Manufacturing activity in the New York Federal Reserve Bank’s district pulled back in November from October’s 3-year high but remained strong. In the latest Empire State Manufacturing Survey, the composite index of general business conditions declined from 30.2 in October, a pace not seen since September 2014, to 19.4 in November. The underlying indicators were somewhat mixed. On the positive side, new orders (up from 18.0 to 20.7) accelerated, which was encouraging. The percentage of respondents saying that sales had increased in the month rose from 32.3 percent in October to 40.7 percent in November, which was more than enough to offset the gain in those suggesting reduced orders, up from 14.3 percent to 20.0 percent. Shipments (down from 27.5 to 18.4) and employment (down from 15.6 to 11.5) continued to expand at decent rates despite some easing, but unfilled orders (down from 2.3 to -4.6) and the average workweek (down from zero to -0.8) both turned slightly negative. Read More
The Institute for Supply Management (ISM) said that manufacturing activity expanded robustly in October, even as it pulled back from September’s reading, which was the fastest pace since May 2004. The ISM Manufacturing Purchasing Managers’ Index (PMI) decreased from 60.8 in September to 58.7 in October. The sample comments suggest that negative impacts from recent hurricanes explain at least part of October’s weaker reading. Nonetheless, the larger story remains one of strength, with business activity continuing to grow at healthy rates. For instance, indices for new orders (down from 64.6 to 63.4) and production (down from 62.2 to 61.0) exceeded 60—a threshold which would signify a vigorous expansion in demand and output in the sector—for the fifth consecutive month. Read More
The Conference Board said that consumer sentiment was at its highest level in nearly 17 years in October. The Consumer Confidence Index rose from 120.6 in September to 125.9 in October, its best reading since December 2000. Americans were more upbeat in their assessments of both current (up from 146.9 to 151.1) and future (up from 103.0 to 109.1) economic conditions. Along those lines, the percentage of respondents saying that business conditions were “good” increased from 33.4 percent to 34.5 percent, which was more than enough to offset the slight uptick of those suggesting that conditions were “bad” (up from 13.2 percent to 13.5 percent).
Overall, these findings mirrored similarly optimistic perceptions about the economic environment seen in the competing survey from the University of Michigan and Thomson Reuters. That report found sentiment was at its highest point since January 2004, largely on improvements in personal finances and positive expectations in the future outlook. Read More
The Bureau of Economic Analysis reported that the U.S. economy grew by an annualized 3.0 percent in the third quarter, extending the 3.1 percent gain in the second quarter. This was slightly better than the predicted growth rate of 2.6 percent—a sign that even with the recent hurricanes, the U.S. economy continues to expand at a decent clip. Strength in consumer and business spending, including inventories, and net exports boosted the third-quarter data. For 2017 as a whole, I am predicting real GDP growth of 2.3 percent, with 3.0 percent growth for the current fourth quarter. This is a slight improvement from the 2.1 percent average growth rate since the Great Recession, but I am also estimating 2.6 percent growth for 2018. In addition, I continue to believe there is upward potential in the forecast, especially for next year and beyond, if pro-growth policies are enacted. Read More
The Kansas City Federal Reserve Bank said that manufacturing activity expanded at a 79-month high in the latest survey data. The composite index of general business conditions rose from 17 in September to 23 in October, a level not seen since March 2011 and a sign that sentiment has continued to strengthen since the spring. The higher figure in October came largely from a jump in those saying that new orders (up from 10 to 27) and employment (up from 18 to 21) had both accelerated, with the hiring figure also at a 79-month high. The sample comments tended to echo the challenge of finding talent. One respondent said, “Qualified, available and reliable labor (primarily hourly) continues to be the number one issue negatively impacting our potential growth.” Read More
The Richmond Federal Reserve Bank reported that manufacturing activity in its district pulled back slightly in October, even as it continued to report expanding levels of activity overall. The composite index of general business activity declined from 19 in September—a seven-month high—to 12 in October, its lowest point since January. Even with some easing, however, the data remained encouraging. To illustrate this, the headline index has averaged 13.8 year to date in 2017, well above the average of 0.6 during the same 10-month time period in 2016. With that said, many of the key measures in October decelerated, including new orders (down from 20 to 17), shipments (down from 22 to 9), capacity utilization (down from 16 to 7), employment (down from 15 to 10) and the average workweek (down from 16 to 8). Read More