Tag: nondurable goods

California’s Manufacturing Sector Expected to Improve in the Second Quarter

Manufacturing activity in California is expected to improve in the second quarter, according to the A. Gary Anderson Center for Economic Research at Chapman University. The composite purchasing managers’ index (PMI) increased from 56.2 in the first quarter (January) to 58.5 in the second quarter (April). Indeed, manufacturers largely anticipate increased paces for production (up from 60.5 to 64.4) and new orders (up from 55.8 to 60.9). Roughly half of the respondents in the survey said that they thought sales and output would be higher in the second quarter.

Employment growth remained soft (down from 55.6 to 53.3). Looking at the specific responses, 24.1 percent felt that their employment levels would increase in the second quarter, with 11.4 percent saying that it would be lower. However, the bulk of responses (64.5 percent) said that their hiring levels would be unchanged for the quarter. One positive, of course, was that net hiring was positive, albeit only modestly so.

The PMI for nondurable goods (up from 56.7 to 58.2) advanced more than the one for durable goods industries (up from 58.1 to 58.3), which increased only marginally. Each was lower than it was one year ago, however, when durable and nondurable goods firms had index values of 60.3 and 60.9, respectively.

Overall, these data show that manufacturers in California see demand and production picking up this quarter. That is a good thing, but it is also worth noting that the pace of growth remains below the pace observed in mid-2013. Moreover, manufacturers in Orange County were less positive this quarter than in the last (down from 64.1 to 58.5) on slower new order and employment growth.

Chad Moutray is the chief economist, National Association of Manufacturers.

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)


New Factory Orders Rebounded in February from Softness in December and January

The Census Bureau said that new factory orders increased 1.6 percent in February, recovering somewhat from the sharp declines in both December and January. This was consistent with the advance data provided on durable goods the week before, with the sector rebounding from winter weather slowness. New manufactured goods orders have risen from $482.7 billion in August to $488.8 billion in February, an increase of 1.3 percent.

New durable goods orders rose 2.2 percent for the month, lifted by strong sales growth for motor vehicles and aircraft. Excluding transportation, manufacturing orders were up 0.7 percent, with durable goods edging only marginally higher in February, up just 0.1 percent. At the same time, new nondurable manufactured goods increased by 1.0 percent.

Looking specifically at new durable goods orders in February, the data were largely mixed. Areas of strength included transportation equipment (up 7.0 percent), primary metals (up 1.7 percent), fabricated metal products (up 0.4 percent), computers and electronic products (up 0.2 percent), and furniture and related products (up 0.2 percent). But, these were offset by reduced new orders for electrical equipment and appliances (down 1.3 percent) and machinery (down 1.2 percent).

Meanwhile, manufactured goods shipments were up 0.9 percent, also rebounding after lower data in both December and January. Durable and nondurable goods shipments rose 0.8 percent and 1.0 percent, respectively. On a year-over-year basis, shipments have grown from $489.5 billion in February 2013 to $493.5 billion, up 0.8 percent.

Sectors with the largest increases in monthly shipments included textile products (up 4.9 percent), petroleum and coal products (up 2.0 percent), machinery (up 1.7 percent), nonmetallic mineral products (up 1.7 percent), transportation equipment (up 1.5 percent), apparel (up 1.4 percent), and plastics and rubber products (up 1.0 percent). In contrast, there were declining shipments in the following areas: leather and allied products (down 1.6 percent), computers and electronic products (down 1.4 percent), beverage and tobacco products (down 0.7 percent), electrical equipment and appliances (down 0.5 percent), printing (down 0.3 percent), and wood products (down 0.3 percent).

Chad Moutray is the chief economist, National Association of Manufacturers.

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)


New Factory Orders Were Down for the Second Straight Month in January

The Census Bureau said that new factory orders declined for the second straight month, down 2.0 percent and 0.7 percent in December and January, respectively. This was not a surprise, particularly given the already-released estimates for durable goods orders and the recent challenges with weather. Much of the decline in January stemmed from reduced auto and defense aircraft sales. As such, new factory orders excluding transportation increased 0.2 percent, indicating a very modest rebound from the 0.1 percent decline the month before.

New durable and nondurable manufactured goods orders were both lower in January, down 1.0 percent and 0.4 percent, respectively. With that said, as noted above, durable goods excluding transportation rose 0.1 percent, indicating broader strength than the headline figure might suggest. Areas of strength in the durable goods sector included fabricated metal products (up 7.4 percent) and computers and electronics (up 3.7 percent). But, these were somewhat offset by reduced new orders for furniture and related products (down 3.6 percent), electrical equipment and appliances (down 2.2 percent), primary metals (down 1.2 percent), and machinery (down 0.7 percent).

