The Empire State Manufacturing Survey reported that manufacturing activity contracted for the third consecutive month in October. The composite index of general business conditions declined from -2.0 in September to -6.8 in October. Many of the underlying data points continued to reflect softness in the New York Federal Reserve Bank’s district, with negative readings once again despite some easing in the rate of decline, including new orders (up from -7.5 to -5.6), shipments (up from -9.4 to -0.6), employment (up from -14.3 to -4.7) and the average workweek (up from -11.6 to -10.4). Indeed, 32.3 percent of respondents said orders fell in October, compared to 26.7 percent noting increases. On the employment front, 65.1 percent of manufacturers were holding firm with hiring in October, with 15.1 percent adding more workers and 19.8 percent reducing the size of their workforce. Read More
The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) rebounded in September after unexpectedly contracting in August. The composite index rose from 49.4 in August to 51.5 in September, expanding for the sixth time in the past seven months. This was encouraging news, and a sign that the August reading were a bit of an outlier. Indeed, new orders (up from 49.1 to 55.1) recovered strongly, with modest growth in production (up from 49.6 to 52.8) and exports (down from 52.5 to 52.0). Despite the easing in exports, international demand has expanded for seven consecutive months. The sample comments also tended to echo the better data in September, even as respondents continued to cite ongoing challenges. Read More
The Census Bureau said that new durable goods orders remained weak in August, continuing a trend that we have seen over the past year or so. New orders dropped from $227.0 billion in July to $226.9 billion in August, essentially unchanged for the month. Moreover, on a year-over-year basis, sales have decreased by 1.3 percent since August 2015. This highlights the ongoing challenges in the sector, including global headwinds and ongoing economic anxieties.
With that said, the headline number received a bit of a boost from transportation equipment orders in August, which were up 0.6 percent largely on stronger demand for autos and defense aircraft. Excluding transportation equipment, new orders for durable goods were down 0.4 percent in August and 1.1 percent year-over-year. This speaks to broader softness outside of transportation among durable goods manufacturers. So-called “core” capital goods orders (or nondefense capital goods excluding aircraft) were up 0.6 percent in August. That might be more encouraging, however, if demand for core capital goods did not decline 3.1 percent year-over-year. Read More
The Richmond Federal Reserve Bank said that manufacturing activity in its district remained weak in September. The composite index of general business activity increased from -11 in August to -8 in September but contracted for the second straight month. Several of the underlying data points eased in the rate of decline in this report, including new orders (up from -20 to -7), shipments (up from -14 to -4) and capacity utilization (up from -19 to -11). At the same time, the labor market data were mixed. Hiring (down from 7 to -13) turned negative for the first time in three years; whereas, the average workweek (up from -4 to 1) expanded ever-so-barely in this release after narrowing in August. These findings show that manufacturers in the region continue to struggle from global headwinds and economic uncertainty. Read More
The Dallas Federal Reserve Bank said that manufacturing activity in its Texas district improved in September, even as sentiment has now contracted for 21 straight months. The composite index of general business conditions increased from -6.2 in August to -3.7 in September, bringing this measure closer to neutral territory. Despite the negative figure in the composite measure, most of the underlying data points reflected strengthening levels of growth in September. This included production (up from 4.5 to 16.7), shipments (up from 9.9 to 20.1) and capacity utilization (up from 0.9 to 13.5). On the other hand, new orders (down from 5.3 to -2.9) shrank once again in September, falling for the eighth time in the past 10 months. Read More
Manufacturing activity rebounded in the Kansas City Federal Reserve Bank’s district in September, expanding after two months of declines. The composite index of general business conditions increased from -4 in August to 6 in September, its fastest pace of growth since December 2014. Indeed, there were rather strong gains seen for new orders (up from -7 to 12), production (up from -7 to 15) and shipments (up from -4 to 16) to support the improved sentiment seen in this survey’s headline number. To be fair, though, the sector also continues to have a number of challenges. Most notably, that includes exports (up from -10 to -4), which contracted for the eighth consecutive month. Manufacturers in the Kansas City region – not unlike their peers in other districts – have had to grapple with a strong U.S. dollar and weaknesses abroad, both of which have dampened international demand.
