{"id":1560,"date":"2019-07-01T13:58:20","date_gmt":"2019-07-01T17:58:20","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1560"},"modified":"2019-07-01T13:58:20","modified_gmt":"2019-07-01T17:58:20","slug":"june-manufacturing-activity-and-may-construction","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1560","title":{"rendered":"June Manufacturing Activity and May Construction"},"content":{"rendered":"\n

KEY DATA:<\/strong> ISM (Manufacturing): -0.4\npoints; Orders: -2.7 points; Employment: +0.8 points\/ Construction: -0.8%;\nPrivate: -0.7%; Residential: -0.6%<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cThe manufacturing slowdown continues and it\nis being mirrored by moderating construction activity.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  The trade battles are supposed to create a\nmore level playing field for manufacturers and lead to a faster growing sector,\nbut for now, the opposite is occurring.  Manufacturing\nactivity continues to fade.  The\nInstitute for Supply Management\u2019s Manufacturing index eased again in June,\ndropping to its lowest level since October 2016.<\/em><\/strong>  That is not to say the sector is not\nexpanding, it is, but the pace has decelerated fairly consistently over the\npast year.  In June, the decline was led\nby faltering orders, which were flat. \nThis was the first time in nearly 3\u00bd years that demand was not\nexpanding.  With output increasing faster,\norder books continued to shrink, which is not good news for future production.<\/em><\/strong>  There was one good number in the report: Employment\nexpanded faster. <\/em><\/strong> Manufacturing\npayrolls may not restrain job gains in Friday\u2019s June employment report, though\nI still think we could see a negative manufacturing number.<\/p>\n\n\n\n

Construction, the other major non-service sector,\nalso looks to be weakening.  Activity\ndropped in May as both public and private sector <\/em><\/strong>and the softness was pretty\nmuch across the board.<\/em><\/strong> \nBoth residential and nonresidential spending were down.<\/em><\/strong>  Compared to May 2018 levels, private sector\nconstruction activity dropped over 6% as residential fell by\ndouble-digits.  Non-residential was off\nminimally.  MARKETS AND FED POLICY IMPLICATIONS:<\/strong>Now\nthat we have cease-fire in the U.S.\/China trade war \u2013 which should have\nsurprised approximately no one – it is time to focus on the economic\nfundamentals.  <\/em><\/strong>Well, maybe we\nshouldn\u2019t.  <\/em><\/strong>There have not been a whole\nlot of good reports recently and today\u2019s numbers continue to paint a picture\nof an economy continuing to moderate. <\/em><\/strong>Manufacturing has been battered by the trade\nwar fears and the weekend\u2019s news wasn\u2019t particularly helpful.  <\/em><\/strong>The reality is that nothing changed\nother than the hope that additional tariffs will not be put in place in the\nnear term.  The Chinese got what they\nwanted and the U.S. put off imposing tariffs that could drive the economy into\nrecession.  I guess you can say that is\ngood but future tariffs have not been ruled out and thus there really is no\nreason for anyone to feel that this situation is close to being resolved.<\/em><\/strong>  It was said that an agreement was 90%\ncomplete, which is downright scary. \nAnyone who has been involved with major negotiations knows that the last\nfew percentage points are the toughest ones and ten percent is a large\nnumber.  So, don\u2019t expect an agreement\nanytime soon, which means that ultimately, the threats of new tariffs will\nlikely rear their ugly heads.  As for the\nFed, the focus is on Friday\u2019s jobs report (yes, there is a jobs report on\nFriday!), which should be decent but hardly great.  I categorize 150,000-175,000 as decent.  Don\u2019t be surprised if the unemployment ticks\nup.  Until we get that number, even with\nadditional data being released before then, the best thing that can be said\nis that the economy is expanding, but at a more trend-like manner, which is\nsomewhere in the 2% range.  <\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: ISM (Manufacturing): -0.4 points; Orders: -2.7 points; Employment: +0.8 points\/ Construction: -0.8%; Private: -0.7%; Residential: -0.6% IN A NUTSHELL:  \u201cThe manufacturing slowdown continues and it is being mirrored by moderating construction activity.\u201d WHAT IT MEANS:  The trade battles are supposed to create a more level playing field for manufacturers and lead to a … Continue reading June Manufacturing Activity and May Construction<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1560","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1560","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1560"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1560\/revisions"}],"predecessor-version":[{"id":1561,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1560\/revisions\/1561"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1560"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1560"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1560"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}