Last updateThu, 22 Oct 2020 5pm

Durable Goods Orders Rebounded in May

New orders for manufactured durable goods in May increased $26.6 billion or 15.8% to $194.4 billion, the U.S. Department of Commerce announced. This increase, up following two consecutive monthly decreases, followed an 18.1% April decrease. Excluding transportation, new orders increased 4.0%. Excluding defense, new orders increased 15.5%. Transportation equipment, also up following two consecutive monthly decreases, led the increase, $20.9 billion or 80.7% to $46.9 billion.

IMF: U.S. Economy to Shrink 8.0% in 2020

Global growth is projected at –4.9% in 2020, 1.9% below the International Monetary Fund’s (IMF) April 2020 World Economic Outlook forecast. For both the U.S. and advanced economies in general, the IMF predicts -8.0% growth. The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast. In 2021 global growth is projected at 5.4%. Overall, this would leave 2021 GDP some 6.5% lower than in the pre-COVID-19 projections of January 2020. The adverse impact on low-income households is particularly acute, imperiling the significant progress made in reducing extreme poverty in the world since the 1990s.

IHS Markit: Manufacturing Contraction Slows in June

Manufacturers indicated only a fractional deterioration in operating conditions in June, as the IHS Markit Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) posted only slightly below the 50.0 no-change mark at 49.6, up from 39.8 midway through the second quarter.

The marked softening in the pace of overall decline largely stemmed from notably slower falls in output and new orders. Although still signaling contractions, rates of decrease were their slowest since before the escalation of the pandemic.

Although the rate of job shedding eased in June, backlogs of work continued to be reduced sharply, showing signs of ongoing spare capacity. Where higher employment was noted, this was generally linked to the return to work of furloughed workers and the hiring of extra staff.

Leading Economic Indicators for U.S. Increased in May

The Conference Board Leading Economic Index (LEI) for the U.S. increased 2.8% in May. Most of the LEI components improved over last month, except for the ISM New Orders Index, consumer expectations for business conditions, and the Leading Credit Index (inverted). In the six-month period ending May 2020, the leading economic index decreased 10.6% (about a -20.0% annual rate), substantially below the 0% changeover the previous six-month period. In addition, the weaknesses among the leading indicators have remained very widespread.

Texas Jobs Decline at Historic Pace from Impact of COVID-19

Payroll employment in Texas contracted at a historic nonannualized rate of 9.6%, or 1.25 million jobs, in the two months ended in April. The sharp contraction from employment levels in February, prior to the impact of the COVID-19 pandemic, was widespread across all industries. However, job losses in Texas were less severe than in the nation.

The Dallas Fed's production index, the headline indicator for manufacturing activity in Texas, remained negative but the contraction slowed from -55.6 to -28.0, a sign that the decline in output had eased since April.

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