Tag: Industrial Production

Factories and Consumers Were Active in April: May 14 – 18

Factories and Consumers Were Active in April: May 14 – 18

Kevin Roth

Manufacturing rebounded while retail held firm in April. Here are the five things we learned from U.S. economic data released during the week ending May 18.

#1Manufacturing output picked up in April. The Federal Reserve estimates manufacturing production gained 0.5 percent on a seasonally adjusted basis during the month after being unchanged in March. Manufacturing output has increased 1.8 percent over the past year. Durable goods production grew 0.4 percent during the month while that for nondurables expanded 0.5 percent. Leading the former were substantial increases for machinery, aerospace equipment, electrical equipment/appliances, and computers/electronics. Boosting the latter were apparel and petroleum/coal. Overall industrial production increased 0.7 percent in April, matching March’s gain and having risen 3.5 percent over the past year. Production at utilities jumped 1.8 percent during April while mining output swelled 1.1 percent (with oil/gas extraction leading the latter).Industrial Production 2016-18 051818

#2Retail sales remained stout in April even as gas prices rise. The Census Bureau reports that retail and food services sales totaled a seasonally adjusted $497.6 billion, up 0.3 percent for the month and 4.7 percent from the April 2017 sales pace. Sales at auto dealers and parts stores inched up 0.1 percent while that as gas stations rose 0.8 percent (because of higher prices at the pump). Net of both, core retail sales increased 0.3 percent during April. Reporting higher sales during the months were retailers focused on apparel (+1.4 percent), furniture (+0.8 percent), groceries (+0.5 percent), and building materials (+0.4 percent). Sales slowed at health/personal care stores (-0.4 percent), restaurants/bars (-0.3 percent), electronics/appliance retailers (-0.1 percent), and sporting goods/hobby stores (-0.1 percent). Nonstore retailers (e.g., internet retailers) saw sales grow 0.6 percent during April and rise 9.6 percent over the past year.

#3Housing starts slowed in April, with less activity for multi-family units. The Census Bureau pegs the seasonally adjusted annualized rate (SAAR) of housing starts for April at 1.287 million units, off 3.7 percent for the month but still 10.5 percent ahead of the year-ago pace. Dragging down the measure was the 12.6 percent drop in starts of multifamily units (to an annualized 374,000 units). Single-family home starts edged up 0.1 percent to an annualized 894,000 units. Looking towards future activity, there were an annualized 1.352 million issued permits to build new homes. While this represented a 1.8 percent decrease from March, it was 7.7 percent above April 2017 levels. Single-family home permits were 0.9 percent higher than that of March. Home completions increased 2.8 percent during the month to an annualized 1.257 million units (+14.8 percent versus April 2017).

#4Homebuilders remained confident about the housing market during May. The National Association of Home Builders’ Housing Market Index (HMI) added two points during the month to a seasonally adjusted reading of 70. This was the 47th consecutive month with an HMI above a reading of 50 (indicative of a greater percentage of builders viewing the housing market as “good” as opposed to “bad”) and places the sentiment measure ahead of its 12-month average of 68.6. While the HMI improved in the Midwest, it lost ground in the both in the South and West and was unchanged in the Northeast. The index measuring current sales of single-family homes added two points (to 76) while measures of expected sales over the next six months (77) and traffic of prospective buyers (51) matched their April readings. The press release notes that demand for homes should remain strong due to “[t]ight housing inventory, employment gains and demographic tailwinds.”

#5Forward-looking indicators suggest continued economic growth for the remainder of 2018. The Conference Board’s Leading Economic Index added 4/10ths of a point in April to a reading of 109.4 (2016=100). The LEI has increased 6.4 percent over the past year. Eight of the ten components to the LEI made positive contributions, led by the interest rate spread and the average number of hours worked in manufacturing. The coincident index gained by 3/10ths of a point to 103.5 (+2.2 percent versus April 2017), with all four components of the coincident index making positive contributions in April. Also adding 3/10ths of a point was the lagging index, with the 104.7 reading being 2.5 percent ahead of that from a year earlier. The press release stated that the leading indicators data “suggest solid growth should continue in the second half of 2018.”

Other U.S. economic data released over the past week:
– Jobless Claims (week ending May 12, 2018, First-Time Claims, seasonally adjusted): 222,000 (+11,000 vs. previous week; -16,000 vs. the same week a year earlier). 4-week moving average: 213.250 (-12.0% vs. the same week a year earlier).
– State Employment (April 2018, Nonfarm Payrolls, seasonally adjusted): 3 states experienced significant increases in payrolls vs. March 2018. 28 states experienced significant payrolls increases vs. April 2017 while 1 experienced a significant decline.
– Business Inventories (March 2018, Manufacturers’ and Trade Inventories, seasonally adjusted): $1.930 trillion (Unchanged vs. February 2018, +3.8% vs. March 2017).
– Treasury International Capital Flows (March 2018, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): +$18.6 billion (vs. February 2018: -$57.7 billion, vs. March 2017: -$35.5 billion).

