Tag: personal spending

Personal Spending Fell in January for the Second Straight Month

The Bureau of Economic Analysis said that personal spending decreased by 0.2 percent in January, falling for the second straight month. Durable and nondurable goods spending were also lower in both December and January, and these data suggest that Americans remain cautious in their spending. Of course, there could also be other factors at play, such as lower gasoline prices and heavy snow storms in some regions of the country. Still, on a year-over-year basis, personal spending has increased 3.6 percent, a fairly decent growth rate. (continue reading…)

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Monday Economic Report – February 9, 2015

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

Manufacturers in the United States have added roughly 18,800 workers per month on average over the past 13 months, with an average of 29,000 from October through January. This suggests that the momentum in demand and production in the second half of 2014 has led to an uptick in hiring, which is encouraging. Income growth was also higher, with average weekly earnings up 2.0 percent year-over-year in January. At the same time, the larger economy has also seen strong growth, with nonfarm payrolls increasing by nearly 260,000 per month since the end of 2013. The unemployment rate edged up to 5.7 percent, however, as more Americans re-entered the labor force looking for work. The participation rate rose from 62.7 percent to 62.9 percent. (continue reading…)

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Personal Spending Fell in December

The Bureau of Economic Analysis said that personal spending fell 0.3 percent in December, the first decline in consumer activity since January. In so doing, the year ended as it begun, with softer personal spending. January’s decline was lower, however, because of winter conditions; whereas, the decrease in December appears to be due to lingering caution. Consumer purchases of durable and nondurable goods were off 1.2 percent and 1.3 percent, respectively.

The surprising part of this data is that the decline in personal spending in December came at a time when consumer confidence and personal income growth were both moving higher, but perhaps that signals better spending data in the months ahead. On the positive side, personal spending rose 3.6 percent in 2014, which was decent pace overall. (continue reading…)

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Monday Economic Report – December 1, 2014

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

The U.S. economy grew 3.9 percent at the annual rate in the third quarter, according to revised real GDP data released last week. This was better than the 3.5 percent original estimate, and more importantly, it suggests real GDP increased at an annualized 4.2 percent over the past two quarters. The report highlighted a number of positive elements in the economy, including healthy increases in consumer and business spending, goods exports and end-of-fiscal-year government spending. The revision also included better inventory replenishment numbers than originally estimated. (continue reading…)

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Personal Income and Spending Both Rose 0.2 Percent in October

The Bureau of Economic Analysis said that personal spending rose 0.2 percent in October, an improvement from being flat in September. This was slower than the 0.5 percent growth observed in August, however. Indeed, we have seen the year-over-year rate of spending growth fall from 4.2 percent in August to 3.6 percent in October. Still, this is a decent figure, indicating modest growth in consumer purchasing. In October, the increased spending occurred primarily with nondurable goods (up 0.2 percent) and services (up 0.3 percent). Durable goods orders (down 0.2 percent) fell for the second straight month. (continue reading…)

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Monday Economic Report – November 3, 2014

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

The U.S. economy grew 3.5 percent at the annual rate in the third quarter, representing decent growth following the disappointing first half of 2014. Consumer and business spending, which rebounded strongly in the second quarter, extended those gains in the third quarter, albeit with some easing in the pace of growth. Exports were also up strongly for the quarter, and imports were down. Dramatic inventory swings over the past three quarters were also evident, with stockpiles searching for a new normal. After adding 1.47 percentage points to real GDP in the second quarter, slower inventory replenishment subtracted 0.57 percent in the third quarter, making it one of the few negatives in the report. (continue reading…)

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Personal Spending Was Cautious in the Third Quarter, with Declines in September

The Bureau of Economic Analysis said that personal spending declined 0.2 percent in September, somewhat offsetting the 0.5 percent gain observed in August. Third quarter spending on consumer goods and services will go down as the slowest since the second quarter of 2012, up 1.5 percent at the annual rate. This suggests that Americans were more cautious in their spending behavior in the quarter than we might have preferred. In September, durable goods spending fell 2.0 percent in September, essentially counterbalancing the 2.1 percent gain of August. Weaker auto sales were likely behind the September decline. Nondurable goods purchases decreased for the second straight month, down 0.4 percent and 0.3 percent, respectively, in August and September. (continue reading…)

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Monday Economic Report – October 6, 2014