The labor market data were mixed. On the one hand, hiring activity (up from -10 to -3) remains soft, even with some easing in the rate of decline in September. The index for the number of employees has been negative now for 21 straight months. At the same time, employers appear to be expanding hours worked (up from 4 to 5), with that measure positive for the fourth consecutive report. Sample comments tended to highlight challenges with attracting new talent, highlighting the skills gap seen in the sector.
Meanwhile, manufacturers continue to be somewhat upbeat about the next six months. The forward-looking composite index edged down from 11 to 10, but it has now been positive each month since April. At least 40 percent of respondents expect sales and output to grow moving forward, which is somewhat promising. Yet, those completing the survey were also less hopeful for hiring, capital spending and export growth over the next six months, showing how cautious business leaders are right now, with expected growth remaining negative.
The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) unexpectedly contracted in August for the first time since February. The composite index dropped from 52.6 in July to 49.4 in August. A couple of the sample responses cited a “flat” business environment for the month. Indeed, new orders (down from 56.9 to 49.1) and production (down from 55.4 to 49.6) both shifted from decent growth in July to decreased activity in August, with employment (down from 49.4 to 48.3) remaining in negative territory for the second straight month.
Overall, this is a disappointing result, as it temporary suspends the narrative that manufacturing was beginning to stabilize after weaknesses seen earlier in the year. Yet, more than anything, this report shows that the sector’s challenges continue to linger even as other data have been more promising. One positive take way was exports (unchanged at 52.5), which have expanded now for six straight months. Read More
The Dallas Federal Reserve Bank said that manufacturing activity in the Texas district was mixed in August. The composite index of general business conditions pulled further lower, down from -1.3 in July to -6.2 to August. This measure has now been in contraction territory for 20 straight months, with the region continuing to be challenged by still-low crude oil prices and a strong U.S. dollar. With that said, several of the underlying data points were more encouraging, including new orders (up from -8.0 to 5.3), production (up from 0.4 to 4.5), capacity utilization (up from 0.3 to 0.9) and shipments (up from 0.1 to 9.9). Along those lines, the percentage of respondents saying that their sales had increased for the month rose from 22.4 percent in July to 28.9 percent in August, with roughly 48 percent noting no change. Read More
The Census Bureau said that new factory orders fell for the second straight month in June, down 1.5 percent in this report after being off by 1.2 percent in May. With that said, the decline mainly stemmed from volatility in aircraft sales, which can experience wide swings from month to month. Excluding transportation equipment, factory orders rose 0.4 percent in June. New orders for manufactured goods have been quite weak over the past 12 months, with a year-over-year decline of 5.6 percent. Excluding transportation, new factory orders were off 4.4 percent since June 2015. This suggests broader softness for manufacturers in terms of demand, perhaps highlighting why business leaders in the sector continue to be so cautious. Read More
After slightly expanding for the first time since January 2015 in June, manufacturing activity in the Kansas City Federal Reserve Bank’s district contracted once again in July. The composite index of general business conditions dropped from 2 in June to -6 in July. This region has been challenged for much of the past two years by pullbacks in the energy sector and the stronger U.S. dollar, and the sample comments suggest that post-Brexit anxieties might have lowered sentiment in this release’s data. New orders (down from 4 to -5), production (down from 12 to -15) and shipments (down from 10 to -17) all returned to negative territory for the month. One-third of all respondents saying that their sales were lower in July, with 28 percent suggesting that sales were higher and 37 percent noting no change. At the same time, the rate of decline somewhat for both hiring (down from -4 to -5) and exports (down from -1 to -7). Interestingly, the average workweek (up from 1 to 7) widened in this report. Read More