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Manufacturing & The Economy

Fed Reports Economic Activity Grew at Moderate Pace

Reports from the twelve Federal Reserve Districts indicate that the economy continued to expand across most regions from mid-February through the end of March. Activity in the Richmond, Chicago, Minneapolis, Dallas, and San Francisco Districts grew at a moderate pace, while New York, Philadelphia, and St. Louis cited modest growth. Boston reported that business activity continues to expand, while Cleveland cited a slight pace of growth. Atlanta and Kansas City described economic conditions as steady.

Demand for manufactured products was mixed during the current reporting period. Weakening activity was attributed in part to the strong dollar, falling oil prices, and the harsh winter weather.

Small Business Optimism Down Across the Board

The National Federation of Independent Business’ (NFIB) Small Business Optimism Index fell 2.8 points to 95.2, declining in sympathy with the rather weak stream of reports on the economy. Bad weather was certainly depressing, for both shoppers and the construction industry. All 10 Index components declined, contributing to the 31 point decline in net positive responses. The only good news is that the 10 Index components didn’t fall further, not much to hang on to. Consumer spending has not shown much strength and the saving rate has increased. Not a recession scenario overall for sure, the NFIB notes, but there is not much growth energy in the economy, especially with the energy boom deflating a bit.

U.S. Manufacturing Technology Orders Down in February

February U.S. manufacturing technology orders totaled $304.74 million according to the Association for Manufacturing Technology (AMT). This total was down 10.6% from January’s $341.02 million and down 14.8% when compared with the total of $357.86 million reported for February 2014. With a year-to-date total of $645.76 million, 2015 was down 9.8% when compared with 2014.

“U.S. manufacturing is facing some pressure in terms of a stronger dollar and lower capital expenditures from the energy industry, but in taking the long view, we’re still in a good position overall,” said AMT president Douglas K. Woods. “The automotive and aerospace industries continue to be strong performers, and a number of international manufacturers are making significant investments in U.S. production facilities. We project that manufacturing technology orders will gain momentum as we move through the second quarter.”

NAM Monday Economic Report – April 13, 2015

After a slew of releases the week before, last week was a quiet one on the economic front. This brief pause allowed us to absorb the data that we have before moving forward. Manufacturers have needed to reconcile the weaker-than-desired market in the first quarter of 2015 with a still-upbeat sales, output and labor market outlook for the coming months. This is true even with significant headwinds, including a stronger U.S. dollar, which should continue at least for the rest of this year. The Federal Reserve has equally had to deal with these changing dynamics, particularly grappling with when to begin normalizing short-term interest rates later this year.


Quarterly Survey Finds U.S. Manufacturers More Optimistic

Although the potential impact of the strong dollar is causing uncertainty, optimism among U.S. industrial manufacturers regarding the direction of the domestic economy continues to rise, according to the Q1 2015 Manufacturing Barometer, released by PwC US. The broad sense of optimism about overall economic conditions and improvements in global demand was offset by concerns about pricing and margins and the potential impact of currency on international revenues.

Optimism regarding the prospects of the U.S. economy during the next 12 months increased among U.S. industrial manufacturers to 76% during the first quarter of 2015, up from 68% in the previous quarter and 71% in the first quarter of 2014. The level of optimism reported was the highest since the fourth quarter of 2005. Optimism about the world economy also improved, but by a more modest four points to 42%, as compared to the previous quarter. 

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