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manufacturing activity

Kansas City Fed: Manufacturing Activity Rebounded a Little in August

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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.

ISM

ISM: Manufacturing Activity Unexpectedly Contracted in August for First Time Since February

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

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

regional Fed

Dallas Fed: Manufacturing Conditions Mixed in August

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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

Factory Orders Fell for the Second Straight Month in June, Largely on Volatility in Aircraft Sales

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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

regional Fed

Kansas City Fed: Manufacturing Activity Contracted Again in July

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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

durable goods

New Durable Goods Orders Fell Sharply in June on Reduced Aircraft Sales and Broader Weaknesses

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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.

Richmond Fed: Manufacturing Activity Improved in July after a Weak June

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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

Dallas Fed: Manufacturing Conditions Stabilized Somewhat in July, but Continued to Contract

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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

Philly Fed: Manufacturing Activity Improved Despite Another Contraction in the Composite Index

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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

ISM

ISM: Manufacturing Activity Expanded at Fastest Pace in 16 Months in June

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

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