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
The Census Bureau said that new durable goods orders fell sharply in June on reduced aircraft sales and broader weaknesses. New orders dropped from $229.0 billion in May to $219.8 billion in June, a decline of 4.0 percent. Moreover, on a year-over-year basis, sales have decreased by 6.4 percent since June 2015. This highlights the ongoing challenges in the sector over the course of the past 12 months or more. With that said, much of the decline in activity in June came from lower nondefense and defense aircraft orders, down 58.8 percent and 7.4 percent for the month, respectively. Note that airplane orders can often be choppy from month-to-month, especially for nondefense sales, with transactions often centering around large trade shows. Excluding transportation equipment, new orders for durable goods were off by 0.5 percent in June, with 3.6 percent decreases year-over-year. This indicated broader weaknesses in the sector, even if the declines were more modest than the headline number suggests.
Looking more closely at the various durable goods sectors, the data were mostly lower in June. The exceptions were motor vehicles and parts (up 2.6 percent) and electrical equipment and appliances (up 0.8 percent), both of which notched some gains. Those increases, however, were not enough to offset declining new orders aircraft sales, as noted above, and for computers and electronic products (down 2.2 percent), primary metals (down 1.3 percent), fabricated metal products (down 0.3 percent) and machinery (down 0.1 percent).
Meanwhile, durable goods shipments increased by 0.4 percent in June, rebounding from the 0.3 percent decrease seen in May. Nonetheless, the higher figure in this release was boosted by motor vehicles (up 2.7 percent), with transportation equipment orders up 1.4 percent for the month. Excluding transportation, shipments of durable goods declined by 0.2 percent. Indeed, the sector-by-sector breakdowns were mixed, but mostly negative. Shipments fell for fabricated metal products (down 0.7 percent), machinery (down 0.4 percent), electronic equipment and appliances (down 0.2 percent), computers and electronic products (down 0.1 percent) and other durable goods (down 0.1 percent). Beyond automobiles, other segments with higher orders in June were communications equipment (up 6.0 percent) and (primary metals (up 0.8 percent).
Since June 2015, durable goods shipments have fallen 2.0 percent, with a decline of 3.2 percent when transportation equipment were excluded.
The Richmond Federal Reserve Bank said that manufacturing activity in its district improved in July after weakening once again in June. The composite index of general business activity rebounded from -10 in June, its lowest reading since January 2013, to 10 in July. Indeed, the underlying data recovered across-the-board in this report, including new orders (up from -17 to 15), shipments (up from -8 to 7), capacity utilization (up from -11 to 3) and the average workweek (up from -7 to 1). In addition, manufacturers in the region accelerated their employment growth (up from 1 to 6) somewhat. Each of these indices were encouraging. Yet, this report has been highly volatile so far this year from month-to-month, with the headline number ranging from -10 in June to 17 in March. Hopefully, the expansion seen in July can be sustained moving forward. Read More
The Dallas Federal Reserve Bank said that manufacturing activity in its Texas district stabilized somewhat in July, even as sentiment has now contracted for 19 straight months. The composite index of general business conditions increased from -18.3 in June to -1.3 in July, bringing this measure closer to neutral territory. This shift was mirrored by better production (up from -7.0 to 0.4), capacity utilization (up from -9.3 to 0.3), shipments (up from -8.6 to 0.1) and capital expenditures (up from -2.1 to 4.8), with each index expanding slightly in July. As such, this release represented some progress for a state that has grappled with lower energy prices and the strong dollar over the past couple years. Read More
The Federal Reserve Bank of Philadelphia said that manufacturing sentiment in July contracted for the third time in the past four months (or the ninth time in the past 11 months). The composite index of general business activity declined from 4.7 in June to -2.7 in July. It is likely that post-Brexit worries negatively impacted assessments about the broader economy. Despite a decrease in the headline number, many of the underlying data points improved for the month. For instance, both new orders (up from -3.0 to 11.8) and shipments (up from -2.1 to 6.0) returned to expansion territory in July, which was encouraging. Indeed, the percentage of respondents suggesting that orders had increased for the month rose from 20.6 percent in June to 27.6 percent in July, with those noting declining sales dropping from 23.6 percent to 15.8 percent. Read More
The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) said that manufacturing activity grew at its fastest pace in 14 months. The composite index rose from 51.3 in May to 53.2 in June. Strong growth in new orders (up from 55.7 to 57.0) and production (up from 52.6 to 54.7) helped to boost the headline number by more than expected. Notably, exports (up from 52.5 to 53.5) also improved in this report, which was encouraging given recent struggles in increasing demand abroad. More importantly, this was the fourth consecutive month with manufacturing activity expanding, signaling some stabilization in the sector after five months in contraction in the months prior to that. Read More
The Richmond Federal Reserve Bank said that manufacturing activity in its district continued to decline in June, falling for the second straight month. The composite index of general business activity decreased from -1 in May to -7 in June, its lowest reading since January 2013. The underlying data reflecting continuing weaknesses across-the-board, even with some easing in the pace of decline for shipments (up from -8 to -3). New orders (down from zero to -14), the backlog of orders (down from -13 to -17), capacity utilization (down from -6 to -10), the average workweek (down from 6 to -4) and hiring (down from 4 to -1) each contracted at a faster rate. It is notable that this report reflected renewed softness in the labor market in June, which had notched some stabilization in May. Read More
The Dallas Federal Reserve Bank said that manufacturing activity in its Texas district has now contracted for 18 straight months. The composite index of general business conditions edged somewhat higher, up from -20.8 in May to -18.3 in June, but with sentiment remaining sufficiently negative for the month. Still-low crude oil prices and a strong U.S. dollar continue to hamper economic growth in the region, as noted in the sample comments. Indeed, in a special question, 46.2 percent of respondents said that lower energy prices have had a negative impact on their business, with one-third noting a positive impact and 20.8 percent suggesting no impact.
Looking more specifically at the June data, key indicators were negative across-the-board, even with some of them easing a bit in this report. That included new orders (up from -14.9 to -14.2), production (up from -13.1 to -7.0), shipments (up from -11.5 to -8.6), capacity utilization (up from -11.0 to -9.3), employment (down from -6.7 to -11.5) and capital expenditures (up from -6.6 to -2.1). Just over 34 percent of those completing the survey said that new orders had declined in June, with 19.9 percent stating increased sales and 45.9 percent noting no change. Read More
The Kansas City Federal Reserve Bank said that manufacturing activity expanded slightly for the first time since January 2015. The composite index of general business conditions rose from -5 in May to 2 in June. New orders (up from -3 to 4), production (up from -11 to 12), shipments (up from -6 to 10) and the average workweek (up from -15 to 1) were all better in this month’s report, with each measure shifting into positive territory after several months of contraction. Yet, it was not all good news, with lingering challenges still present. Along those lines, hiring (up from -13 to -4), the backlog of orders (up from -19 to -3) and exports (up from -8 to -1) continued to decrease, albeit with some easing in June in the rate of decline in this release. In addition, the sample comments suggest that respondents remain cautious in their outlook, stressing ongoing challenges in the marketplace. Read More