Tag: output

Markit: Chinese and European Economies Stalled in November

The HSBC Flash China Manufacturing Purchasing Managers’ Index (PMI) fell to neutral (50) in November, down from 50.4 in October. This was the weakest reading since Chinese respondents noted contracting levels of activity from January through May. Indeed, output contracted once again (down from 50.7 to 49.5) for the first time since May, which was not a good sign. Hiring (down from 48.9 to 48.4) was also negative for the 13th straight month. On the positive side, new orders (up from 51.2 to 51.4) edged slightly higher, and exports (down from 51.7 to 50.5) continued to expand, albeit at a much slower pace. (continue reading…)

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Industrial Production Disappoints in October

Manufacturing production rose 0.2 percent in October. At the same time, output in the sector was revised down from an original estimate of 0.5 percent in September to 0.2 percent. As such, manufacturing production has been weaker over the past three months than desired. Capacity utilization among manufacturers has also edged lower over this time frame, down 77.8 percent in July to 77.2 percent in October.

On a year-over-year basis, manufacturing production has risen 3.4 percent since October 2013. That indicates modest growth over the past 12 months, and yet, it also reflects a deceleration in the year-over-year pace since peaking in July at 4.9 percent. (continue reading…)

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Somewhat Better Manufacturing Data in China and Europe for October, But Weaknesses Persist

The HSBC Flash China PMI rose to its highest level in three months, up from 50.2 in September to 50.4 in October. It was the fifth consecutive monthly expansion in manufacturing activity in China, an improvement from the contracting activity levels experienced in the first five months of 2014. Yet, despite the better headline figure, many of the underlying data points reflect some easing in growth rates for the month, including new orders (down from 51.5 to 51.4), exports (down from 54.5 to 52.8) and output (down from 51.3 to 50.7). Hiring continued to decline but at a slower rate (up from 47.5 to 48.6).

As such, Chinese manufacturers are expanding but not by as much as we might prefer. This finding is consistent with the deceleration in other Chinese data, including real GDP, which slowed from 7.5 percent year-over-year growth in the second quarter to 7.3 percent in the third quarter. Fixed real investment (down from 16.5 percent year-over-year in August to 16.1 percent in September) and retail sales (down from 11.9 percent year-over-year to 11.6 percent) also declined. On the positive side, industrial production picked up, increasing from the year-over-year rate of 6.9 percent in August to 8.0 percent in September; yet, that remained lower than July’s 9.0 percent pace.

Meanwhile, the Markit Flash Eurozone Manufacturing PMI increased from 50.3 to 50.7. That is good news, as the September figure had been the lowest level since July 2013, when Europe first emerged from its recession. October’s reading was higher largely due to a pickup in output (up from 51.0 to 51.9) and employment (up from 50.1 to 50.6). Still, new orders (unchanged at 49.3) contracted for the second straight month, with exports (down from 51.6 to 50.5) easing. The Eurozone continues to face challenges in manufacturing, especially in terms of falling sales. The results also vary by country, with Germany (up from 49.9 to 51.8) improving somewhat, while French manufacturers  (down 48.4 to 47.6) continue to report weakness.

Closer to home, the Markit Flash U.S. Manufacturing PMI dropped slightly, down from 57.5 to 56.2. The pace of activity was down across-the-board, including new orders (down from 59.8 to 57.1), output (down from 59.6 to 58.0), hiring (down from 56.4 to 56.2) and exports (down from 54.1 to 51.9). While the index for new orders was at its lowest level since January’s 53.9 reading, it is hard to get too worked up over October’s decline for these indicators. After all, demand, production and employment continue to grow at decent rates, and manufacturers are reporting higher activity levels than earlier in the year.

Still, we would like to see better results to begin the fourth quarter, particularly for exports. Given the softness in worldwide markets, however, this weakness should not be a surprise.

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

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Manufacturing Production Rebounded in September from a Soft August

Manufacturing production increased 0.5 percent in September, offsetting the revised 0.5 percent decline observed in August. Over the past 12 months, manufacturing output has risen 3.7 percent. This was slower than the 4.7 percent pace observed in July but a nice improvement from the more-sluggish 1.5 percent rate observed in January. As such, this latest data reflects some a bit of softness in market, most notably for motor vehicles, which had a 1.4 percent decline in production in September. Still, auto sector output has expanded 5.7 percent year-over-year, continuing to make it one of the brighter spots overall.