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

Vehicles Drive Manufacturing and Retail Sales: April 16 – 20

Vehicles Drive Manufacturing and Retail Sales: April 16 – 20

Kevin Roth

Manufacturing activity grew again in March (albeit at a slower pace than in February) while retail sales had its best month since last November. Here are the five things we learned from U.S. economic data released during the week ending April 20.

#1Manufacturing output grows at a slower pace during March. The Federal Reserve estimates manufacturing production increased 0.1 percent on a seasonally adjusted basis during the month following a 1.5 percent gain in February, leaving the measure up 3.0 percent over the past year. Production of durable goods gained 0.4 percent—which included the impact of a 2.7 percent surge in motor vehicle output—and has increased 3.8 percent over the past year. Production of nondurables slowed 0.3 percent during the month but remained 2.7 percent ahead of its March 2017 mark. Overall industrial production rose 0.5 percent during March and has jumped 4.3 percent over the past 12 months. Mining output increased 1.0 percent (down from its 2.9 percent increase in February) while production at utilities surged 3.0 percent. The latter helped lead a 3/10ths of a percentage point in capacity utilization (factory utilization) to 78.0 percent, its highest point in three years.Industrial Production Capacity Utilization 042018

#2Retail sales gained in March. Retail and food services sales increased 0.6 percent during the month to a seasonally adjusted $494.6 billion, per the Census Bureau. This was the largest single-month percentage increase in retail sales since last November and left the measure up 4.5 percent over the past year. Leading the surge in retail sales was the 2.0 percent jump in sales at auto dealers/parts stores. Net of auto dealer/parts stores, retail sales gained a more modest 0.2 percent in March and was 4.5 percent ahead of the year-ago sales pace. Sales grew at retailers focused on health/personal care (+1.4 percent), furniture (+0.7 percent), electronics (+0.5 percent), general merchandisers (+0.3 percent), and groceries (+0.2 percent). Sales also improved at nonstore retailers (+0.8 percent) and restaurants/bars (+0.4 percent). Slipping were sales at sporting goods/hobby stores (-1.8 percent), building materials retailers (-0.6 percent), gas stations (-0.3 percent), and department stores (-0.3 percent).

#3Forward-looking economic indicators foretell continued economic growth in the coming months. The Conference Board’s Leading Economic Index (LEI) added 3/10ths of a point during March to 109.0 (2016=100), rising 6.2 percent over the past year. Six of the ten LEI components made positive contributions to the index, led by the interest rate spread, the new orders index from the Institute for Supply Management, and consumer expectations for future business conditions. The coincident index increased by 2/10ths of a point to 103.4, 2.2 percent ahead of its year-ago reading. All four components of the coincident index made positive contributions, including that for industrial production and personal income net of transfer payments. The lagging index inched up 1/10th of a point to 104.5 (+2.6 percent versus March 2017), with five of seven components making a positive contribution. The press release noted that leading indicators point “to continued solid growth in the U.S. economy for the rest of the year” but that weakness in labor market indicators “bear watching in the future.”

#4Housing starts advanced in March, thanks to gains in multifamily units. The Census Bureau estimates housing starts increased 1.9 percent to a seasonally adjusted annualized rate (SAAR) of 1.319 million units. This was 10.9 percent ahead of the year-ago rate of starts. Starts of multifamily units (e.g., condos, apartments) jumped 16.1 percent during the month to an annualized 439,000 units while those of single-family homes dropped 3.7 percent to 867,000 units (SAAR). Looking towards future construction activity, the annualized count of issued building permits increased 2.5 percent during March to 1.354 million permits (+7.5 percent versus March 2017). Again, the 22.9 percent bump in permits for multifamily units outpaced the 5.5 percent decline in issued permits for single-family homes. Completions of homes slowed 5.1 percent during the month to 1.217 million homes (SAAR)—this was 1.9 percent ahead of March 2017’s pace of completions.

#5Home builders’ confidence held strong in April. The National Association of Home Builders’ Housing Market Index (HMI) lost a point to a seasonally adjusted reading of 69. While this was the HMI’s lowest point since last November, it represented the 46th consecutive month with a reading above 50, indicating more homebuilders see the housing market as “good” rather as “poor.” The index slipped in the South and West, held steady in the Midwest, and inched up in the Northeast. Also losing grounds were indices measuring current and expected sales, with the former shedding two points to 75 and the latter slipping by a point to 77. The index for traffic of prospective buyers was unchanged at 51. The press release said that the housing market “remains on solid ground” thanks to “strong demand” with the NAHB expecting “the market to continue to make gains at a gradual pace.”

