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Manufacturing Continued to Post Solid Gains, Capacity Utilization Rate Beat Forecast
Two engineers — one male and one female — in a manufacturing factory discussing operations in industrial production. (Photo: AdobeStock)
Washington, D.C. (PPD) — The Federal Reserve reported total industrial production rose 3.0% in July, a solid gain that matched the consensus forecast. That follows an upwardly revised 5.7% gain in June, which was initially reported at 5.4%.
Forecasts for industrial production ranged from a low of 1.5 to a high of 4.7. The consensus forecast was 3.0. The total index is now only 8.4% below the pre-pandemic level after posting the largest monthly drop in the 101-year history of the index in April.
That decline was the direct result of factories slowing or suspending operations to mitigate the spread of the Chinese Coronavirus (COVID-19) throughout the month.
Manufacturing output gained a solid 3.4%, the largest being a 28.3% gain by motor vehicles and parts. Forecasts for manufacturing ranged from a low of 2.0 to a high of 6.5. The consensus forecast was 3.0.
Mining production gained 0.8% after declining for five straight months. The output of utilities rose 3.3%, which the Federal Reserve attributed to “unusually warm temperatures” that increased demand for air conditioning.
At 100.2% of its 2012 average, the level of total industrial production was 8.2% lower in July 2020 than it was a year earlier in July 2019. Capacity utilization for the industrial sector rose 2.1 percentage points in July to 70.6%. While that rate is 9.2 percentage points below its long-run (1972–2019) average, it is 6.4 percentage points above its low in April and higher than the forecast.
Forecasts for the Capacity Utilization Rate ranged from a low of 69.0 to a high of 71.5. The consensus forecast was 70.3.
Group of friends sitting outdoors with shopping bags; several people holding smartphones and tablets. (Photo: AdobeStock/ OneInchPunch/PPD)
Washington, D.C. (PPD) — The U.S. Census Bureau reported advance retail sales came in at $536.0 billion in July, a 1.2% (± 0.5%) gain slightly missing the consensus forecast. That’s 2.7% (± 0.7%) above July 2019 and total sales for the May 2020 through July 2020 period are down just 0.2% (± 0.5%) from the same period a year ago.
Forecasts ranged from a low of 0.7% to a high of 4.0%. The consensus forecast was 2.0%. The percentage change for June was revised higher from up 7.5% (± 0.5%) to up 8.4% (± 0.2%).
Retail sales were initially reported to have soared a record 17.7% (± 0.5%) in May, recovering more than the loss in April, which was revised from down 16.4% (± 0.5%) to down 14.7% (± 0.2%). That’s the largest monthly gain ever on record and far better than economists expected.
Forecasts for retail sales less auto and gas ranged from a low of 0.5% to a high of 1.5%. The consensus forecast was 0.9%. The advance estimate for May also came in at 1.5%, higher than expected.
Forecasts for retail sales less auto ranged from a low of 0.5% to a high of 2.9%. The consensus forecast was 1.5%. The advance estimate for July came in higher at 1.9%.
Insured Unemployment Rate Dives Again to 10.6% in First Report Under 1M Since Pandemic
U.S. initial jobless claims graph on a tablet screen. (Photo: AdobeStock)
Washington, D.C. (PPD) — The U.S. Labor Department (DOL) reported initial jobless claims fell significantly to 963,000 for the week ending August 8, a decrease of 228,000. The previous week was upwardly revised by just 5,000 from 1,186,000 to 1,191,000.
Forecasts ranged from a low of 1,050,000 to a high of 1,220,000. The consensus forecast was 1,150,000. This week marks the first week after 18 straight weeks since the start of the pandemic in which jobless claims fell below 1,000,000.
The 4-week moving average came in at 1,252,750, a decrease of 86,250. The previous week’s average was upwardly revised slightly by 1,250 from 1,337,750 to 1,339,000.
Lagging Jobless Claims Data
The advance seasonally adjusted insured unemployment rate took another drive to 10.6% for the week ending August 1, down 0.4% from the previous week’s unrevised rate.
The insured unemployment rate hit the first high of the current crisis at 8.2% for the week ending April 4. The all-time high prior to that was 7.0%, recorded in May of 1975. On April 11, it rose to 11.0% and 12.4% on April 25.
Under the Trump Administration, this rate had fallen to an all-time low 1.1% and remained at 1.2% just weeks ago, as recently as March 14. But that was before coronavirus (COVID-19) mitigation efforts.