Meanwhile, manufactured goods shipments were also lower for the second consecutive month, with declines of 0.3 percent in both December and January. Durable goods shipments were off by 0.3 percent, with nondurable goods down 0.4 percent. Negative weather influences can be seen in this data, particularly to the extent that consumers were not able to get the stores to make purchases.

Sectors with the largest declines in monthly shipments included textile products (down 11.4 percent), textile mills (down 3.8 percent), machinery (down 2.9 percent), automobiles (down 1.8 percent), apparel (down 1.0 percent), and chemical products (down 1.0 percent). In contrast, there were increased shipments observed in the following areas: electrical equipment and appliances (up 1.5 percent), nonmetallic mineral products (up 1.3 percent), food products (up 1.2 percent), computers and electronics (up 0.7 percent), and wood products (up 0.7 percent).

Chad Moutray is the chief economist, National Association of Manufacturers.

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)


Manufacturing Labor Productivity Improved in the Fourth Quarter on Stronger Output Growth

The Bureau of Labor Statistics said that labor productivity in the manufacturing sector improved in the fourth quarter on stronger output growth. Manufacturing labor productivity rose 2.0 percent in the fourth quarter, rebounding from the decline of 0.1 percent in the third quarter.

For the year as a whole, labor productivity for the sector was up a modest 2.0 percent, a slight gain over the 1.8 percent increase observed in 2012. The annual growth in 2013 stemmed largely from durable goods firms, which outpaced the labor productivity growth of nondurable goods businesses by 3.1 percent to 1.4 percent, respectively.

Labor productivity for durable goods was up a healthy 3.4 percent, buoyed by an 8.8 percent jump in output growth. This was a nice improvement from the 1.0 percent increase in labor productivity and 3.2 percent growth in output for the durable goods sector seen in the third quarter. Unit labor costs declined in both quarters, however, down 0.9 percent and 2.7 percent, respectively. We have seen durable goods unit labor costs decline 11.6 percent since the end of 2009, helping to keep these manufacturers more competitive globally.

Nondurable goods manufacturers also had productivity improvements in the fourth quarter. Labor productivity for nondurable goods firms rose 1.0 percent in the fourth quarter, up from the 0.8 percent decline observed in the third quarter. This corresponded with a recovery in output growth from a decrease of 0.8 percent in the third quarter to a gain of 4.1 percent in the fourth quarter. Nonetheless, unit labor costs were higher in both quarters, up 4.0 percent and 0.7 percent, respectively. In the fourth quarter, this was due to output growth outpacing the increase in the average number of hours worked in the nondurable goods sector.

In the larger economy, nonfarm labor productivity grew 3.2 percent in the fourth quarter, expanding upon the 3.6 percent growth notched in the third quarter. For the year as a whole, however, nonfarm productivity was a more disappointing 0.6 percent, averaging just 0.9 percent over the past three years. In the fourth quarter, output growth picked up strongly, increasing by 4.9 percent. Unit labor costs were down 1.6 percent for the quarter, but were up 1.0 percent for 2013.

Chad Moutray is the chief economist, National Association of Manufacturers.

productivity

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)


Reduced Durable Goods Sales Pushed New Factory Orders Lower in December

The Census Bureau reported a 1.5 percent decrease in new factory orders in December, essentially offsetting the 1.5 percent gain observed in November. This news was somewhat expected, particularly given the disappointing preliminary durable goods figures released the week before. Durable goods sales were down 4.2 percent in December, with fairly broad-based declines extending beyond the transportation sector. Weather and the holidays were factors in the reduced figures. In contrast, nondurable goods orders rose 1.1 percent for the month, and new manufacturing orders excluding transportation edged slightly higher, up 0.2 percent.

With the release of December data, we are now able to look at 2013 as a whole. New factory orders were up only marginally for the year, up just 0.8 percent, with a significant amount of volatility in the month-to-month numbers. On a more positive note, manufacturing sales excluding transportation increased 2.0 percent over the past 12 months, suggesting modest gains in the broader market. Similarly, new nondurable goods orders increased 1.2 percent year-over-year.

Looking specifically at the December durable goods data, the decline in new orders stemmed largely from decreases in a number of sectors. This included transportation equipment (down 9.7 percent, including a 1.5 percent decline in motor vehicles), computers and electronics products (down 6.3 percent), fabricated metal products (down 3.1 percent), and primary metals (down 2.3 percent). In contrast, electrical equipment and appliances (up 3.5 percent) and machinery (up 1.3 percent) bucked the negative trend with higher sales for the month.

