{"id":1653,"date":"2020-02-03T13:11:10","date_gmt":"2020-02-03T18:11:10","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1653"},"modified":"2020-02-03T13:11:10","modified_gmt":"2020-02-03T18:11:10","slug":"january-manufacturing-activity-and-december-construction","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1653","title":{"rendered":"January Manufacturing Activity and December Construction"},"content":{"rendered":"\n

KEY DATA:<\/strong>  ISM (Man.): +3.1 points; Orders: +4.4 points;\nProduction: +9.5 points\/ Construction: -0.2; Private: -0.1%<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cThe manufacturing sector started expanding\nagain in January, but it isn\u2019t clear why that happened.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  Manufacturing had been faltering for much of\n2019 and then the GM strike hit.  We got\nover that impediment but Boeing then shut part of its production.  Despite the chaos, the Institute for Supply\nManagement\u2019s manufacturing activity index jumped in January.  This was the first time since July 2019 that\nthe measure was above fifty, which means the sector is growing.<\/em><\/strong>  The consensus was for the number to show\nactivity still slowing, though at a lesser pace.  The details backed up the rise.  New orders, including exports and imports,\nwere strong and production soared.  But\nhiring was still contracting and order books thinning.<\/em><\/strong>  We have not seen any surge in durable goods\norders and while some of the trade concerns have dissipated, the solid\nimprovement in manufacturing implied by this report is not backed by other\ndata.<\/em><\/strong>  I will take the rise as a\npositive sign, but it would be nice to have supporting figures and a better\nunderstanding why this happened.  I will\nwait a couple of months before I can believe the weakness in manufacturing is\nbehind us.<\/p>\n\n\n\n

As for construction, it is largely going\nnowhere.  Private sector spending faded in\nDecember as a large drop in nonresidential activity overcame a solid rise in\nhome building.<\/em><\/strong>  Public sector construction\nspending was also down, though public housing activity improved.   For\nall of 2019, private construction spending declined<\/em><\/strong>, which is a real\ndisappointment.     MARKETS AND FED\nPOLICY IMPLICATIONS:<\/strong>Let\u2019s\nhope the supply managers\u2019 measure does indeed point to better times for the\nmanufacturing sector.  This has become a\nreal weak link<\/em><\/strong>, but part of that was due to the GM strike and the\nproblems with the 737 Max.  We\ndon\u2019t know how much Boeing\u2019s assembly line shutdown will take out of growth\nthis quarter, but it is likely to be fairly large.  And who knows how the coronavirus will affect\nnot only the Chinese economy, but also the U.S., EU and especially the developing\nnations that depend upon China to buy materials.  That is why I am reticent to declare that\nhappy days are here again.<\/em><\/strong> \nStill, you take the good news while you can.  But it isn\u2019t the economic data that are\ndriving equity prices.  The ebb and flow\nof coronavirus news is the focus of attention. \nChina seems to be acting much more forcibly, but an awful lot of cats\nhave been let out of the bag and they are hard to herd <\/em><\/strong>\u2013 something we cat\n\u201cowners\u201d know so well.  With\nno real understanding of the extent of the problem, the huge movements in the\nmarkets are both understandable and disturbing. \nBut until we know more, look for the wild ride to continue. <\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA:  ISM (Man.): +3.1 points; Orders: +4.4 points; Production: +9.5 points\/ Construction: -0.2; Private: -0.1% IN A NUTSHELL:  \u201cThe manufacturing sector started expanding again in January, but it isn\u2019t clear why that happened.\u201d WHAT IT MEANS:  Manufacturing had been faltering for much of 2019 and then the GM strike hit.  We got over that … Continue reading January Manufacturing Activity and December 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":[1],"tags":[],"class_list":["post-1653","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1653","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=1653"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1653\/revisions"}],"predecessor-version":[{"id":1654,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1653\/revisions\/1654"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1653"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1653"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1653"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}