth consecutive month. Read More
We have seen a steady stream of good economic numbers in the past few weeks, including today’s jobs numbers. First and foremost, the unemployment rate fell to 4.6 percent, its lowest level since August 2007. At the same time, nonfarm payrolls rose by 178,000, which was on par with the consensus estimate of around 180,000. Overall, this mirrors healthier figures for consumer spending and improved business sentiment in recent data, and these reports show that the U.S. economy has strengthened. This should help cement a Federal Reserve rate hike at their upcoming meeting on December 13-14.
Despite these positives, manufacturers have continued to struggle, as evidenced by the loss of 4,000 workers in November, with 60,000 fewer workers on net year-to-date. It was the fourth straight monthly decline for employment in the sector. Moving forward, manufacturing leaders are cautiously optimistic about demand and production for 2017, and we would expect that this increase in activity would lead to additional hiring.
With that said, it’s clear the incoming administration, which has touted manufacturing as a top priority, has its work cut out for it. Manufacturers look forward to working with the next Administration and Congress to enact policies – from infrastructure, to comprehensive tax reform – that will help spur America’s manufacturing economy. To this end, as an extension of the NAM’s Competing to Win policy platform, the NAM will be releasing individual policy white papers in the coming weeks. Each white paper will focus on a specific policy priority that manufacturers urge the incoming presidential administration and Congress to focus on and will be send to the respective transition teams.
There are also things the current Congress/administration can do to help grow jobs including take action to restore the Ex-Im Bank to full functionality. As long as Ex-Im cannot fully operate, manufacturers in the U.S. will continue to lose manufacturing jobs to our foreign competitors.
The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) continued to expand modestly in October, sustaining the rebound seen in September. The composite index edged up from 51.5 in September to 51.9 in October, growing for the second straight month. Overall, this is encouraging for a sector that has seen subpar growth over much of the past two years on global headwinds and economic anxieties. On the positive side, production (up from 52.8 to 54.6) and exports (up from 52.0 to 52.5) both accelerated in October, and employment (up from 49.7 to 52.9) expanded for only the second time year-to-date. Manufacturers have been rather cautious so far in 2016, with hiring pulling back. Hopefully, better hiring data will follow stronger demand and output figures moving forward. Read More
The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) expanded for the second straight month, albeit at a slower pace in April. The composite index declined from 51.8 in March to 50.8 in April, but even with the decrease, this represented progress in the manufacturing sector after contracting for five consecutive months from October through February. New orders (down from 58.3 to 55.8) and production (down from 55.3 to 54.2) each grew at decent rates for the month despite some easing in this release, and exports (up from 52.0 to 52.5) accelerated, increasing for only the third time in the last 12 months.
Last month’s release helped to fuel the narrative that manufacturing activity was starting to stabilize, and the current data mostly support that view. At the same time, though, manufacturers remain challenged by global headwinds and still-low commodity prices, and a number of economic indicators have been disappointing, highlighting the fact that business’ struggles are still far from over. The sample comments tended to echo this nuanced view of modest improvements, with some respondents noting a pickup in sales while others cited ongoing sluggishness. One’s perspective was likely industry-specific. Read More
U.S. manufacturing activity grew at the slowest pace since September 2009, according to preliminary figures from Markit. The Markit Flash U.S. Manufacturing PMI decreased from 51.5 in March to 50.8 in April. In general, the strong dollar and weaknesses abroad have dampened international demand and overall sentiment over the course of the past year. Manufacturing activity has decelerated significantly over the past 12 months, with the main PMI number down from 54.2 in April 2015. In this report, output (down from 51.4 to 50.3) and hiring (down from 52.1 to 50.2) each pulled back to a near-standstill, with exports (down from 50.0 to 48.5) contracting for the second time in the past three months. On the other hand, new orders (down from 52.8 to 52.0) continued to expand modestly, but with some easing for the month.
As such, this report stands in sharp contrast to the better-than-expected sentiment seen in the competing data from the Institute for Supply Management (ISM). In that release, new orders and output each grew surprisingly strong in March, lifting its manufacturing PMI value above 50 for the first time since August. It provided some encouragement after months of softness, even as other economic data – including this one from Markit – continue to suggest ongoing challenges. Read More
It is clear hiring remains weak for manufacturers as they grapple with global headwinds and lingering anxieties about the overall economic outlook. Employment in our sector declined by 29,000 in March. That said, we have begun to see some signs of stabilization for demand and production in other manufacturing data—but that has not translated into jobs just yet, according to today’s release. Meanwhile, nonfarm payrolls continued to make slow-but-steady gains, with growth near consensus estimates.
For the Federal Reserve, this report does not change much, as short-term rates were not likely to be increased at the upcoming meeting in April anyway. Instead, the Federal Open Market Committee will be looking for broader-based improvements in the U.S. economy as it prepares for its June meeting, and for manufacturers, we would hope that such data would include progress in the industrial sector. Manufacturers have been nervous about the Federal Open Market Committee raising rates too quickly, as they reported in the most recent NAM Manufacturers’ Outlook Survey.
Sluggish hiring for manufacturers should also force our political leaders to consider pro-growth policies to improve overall economic conditions and to allow our businesses to better compete in the global marketplace. The NAM has outlined its pro-manufacturing policy agenda in its “Competing to Win” document, which was released earlier this year.
The Conference Board said that consumer sentiment waned again in February, with Americans nervous in their economic outlook. The Consumer Confidence Index dropped from 97.8 in January to 92.2 in February, its lowest level in seven months. Since June of last year, these data have been highly volatile, ranging from a low of 91.0 in July to 102.6 in September, with the latter being the second-highest reading since the recession. (The index peaked at a post-recessionary high of 103.8 in January 2015.) The high degree of change from month-to-month indicates just how anxious the public is right now, with recent financial market volatility likely dampening perceptions in this report. In February, consumers were less upbeat in their assessments of the current (down from 85.3 to 78.9) and future (down from 116.6 to 112.1) economy.
Respondents to this survey are often swayed by pocketbook issues, including worries about labor market prospects, and this release is no different. The percentage of those completing the survey suggesting that jobs were “plentiful” declined from 23.0 percent to 22.1 percent, with those saying that jobs were “hard to get” rising from 23.6 percent to 24.2 percent. In a similar fashion, the percent expecting their incomes to increase in the coming months decreased from 18.6 percent to 17.2 percent, with those predicting declining incomes increasing from 10.7 percent to 12.5 percent.
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
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. Read More