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Manufacturing & The Economy

U.S. Economy Grew 2.3% in Second Quarter

Real GDP in the United States, adjusted for price changes -- increased at an annual rate of 2.3% in the second quarter of 2015, according to the advance estimate released by the Bureau of Economic Analysis. First-quarter GDP, previously reported to have shrunk at a 0.2% pace, was revised up to show it rising at a 0.6% rate.

The increase in real GDP in the second quarter reflected positive contributions from personal consumption expenditures (PCE), exports, state and local government spending, and residential fixed investment that were partly offset by negative contributions from federal government spending, private inventory investment, and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased. 

Durable Goods Orders Up 3.4%, Beating Forecast

New orders for manufactured durable goods in June increased $7.7 billion or 3.4% to $235.3 billion, the U.S. Census Bureau announced Monday. Bloomberg surveyed economists who forecast a 3.2% jump in overall durable-goods orders. This increase, up following two consecutive monthly decreases, followed a 2.1% May decrease. Excluding transportation, new orders increased 0.8%. Excluding defense, new orders increased 3.8%.

Consumer Confidence Declined Sharply in July

The Conference Board Consumer Confidence Index, which had improved in June, declined in July. The Index now stands at 90.9, down from 99.8 in June. Consumers’ optimism about the short-term outlook decreased sharply in July.

Consumers’ assessment of current conditions was somewhat less favorable in July. Those saying business conditions are “good” decreased from 26.1% to 24.2%. However, those claiming business conditions are “bad” was virtually unchanged at 17.9%. Consumers were slightly less positive about the job market. Those stating jobs are “plentiful” decreased from 21.3% to 20.7%, while those claiming jobs are “hard to get” increased marginally from 26.1% to 26.7%.

Texas Manufacturing Slump Moderates, Outlooks Improve

Texas factory activity declined slightly in July, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, remained negative but rose for a second month in a row to -1.9, suggesting further moderation in the decline in manufacturing output.

A similar pattern was seen among other measures of current manufacturing activity in July. The capacity utilization index edged up to -4.2, and the shipments index increased to -4.3. These negative index levels indicate contraction, but the upward movement again this month suggests the pace of decline continued to slow. The new orders index rebounded strongly in July and posted a reading of 0.7 after six months in negative territory. The growth rate of orders index jumped 11 points from -16.5 to -5.2.

Perceptions of broader business conditions were mixed. The general business activity index remained negative, but it rose for a second month in a row and reached -4.6 in July. Manufacturers expect improved conditions ahead. The company outlook index surged nearly nine points and posted its first positive reading in seven months, coming in at 1.2.

U.S. Weekly Jobless Claims at Lowest Level Since 1973

In the week ending July 18, the advance figure for seasonally adjusted initial claims was 255,000, a decrease of 26,000 from the previous week's unrevised level of 281,000. This is the lowest level for initial claims since November 24, 1973 when it was 233,000. The 4-week moving average was 278,500, a decrease of 4,000 from the previous week's unrevised average of 282,500. There were no special factors impacting the week's initial claims.

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