Meanwhile, manufacturing goods shipments were off by 0.2 percent, with a 0.7 percent gain if you exclude the highly-volatile transportation sector. Durable goods shipments were down 1.7 percent in December, but if you exclude transportation, they would have been essentially unchanged. On the other hand, nondurable goods shipments rose 1.1 percent. For the entire year of 2013, durable goods shipments growth outpaced that for nondurable goods by 3.1 percent to 1.2 percent.

In terms of shipment changes for the month of December, the largest increases were seen in the petroleum and coal products (up 2.7 percent), textile products (up 1.7 percent), leather and allied products (up 1.6 percent), and computer and electronic products (up 1.1 percent) major sectors. At the same time, there were significant shipment declines seen in the transportation equipment (down 5.5 percent), beverage and tobacco products (down 1.9 percent), wood products (down 1.7 percent), fabricated metal products (down 1.1 percent), and nonmetallic mineral products (down 1.1 percent) sectors.

Chad Moutray is the chief economist, National Association of Manufacturers.

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)


Strong Growth in Durable Goods Sales Lifted November’s Factory Orders Higher

The Census Bureau reported that new manufactured goods orders rose 1.8 percent in November, rebounding from the 0.5 percent decline observed in October. Over the past 12 months, new factory orders have risen 4.9 percent, but that somewhat overstates the year-over-year change. This data was highly volatile for much of 2013, with large shifts in aircraft orders pushing the data up and down. Illustrating this, the year-to-date growth (from December 2012) was a more modest 2.6 percent, and November’s level of new factory orders ($497.9 billion) was not much different than what was experienced in June ($497.1 billion).

Still, even with the volatility, it is clear that new factory orders have moved higher, particularly when you look at the longer-term data. Over the past three years, new factory orders have grown 17.3 percent, up from $424.6 billion in November 2010.

Looking specifically at the November 2013 data, the increase stemmed largely from strong growth in durable goods sales, up 3.4 percent for the month. In contrast, new nondurable goods orders were up just 0.3 percent. The report reflects healthy gains in aircraft and motor vehicle orders in November, and if you exclude transportation from the analysis, the increase in durable goods sales would be a more modest 1.1 percent. Nonetheless, the broader durable goods measure reflects a slow-but-steady increase in new orders, up 3.0 percent since January and 1.9 percent over the past two months. The latter figure suggests the pace of sales has accelerated more recently, consistent with other indicators.

Outside of aircraft, durable goods sectors with the largest monthly increases in new orders in November were furniture and related products (up 5.9 percent), machinery (up 3.3 percent), motor vehicles and parts (up 2.4 percent), and computers and electronic products (up 1.8 percent). These were partially offset, though, by declines in electrical equipment and appliances (down 1.9 percent) and primary metals (down 0.5 percent).

Meanwhile, shipments of manufactured goods increased 1.0 percent, its strongest monthly gain since July. Durable and nondurable goods shipments rose 1.8 percent and 0.3 percent, respectively. Sectors with the greatest increases in November included machinery (up 4.2 percent), transportation equipment (up 2.0 percent), computers and electronic products (up 1.6 percent), furniture and related products (up 1.9 percent), petroleum and coal products (up 1.4 percent), and primary metals (up 0.8 percent).

At the same time, textile mills (down 2.1 percent), beverage and tobacco products (down 1.5 percent), apparel (down 1.1 percent), paper (down 0.9 percent), and nonmetallic minerals (down 0.4 percent) were among those major manufacturing sectors with reduced shipments for the month.

Chad Moutray is the chief economist, National Association of Manufacturers.

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)


November Personal Spending Increased Modestly Led by Strong Growth in Durable Goods

The Bureau of Economic Analysis said that personal spending growth grew 0.5 percent in November, extending the 0.4 percent gain seen in October. Consumer spending has increased 3.5 percent over the past 12 months, its fastest pace so far in 2013 and an improvement from the 2.9 percent year-over-year rate in September. Nonetheless, it is clear that personal spending growth has decelerated from the 4.1 percent pace average of 2012 to the 3.1 percent average year-to-date in 2013.

Looking specifically at the November data, the growth in personal goods spending stemmed from an increase in durable goods expenditures. Spending on durable goods increased from an annualized $1.282 trillion in October to $1.307 trillion in November. Meanwhile, purchases of nondurable goods declined in the month from $2.667 trillion to $2.657 trillion.