Other U.S. economic data released over the past week:
– Jobless Claims (week ending April 14, 2018, First-Time Claims, seasonally adjusted): 232,000 (-1,000 vs. previous week; -15,000 vs. the same week a year earlier). 4-week moving average: 231,250 (-5.3% vs. the same week a year earlier).
– State Employment (March 2018, Nonfarm Payrolls, seasonally adjusted): Two states had significant increases in payrolls vs. February 2018. 24 states had significant increases in payrolls vs. March 2017.
– Treasury International Capital Flows (February 2018, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): +$57.9 billion (vs. January 2018: +$62.5 billion; vs. February 2017: +$38.3 billion).
– Business Inventories (February 2018, Manufacturers’ and Trade Inventories, seasonally adjusted): $1.929 trillion (+0.6% vs. January 2018, +4.0% vs. February 2017).
– Beige Book 

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

Manufacturing Grows, Retail Sales Pause: March 12 – 16

Manufacturing Grows, Retail Sales Pause: March 12 – 16

Kevin Roth

Moderate winter weather appears to have boosted manufacturing in February, less so for retail. Here are the five things we learned from U.S. economic data released during the week ending March 16.  

#1Manufacturing grew at its fastest pace in four months during February. The Federal Reserve reports that manufacturing output increased a seasonally adjusted 1.1 percent during the month, after having contracted 0.2 percent during the prior month. Manufacturing production has expanded 2.5 percent over the past year. The rebound in manufacturing was widespread with durable goods output jumping 1.8 percent in February while that for nondurables gaining 0.7 percent in February. There were output jumps of at least one percent in orders for business equipment, defense/space equipment, and construction supplies. Overall industrial production increased 1.1 percent during February as mining jumped 4.3 percent (due to improvements in gas/oil extraction and coal mining) and utilities output slumped 4.7 percent (with more moderate weather lessening the demand for heating). Overall capacity utilization hit a three-year high at 78.1 percent (up 7/10ths of a percentage point for the month) while utilization in manufacturing jumped by 9/10ths of a percentage point to 76.9 percent.Capacity Utilization 031618.png

#2Retail sales sputtered for a third straight month. The Census Bureau estimates retail and food services sales slipped 0.1 percent during February to a seasonally adjusted $492.0 billion. This was 4.0 percent ahead of the year-ago sales pace. Dragging down the headline number were slumping sales at auto dealers and parts stores (-0.9 percent). Net of vehicles/parts, retail sales increased 0.2 percent during the month and were 4.4 percent ahead of February 2017 sales. Sales grew at retailers focused on sporting goods/hobbies (+2.2 percent), building materials (+1.9 percent), and apparel (+0.4 percent). Sales also inched up 0.2 percent at restaurants/bars. Falling were sales at gas stations (-1.2 percent), department stores (-0.9 percent), furniture retailers (-0.8 percent), health/personal care retailers (-0.4 percent), and grocery stores (-0.2 percent). Immune from the sluggish activity were nonstore retailers (e.g., web retailers) where sales gained 1.0 percent during February and have risen 10.1 percent over the past year.

#3Inflation cooled off in February. The Consumer Price Index (CPI) gained 0.2 percent on a seasonally adjusted basis after having risen 0.5 percent in January, per the Bureau of Labor Statistics. The slower pace of inflation resulted from lower prices for gasoline (-0.9 percent) and fuel oil (-3.6 percent) after having surged during the previous month. As a result, energy CPI grew by only 0.1 percent after a 3.0 percent bump in January. Food CPI was unchanged for the month. Net of energy and food, core CPI increased 0.2 percent (after a 0.3 percent gain in January). Rising were prices for apparel (+1.5 percent), transportation services (+1.0 percent), and shelter (+0.2 percent) while losing stream were prices for new vehicles (-0.5 percent), used cars (-0.3 percent), and medical care commodities (-0.3 percent). Over the past year, consumer prices have risen 2.2 percent while core CPI has grown 1.8 percent.

The Producer Price Index (PPI) for final demand sliced in half its increase from January with a 0.2 percent gain during February. Net of food, energy and trade services, core PPI increased 0.4 percent, matching its January gain. Reversing course was PPI for final demand goods, dropping 0.1 percent after having surged 0.7 percent during the previous month. Wholesale prices for both energy (-0.5 percent) and food (-0.4 percent) declined, but PPI net of energy and food grew 0.2 percent. PPI for final demand services gained 0.3 percent (matching January’s increase), featuring a 0.9 percent bump in prices for transportation/warehousing services. Final demand PPI has risen 2.8 percent over the past year with a still robust +2.7 percent 12-month comparable after removing the impact of energy, food, and trade services.

