August 1, 2016

Construction Spending Picked a Really Bad Time (i.e., Peak Season) to Go in the Tank

Filed under: Economy,Taxes & Government — Tom @ 4:18 pm

From the Census Bureau:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during June 2016 was estimated at a seasonally adjusted annual rate of $1,133.5 billion, 0.6 percent (±1.3%)* below the revised May estimate of $1,140.9 billion. The June figure is 0.3 percent (±1.6%)* above the June 2015 estimate of $1,130.5 billion.

During the first 6 months of this year, construction spending amounted to $539.8 billion, 6.2 percent (±1.3%) above the $508.1 billion for the same period in 2015.

In other words, all of this year’s increases are in earlier months.

Seasonally adjusted construction spending has dropped 3.6 percent, from an annualized $1.1764 trillion $1.1335 trillion, in the past three months. Seasonally adjusted residential construction has dropped by 4.9 percent, supporting that sector’s negative contribution to GDP in last week’s second-quarter report.

The case for second-quarter GDP staying above 1.0 percent in future revisions just got much weaker.

ISM Manufacturing: 52.6 Percent, Down from 53.2 Pct. in June

Filed under: Economy — Tom @ 4:07 pm

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

Economic activity in the manufacturing sector expanded in July for the fifth consecutive month, while the overall economy grew for the 86th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

… The July PMI® registered 52.6 percent, a decrease of 0.6 percentage point from the June reading of 53.2 percent. The New Orders Index registered 56.9 percent, a decrease of 0.1 percentage point from the June reading of 57 percent. The Production Index registered 55.4 percent, 0.7 percentage point higher than the June reading of 54.7 percent.

The Employment Index registered 49.4 percent, a decrease of 1 percentage point from the June reading of 50.4 percent. Inventories of raw materials registered 49.5 percent, an increase of 1 percentage point from the June reading of 48.5 percent.

The Prices Index registered 55 percent, a decrease of 5.5 percentage points from the June reading of 60.5 percent, indicating higher raw materials prices for the fifth consecutive month.

Manufacturing registered growth in July for the fifth consecutive month, as 12 of our 18 industries reported an increase in new orders in July (same as in June), and nine of our 18 industries reported an increase in production in July (down from 12 in June).”

Of the 18 manufacturing industries, 11 are reporting growth in July in the following order: Textile Mills; Printing & Related Support Activities; Miscellaneous Manufacturing; Wood Products; Furniture & Related Products; Chemical Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; Nonmetallic Mineral Products; Petroleum & Coal Products; and Computer & Electronic Products. The seven industries reporting contraction in July — listed in order — are: Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Machinery; Primary Metals; Transportation Equipment; and Paper Products.

Backlog of Orders moved into contraction, dropping from 52.5 to 48.0.

So the Fed (July thru June) says industrial production has dropped 0.7 percent in the past 12 months, and that manufacturing has only increased by 0.4 percent, and most regional manufacturing reports are showing contraction. But the ISM soldiers on, thanks to positive selection bias and creative seasonalizing, telling us that manufacturing continues to expand at a pretty decent pace.

Don’t buy it. If we’re lucky, it’s flat or barely expanding.

Monday Off-Topic (Moderated) Open Thread (080116)

Filed under: Lucid Links — Tom @ 6:00 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.

Positivity: HACIENDA HEIGHTS COUPLE CELEBRATE 75 YEARS OF MARRIAGE, GET GIFT FROM POPE

Filed under: Positivity — Tom @ 5:55 am

From Los Angeles:

Tuesday, July 26, 2016 12:50PM

A Hacienda Heights couple celebrated their 75th anniversary, and even received a special gift from Pope Francis.

Albert and Bernice Trujillo met in New Mexico in 1940, marrying a year later. In 1972, they settled in Hacienda Heights.

Their priest delivered a blessing at a celebration Sunday, along with a special plaque from Pope Francis.

“My parents celebrating their 75th wedding anniversary has just been a really emotional time for the whole family because we’re extremely proud of them,” their daughter, Cathy Henno, said. “They’re terrific role models – 10 children, and my dad has provided for our family all these years. We’re extremely proud and so happy for them.” …

Go here for the rest of the story.