Capacity utilization in the sector was also higher, up from 77.1 percent to 77.3 percent. On a year-over-year basis, capacity has expanded by a modest 2.1 percent.

Both durable and nondurable goods production rose 0.5 percent in September. Furniture and related products (up 2.4 percent), aerospace and other transportation equipment (up 1.7 percent), miscellaneous durable goods (up 1.6 percent), apparel and leather products (up 1.5 percent) and plastics and rubber products (up 1.2 percent) were among the leaders for production growth in the month. In contrast, sectors with declining output included motor vehicles and parts (down 1.4 percent), wood products (down 0.8 percent), nonmetallic mineral products (down 0.2 percent) and machinery (down 0.1 percent).

Meanwhile, overall industrial production jumped 1.0 percent in September, a nice gain after declining by 0.2 percent in August. Mining (up 1.8 percent) and utilities (up 3.9 percent) were up strongly for the month. Mining production, in particular, has increased significantly over the past 12 months, up 9.1 percent, largely due to the pickup in energy exploration. Total capacity utilization rose from 78.7 percent to 79.3 percent, its highest level since May 2007.

In conclusion, manufacturers have continued to be mostly upbeat about the economy. These production figures suggest that manufacturing output growth remains relatively healthy, with durable and nondurable goods production up 5.4 percent and 2.7 percent year-over-year, respectively. Each represents progress from earlier in the year (even if the durable goods figure has fallen since July).

Nonetheless, volatility in global markets and a still-cautious consumer pose downward risks moving forward, and it will be interesting to see how events play out in the coming days and weeks to see if they derail what had been a relatively positive outlook for manufacturers.

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

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Markit: Chinese Manufacturing Picks Up Slightly, While Europe’s Eases Yet Again

The HSBC Flash China Manufacturing Purchasing Managers’ Index (PMI) edged slightly higher, up from 50.2 in August to 50.5 in September. The Chinese economy nearly stalled in July, and these latest data suggest that there are some signs of stabilization. For instance, this was the fourth consecutive month with expanding manufacturing activity – an improvement from earlier in the year when demand and output were contracting. In August, growth in new orders (up from 51.3 to 52.3) and exports (up from 51.9 to 53.9) accelerated somewhat, but production growth was unchanged at 51.8. One negative continues to be employment (down from 47.4 to 46.9), with hiring contracting for 11 straight months.

If the Chinese economy has rebounded marginally in September, it would be welcome news. Industrial production plummeted from 9.0 percent year-over-year in July to 6.9 percent in August, the slowest pace since December 2008. Fixed asset investments also slowed, down from an annual rate of 17.0 percent to 16.5 percent. Nonetheless, real GDP growth improved from 7.4 percent year-over-year growth in the first quarter to 7.5 percent in the second quarter. The latest data suggest that the annual pace of growth might decelerate further, however.

At the same time, the Markit Flash Eurozone Manufacturing PMI eased yet again, down from 50.7 to 50.5. This was the lowest level observed since July 2013, the first month that the Eurozone emerged from its deep two-year recession. As such, it indicates the extent to which activity in Europe has come to a halt. New orders (down from 50.7 to 49.7) contracted slightly for the first time in 15 months. Output was unchanged at 51.0, and export sales were flat at 51.7. Hiring advanced to a neutral position (up from 49.3 to 50.0). On the closely-watched inflation measures, both input (down from 51.8 to 49.4) and output (down from 50.3 to 49.2) prices moved into negative territory.

There have been persistent worries about deflation on the continent, with the European Central Bank lowering rates recently in the hope of spurring more economic activity and additional lending. As of August, Eurozone inflation had risen just 0.3 percent over the past 12 months, prompting continued worries about deflationary pressures in the economy. The annual inflation pace is down from 1.3 percent in August 2013. Real GDP remained unchanged in the second quarter, down from 0.2 percent growth in the first quarter. Moreover, it has increased just 0.7 percent year-over-year, illustrating just how sluggish the recovery has been.

