{"id":1576,"date":"2019-08-01T13:08:51","date_gmt":"2019-08-01T17:08:51","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1576"},"modified":"2019-08-01T13:08:51","modified_gmt":"2019-08-01T17:08:51","slug":"july-manufacturing-activity-june-construction-july-layoff-notices-and-weekly-jobless-claims","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1576","title":{"rendered":"July Manufacturing Activity, June Construction, July Layoff Notices and Weekly Jobless Claims"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><strong>KEY DATA:<\/strong> ISM (Manufacturing): -0.5 pt.;\nOrders: +0.8 pt.; Employment: -2.8 pts.\/ Construction: -1.3%; Private: -0.4%\/ Notices:\n38,845\/ Claims: +8,000<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>IN A\nNUTSHELL:<\/strong> <strong><em>&nbsp;\u201cThe manufacturing sector is not likely to do\nmuch until the trade issues are behind us.\u201d<\/em><\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>WHAT IT\nMEANS:<\/strong> &nbsp;If you believe the Fed and Mr. Powell in\nparticular, it is all about trade.&nbsp; Trade\nwars are causing uncertainty, slowing world growth, U.S. business investment\nand exports and restraining manufacturing activity.&nbsp; And there is little doubt that is the\ncase.&nbsp; <strong><em>In July, we saw that the\nindustrial portion of the economy continued to moderate.&nbsp; The Institute for Supply Management\u2019s\nManufacturing index eased to its lowest in three years.<\/em><\/strong>&nbsp; <strong><em>Production and hiring increased\nsignificantly more slowly and order books thinned at a more rapid pace<\/em><\/strong>.&nbsp; None of those are good signs and the modest\nincrease in jobs points minimal help from manufacturing in tomorrow\u2019s July\nemployment report.&nbsp; <strong><em>A similar measure, the IHS Markit\nManufacturing Purchasing Managers\u2019 Index, hit its lowest level in nearly a\ndecade, so it does appear that manufacturing conditions have weakened\nsignificantly this year.&nbsp; <\/em><\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong><em>Adding to the economy\u2019s woes is the slowdown in\nconstruction, which declined sharply in June.&nbsp;\nMost of that came from a large drop in government spending on education,\nhighways and health care.<\/em><\/strong>&nbsp; I guess we\ndon\u2019t need new schools, roads or hospitals.&nbsp;\nBut this report was not totally negative as <strong><em>private sector commercial and health\ncare construction rose. <\/em><\/strong>&nbsp;Still,\ncommercial construction has not been great this year and there is little reason\nto expect that to change.&nbsp; <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong><em>As for the labor market data, the numbers did little\nto change the perception that conditions remain tight.<\/em><\/strong>&nbsp; Challenger, Gray and Christmas reported that\nlayoff notices continue to grow rapidly.&nbsp;\nThe weakest sector is industrial goods, consistent with the softening of\nthe manufacturing sector.&nbsp; The rise in\nunemployment claims last week only moves us back to more normal, but\nextraordinarily low levels.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>MARKETS AND\nFED POLICY IMPLICATIONS:<\/strong> <strong><em>What will Mr. Powell and his band of\nmonetary policy makers do next?&nbsp; You tell\nme and we both know.&nbsp; The economy is\nstill expanding decently but the trade war issues are not going away.<\/em><\/strong>&nbsp; With China showing it can be just as\nintransigent as Trump, don\u2019t look for much to happen anytime soon.&nbsp; The Chinese have decided to target\nagriculture and they are not buying our farm products.&nbsp; How long farmers will be willing to stay on\ngovernment welfare I don\u2019t know, but it cannot be for too much longer. A lot of\nwhat is going on has to do with politics not economics, so the Chinese decision\nto hurt the politically important farm sector has to be recognized as an\nimportant factor in the negotiations to create true change in the bilateral\nrelationship. Consequently<strong><em>, if a trade agreement with China occurs, it\nis likely to be mostly puff and little pastry.&nbsp;\nBut it would at least ease the uncertainty provide a short-term boost to\ngrowth.&nbsp; <\/em><\/strong>Until then, the\nexpansion should continue to moderate but not falter.&nbsp; <strong><em>Chair Powell still claims the Fed is data\ndependent, which is hard to believe given the data didn\u2019t support a rate\ncut.&nbsp; I just don\u2019t know what he is\nlooking at<\/em><\/strong> and what he characterizes as weak enough to cut again.&nbsp; <strong><em>If all he is worried about is world growth,\nhe will probably get the data he needs to reduce rates again this year.&nbsp; If growth and inflation are the keys, I am\nnot sure the numbers will be as supportive.&nbsp;\nAnd with the Fed clearly divided, forecasting what happens next has\nbecome a lot more uncertain<\/em><\/strong>, which is saying a lot given Mr. Powell\u2019s\npenchant to change course on a dime.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>KEY DATA: ISM (Manufacturing): -0.5 pt.; Orders: +0.8 pt.; Employment: -2.8 pts.\/ Construction: -1.3%; Private: -0.4%\/ Notices: 38,845\/ Claims: +8,000 IN A NUTSHELL: &nbsp;\u201cThe manufacturing sector is not likely to do much until the trade issues are behind us.\u201d WHAT IT MEANS: &nbsp;If you believe the Fed and Mr. Powell in particular, it is all &hellip; <a href=\"https:\/\/naroffeconomics.com\/?p=1576\" class=\"more-link\">Continue reading <span class=\"screen-reader-text\">July Manufacturing Activity, June Construction, July Layoff Notices and Weekly Jobless Claims<\/span> <span class=\"meta-nav\">&rarr;<\/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-1576","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1576","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=1576"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1576\/revisions"}],"predecessor-version":[{"id":1577,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1576\/revisions\/1577"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1576"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1576"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1576"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}