{"id":1634,"date":"2020-01-03T11:40:07","date_gmt":"2020-01-03T16:40:07","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1634"},"modified":"2020-01-03T11:40:07","modified_gmt":"2020-01-03T16:40:07","slug":"december-manufacturing-activity-and-november-construction-spending","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1634","title":{"rendered":"December Manufacturing Activity and November Construction Spending"},"content":{"rendered":"\n

KEY DATA:<\/strong>  ISM (Manufacturing): -0.9%; Orders: -0.4%;\nProduction: -5.9%; Hiring: -1.5%\/ Construction: +0.6%; Private: +0.4%; Public:\n+0.9%<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cManufacturers did not end the year on a high\nnote as the sector continues to contract.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong> Last\nyear may have been the best of times for the equity markets but that was hardly\nthe case for the manufacturing sector. \nIn December, the Institute for Supply Management\u2019s index was in the red\nfor the fifth consecutive month.<\/em><\/strong> \nContinued declines in demand led to a sharp drop in production.  <\/em><\/strong>Indeed, the production measure was\nthe lowest since April 2009 and lest we forget, that was during the peak of the\nGreat Recession cut backs.  The slowdown\nin output has triggered a decline in payrolls. <\/em><\/strong> Four of the six major industry sectors posted\nshrinking employment.  Only one was\nup.  We could see a negative number in\nthe manufacturing segment of the employment report that will be released next\nFriday.  With demand, production and\nbacklogs fading, firms are slimming down and inventories are shrinking.  Basically, this report was ugly.<\/em><\/strong><\/p>\n\n\n\n

While manufacturing may be fading, construction\nseems to be picking up.<\/em><\/strong>  Given how soft it had been,\nthat is not a major surprise, though it is welcome news.  Both public and private spending was up\nsolidly in November.  However, it is still\nthe government that is the driving force as activity was up twice as quickly as\nthe private sector.<\/em><\/strong> \nYear-over-year, November total public construction rose by 12.4%\ncompared to only 1.6% for the private sector. \nThe private sector weakness was largely in nonresidential building,\nwhich fell in both November and over the year. \nResidential activity has picked up, but not by a whole lot.  MARKETS AND FED\nPOLICY IMPLICATIONS:<\/strong>The\neconomic data did not provide us with a very merry welcome to 2020.   The manufacturing\nsector is not in great shape and even the comments reported in the Supply\nManagers\u2019 report were cautiously optimistic at best. <\/em><\/strong> We don\u2019t know a whole lot about the so-called\nphase one trade agreement with China, but it looks to be mostly centered on\ntrying to keep the farm sector from going bankrupt. But I will hold my judgment\nuntil we see the text.  As\nfor the markets, the shift from trade war to potential shooting war with Iran\nwas hardly something investors wanted to see.<\/em><\/strong>  The ball is now in Iran\u2019s court and it is\nlikely something bad will be attempted. \nWe just don\u2019t know how big or how long before it occurs.  That could keep investors on edge. Concerns\nabout the trade war hardly slowed investors down in 2019, so it is not clear\nthat a shooting war will do much this year. \nKeep in mind, the economy grew at a roughly 2.25% pace last year while\nthe major equity indices soared by well over 20% and even over 30%.<\/em><\/strong>That seems to imply that the economy and the\nmarkets are not closely linked.  <\/em><\/strong>That\nis something the Fed doesn\u2019t seem to be overly concerned about as the members\ncontinue to pat themselves on their backs for doing such a great job.  Well, there goes one of my resolutions.  I promised myself I would lay off criticizing\nthe Fed for a while and here I am in my first commentary of the year doing just\nthat.  Oh, well, I just calls \u2018em as I\nsees \u2018em.  \n\n\n\n<\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA:  ISM (Manufacturing): -0.9%; Orders: -0.4%; Production: -5.9%; Hiring: -1.5%\/ Construction: +0.6%; Private: +0.4%; Public: +0.9% IN A NUTSHELL:  \u201cManufacturers did not end the year on a high note as the sector continues to contract.\u201d WHAT IT MEANS: Last year may have been the best of times for the equity markets but that was … Continue reading December Manufacturing Activity and November Construction Spending<\/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":[1],"tags":[],"class_list":["post-1634","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1634","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=1634"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1634\/revisions"}],"predecessor-version":[{"id":1635,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1634\/revisions\/1635"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1634"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1634"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1634"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}