{"id":236,"date":"2014-07-01T18:28:08","date_gmt":"2014-07-01T22:28:08","guid":{"rendered":"http:\/\/naroffeconomics.com\/?p=236"},"modified":"2014-07-02T12:17:39","modified_gmt":"2014-07-02T16:17:39","slug":"june-supply-managers-manufacturing-index-and-may-construction","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=236","title":{"rendered":"June Supply Managers\u00e2\u20ac\u2122 Manufacturing Index and May Construction"},"content":{"rendered":"

KEY DATA:<\/strong> ISM (Manufacturing): down 0.1 point; Orders: up 2 points: Employment: flat\/ Construction: up 0.1%<\/p>\n

IN A NUTSHELL:<\/strong>\u00c2\u00a0\u00e2\u20ac\u0153Manufacturing activity remains solid and the sharp rise in demand points to improvement going forward.\u00e2\u20ac\u009d <\/em><\/strong><\/p>\n

WHAT IT MEANS:<\/strong>\u00c2\u00a0We know the economy went backwards sharply during the winter, but where are we now and where are we going?\u00c2\u00a0 It looks like the economy is accelerating, but maybe not as rapidly as most of us had hoped.\u00c2\u00a0 The Institute for Supply Management\u00e2\u20ac\u2122s June measure of activity eased a touch <\/em><\/strong>but the May level was the highest in five months.\u00c2\u00a0 In other words, the winter wipeout has been wiped out.\u00c2\u00a0 On the positive side, new orders surged and that is good news for future production,<\/em><\/strong> which moderated.\u00c2\u00a0 However, the level of the production index remained quite high, so we are not talking about any major retrenchment.\u00c2\u00a0 Export demand continued to grow, but less robustly while imports accelerated.\u00c2\u00a0 Despite the new orders growth, backlogs fell and that may be the reason that hiring didn\u00e2\u20ac\u2122t pick up. <\/em><\/strong>\u00c2\u00a0We get the employment report on Thursday and it should be really good, but manufacturing may not be the prime driver of the gains.<\/p>\n

In a separate report, construction activity increased less than expected in May as residential activity declined.\u00c2\u00a0 <\/em><\/strong>The good news is that the government is back building infrastructure again as spending on roads, water and sewer projects, power and transportation needs were all up solidly.<\/p>\n

MARKETS AND FED POLICY IMPLICATIONS:<\/strong> Last week we saw that consumer spending was nothing special in May and that has raised some questions about how strong growth was in the just completed second quarter.\u00c2\u00a0 <\/em><\/strong>We know that households bought lots of motor vehicles.\u00c2\u00a0 Indeed, it looks like the June numbers will be even better than projected.\u00c2\u00a0 But spending on most other goods was moderate, at best.\u00c2\u00a0 Disturbingly, demand for services, the largest component of demand, was up minimally.\u00c2\u00a0 Maybe the warm June caused utility demand to jump, but right now, it is hard to see growth above the four percent growth pace I have been forecasting.\u00c2\u00a0 But that doesn\u00e2\u20ac\u2122t mean the economy is weak or soft or not accelerating.\u00c2\u00a0 The manufacturing sector is not doing well because the rest of the world is growing rapidly.<\/em><\/strong>\u00c2\u00a0 It is doing well because domestic demand is on the rise.\u00c2\u00a0 <\/em><\/strong>So I still think it is possible that the second half of the year will see strong to robust growth, but until that happens, it will remain a hope.\u00c2\u00a0 And the Fed is not operating on hopes and prayers.\u00c2\u00a0 Chair Yellen may not be from Missouri but she seems to believe in the state\u00e2\u20ac\u2122s nickname of\u00c2\u00a0 \u00e2\u20ac\u0153Show Me\u00e2\u20ac\u009d.\u00c2\u00a0 Until growth really does hit its stride, the Fed will be keeping rates low.\u00c2\u00a0 As for investors, it\u00e2\u20ac\u2122s the first day of the new quarter and they also seem to be willing to believe that rates will remain low and the markets can rise until they are shown that is not the case.<\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: ISM (Manufacturing): down 0.1 point; Orders: up 2 points: Employment: flat\/ Construction: up 0.1% IN A NUTSHELL:\u00c2\u00a0\u00e2\u20ac\u0153Manufacturing activity remains solid and the sharp rise in demand points to improvement going forward.\u00e2\u20ac\u009d WHAT IT MEANS:\u00c2\u00a0We know the economy went backwards sharply during the winter, but where are we now and where are we going?\u00c2\u00a0 … Continue reading June Supply Managers\u00e2\u20ac\u2122 Manufacturing Index and May Construction<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20,3,19],"tags":[],"class_list":["post-236","post","type-post","status-publish","format-standard","hentry","category-construction","category-economic-indicators","category-supply-managers-manufacturing-index"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/236","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\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=236"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/236\/revisions"}],"predecessor-version":[{"id":237,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/236\/revisions\/237"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=236"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=236"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=236"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}