Manufacturing activity in the New York Federal Reserve Bank’s district continued to show solid gains in manufacturing activity in March. In the latest Empire State Manufacturing Survey, the composite index of general business conditions rose from 13.1 in February to 22.5 in March. After decelerating for four straight months from the three-year high of 28.8 in October, it was encouraging to see the headline index rebound once again. Many of the key underlying data points were also higher in March, including faster expansions for new orders (up from 13.5 to 16.8), shipments (up from 12.5 to 27.0), the average workweek (up from 4.6 to 5.9) and inventories (up from 4.9 to 5.6). Read More
The Bureau of Economic Analysis said that the U.S. economy grew by an annualized 2.5 percent in the fourth quarter, off marginally from the previous estimate of 2.6 percent growth. The overall findings were little changed from the preliminary report, with somewhat better residential investment and service-sector consumer spending being offset by slightly reduced estimates for durable and nondurable goods spending and inventory spending. Nonetheless, the latest figures continued to find solid growth in consumer, business and government spending, but headline growth was pulled lower by both net exports and inventory spending. To illustrate the impact of those various components, real GDP growth would have been 4.36 percent absent the drag from net exports and inventories, which subtracted 1.83 percentage points from the top-line growth figure.
In 2017, real GDP increased by 2.3 percent, up from 1.5 percent in 2016. Since the end of the Great Recession, the U.S. economy has expanded by 2.2 percent on average. Moving forward, we anticipate 3.0 percent growth in 2018. There continues to be upward potential in that outlook for next year, especially as firms increase their investments. Passage of comprehensive tax reform and other pro-growth measures should help to stimulate economic activity, hopefully allowing us to reach 3.0 percent annual growth for the first time since 2005. Read More
The Richmond Federal Reserve Bank said that manufacturing activity in its district accelerated strongly in February. The composite index for the general business assessment doubled from 14 in January to 28 in February. This was not far from November’s all-time high in the survey’s 34-year history (30). The bottom line is that manufacturers in the region see relatively strong expansions in activity through the first two months of 2018, continuing the trend of decent growth experienced for much of 2017. The underlying data were also encouraging, including healthy expansions in new orders (up from 16 to 27), shipments (up from 15 to 31), capacity utilization (up from 13 to 32), employment (up from 10 to 25) and capital expenditures (up from 18 to 28).
The Richmond Fed has also added several measures to provide even more details on this activity, with improvements seen in February for equipment and software expenditures (up from 22 to 27) and local business conditions (up from 13 to 29). In addition, an index was created for the availability of skills needed (down from -10 to -17), which continued to illustrate just how much tightness in the labor market has challenged manufacturers’ ability to hire new workers. Read More
The Kansas City Federal Reserve Bank reported that manufacturing activity continued to expand strongly in February, building on solid growth seen over the past year. The composite index of general business conditions increased from 16 in January to 17 in February, a four-month high. Many of the key underlying data points also reflected faster growth for the month, including new orders (up from 14 to 16), production (up from 16 to 21), shipments (up from 14 to 24), employment (up from 18 to 23) and the average workweek (up from 2 to 11). Forty percent of respondents said new orders increased in February, with 24 percent citing reduced sales. At the same time, exports slowed somewhat but remained positive for the third straight report (down from 6 to 2). Read More
The IHS Markit Flash U.S. Manufacturing PMI rose from 55.5 in January to 55.9 in February, registering the best reading since October 2014 and boosted by accelerating new orders (up from 56.7 to 57.8) and employment (up from 55.0 to 55.8). Similarly, the index for future output (up from 66.9 to 71.0) was just shy of December’s reading (71.1), which was nearly a two-year high. More importantly, this suggests very healthy growth in production over the next six months. At the same time, current output (down from 56.2 to 56.1) and exports (down from 52.9 to 52.1) eased slightly in the February survey but continued to grow at a promising pace. On the downside, input prices picked up in the latest survey (up from 58.6 to 61.9), with costs expanding at rates not seen since December 2012. Read More