The advance number for seasonally adjusted insured unemployment came in at 15,486,000 during the week ending August 1. That’s a decrease of 604,000 from the previous week’s level, which was revised down by 17,000 from 16,107,000 to 16,090,000. The 4-week moving average was 16,169,500, a decrease of 454,500 from the previous week’s revised average, which was also revised down by 4,250 from 16,628,250 to 16,624,000.
Extended Benefits were available in all 50 states, Puerto Rico and D.C. during the week ending July 25. The total number of people claiming benefits in all programs for that same period fell 3,065,616 from the previous week.
The highest insured unemployment rates in the week ending July 25 were in Nevada (23.6), Hawaii (21.1), Puerto Rico (19.1), Louisiana (17.3), New York (16.5), California (16.0), Connecticut (15.3), Georgia (14.4), Massachusetts (14.3), and Rhode Island (12.7).
The largest increase in initial claims for the week ending August 1 was in Rhode Island (+87), while the largest decreases were in California (-22,610), Virginia (-19,048), Texas (-14,095), Florida (-13,176), and New Jersey (-11,489).
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CPI Recovered Nearly All Losses During COVID-19 Shutdown
Consumer Price Index (CPI) graphic concept. (Photo: AdobeStock)
Washington, D.C. (PPD) — The Consumer Price Index (CPI) for final demand rose a seasonally-adjusted 0.6% in July, doubling the forecast in the largest gain since January. That large gain follows another 0.6% increase in July and June, recovering all but 0.1% of the total losses during the shutdown.
Forecasts for the CPI ranged from a low of 0.2% to a high of 0.5%. The consensus forecast was 0.3%.
On Tuesday, BLS reported the Producer Price Index (PPI) for final demand rose a seasonally-adjusted 0.6% in July, doubling the forecast and the largest gain since October 2018. That gain recovered all of the -0.2% and -0.4% readings in June and May, respectively.
Producer Price Index (PPI) graphic concept. (Photo: AdobeStock)
Washington, D.C. (PPD) — The Producer Price Index (PPI) for final demand rose a seasonally-adjusted 0.6% in July, doubling the forecast and the largest gain since October 2018. That large gain recovers all of the -0.2% and -0.4% readings in June and May, respectively.
Forecasts for the PPI ranged from a low of 0.2% to a high of 0.6%. The consensus forecast was 0.3%. The gain was led by a 0.5-percent rise in prices for final demand services. The index for final demand goods also moved higher, increasing 0.8%.
The PPI for final demand less foods and energy came in at 0.5%. The forecasts ranged from a low of 0.0% to a high of 0.2%. The consensus forecast was flat at 0.0%.
Watch Live 10:30 AM EST (PPD) — On Inside The Numbers, we discuss the forces choosing the running mate for Joe Biden, and panic-pushers hurting the economy.
With cautious optimism a small business owner wearing a face mask and disposable gloves posts safety rules as she reopens her store after the coronavirus (COVID-19)shutdown. (Photo: AdobeStock/JHDT Productions)
Washington, D.C. (PPD) — The Small Business Optimism Index dipped 1.8 points in July to 98.8 from 100.6, less than expected though near the historic average. Four of the 10 index components in the NFIB index improved, 5 declined and 1 was unchanged.
Forecasts ranged from a low of 97.0 to a high of 101.8. The consensus forecast was 100.0.
Small business owners lowered their six month outlook amid concerns the economy is not fully reopening quickly enough. The percentage expecting better business conditions in the next six months declined 14 points to a net 25%.
“This summer has been challenging for many small business owners who are working hard to keep their doors open and remain in business,” said NFIB’s Chief Economist Bill Dunkelberg. “Small business represents nearly half of the GDP and this month we saw a dip in optimism. There is still plenty of work to be done to get businesses back to pre-crisis numbers.”
The net for hiring plans over the next 3 months came in at a seasonally adjusted 18%, up 2 points from June and 17 percentage points higher than in April. However, too many workers have not yet returned to work.
The generous unemployment benefits provided by the CAREs Act only expired in July. Further, 21% cited “finding qualified labor” as their top business problem, with 37% being in construction.
The percentage of small business owners reporting capital outlays in the last six months rose 1 point to 49%. Of those, 33% reported spending on new equipment, 21% acquired vehicles, and 13% improved or expanded facilities. Another 5% acquired new buildings or land for expansion and 10% spent money for new fixtures and furniture. Twenty-six percent (26%) of owners are planning capital outlays in the next few months.
Only 3% of small business owners say their borrowing needs were not met and 35% reported all their credit needs were met. Fifty-one (51%) have no interest in a loan, while just 2% net reported it was harder to obtain a loan than previously.
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