Meanwhile, the Markit Flash U.S. Manufacturing PMI was unchanged at 57.9, its fastest pace since May 2010. This report continues to show strong growth in manufacturing activity in the U.S., a sign that the sector has regained the robustness seen at the end of 2013. The pace of new orders were unchanged at 60.5, indicating healthy gains, and hiring (up from 54.6 to 56.6) accelerated to its highest level since March 2012. Production (down from 60.7 to 59.9) growth was healthy, and export orders (down from 54.4 to 53.8) expanded modestly despite a slight deceleration in each figure.

Overall, the U.S. data suggest that manufacturers remain upbeat in September about overall activity, with the sector continuing to recover from softness earlier in the year. This data is largely consistent with other indicators, as well.

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

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Monday Economic Report – September 22, 2014

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

Manufacturing production declined unexpectedly in August, led lower by reduced motor vehicle output. This drop was likely the result of automakers’ switching over to a new model year and summer vacations. Indeed, auto production has risen 8.1 percent over the past 12 months, continuing to make it one of the bright spots in the economy. Excluding autos, manufacturing output rose 0.1 percent, suggesting slightly better news for the broader sector. Still, the larger story is the accelerated pace of output seen since the winter months, with the year-over-year pace up from 1.6 percent in January to 4.0 percent in August. Durable and nondurable goods production has increased 5.6 percent and 2.2 percent year-over-year, respectively. Hopefully, the August figures reflect a brief pause before picking up again in September.

Regional sentiment surveys tend to suggest that this might be the case. The Empire State Manufacturing Survey from the New York Federal Reserve Bank said that business conditions rose at their fastest pace in nearly five years, with 46 percent of those taking the survey saying that the environment had improved in the month. At the same time, the Philadelphia Federal Reserve Bank’s Manufacturing Business Outlook Survey found healthy rates of growth in September, even as the pace pulled back slightly from very strong gains in August. Each of these two surveys reported higher levels for new orders and shipments, but they were mixed regarding hiring growth. Nonetheless, manufacturers in both districts were overwhelming upbeat about the next six months, with more than half of respondents predicting sales increases. Moreover, the Philly Fed found that a majority of those taking its survey expect production to increase in the third and fourth quarters.

Meanwhile, housing starts fell from an annualized 1,117,000 units in July to 956,000 in August. To be fair, the July figure—the second fastest pace since November 2007—was likely an outlier, and the pendulum—not unexpectedly—swung back somewhat. Yet, the slowdown in August was still disappointing. On the bright side, while single-family and multi-family unit starts and permits were both down, the highly volatile multi-family segment comprised the bulk of the decline. Looking at a longer time horizon, each has continued a slow, but steady upward trajectory. I continue to expect housing starts to be solidly at 1.1 million by year’s end. Indeed, home-builder confidence was equally optimistic about better figures moving forward, with the Housing Market Index at its highest level since November 2005.

The Federal Reserve Board provided the other major headline from last week. The Federal Open Market Committee (FOMC) began laying out its principles for winding down the extraordinary stimulus that it has pursued since the financial crisis at the end of 2008. The Fed will end its purchases of long-term and mortgage-backed securities after its October FOMC meeting, and the expectation is that short-term interest rates will begin to “normalize” at some point in 2015. The federal funds rate, however, will remain near zero for a “considerable time after the asset purchase program ends,” a statement that some suggest means that normalization will not occur until mid-2015 at the earliest. Fortunately, news that consumer and producer pricing pressures eased in August was likely welcomed at the FOMC because it takes some pressure off of the Fed to act sooner, at least for now. (Inflation has accelerated from where it was earlier in the year, but remains below the Fed’s stated 2.0 percent goal.)

In its FOMC statement, the Federal Reserve said that “economic activity is expanding at a moderate pace.” Nonetheless, it continues to worry about slack in the economy, particularly in labor markets. The Fed predicts growth this year of between 2.0 and 2.2 percent, with 2.6 to 3.0 percent real GDP growth next year. The unemployment rate is expected to fall to 5.9 or 6.0 percent by the end of 2014 and 5.4 to 5.6 percent by the end of 2015. In terms of inflation, the Fed forecasts prices growing by less than 2.0 percent over the next few years. If core inflation consistently exceeds 2.0 percent, it will give greater credence to hawks on the FOMC to increase rates sooner rather than later.

