June 1, 2015

April Construction Spending: Up 2.2 Percent From March

Filed under: Economy,Taxes & Government — Tom @ 12:17 pm

After dismal news on Personal Consumption Expenditures, this news comes in as a bit of an offset.

Seasonally adjusted construction spending increased by 2.2 percent in April from March, crushing expectations of a 0.7 percent increase.

I would excerpt the Census Bureau’s release, but I can’t get its PDF to display.

As I noted in my most recent PJ Media column, seasonally adjusted first-quarter construction spending was less than that seen in last year’s fourth quarter, so today’s result is a welcome early sign of a turnaround — though I should note that all of April’s increase was in nonresidential spending.

ISM Manufacturing: 52.8 Percent, Up 1.3 Points From April

Filed under: Economy — Tom @ 11:59 am

From the Institute for Supply Management (some paragraph breaks added by me; bolds are mine):

Economic activity in the manufacturing sector expanded in May for the 29th consecutive month, and the overall economy grew for the 72nd consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The May PMI® registered 52.8 percent, an increase of 1.3 percentage points over the April reading of 51.5 percent. The New Orders Index registered 55.8 percent, an increase of 2.3 percentage points from the reading of 53.5 percent in April.

The Production Index registered 54.5 percent, 1.5 percentage points below the April reading of 56 percent. The Employment Index registered 51.7 percent, 3.4 percentage points above the April reading of 48.3 percent, reflecting growing employment levels from April.

Inventories of raw materials registered 51.5 percent, an increase of 2 percentage points from the April reading of 49.5 percent. The Prices Index registered 49.5 percent, 9 percentage points above the April reading of 40.5 percent, indicating lower raw materials prices for the seventh consecutive month.

Comments from the panel carry a positive tone in terms of an improving economy, increasing demand, and improving flow of goods through the West Coast ports. Also noted; however, are continuing concerns over the price of the US dollar and challenges affecting markets related to oil and gas industries.

Of the 18 manufacturing industries, 14 are reporting growth in May

Backlog of orders returned to expansion, rising from 49.5 percent in April to 53.5 percent in May.

Zero Hedge notes that ISM’s result differs from the sharply declining “Markit” result (from 54.0 to 51.0).

It’s remarkable how these surveys remain in expansion, even as much of the most recent raw data tells us that this year is running below last year, as seen in this graphic from my latest PJ Media column:

MfgOrdersAndShipmts1Q13and1Q14and!q15

It seems more than fair to ask ISM if the survey responses are being dominated by firms which are doing well, and under-representing firms which aren’t.

April Personal Consumption Expenditures: Off to a Slow Second Quarter Start

Filed under: Economy,Taxes & Government — Tom @ 11:44 am

From the Bureau of Economic Analysis: Personal Consumption Expenditures (PCE), the figure which represents about 70 percent of GDP, showed a small decline in April, both before and after inflation:

Personal income increased $59.4 billion, or 0.4 percent, and disposable personal income (DPI) increased $48.8 billion, or 0.4 percent, in April, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) decreased $2.6 billion, or less than 0.1 percent. In March, personal income increased $4.0 billion, or less than 0.1 percent, DPI increased $0.5 billion, or less than 0.1 percent, and PCE increased $65.6 billion, or 0.5 percent, based on revised estimates.

Real DPI increased 0.3 percent in April, in contrast to a decrease of 0.2 percent in March. Real PCE decreased less than 0.1 percent, in contrast to an increase of 0.4 percent.

The income increase is helpful, but the idea that once incomes began to increase people were just going to go out and spend it all seemed absurd to me.

For starters, you not going to conistently increase your spending on other things in reaction to gas-price declines unless you think they’re going to be long-lasting. Most people thought they wouldn’t be, President Obama promised they wouldn’t be, and they haven’t been. Gas prices around here have jumped to an average of $2.84 from the low $2.40s a month ago and the low $2.20s two months ago. Those are not small moves.

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UPDATE, 8:30 p.m.: At Zero Hedge“May Consumer Spending Has Biggest Annual Drop Since Great Financial Crisis, Gallup Survey Finds”

What shocked me was the fact that respondents say that average daily spending is 20 percent below where it was in 2008.

Monday Off-Topic (Moderated) Open Thread (060115)

Filed under: Lucid Links — Tom @ 6:05 am

This open thread is meant for commenters to post on items either briefly noted below (if any) or otherwise not covered at this blog. Rules are here.

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She’s already up to 30, and that’s only since the beginning of her campaign, and despite predominantly hiding from the press — Blonde Gator’s “Handy Reference Guide to Hillary Clinton’s Gaffes & Goofs”

Glad to see at least one other person has figured this out“Portman is poster boy for bad politicians.” The Ohio U.S. Senate race in 2016 promises to be a Seinfeld rerun: all about nothing.