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

Several recent indicators have shown marked improvements in the U.S. economy and for manufacturing activity, particularly when compared to earlier in the year. These range from the NAM/IndustryWeek Survey of Manufacturers to increased levels of demand and output. Last week, for instance, the Institute for Supply Management (ISM) reported that the pace of production (up from 64.5 to 64.6) was marginally higher in September, with the index exceeding 60—indicating strong growth—for four consecutive months. Likewise, the new orders index has measured 60 or higher for three straight months, even though it eased somewhat in September (down from 66.7 to 60.0). That was an encouraging sign, and it was consistent with a relatively upbeat outlook as noted by the National Association for Business Economics (NABE).

Yet, the headline ISM Purchasing Managers’ Index (PMI) for manufacturing unexpectedly dropped from 59.0 to 56.6. The prior month’s reading had been a three-year high, making the deceleration in sentiment a bit of a disappointment. The drop stemmed from slower paces of growth for domestic sales, exports (down from 55.0 to 53.5) and employment (down from 58.1 to 54.6). Along those lines, manufacturers added just 4,000 net new workers in September, with August’s employment number revised lower to reflect a decline of 4,000 employees for the sector. As such, we have had two straight months of disappointing manufacturing jobs numbers, which stand in stark contrast to the stronger hiring rates seen prior to August. We can hope for healthier job gains in the coming months, which would be more consistent with the mostly optimistic tone seen in other measures.

Indeed, the Dallas Federal Reserve Bank’s manufacturing survey noted robust pickups in production, capacity utilization and shipments in September, and respondents continue to expect stronger activity levels over the next six months. In addition, factory shipments have risen 2.1 percent year-to-date through August, or 3.1 percent over the past 12 months. The corresponding data on new factory orders reflected a sharp decline in August, but that was the result of very strong nondefense aircraft sales in July. While new manufactured goods sales remained soft when excluding transportation orders, the underlying data also reflect gains made since the winter months. Moreover, manufacturers have been confident enough in their outlook to increase construction spending, which rose 1.5 percent in August, increasing for the fifth straight month. Year-over-year growth in manufacturing construction spending was an impressive 14.9 percent.

At the consumer level, personal spending rebounded in August after holding steading in July. Since winter-related declines in January, personal spending has risen 2.7 percent, with 4.1 percent growth year-over-year. Strength in durable goods purchases boosted the August consumption figure. Still, Americans remain anxious, particularly about labor and income growth. The Conference Board’s Consumer Confidence Index declined from 93.4 in August to 86.0 in September, a notable and sizable decrease especially after the index had been at its highest point since October 2007 in August. It is possible that geopolitical events have put the public on edge, dampening enthusiasm. (The same could probably be said of the ISM report discussed above.) We have similar concerns in comparable data from the University of Michigan and Thomson Reuters, and the two releases support the notion that the consumer remains cautious despite recent improvements in sentiment.

Meanwhile, the U.S. trade deficit narrowed from $40.32 billion in July to $40.11 billion in August, its lowest level since January. In general, we have seen the trade deficit decline after peaking at $45.98 billion in April. Since then, goods exports have increased by $3.79 billion, and goods imports have declined by $1.99 billion, helping to explain the bulk of the shift over that four-month period. Much of that improvement can be explained by increased energy exports and reduced energy imports.

After a busy economic data release calendar last week, this week will be much lighter. The minutes of the September 16–17 Federal Open Market Committee meeting will be released on Wednesday, with market watchers looking for clues for when the Federal Reserve will start raising short-term rates. Other highlights include the latest data on consumer credit, job openings and wholesale trade.

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

manufacturing construction - oct2014

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Personal Spending Rebounded in August from Cautiousness in July

The Bureau of Economic Analysis said that personal spending rebounded in August after being unchanged in July. Personal spending increased 0.5 percent in August. Aside from the brief pause in July, consumers have been more willing to open their wallets since the weather-related storms in January. Indeed, since January, personal spending has risen 2.7 percent, with 4.1 percent growth year-over-year. The August consumption figure was boosted by strength in durable goods spending, which rose 1.8 percent for the month.

