The Federal Reserve Bank of Philadelphia said that manufacturing activity expanded at its fastest pace in 26 months, continuing to accelerate as we begin 2017. The composite index of general business activity rose from 19.7 in December to 23.6 in January, its highest level since November 2014. In addition, sentiment has now expanded for six consecutive months, improving from broad-based weaknesses in late 2015 and early 2016. Growth in new orders (up from 14.9 to 26.0) also rose strongly, with 41.4 percent of respondents noting increased sales for the month, up from 31.6 percent in the prior release. At the same time, shipments (down from 21.7 to 20.5) and hiring (up from 3.6 to 12.8) were also encouraging, albeit with a slight easing in the former. Read More
The Census Bureau said that private manufacturing construction spending remained weak in November, falling to an 11-month low. The value of construction put in place in the sector declined from $73.53 billion in October to $72.71 billion in November, down 1.1 percent for the month. While manufacturing construction has largely trended higher over the past few years, activity has stalled more recently as the sector has grappled with sluggish growth and economic and political anxieties. Along those lines, construction activity in the manufacturing sector has pulled sharply lower since achieving the all-time high of $82.15 billion in September 2015. Over the past 12 months, manufacturing construction spending has fallen 8.0 percent. Read More
The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) accelerated to a two-year high in December. The composite index rose from 53.2 in November to 54.7 in December, its highest level since December 2014. It was the second consecutive increase in the headline number, mirroring the jump in business confidence seen in other economic indicators since the election. Indeed, all of the sample comments provided by the ISM echoed the improvement in activity and outlook, with the comments of one plastics of rubber products manufacturer summing up the thoughts of many: “Our business remains strong, and we are seeing continued growth.” Along those lines, respondents also cited a tight labor market and a pickup in inflationary pressures, both of which would also be consistent with stronger demand and output.
Looking more closely at the data, the underlying figures were encouraging in December, including very healthy gains for new orders (up from 53.0 to 60.2) and production (up from 56.0 to 60.3). It was the first time both of these measures have exceeded 60—signifying strong expansions—in 25 months, or since November 2014. Growth in export sales (up from 52.0 to 56.0) and employment (up from 52.3 to 53.1) also improved for the month. Read More
The Federal Reserve Bank of Philadelphia reported that manufacturing activity expanded at its fastest pace in 25 months, expressing post-election optimism in its latest survey. The composite index of general business activity soared from 7.6 in November to 21.5 in December, its highest level since November 2014. In addition, sentiment has now expanded for five consecutive months, improving from weaker data earlier in the year. With that said, the underlying data were mixed, but still encouraging. Growth in new orders eased somewhat (down from 18.6 to 13.9), whereas shipments accelerated (up from 19.5 to 22.0), with both variables expressing relatively strong expansions. Read More
The Empire State Manufacturing Survey said that manufacturing activity grew at its fastest pace in eight months in December, expanding for the second straight month. The composite index of general business conditions increased from 1.5 in November to 9.0 in December. As such, sentiment among manufacturers in the New York Federal Reserve Bank’s district has jumped post-election, expanding modestly and improving from weaknesses seen in the autumn months. This can be seen in some of the underlying data points, as well, especially new orders (up from 3.1 to 11.4). Indeed, the percentage of respondents suggesting that their sales rose in the month increased from 29.4 percent in November to 38.5 percent in December. Shipments (unchanged at 8.5) figures were also encouraging. Read More
The Census Bureau said that new factory orders rose 2.7 percent in October, the fourth straight monthly gain and its fastest pace of monthly growth since June 2015. Yet, the jump in October came largely from a big boost in aircraft sales, with transportation equipment orders up 12.0 percent. Excluding transportation, new orders for manufactured goods increased 0.8 percent. Over the longer term, new factory orders have started to stabilize on a year-over-year basis, up 1.3 percent since October 2015 but improving from a negative year-over-year position in August. Nonetheless, new orders for manufacturing goods excluding transportation have risen just 0.5 percent over the past 12 months. This suggests still-soft demand in the broader manufacturing sector, even as this was the first positive year-over-year reading since October 2014. Read More
The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) rebounded once again in November, growing at a five-month high. The composite index rose from 51.9 in October to 53.2 in November, expanding for the third straight month. This is encouraging for a sector that has seen subpar growth over much of the past two years on global headwinds and economic anxieties. Indeed, manufacturing production (up from 54.6 to 56.0) in November expanded at its fastest clip since July 2015, with new orders (up from 52.1 to 53.0) also accelerating slightly. Exports (down from 52.5 to 52.0) and employment (down from 52.9 to 52.3) slowed a little for the month but remained positive, with hiring expanding for only the third time this year so far.
Overall, manufacturers appear to be more upbeat in their assessments of the economy and about demand. The sample comments tend to echo this. One computer and electronic products leader reported, “Strong manufacturing numbers in anticipation of strong year-end bookings.” Other comments also mirrored that positive trend, describing activity as “steady” or “consistent” or “good.” Read More
The Census Bureau said that new durable goods orders jumped 4.8 percent in October. New orders rose from an upwardly revised $228.4 billion in September to $239.4 billion in October. On a year-over-year basis, sales have increased 2.1 percent since October 2015, up from $234.5 billion. However, the data have been skewed by volatility in the transportation equipment segment. In October, transportation equipment orders soared 12.0 percent higher on strong sales for defense and nondefense aircraft and parts. Excluding transportation, new orders for durable goods increased 1.0 percent in October, but over the past 12 months, growth in activity has been more minimal, up just 0.3 percent.
Therefore, even with the healthy gains in demand seen in October, new orders growth for durable goods continue to be quite weak on a year-over-year basis, highlighting lingering challenges in the sector. Along those lines, core capital goods orders (or nondefense capital goods excluding aircraft) increased 0.4 percent in October, but have fallen 4.0 percent over the past 12 months. Read More
The Richmond Federal Reserve Bank said that manufacturing activity in its district rebounded modestly in November after contracting in four of the prior five months. The composite index of general business activity increased from -4 in October to 4 in November. The shift in this month’s report came largely from better new orders (up from -12 to 7) data, with shipments (down from 2 to 1) also expanding ever-so-slightly. At the same time, there are lingering weaknesses seen in indices for the backlog of orders (down from -11 to -12) and capacity utilization (up from -5 to -1). Beyond those measures, the labor market data were promising. Hiring (up from 3 to 5) accelerated for the second consecutive month, and the average workweek (up from -3 to 4) widened again. Read More
The Kansas City Federal Reserve Bank said that manufacturing activity slowed in November but continued to expand ever-so-slightly. The composite index of general business conditions declined from 6 in October to 1 in November; yet, it was also the third straight month with this measure positive after two years of struggles. Indeed, manufacturers in the district have faced tremendous challenges due to global headwinds and reduced commodity prices, especially for crude oil. The underlying data in November mirrored the headline figure, with easing expansions for new orders (down from 14 to 6), production (down from 18 to 9) and shipments (down from 20 to 7). Export growth (down from 3 to zero) was stagnant in November after slightly improving in October for the first time since January. Read More