Both durable and nondurable goods spending continue to increase over a longer term. Six months ago (May), for instance, durable and nondurable goods purchases were $1.255 trillion and $2.585 trillion, respectively.

Meanwhile, personal income rebounded in November, rising by 0.2 percent after falling 0.1 percent in November. Much of October’s decrease had been attributable to a sharp falloff in farm proprietors’ income, which was still down in November. But, it was offset by stronger growth in wages and salaries, which increased 0.4 percent for the month. For manufacturers, total wages and salaries rose from $754.3 billion to $759.1 billion. This figure has gradually moved higher. Six months ago, wages and salaries in the sector were $744.8 billion, and they moved steadily higher from the averages of $707.1 billion and $735.4 billion in 2011 and 2012, respectively.

Perhaps disappointingly, the year-over-year pace of personal income continues to decelerate, down from 3.4 percent in October to 2.3 percent in November. In contrast to personal spending, this was the lowest annual pace of the year. Through the first 11 months of 2013, the annual pace has averaged 3.2 percent, down from the 4.2 percent rate experienced in all of 2012.

With personal spending outstripping personal income, the savings rate has fallen in each of the past two months, down from 5.1 percent in September to 4.5 percent in October to 4.2 percent in November.

Overall inflationary pressures remain minimal, with prices for personal consumption expenditures (PCE) unchanged for the second month in a row. The year-over-year rate of PCE growth was just 0.9 percent, and when you exclude food and energy, the annual rate of core PCE growth was 1.1 percent. Much as we have seen in recent consumer and producer price data, inflation remains below the Federal Reserve’s 2 percent target rate, which frees the Fed up to pursue its highly accommodative policies.

Chad Moutray is the chief economist, National Association of Manufacturers.

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)


Manufacturing Labor Productivity Dropped 0.1 Percent in the Third Quarter

The Bureau of Labor Statistics said that labor productivity for the manufacturing sector was down 0.1 percent in the third quarter, its slowest pace in one year. Beyond the headline figure, the manufacturing data were split between durable and nondurable goods sectors.

Labor productivity for durable goods firms was up 1.1 percent, boosted by output growth of 3.1 percent. Durable goods productivity was lower than what was observed in the second quarter (4.3 percent), but output increased (up from 1.4 percent). The good news was that unit labor costs for durables was down in each of the past four quarters, with unit labor costs decreasing 0.8 percent in the third quarter. Overall, we have seen an 11.0 percent decline in unit labor costs for durable goods industries since the end of 2009. This helps businesses become more competitive globally.

In contrast, labor productivity and output for nondurable goods firms were both down 1.0 percent in the third quarter. This suggests continued weaknesses for nondurable goods manufacturers, which has seen output declines in each of the past two quarters. Unit labor costs were also higher in both the second and third quarters, up 2.5 percent and 4.0 percent, respectively.

In the larger economy, nonfarm productivity grew 3.0 percent, higher than the earlier estimate of 1.9 percent. Output growth clearly picked up in the third quarter, increasing from 3.3 percent in the second quarter to 4.7 percent. Unit labor costs were down 1.4 percent in the third quarter.

Chad Moutray is the chief economist, National Association of Manufacturers.

productivity

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)


Monday Economic Report – November 18, 2013

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

In July, year-over-year growth in manufacturing production was 1.2 percent, the slowest pace of growth in output for the sector since January 2010. It was the culmination of weaknesses experienced among manufacturers since mid-2012 as global demand and domestic uncertainties weighed heavily on overall production, pushing it to disappointingly low levels. Since then, however, we have begun to see a pickup in new orders and overall sentiment. The year-over-year pace of manufacturing production was 3.3 percent in the Federal Reserve Board’s most recent industrial production report. Manufacturing output has risen 1.1 percent in just the past three months, with capacity utilization up from 75.7 percent to 76.2 percent over that time frame.

While there has been progress, some weaknesses persist for the sector. Nondurable goods production continues to lag behind durable goods, with year-over-year growth of 1.5 percent for nondurable goods firms relative to a much stronger 5.4 percent increase for durable goods. Moreover, manufactured goods exports remain slow, up 2.2 percent year-to-date through September relative to the same nine-month period in 2012. Nonetheless, this suggests some improvement from the 1.7 percent year-to-date rate that was observed through June, with declines in export levels to Europe lessening as the year progresses. Meanwhile, the overall U.S. trade deficit widened from $38.7 billion in August to $41.8 billion in September largely on higher goods imports.