Meanwhile, personal income was also modestly higher, up 0.3 percent in August. Over the past 12 months, personal incomes have expanded by 4.3 percent. For manufacturers, total wages and salaries increased from $786.1 billion in July to $789.7 billion in August. This continues an upward trend for compensation in the sector, with average wages and salaries of $734.4 billion and $747.6 billion in 2012 and 2013, respectively.

With the pace of spending growth outpacing income growth in August, the savings rate edged down from 5.6 percent in July to 5.4 percent in August. Still, the longer term trend reflects upward movement in the savings rate, up from 4.1 percent in December.

In other news, the personal consumption expenditure (PCE) deflator was unchanged in August, with falling energy prices helping to reduce inflationary pressures. Nonetheless, food costs continue to move higher, up 0.3 percent in the month. On a year-over-year basis, the PCE deflator has increased 1.5 percent, down from 1.7 percent in May. Core inflation (which excludes food and energy costs) was also at a 1.5 percent pace in August. While pricing pressures have accelerated somewhat from earlier in the year, the recent easing will provide a little breathing room to the Federal Reserve as its seeks to normalize its policies.

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

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Monday Economic Report – September 2, 2014

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

Manufacturers continue to report improved activity in August. Last week, the Dallas, Kansas City and Richmond Federal Reserve Banks all noted expanding levels of new orders and production for the month, mirroring releases from the New York and Philadelphia Federal Reserve Banks in the prior weeks. These surveys reflect rebounds from earlier in the year, and perhaps more importantly, they suggest a mostly upbeat assessment in demand, output, hiring and capital spending over the next six months. At the same time, the Dallas and Kansas City studies showed some easing in growth rates in August, with the latter indicating that hiring had turned negative for the month. Exports also contracted in the Kansas City district, showing persistent international sales weaknesses in that region. The data illustrate that, even where we have seen progress, there are often some nagging challenges beneath the surface.

This same observation could be made about much of the other data released last week, too. For instance, new durable goods orders soared in July, up a whopping 22.6 percent. This represented an all-time high for the data series, but it was also largely the result of a jump in nondefense aircraft sales. Commercial airplane orders are choppy, with sales usually announced in batches. New durable goods orders have improved from earlier in the year. Outside of transportation, the manufacturing sector was weak in July. New durable goods orders excluding transportation fell 0.8 percent for the month. This suggests that the broader market for manufacturers was soft in July despite the sky-high headline figure.

Along those lines, the Conference Board reported that consumer confidence rose to its highest point since October 2007. This increase stemmed from improvements in views about the current economic environment. Yet, the Conference Board’s figures also suggested some lingering worries about employment and income growth. The University of Michigan and Thomson Reuters’ report on consumer sentiment seems to focus even more on these anxieties. Even with a marginal increase in the August confidence measure, the University of Michigan data have not changed much this year, and respondents have had a diminished view of future growth over the past few months, not unlike what was seen in the Conference Board data. Geopolitical worries might be playing into these doubts. Either way, the confidence reports mirror other indicators, which show that consumers are cautious right now. Personal spending in July declined for the first time since January, consistent with other data showing flat retail sales.

Despite some softness in July, personal spending has increased at an annualized 4.1 percent over the past six months. Indeed, consumer and business spending were strengths during the second quarter, according to the latest revision of real GDP growth. The U.S. economy grew 4.2 percent at the annual rate during the second quarter, slightly better than the 4.0 percent original estimate and reflecting a rebound from the 2.1 percent decline in the first quarter. The biggest disappointment in the second quarter continued to be international trade figures, with net exports serving as a drag on growth. Moving forward, I estimate real GDP growth of roughly 3.0 percent during the second half of 2014. A number of risks abound, and business leaders and consumers remain tentative. If the first half of this year has taught us anything, it is an optimistic recovery can still be a fragile one.

This week, we will get additional insights regarding the health of the manufacturing sector. This morning, the Institute for Supply Management will release its August Purchasing Managers’ Index data for the sector. The ISM report found strong gains in demand, output and employment in July, and the August survey is expected to show another pickup in activity. Moreover, the Bureau of Labor Statistics will publish new jobs numbers on Friday. Manufacturers have added 15,000 workers on average each month since August 2013, with a 22,000 average from May to July of this year. Look for continued hiring growth for the sector in the August numbers that are at least consistent with the average of the past year. Other highlights this week include the latest data on construction spending, factory orders, international trade and productivity.

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

personal spending - sept2014

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