Tag: federal reserve

Monday Economic Report – May 4, 2015

Here is the summary for this week’s Monday Economic Report: 

The U.S. economy stagnated in the first quarter, with real GDP growing by just 0.2 percent. This compares to a consensus estimate of 1.1 percent, and it was lower than the 5.0 percent and 2.2 percent growth rates observed in the third and fourth quarters of 2014, respectively. As one might expect from a data point that is just shy of zero, the underlying contributions to growth were mixed. Net exports and government spending were drags on activity in the first quarter, particularly with headwinds from a stronger dollar. Consumer spending on goods and nonresidential fixed investment were also weak, with the latter experiencing sharp declines stemming from the energy market and its supply chain. The bright spots—to the extent that you could call them that—were service-sector spending and a rebound in inventories. (continue reading…)

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Monday Economic Report – April 20, 2015

Here is the summary for this week’s Monday Economic Report:

Manufacturing production increased 0.1 percent in March. This followed three months of weaker data, including declines in both January and February. There have been some significant headwinds hitting the manufacturing sector over the past few months, including a strong U.S. dollar, weakened economic markets abroad, lower crude oil prices, the West Coast ports slowdown and weather. These challenges have slowed activity in the sector since November. The latest Beige Book discussed these headwinds. The year-over-year pace of manufacturing production in March was 2.4 percent, down from 4.5 percent in November. Meanwhile, total industrial production, which includes mining and utilities, fell 0.6 percent in March, declining for the third time in the past four months. As such, the data suggest manufacturers have started the new year on a very soft note despite optimism for better demand and output moving forward. (continue reading…)

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Higher Gasoline Costs Help Increase Consumer Prices for the Second Straight Month

The Bureau of Labor Statistics said that the consumer price index increased for the second straight month in March, up 0.2 percent. This was largely due to higher gasoline prices, which increased 2.4 percent and 3.9 percent in February and March, respectively. To be fair, the price of regular gasoline remains 29.2 percent lower today than it was 12 months ago. Indeed, the average price of regular gasoline rose from $1.982 a gallon on January 26 to $2.348 per gallon on March 30, according to the Energy Information Administration. It has edged marginally lower since then, down to $2.317 per gallon on April 13, or earlier this week. (continue reading…)

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Monday Economic Report – April 13, 2015

Here is the summary for this week’s Monday Economic Report: 

After a slew of releases the week before, last week was a quiet one on the economic front. This brief pause allowed us to absorb the data that we have before moving forward. Manufacturers have needed to reconcile the weaker-than-desired market in the first quarter of 2015 with a still-upbeat sales, output and labor market outlook for the coming months. This is true even with significant headwinds, including a stronger U.S. dollar, which should continue at least for the rest of this year. The Federal Reserve has equally had to deal with these changing dynamics, particularly grappling with when to begin normalizing short-term interest rates later this year. (continue reading…)

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Monday Economic Report – March 23, 2015

Here is the summary for this week’s Monday Economic Report: 

The U.S. economy has sputtered a bit in the early months of 2015. While it continues to grow modestly, several economic indicators are weaker than we would prefer. For example, manufacturing production decreased by 0.2 percent in February, declining for the third straight month. Many headwinds have combined to bring about this softness in the manufacturing sector, including global economic weakness, a strong U.S. dollar, the West Coast ports slowdown, a cautious consumer and the weather in some parts of the country. (continue reading…)

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The Fed Drops “Patience” from its Monetary Policy Statement

As expected, the Federal Reserve no longer says that it can be “patient” in normalizing monetary policy. The Federal Open Market Committee (FOMC), which met on March 17 and 18, does say that “an increase in the target range for the federal funds rate remains unlikely at the April FOMC meeting.” This would suggest that the soonest that short-term rate might increase would be at the June 16-17 meeting. With that said, the fed funds rate will change only when data warrant such actions. Still, conventional wisdom holds that the FOMC will vote to raise rates at some point in 2015, likely in June, July or September. For the most part, the Fed has been on automatic pilot with its intentions for a mid-year hike, and this action clears the way for that to happen. (continue reading…)

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Monday Economic Report – March 16, 2015

Here is the summary for this week’s Monday Economic Report: 

Global news dominated the headlines once again last week. The euro sank lower as the European Central Bank began its quantitative easing program, where it plans to purchase 1 trillion euros in government bonds over the next 18 months in an effort to stimulate faster economic growth. As a result, the euro has depreciated by nearly 25 percent over the past 10 months, down from $1.3924 per one euro on May 6 to a close of $1.0483 on Friday. There is also some expectation that it will move to parity soon, a level last seen in November 2002. (For more information on international developments, see the latest Global Manufacturing Economic Update.) (continue reading…)

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Producer Prices for Final Demand Goods Have Fallen for 8 Straight Months

The Bureau of Labor Statistics said that producer prices for final demand goods and services surprisingly fell 0.5 percent in February. The consensus expectation had been for an increase of 0.3 percent, particularly as petroleum prices have stopped falling. Indeed, final demand energy goods prices were unchanged as a whole in February, the first non-negative number since June. Yet, lower food prices helped to reduce producer prices for final demand goods for the eighth straight month, down 0.4 percent. In particular, there were lower prices reported for dairy products, fruits and vegetables, grains, meats and shellfish – precisely the areas that have seen significant increases over much of the past year. Food prices rose 4.3 percent in 2014, but declines in the first two months of 2015 have reduced these costs by 2.6 percent. (continue reading…)

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Producer Prices for Final Demand Goods Declined in December for the Sixth Straight Month

The Bureau of Labor Statistics said that producer prices for final demand goods and services decreased 0.3 percent in December. Looking just at goods, producer prices for final demand items have now fallen for six consecutive months, down 3.0 percent over that time frame. A large part of that decline, of course, stemmed from sharply lower petroleum prices. Producer prices for energy goods were off 6.6 percent in December, with a 14.8 percent decline since June. This has generally helped to push inflationary pressures lower.  (continue reading…)

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Lower Energy Costs Pushed Consumer Prices Down 0.3 Percent in November

The Bureau of Labor Statistics said that the consumer price index (CPI) decreased by 0.3 percent in November. More importantly, consumer inflation has increased 1.3 percent over the past 12 months, down from 2.1 percent in May and 1.7 percent in October. In addition, core prices, which exclude food and energy costs, were up 1.7 percent in November, down from 1.8 percent the month before. As such, core inflation continues to remain below the Federal Reserve’s stated goal of 2 percent at the annual rate, which it has now done for 21 consecutive months. Overall, these trends mirror the producer price index data released earlier in the week.

Lower energy costs have helped to decelerate pricing pressures, with petroleum costs down sharply since June. The energy component of CPI has fallen 9.0 percent since June, for instance, with gasoline costs down 14.3 percent. Indeed, we have seen the average price of regular gasoline decline from $3.64 a gallon during the week of June 23 to $2.50 a gallon this week, according to the Energy Information Administration. (continue reading…)

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