Issues in the Brief
Troubling Signs Amidst Persistent Strength in Employment Numbers
Employment remains a star in an otherwise lackluster economic expansion. U.S. employer payrolls swelled by a strong 209,000 in July, and the unemployment rate fell a tick to 4.3 percent, remaining at a 16-year low. Even with the sluggish GDP growth of recent quarters, it is clear that the U.S. economy is growing above its long-term, non-inflationary potential, creating a strong demand for labor even after eight years of economic recovery and expansion.
Is the August Slump Actually the August Productivity Bump?
With growing to-do lists and action items, everyone feels the crushing need to be more productive with the hours in the day to achieve “peak productiveness.” This means fighting against the natural rhythms of our bodies that lead to the afternoon slump, as well as the productivity levels that slacken as the week fades into the rearview and the weekend comes into focus.
Growing Reasons for U.S. Manufacturing Optimism
In spite of the modest drop in the Institute for Supply Management’s (ISM) widely-followed Purchasing Managers’ (PMI) Index, U.S. manufacturing growth remains on a path of considerable improvement. After reaching 57.8% in June, more than 3 percentage points above the current 12-month average, the PMI index slipped by 1.5 percentage points in July to a still strong 56.3%. Key survey indices such as new orders, production, and the backlog of orders remain in solid growth territory although they all fell modestly last month.
A Good Day for U.S. Manufacturing and the U.S. Statistical System
I anticipated that the historical U.S. GDP revisions, which accompany the initial release of the second quarter GDP report and currently extend back to the first quarter of 2014, would make for some interesting analysis. What’s remarkable, however, is just how small the revisions are on the whole. The revised data in no way change the qualitative narrative of growth for a frustrating period in which U.S. manufacturing was all but stagnant. Score one for the reliability and stability of the U.S. economic data system.
The Era of Low Interest Rates Continues
The FOMC punted on another move and released a statement that smacks of trepidation on the sustainable strength of the U.S. economy. They acknowledge that job gains have been solid and that consumer spending and business fixed investment have continued to expand. The troubling point remains inflation, and they are quite concerned.
U.S. Industrial Outlook: Stronger World Propelling U.S. Manufacturing
The upswing in the global economy that began in the winter of 2016 continues apace. All told, the MAPI Foundation’s forecast remains relatively unchanged from the February 2017 report.
Machinery and Computers Lead the Way to Stronger U.S. Manufacturing
Today’s global uncertainties can quickly present head- or tail-winds to future U.S. growth. In addition to our quarterly scenario for U.S. manufacturing growth, the June 2017 report also explores the boundaries of plausible factory sector growth through 2020.