The Bureau of Labor Statistics said that manufacturers lost 9,000 workers in September, extending the 18,000 declines seen in August. These numbers are disappointing, as they show just how sluggish growth has become in the manufacturing sector over the past few months, mirroring the stagnant ISM data released yesterday. Since January (or over the past eight months), the manufacturing sector has netted zero net new jobs, with 27,000 workers lost in just the past two months. In the second half of 2014, manufacturers were hiring at the more-robust pace of 20,667 workers per month on average, illustrating a significant pullback in employment growth year-to-date. Indeed, manufacturers have grappled for much of this year with headwinds from abroad, a strong U.S. dollar, gridlock in Washington on critical market-opening policies and lower crude oil prices – each of which have combined to dampen demand, production and hiring. (continue reading…)
Tag: federal reserve
Manufacturing production declined 0.5 percent in August, falling back after rebounding strongly in July. Overall, these data continue to show the sector struggling with a number of economic headwinds, with output down in three of the past four months. Capacity utilization for manufacturers increased from 76.2 percent to 75.8 percent. On a year-over-year basis, manufacturing production increased 1.4 percent in August, down from 1.5 percent in July. This represented a sharp deceleration in output from the 4.3 year-over-year pace observed in January. (continue reading…)
The Bureau of Economic Analysis revised its estimate of growth in the U.S. in the second quarter sharply higher. Real GDP increased 3.7 percent in the second quarter, significantly higher than the 2.3 percent original estimate released last month. This was slightly above the consensus estimate of 3.2 percent, and the improvement in economic growth for the quarter was attributed to upward revisions in many categories, but particularly for inventory spending. Despite the better headline figure, the underlying trends were largely the same, including rebounds in consumer and business spending and with net exports recovering a bit after serving as a drag in the prior two quarters. (continue reading…)
The Bureau of Labor Statistics said that producer prices for final demand goods and services rose 0.4 percent in June, extending the 0.5 percent increase seen in May. The gains for the goods sector were even stronger. Indeed, producer prices for final demand goods jumped 1.3 percent and 0.7 percent, respectively, in May and June, with each month spurred higher by rising energy and food costs. On the energy front, energy goods were 5.9 percent and 2.4 percent more expensive in those two months, respectively. This was consistent with the rise in West Texas intermediate crude oil prices, up from an average of $54.45 per barrel in April to $59.82 a barrel in June. At the same time, final demand energy goods costs remain 17.9 percent lower today than 12 months ago. (continue reading…)
The Bureau of Economic Analysis said that personal spending rose 0.9 percent in May, rebounding from a more-cautious 0.1 percent growth rate observed in April. It was the fastest monthly growth rate since August 2009. From the manufacturing perspective, this was welcome news, with spending on durable and nondurable goods up 2.2 percent and 1.9 percent, respectively. More importantly, it provides some encouragement that Americans might return to opening their wallets – something that there has been more hesitance to do so far this year. The year-over-year rate of personal spending in May, 3.6 percent, was the highest since December, up from 3.1 percent since in April. (continue reading…)
Here is the summary for this week’s Monday Economic Report:
Last week, one media outlet reported that manufacturing has been in a “technical recession” for the past six months. I am more hesitant to use the R-word to describe the sector’s performance year-to-date, and in my view, this description somewhat overstates the significance of broader market trends, particularly for expectations moving forward. At the same time, manufacturing production has declined since late last year, as illustrated in the graphic below. A number of significant economic headwinds have reduced output in four of the past six months, reducing the year-over-year pace of growth in the sector from 4.5 percent in November to 1.8 percent in May. Capacity utilization has also declined for five consecutive months, down from 78.1 percent in December to 77.0 percent in May. (continue reading…)
The Federal Reserve downgraded its forecast for growth for 2015 in its latest economic projections. Fed participants now expect real GDP to grow between 1.8 and 2.0 percent this year, down from an estimate of 2.3 to 2.7 percent growth seen in its March forecast. Indeed, this represented the second downward revision in growth estimates for the year, decelerating from the 2.6 to 3.0 percent outlook observed in December. As such, the reduced outlook for the economy this year from the Federal Reserve mirrors similar drops in growth estimates from other economists – including me – in light of softer-than-desired performance over the past six months, both in the U.S. and globally. This is consistent with the latest NAM Manufacturers Outlook Survey, which found that respondents were less upbeat about future activity in light of headwinds from a stronger dollar, weaknesses abroad, lower crude oil prices and a still-cautious consumer.
The National Association for Business Economics (NABE) said that panelists in its Outlook Survey downgraded their estimates for growth in 2015. Business economists now expect real GDP growth of 2.4 percent this year, down from 3.1 percent in the March survey. This reflects recent headwinds in the U.S. economy, with 80 percent and 72 percent suggesting that a stronger U.S. dollar and slower growth in China, respectively, were having a negative impact on U.S. economic growth. To illustrate this point, the estimates for export growth have declined from 5.4 percent in December to 2.1 percent in the current report. (continue reading…)
The Bureau of Labor Statistics said that manufacturers added 7,000 net new workers in May. This continues a softer-than-desired pace of hiring growth in the early months of 2015, with the sector adding just 4,250 workers on average per month over the past four months (February to May). This compares to 26,000 additional employees per month over the four months prior to that (October to January), and it largely mirrors the softness that we have seen from a number of economic headwinds of late (e.g., a strong dollar, lower crude oil prices, the West Coast ports slowdown, etc.), and policy hurdles coming from Washington (e.g. stalled consideration of Trade Promotion Authority and Export-Import Bank reauthorization, the prospect of a giant ozone regulation).