This week, we will get a sense of how manufacturing activity is faring globally with preliminary purchasing managers’ index (PMI) data from Markit for China, the Eurozone and the United States. The Chinese economy has begun to stabilize after slowing earlier in the year, but is still not growing by much. European growth has effectively come to a halt. In the United States, however, recent PMI data have reflected healthy gains in both demand and output over the summer months. We will also get new surveys from the Kansas City and Richmond Federal Reserve banks. Beyond those surveys, we will get the second revision to real GDP growth for the second quarter on Friday, with a consensus estimate of 4.3 percent growth, or just slightly higher than the previous 4.2 percent figure.

Other highlights this week include the latest data on consumer confidence, durable goods orders and shipments, and existing and new home sales.

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

housing starts and permits - sept2014

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Monday Economic Report – August 18, 2014

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

While geopolitical events continue to provide significant downside risks to the economy, recent data suggest that manufacturers in the United States are faring better this summer. Manufacturing production increased 1.0 percent in July, helping to lift the year-over-year pace of manufacturing output to 4.9 percent, its fastest annual pace since June 2012. Last month’s gain stemmed largely from increased motor vehicle production, with all but three of the major manufacturing sectors notching higher output levels for the month. At the same time, the utilization rate for manufacturers increased to 77.8 percent, nearly reaching pre-recessionary capacity levels.

Similarly, the Empire State Manufacturing Survey reflected strong growth in August, albeit less so than the robust levels observed in July. More importantly, respondents to the New York Fed’s survey were significantly more upbeat, with roughly 60 percent anticipating higher sales and output over the next six months. This study also reported that approximately 30 percent of manufacturers in its district planned to hire more workers and invest in additional capital expenditures in the coming months. This is welcome news, and it was largely consistent with the recent pickup in the labor market. Manufacturing job openings increased in June to their highest level in two years, with net hiring also accelerating. Of course, we already knew that to some extent. The most recent employment data found that manufacturers hired an additional 22,000 workers on average from May to July.

Meanwhile, the European economy has shown signs of backtracking, with real GDP in the Eurozone remaining unchanged in the second quarter. Germany’s economy contracted by 0.2 percent, helping to push the continent’s growth figure lower, but Italy (also down 0.2 percent) and France (flat for the second straight quarter) were also weak. In addition, industrial production has decreased in three of the past four months, with output unchanged year-over-year. We will get our first look at August purchasing managers’ index (PMI) data this week. The Markit Eurozone Manufacturing PMI report in July provided mixed news, with activity expanding for 13 straight months but growth continuing to ease over the course of this year. The latest data suggest that Europe’s economic challenges are still not behind them.

To some extent, that is true in the United States as well. We have seen improvements in a number of economic indicators, and yet, there are also persistent worries about future growth. Some of this could stem from global anxieties, but it could also be a function of disappointment with the lack of growth in the first half of the year. Preliminary consumer sentiment data from the University of Michigan and Thomson Reuters appears to pick up on this nuance, with Americans less confident once again in their forward-looking expectations. Indeed, retail sales data also reflect cautiousness on the part of the consumer, with spending unchanged in June.

This week, we will get additional insights about the health of the manufacturing sector worldwide. In addition to new PMI data for Europe, Markit will also release flash reports for China, Japan and the United States. While China’s economy had begun to stabilize in July, last week we learned that Japan’s real GDP contracted by 1.7 percent in the second quarter, or 6.8 percent year-over-year. Closer to home, the Federal Reserve will release the minutes of its July 29–30 Federal Open Market Committee meeting. Analysts will be looking for clues about when the Fed plans to start normalizing short-term rates. The Fed received good news last week with an easing in producer prices in July from recent highs, and this should help to alleviate some of the immediate pressure from inflation hawks, at least for now. Other highlights this week include the latest data on consumer prices, housing starts and permits, leading indicators and Philadelphia Fed manufacturing sentiment.

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

manufacturing production - aug2014

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Manufacturing Production Rose One Percent in July, with Capacity Reaching a Six-Year High

Manufacturing production increased 1.0 percent in July, its fastest pace since February’s post-weather rebound earlier in the year. The jump in output helped to lift the year-over-year pace of manufacturing production to 4.9 percent, its fastest annual rate since June 2012. As such, it illustrates the recover in output in the sector since the winter months, with the year-over-year pace up from 1.5 percent in January.

Meanwhile, manufacturing capacity utilization increased from 77.2 percent in June (and just 75.5 percent in January) to 77.8 percent in July. This suggests that utilization rates for manufacturers have nearly reached their pre-recessionary levels, with July’s rate the highest level since February 2008.

