Here is the summary for this week’s Monday Economic Report:
Manufacturing activity in the United States has accelerated in the past few months, with several indicators reflecting a pickup in sales, output and shipments. The Institute for Supply Management’s (ISM) Purchasing Managers’ Index (PMI) increased from 55.4 in July to 55.7 in August, with strong growth in new orders and production. This was the third consecutive month of expanding activity—a sign that the sector has begun to rebound from softness during the spring. Still, hiring growth remained more modest, and several sample comments tended to echo a cautious tone in contrast to the more optimistic data. This morning, we will release the results of the NAM/IndustryWeek Survey of Manufacturers, which support many of these findings. Our members have a slightly improved business outlook, but we are still not seeing the robust growth that we had at the beginning of 2012. We will discuss more of the survey’s highlights in next week’s report.
August’s jobs numbers continued to be disappointing, even though manufacturers added 14,000 additional workers on net. Revisions cut the number of manufacturing jobs in June and July by 14,000, negating August’s gains. The good news was that August’s gains followed five straight months of declining employment. Nonetheless, the sector has added just 20,000 net new workers over the past 12 months, or less than 1 percent of all nonfarm payroll workers created over the past year. We hope the increases in manufacturing production will yield additional hiring moving forward—something that might require stronger economic growth both domestically and globally.
On the export front, the trade deficit widened from $34.54 billion in June to $39.15 billion in July, mainly due to higher goods imports. Despite the increased deficit, July’s figure was in line with the 2013 average of $39.94 billion. Manufactured goods exports have grown frustratingly slow so far this year, up just 1.6 percent through the first seven months. Europe’s challenges are a major factor in this easing. Europe’s economy appears to be stabilizing, with the Markit Eurozone Manufacturing PMI expanding for the second consecutive month (following 23 straight months of contraction). We have seen modest gains in exports with our major trading partners otherwise, but these gains have still not been as large as past years.
The next Global Manufacturing Economic Update, which will be released on Friday, will delve deeper into international trends. Also this week, we will get the latest data on consumer and small business confidence, job openings, producer prices, retail sales and wholesale trade.
Chad Moutray is the chief economist, National Association of Manufacturers.