#4The number of unfilled job openings grew ever larger in January. There were a seasonally adjusted 6.312 million job openings on the final day, surging by 645,000 from December and 15.9 percent from a year earlier. This is the greatest number of job openings measured since the start of the Bureau of Labor Statistics measure in 2000. The report shows that there were 5.751 private sector job openings at the end of January, up 608,000 from December and 15.7 percent from January 2017. Industries with the largest year-to-year percentage increases in job openings included transportation (+63.1 percent), construction (+57.2 percent), retail (+28.6 percent), leisure/hospitality (+20.8 percent), government (+18.4 percent), professional/business services (+17.2 percent), wholesale trade (+17.2 percent), and manufacturing (+17.0 percent). Hiring grew at a far more modest pace, increasing by 59,000 to 5.583 million jobs (+2.3 percent versus January 2017) while private sector hiring gained 71,000 to 5.244 million jobs (+2.7 percent versus January 2017). Industries with the greatest percentage year-to-year gains in hiring included manufacturing (+16.9 percent), professional/business services (+6.5 percent), health care/social assistance (+4.8 percent), and retail (+4.2 percent). More people left their jobs during January, growing by 95,000 during the month to 5.409 million people (+3.5 percent versus January 2017). The number of people quitting their jobs slipped by 69,000 to 3.271 million workers (+3.2 percent versus January 2017) while layoffs grew by 107,000 to 1.762 million (+6.2 percent versus January 2017).

#5Housing starts slowed in February, especially for multifamily units. The Census Bureau places the seasonally adjusted annualized rate of housing starts at 1.236 million units, down 7.0 percent from the prior month and 4.0 percent behind the year-ago pace. The decline was solely on the multifamily side of the market (e.g., condos), where starts plummeted 28.0 percent during February. Single-family home starts increased 2.9 percent during the month (and from a year earlier) to 902,000 units. Less sanguine was the count of issued building permits, which dropped 5.7 percent during the month to an annualized rate of 1.298 million (+6.5 percent versus February 2017). Permits for multifamily units slumped 14.6 percent during the month while the decline for single-family home permits was a much more modest 0.6 percent. Rising was the annualized count of completed homes, jumping 7.8 percent to 1.319 million homes. This was 13.6 percent ahead of its February 2017 pace. 

Other U.S. economic data released over the past week:
– Jobless Claims (week ending March 10, 2018, First-Time Claims, seasonally adjusted): 226,000 (-4,000 vs. previous week; -20,000 vs. the same week a year earlier). 4-week moving average: 221,500 (-9.1% vs. the same week a year earlier).
– Import Prices (February 2018, All Imports, not seasonally adjusted): +0.4% vs. January 2018, +3.5% vs. February 2017. Nonfuel imports: +0.5% vs. January 2018, +2.1% vs. February 2017.
– Export Prices (February 2018, All Exports, not seasonally adjusted): +0.2% vs. January 2018, +3.3% vs. February 2017. Nonagricultural exports: +0.2% vs. January 2018, +3.6% vs. February 2017.
– Small Business Optimism (February 2018, Optimism Index (1986=100), seasonally adjusted): 107.6 (highest since 1983) (vs. January 2018: 106.9; February 2017: 105.3).
–Housing Market Index (March 2018, Index (>50=”Good” Housing Market, seasonally adjusted): 70 (February 2018: 71, March 2017: 71).
– Monthly Treasury Statement (February 2018, Surplus/Deficit): -$215.2 billion (vs. February 2017: -$192.0 billion). First 5 months of FY18: -$391.0 billion (vs. first 5 months of FY17: -$350.6 billion).
– Business Inventories (January 2018, Manufacturers’ and Trade Inventories, seasonally adjusted): $1.917 trillion (+0.6% vs. December 2017, +3.7% vs. January 2017).
– University of Michigan Consumer Sentiment (March 2018-preliminary, Index (1966Q1=100), seasonally adjusted): 102.0 (vs. February 2018: 99.7, vs. March 2017: 96.9).
– Treasury International Capital Flows (January 2018, Net Foreign Purchases of Domestic Securities, not seasonally adjusted): +$63.2 billion (vs. December 2017: +$31.0 billion, vs. January 2017: +$17.1 billion.
– State Employment (January 2018, Change in Nonfarm Payrolls, seasonally adjusted):  Vs. December 2017: 3 states had significant increases in payrolls 1 had a significant decrease. Vs. January 2017: 21 states had payrolls increases.

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.