Looking at sectoral performance, durable and nondurable goods output were both higher, up 1.7 percent and 0.3 percent, respectively. The largest increase stemmed from motor vehicle production, which increased by a whopping 10.1 percent in July, recovering from being flat in June. On a year-over-year basis, motor vehicles and parts output has risen 21.9 percent. This reflected the sizable gain in 2014, but it was also a function of softness in 2013 due to the sector gearing up for a new model year.

Other sectors with notable increases in July included apparel and leather (up 1.8 percent), textile and product mills (up 1.7 percent), furniture and related products (up 1.4 percent), petroleum and coal products (up 1.3 percent), nonmetallic mineral products (up 1.0 percent), primary metals (up 1.0 percent), machinery (up 0.9 percent) and computer and electronic products (up 0.8 percent). In contrast, just 3 of the 19 major sectors had declining production for the month, and these were: miscellaneous durable goods (down 0.8 percent); food, beverage and tobacco products (down 0.3 percent); and plastics and rubber products (down 0.3 percent).

On a year-over-year basis, durable goods production has risen by a healthy 8.2 percent since July 2013, with nondurable goods output up 2.1 percent. The five sectors with the fastest growth over the past 12 months include: motor vehicles and parts (up 21.9 percent), furniture and related products (up 9.2 percent), machinery (up 8.3 percent), plastics and rubber products (up 7.4 percent) and nonmetallic mineral products (up 7.3 percent).

Meanwhile, overall industrial production rose 0.4 percent in July, equaling the increase seen in June. It was the sixth straight monthly gain in production, following January’s weather-induced decline. Since January, industrial output has risen 3.0 percent, with 5.0 percent growth year-over-year. Mining production increased 0.3 percent, but utility output continues to soften, down 3.4 percent for the month. Total capacity utilization increased from 79.1 percent in June to 79.2 percent in July, its highest rate since June 2008.

In conclusion, manufacturers continue to expand strongly in July, recovering from weaknesses earlier in the year. Moreover, surveys suggest optimism for the months ahead, including respondents from the Empire State Manufacturing Survey released this morning. Yet, manufacturing leaders have also been disappointed with the slow pace of growth in the first half of this year, and their upbeat sentiment about the second half remains is filled with caution. For that reason, policymakers should focus on those initiatives which will keep the economy growing moving forward.

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

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Continued Progress in China and the U.S., with Europe and Japan Growing More Modestly

The HSBC Flash China Manufacturing Purchasing Managers’ Index (PMI) expanded for the second straight month in July, rebounding from softness from January through May. The headline index rose from 50.7 in June to 52.0 in July, its highest level since March 2011. The underlying data were mostly higher, including new orders (up from 51.8 to 53.7), output (up from 51.8 to 52.8) and exports (up from 50.6 to 52.7). The sales pace was the fastest since January 2011, and each of these measures are a sign that recent stimulative actions taken by the Chinese government have had a positive impact. Some downsides in the PMI survey contracting hiring rates for the 16th consecutive month (up from 48.7 to 49.5) and slightly accelerated raw material prices (up from 50.8 to 52.9).

Meanwhile, Japanese manufacturing activity also expanded for the second straight month, but it eased slightly in July. The Markit/JMMA Flash Japan Manufacturing PMI declined from 51.5 to 50.8. The recent uptick in activity has materialized as the Japanese economy has recovered from an increased in taxes that went into effect on April 1st. Still, manufacturers in the country cannot cheer yet, as output growth came to a halt in July (down from 51.8 to 50.0, or neutral). Other indicators were mixed. Export sales (up from 49.0 to 51.6) and employment (up from 49.8 to 50.8) both shifted to positive growth, but the pace of new orders decelerated somewhat (down from 52.0 to 51.1).

In other news, the Markit Flash Eurozone Manufacturing PMI edged marginally higher, up from 51.8 to 51.9. The Flash Eurozone PMI Composite PMI was up more strongly, increasing from 52.8 to 54.0, suggesting healthier growth in the service sector. For manufacturers, the data suggest slightly faster growth in production (up from 52.8 to 53.0) and exports (up from 52.4 to 52.7), but the pace of growth for new orders (51.9) and employment (50.3) were unchanged.