Labor productivity in the manufacturing sector rose at a slower pace in the third quarter, up 0.4 percent versus the 2.7 percent gain in the second quarter. Output was higher in the third quarter, led by strong gains for durable goods businesses. Unit labor costs were down 0.4 percent for durable goods manufacturers, helping to make them more competitive globally. Unit labor costs have decreased a whopping 11.1 percent for the durable goods sector since the end of the recession. In contrast, the numbers for nondurable goods manufacturers were more challenging, with third-quarter output down 0.3 percent and unit labor costs up 3.4 percent.

The two sentiment surveys released last week were both lower. The National Federation of Independent Business’s (NFIB) Small Business Optimism Index dropped from 93.9 in September to 91.6 in October. Weaker sales growth and continuing political frustrations were key factors in the latest drop in attitudes.

Meanwhile, the Empire State Manufacturing Survey from the New York Federal Reserve Bank reported contracting activity levels in November for the first time since May, with reduced new orders and shipments and employment stalled. Despite reduced optimism about the current economic environment, manufacturers in the New York Federal Reserve district remain mostly upbeat about the next six months. Nearly half of the respondents anticipate increased new orders and shipments in the coming months, with one-third expecting to add new workers. The latter is a potentially hopeful sign, especially with so many manufacturers hesitant to hire of late. Indeed, 56.6 percent said they were not planning to change their employment levels.

This week, we will learn even more about current manufacturing activity, with new surveys from the Kansas City and Philadelphia Federal Reserve Banks. In addition, Markit will release Flash PMI survey data for the United States, China and the Eurozone. Financial markets will focus on the minutes of the Federal Open Market Committee’s meeting October 29–30, trying to glean additional insights about future monetary policy directions before the upcoming December 19–20 meeting. As such, this will build on last week’s confirmation hearing of Janet Yellen to be the next Federal Reserve Board chair, in which she mostly reiterated the need to continue the Federal Reserve’s accommodative policies. Other highlights will be new data on consumer and producer prices, existing home sales, homebuilder optimism, job postings, retail sales and state employment changes.

Chad Moutray is the chief economist, National Association of Manufacturers.

manufactured goods exports - nov2013

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)


Federal Reserve: Manufacturing Production Picked Up Modestly in October

The Federal Reserve Board said that manufacturing production edged up modestly in October by 0.3 percent. This was the third consecutive gain in manufacturing output, following 0.7 percent and 0.1 percent increases in August and September, respectively. Year-over-year growth also picked up, rising from 2.6 percent in September to 3.3 percent in October. This was a definite improvement from the softness of the spring and early summer.

This suggests that the acceleration in manufacturing activity observed in other data continued into October. This was true despite the government shutdown.

Durable and nondurable goods production each increased by 0.3 percent each in October. In both cases, this reflected an acceleration from September’s gain of 0.1 percent for durable goods and the decline of 0.4 percent for nondurable goods. Over the past 12 months, durable goods output has risen 5.4 percent, with nondurable goods production up 1.5 percent.

On a sector-by-sector basis, the largest monthly gains in manufacturing production occurred in the printing and support furniture and related products (up 1.5 percent), miscellaneous durable goods (up 1.5 percent), primary metals (up 1.1 percent), fabricated metal products (up 0.9 percent), plastics and rubber products (up 0.8 percent), and computer and electronic products (up 0.7 percent) sectors.

In contrast, there were declines in output for motor vehicles (down 1.3 percent), apparel and leather products (down 0.3 percent), electrical equipment and appliances (down 0.3 percent), nonmetallic mineral products (down 0.3 percent), petroleum and coal products (down 0.3 percent), and machinery (down 0.2 percent).

The overall industrial production data reflected weaknesses in mining and utilities output, with total production down 0.1 percent for the month. Capacity utilization also fell, down from 78.3 percent to 78.1 percent. Year-over-year growth in industrial production, however, was up 3.3 percent, mirroring the progress noted above for the manufacturing sector.

In conclusion, manufacturing activity has begun to recover from weaker production data earlier this year. Softer domestic and global demand, combined with increased governmental uncertainties, lessened business confidence and overall production data. But, since July, we have seen an acceleration in new orders and output, with year-over-year rates returning to levels not seen since last November. The key will be for policymakers to help build on these gains by pursuing pro-growth strategies and – perhaps most of all – not creating additional headwinds.

Chad Moutray is the chief economist, National Association of Manufacturers.

industrial production

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)


A Manufacturing Blog

  • Categories

  • Connect With Manufacturers

            
  • Blogroll