Tag

FOMC

Monday Economic Report – December 14, 2015

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

NAM manufacturing outlook index - dec2015The NAM Manufacturing Outlook Index declined from 45.8 in September to 40.5 in the most recent survey, falling below the historical average for the second consecutive quarter. Nearly 60 percent of respondents were either somewhat or very positive about their own company’s outlook, a sharp decline from the 91.2 percent who said the same thing one year ago. Manufacturers continue to wrestle with global headwinds and lower commodity prices, which likely dampened enthusiasm in this report, especially regarding export expectations, with roughly 58 percent suggesting that their firms were negatively impacted by the global slowdown. Capital spending and hiring plans pulled back materially from the prior survey, which we also saw in the latest job openings numbers. On the positive side, manufacturing leaders anticipate 1.4 percent growth in sales and production over the next 12 months. While this pace remained well below the 4.5 percent pace observed in December 2014, it does suggest that activity remains positive, albeit less than desired.

The top business challenge was an unfavorable business climate, cited by 77.3 percent of manufacturing respondents. Indeed, manufacturers continue to be frustrated with the lack of comprehensive tax reform and with a perceived regulatory assault on their businesses. Rising health care and insurance costs were also a major concern, cited by 72.2 percent as a primary challenge. Manufacturers see health insurance costs increasing eight percent over the next 12 months. Small and medium-sized firms anticipate health insurance premiums to jump faster in the next year than large manufacturers do, with rates rising 8.6 percent and 6.5 percent, respectively.
Read More

Manufacturing Production Has Declined in Three of the Past Four Months

By | General | No Comments

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. Read More

Second Quarter Real GDP Revised Sharply Higher, up from 2.3 Percent to 3.7 Percent Growth

By | General | No Comments

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.  Read More

Producer Prices Were Higher in June, Extending the Gains Seen in May

By | Economy | No Comments

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. Read More

Monday Economic Report – June 22, 2015

By | Economy, General | No Comments

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. Read More

The Federal Reserve Downgraded its Forecast for 2015, Maintained its Existing Policies for Now

By | Economy | No Comments

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.

Read More

Monday Economic Report – May 26, 2015

By | Economy | No Comments

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

The minutes of the April 28–29 Federal Open Market Committee (FOMC) meeting highlighted the nuance that many of us see in the economy right now. The Federal Reserve highlighted a number of challenges facing consumers and businesses in the early months of 2015, noting how these headwinds have dampened overall activity year-to-date. On the other hand, the FOMC felt that slowing economic growth was largely due to “transitory factors,” with its outlook mostly unchanged for the rest of this year. The Federal Reserve projects growth of 2.3 to 2.7 percent in 2015, and it expects the unemployment rate to fall to 5.0 to 5.2 percent.   Read More

Monday Economic Report – May 4, 2015

By | General | No Comments

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. Read More

Monday Economic Report – April 20, 2015

By | Economy, General | No Comments

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. Read More

Monday Economic Report – March 23, 2015

By | Economy | No Comments

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. Read More