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Monday Economic Report

Monday Economic Report – December 14, 2015

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

NAM manufacturing outlook index - dec2015The NAM Manufacturing Outlook Index declined from 45.8 in September to 40.5 in the most recent survey, falling below the historical average for the second consecutive quarter. Nearly 60 percent of respondents were either somewhat or very positive about their own company’s outlook, a sharp decline from the 91.2 percent who said the same thing one year ago. Manufacturers continue to wrestle with global headwinds and lower commodity prices, which likely dampened enthusiasm in this report, especially regarding export expectations, with roughly 58 percent suggesting that their firms were negatively impacted by the global slowdown. Capital spending and hiring plans pulled back materially from the prior survey, which we also saw in the latest job openings numbers. On the positive side, manufacturing leaders anticipate 1.4 percent growth in sales and production over the next 12 months. While this pace remained well below the 4.5 percent pace observed in December 2014, it does suggest that activity remains positive, albeit less than desired.

The top business challenge was an unfavorable business climate, cited by 77.3 percent of manufacturing respondents. Indeed, manufacturers continue to be frustrated with the lack of comprehensive tax reform and with a perceived regulatory assault on their businesses. Rising health care and insurance costs were also a major concern, cited by 72.2 percent as a primary challenge. Manufacturers see health insurance costs increasing eight percent over the next 12 months. Small and medium-sized firms anticipate health insurance premiums to jump faster in the next year than large manufacturers do, with rates rising 8.6 percent and 6.5 percent, respectively.
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Monday Economic Report – June 29, 2015

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Here is the summary for this week’s Monday Economic Report:

Last week, there were several reminders that the manufacturing sector has not recovered fully from economic weaknesses earlier in the year, even as business leaders remain cautiously optimistic about activity in the coming months. Durable goods orders declined 1.8 percent in May, extending April’s 1.5 percent decrease. Much of this softness stemmed from reduced aircraft sales, with orders excluding transportation modestly higher. Nonetheless, durable goods demand has been quite weak for much of the past year. On the positive side, we would expect stronger durable goods orders in the June data, with the recent Paris Air Show lifting aircraft sales, and the broader measure, which excludes transportation, has edged marginally higher over the past three months. We hope that this is the start of a rebound. Read More

Monday Economic Report – June 22, 2015

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Here is the summary for this week’s Monday Economic Report: 

Last week, one media outlet reported that manufacturing has been in a “technical recession” for the past six months. I am more hesitant to use the R-word to describe the sector’s performance year-to-date, and in my view, this description somewhat overstates the significance of broader market trends, particularly for expectations moving forward. At the same time, manufacturing production has declined since late last year, as illustrated in the graphic below. A number of significant economic headwinds have reduced output in four of the past six months, reducing the year-over-year pace of growth in the sector from 4.5 percent in November to 1.8 percent in May. Capacity utilization has also declined for five consecutive months, down from 78.1 percent in December to 77.0 percent in May. Read More

Monday Economic Report – June 15, 2015

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Here are the files for this week’s Monday Economic Report: 

Manufacturers and other businesses came into this year with a lot of optimism, particularly given robust growth in the second half of last year. Instead, economic growth has been disappointing year-to-date. A number of significant headwinds have challenged the sector, including a stronger dollar, lower crude oil prices, the residual effects of the West Coast ports slowdown and cautiousness in consumer spending. Much of this can be seen in recent GDP and production figures, which have reflected recent declines in activity, particularly in the first quarter. Read More

Monday Economic Report – June 8, 2015

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Here is the summary for this week’s Monday Economic Report: 

The Federal Reserve’s Beige Book reported that the economy expanded modestly in its recent assessment. More importantly, it said that activity for manufacturers “held steady or increased over the reporting period” in all of its regions except for the Dallas and Kansas City districts. Those two regions have been rocked by lower crude oil prices and sluggish export growth in particular. Yet, beyond those challenges, the Federal Reserve noted some improvements in retail spending (especially for motor vehicles), housing and employment. Despite this mostly upbeat economic analysis, the Federal Reserve is keenly aware of the challenges that exist in the marketplace, as noted in the minutes of the most recent Federal Open Market Committee meeting. Indeed, data released last week continue to reflect a softer-than-desired level of activity in many areas, even as manufacturers might remain cautiously optimistic about the future and some of the measures rebounded somewhat. Read More

Monday Economic Report – June 1, 2015

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Here is the summary for this week’s Monday Economic Report: 

The U.S. economy shrank in the first quarter for the second year in a row, with revised data showing that real GDP declined by 0.7 percent. This was down from an earlier estimate of 0.2 percent growth. Overall, this was a disappointing start to 2015. That is particularly true when you look at the optimism that many businesses had at the start of the year. Yet, manufacturers faced a number of significant headwinds in recent months, including weaknesses abroad, a strong U.S. dollar, lower crude oil prices, the residual effects of the West Coast ports slowdown, bad weather in some regions of the country and a still-cautious consumer. Read More

Monday Economic Report – May 26, 2015

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Here is the summary for this week’s Monday Economic Report:

The minutes of the April 28–29 Federal Open Market Committee (FOMC) meeting highlighted the nuance that many of us see in the economy right now. The Federal Reserve highlighted a number of challenges facing consumers and businesses in the early months of 2015, noting how these headwinds have dampened overall activity year-to-date. On the other hand, the FOMC felt that slowing economic growth was largely due to “transitory factors,” with its outlook mostly unchanged for the rest of this year. The Federal Reserve projects growth of 2.3 to 2.7 percent in 2015, and it expects the unemployment rate to fall to 5.0 to 5.2 percent.   Read More

Monday Economic Report – May 18, 2015

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Here is the summary for this week’s Monday Economic Report:

One of the larger headlines of the past week was the renewed strength of the euro, which closed at $1.1449 on Friday. To put that exchange rate in perspective, the euro traded for $1.0582 on April 13, and Friday’s close was the highest level for the euro since February 2. To be fair, the U.S. dollar remains strong against the euro, up 17.8 percent since May 6, 2014. Yet, the recent weakness in the dollar (and strength in the euro) has been the result of weaker-than-expected economic data in the United States and better-than-anticipated numbers coming out of Europe. Many of the underlying long-term fundamentals in these two regions remain the same, but those manufacturers worried about the negative impact of a soaring dollar got some welcome relief last week in the recent easing of the greenback. Read More

Monday Economic Report – May 11, 2015

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Here is the summary for this week’s Monday Economic Report: 

Once again, there was evidence last week that significant headwinds have dampened activity in the manufacturing sector. The sector added just 1,000 net new workers in April, marking the third consecutive month with soft hiring. The data suggest that challenges from a strong dollar, slowing growth abroad, lower crude oil prices, residual effects from the West Coast ports slowdown, a cautious consumer and weather have combined to take their toll on the economy, at least for the time being. Read More

Monday Economic Report – May 4, 2015

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Here is the summary for this week’s Monday Economic Report: 

The U.S. economy stagnated in the first quarter, with real GDP growing by just 0.2 percent. This compares to a consensus estimate of 1.1 percent, and it was lower than the 5.0 percent and 2.2 percent growth rates observed in the third and fourth quarters of 2014, respectively. As one might expect from a data point that is just shy of zero, the underlying contributions to growth were mixed. Net exports and government spending were drags on activity in the first quarter, particularly with headwinds from a stronger dollar. Consumer spending on goods and nonresidential fixed investment were also weak, with the latter experiencing sharp declines stemming from the energy market and its supply chain. The bright spots—to the extent that you could call them that—were service-sector spending and a rebound in inventories. Read More