Overall, these figures provide a limited degree of encouragement for the manufacturing sector in Europe, which has worried of late about slow economic and income growth. It is also still clear that the data vary on country-by-country basis, with German manufacturing activity (up from 52.0 to 52.9) accelerating in July but with French manufacturers noting yet another deterioration in sales and output. Indeed, the French economy remains in a rut, with manufacturing activity positive in just three months since January 2013.

Closer to home, the Markit Flash U.S. Manufacturing PMI decreased from 57.3 to 56.3. Despite the slight easing in July, manufacturing activity continues to grow at relatively decent rates. Through the first seven months of 2014, the top-line index has averaged 55.9, stronger than the 53.5 average noted for 2013 as a whole. The July data show both new orders (down from 61.7 to 59.8) and output (down from 61.0 to 60.4) growing at a healthy paces, albeit with some deceleration for the month. Yet, hiring growth remains more modest (down from 53.8 to 52.1) and export sales (down from 50.9 to 50.6) were just barely growing, suggesting that there remains room for improvement.

Flash data give us an advance estimate of manufacturing activity incorporating “approximately 85% of the usual monthly survey replies,” with the final PMI data for the month released on August 1.

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

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Manufacturing Production Rebounded in May after a Soft April

Manufacturing production increased 0.6 percent in May, rebounding from a revised 0.1 percent decline in April, according to the Federal Reserve Board. We have seen relatively strong growth in the manufacturing sector since January’s winter-related decreases in output. Indeed, manufacturing production has risen 2.8 percent since January, with 3.6 percent growth over the past 12 months. That was the fastest year-over-year pace for the sector since October.

Capacity utilization for manufacturers also increased for the month, up from 76.7 percent in April to 77.0 percent in May. That was the highest level since March 2008, continuing a trend of reaching near pre-recessionary paces nearly five years after the economic recovery began. Still, on a year-over-year basis, manufacturing capacity has grown just 1.4 percent, which leaves room for improvement.

In May, durable goods production growth outpaced nondurable goods activity by 0.9 percent to 0.4 percent, respectively. In all, 12 of the 19 major sectors experienced output gains for the month, with most of the decliners among nondurable goods segments. The largest increases in production were in the plastics and rubber products (up 1.8 percent), wood products (up 1.7 percent), motor vehicles and parts (up 1.5 percent), petroleum and coal products (up 1.3 percent), electrical equipment and appliances (up 1.1 percent), and machinery (up 1.1 percent) sectors.

In contrast, textile and product mills (down 0.9 percent), paper (down 0.5 percent), apparel and leather products (down 0.4 percent), food, beverage and tobacco products (down 0.3 percent), primary metals (down 0.1 percent), and printing and support (down 0.1 percent) had lower production in May.

On a year-over-year basis, durable goods production jumped from 4.7 percent in April to 5.3 percent in May, and it has risen steadily since bottoming out at 3.1 percent in January. Several durable goods sectors have experienced robust growth over the past year, including motor vehicles and parts (up 7.7 percent), machinery (up 7.6 percent), furniture and related products (up 6.7 percent), and wood products (up 6.2 percent). At the same time, nondurable goods output rose 2.2 percent over the past 12 months, up from 0.3 percent in January and 2.0 percent in April. The fastest annual growth in the nondurable goods space was plastics and rubber products (up 5.9 percent).

Meanwhile, overall industrial production rose 0.6 percent in May, recovering from the 0.3 percent drop in April. In addition to the gain from manufacturing for the month, mining output also grew strongly (up 1.3 percent). Yet, utility production dropped for the fourth straight month (down 0.8 percent). Total capacity utilization increased from 78.9 percent to 79.1 percent, with year-over-year growth of 2.4 percent.

In conclusion, manufacturers began to see better production numbers in May, with decent growth over the past few months. The NAM/IndustryWeek Survey of Manufacturers also suggests that business leaders remain mostly upbeat about sales and output over the next year, which is definitely positive.

Yet, we could still do more to make this growth more broad-based, particularly extending these production gains to the nondurable goods sector. And, it is also clear that manufacturers remain somewhat cautious in their optimism, remaining particularly frustrated with the political environment. For that reason, policymakers should focus on those initiatives which will keep the economy growing moving forward, helping to fulfill the hopeful outlook seen in so many surveys, including ours.

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

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