U.S. Manufacturing Sector Enters Expansion Cycle Earlier than Economists Expected Post-Coronavirus
Tempe, Arizona (PPD) — The Institute for Supply Management (ISM) Manufacturing Index (PMI) came in stronger than expected at 52.6% in June, up from 43.1% in May. This reading indicates the overall economy in expansion for the second straight month after one month of contraction that ended 131 consecutive months of growth.
Forecasts for the PMI ranged from a low of 46.0 to a high of 51.5, and the consensus forecast was 49.0.
The reading also indicates the U.S. manufacturing sector entered an expansion cycle earlier than expected after the contraction caused by the efforts to mitigate the spread of coronavirus (COVID-19). The rate of increase for the PMI is a level not seen since August 1980.
Comments from the panel were positive (1.3 positive comments for every one cautious comment), reversing the cautious trend which began in March. The manufacturing sector is reversing the heavy contraction of April, with the PMI® increasing month-over-month at a rate not seen since August 1980, with several other indexes also posting gains not seen in modern times.
Index
Series Index Jun
Series Index May
Percentage Point Change
Direction
Rate of Change
Trend* (Months)
PMI®
52.6
43.1
+9.5
Growing
From Contracting
1
New Orders
56.4
31.8
+24.6
Growing
From Contracting
1
Production
57.3
33.2
+24.1
Growing
From Contracting
1
Employment
42.1
32.1
+10.0
Contracting
Slower
11
Supplier Deliveries
56.9
68.0
-11.1
Slowing
Slower
8
Inventories
50.5
50.4
+0.1
Growing
Faster
2
Customers’ Inventories
44.6
46.2
-1.6
Too Low
Faster
45
Prices
51.3
40.8
+10.5
Increasing
From Decreasing
1
Backlog of Orders
45.3
38.2
+7.1
Contracting
Slower
4
New Export Orders
47.6
39.5
+8.1
Contracting
Slower
4
Imports
48.8
41.3
+7.5
Contracting
Slower
5
OVERALL ECONOMY
Growing
Faster
2
Manufacturing Sector
Growing
From Contracting
1
Manufacturing ISM Report On Business data is seasonally adjusted for the New Orders, Production, Employment and Inventories indexes. *Number of months moving in current direction.
Private Sector Employment Revised from -2,760,000 to 3,065,000 for May
Roseland, N.J. (PPD) — The ADP National Employment Report found private sector employment increased by 2,369,000 jobs in June and the prior month was revised to show historic job gains. The historic gains come after a historic loss in April.
“Small business hiring picked up in the month of June,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “As the economy slowly continues to recover, we are seeing a significant rebound in industries that once experienced the greatest job losses. In fact, 70 percent of the jobs added this month were in the leisure and hospitality, trade and construction industries.”
While the headline number missed the forecast, a large and expected upward revision to the month prior more than makes up for the miscalculation. The May total of jobs added was revised from -2,760,000 to 3,065,000.
Despite Solid Gain, Consumer Confidence Index Remains Below Pre-Pandemic Levels in June Due to Present Situation Index
The Conference Board Consumer Confidence Index (CCI) increased significantly by 12.2 points in June, easily beating economists’ expectations. The Index now stands at 98.1 (1985=100), up from a virtually unchanged reading of 85.9 in May.
Forecasts ranged from a low of 79.0 to a high of 101.3. The consensus forecast was 90.0. The historic low reading at 25.0 was measured during the Great Recession in February 2009.
“Consumer Confidence partially rebounded in June but remains well below pre-pandemic levels,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The re-opening of the economy and relative improvement in unemployment claims helped improve consumers’ assessment of current conditions, but the Present Situation Index suggests that economic conditions remain weak.”
The Present Situation Index — which is based on consumers’ assessment of current business and labor market conditions — rose from 68.4 to 86.2. The Expectations Index — gauging consumers’ short-term outlook for income, business, and labor market conditions — increased from 97.6 in May to 106.0 this month.
“Looking ahead, consumers are less pessimistic about the short-term outlook, but do not foresee a significant pickup in economic activity,” Franco added. “Faced with an uncertain and uneven path to recovery, and a potential COVID-19 resurgence, it’s too soon to say that consumers have turned the corner and are ready to begin spending at pre-pandemic levels.”
The Consumer Confidence Survey is conducted monthly and based on a probability-design random sample for the Conference Board by Nielsen. The cutoff date for the preliminary results was June 18.
The S&P CoreLogic Case-Shiller 20-City Composite Home Price Index (HPI) SA rose as economists expected by a solid 0.5% for April, seasonally adjusted. Forecasts ranged from a low of 0.4% to a high of 0.6%.
The 20-City Composite Home Price Index (HPI) NSA rose slightly more than economists expected by a solid 1.1% for April, non-seasonally adjusted. Forecasts ranged from a low of -0.6% to a high of 1.0% with 1.0% being the consensus.
The S&P CoreLogic Case-Shiller 20-City Composite Home Price Index (HPI) NSA rose as economists expected by 3.9% year-over-year. Forecasts ranged from a low of 3.4% to a high of 4.5%
Texas Manufacturing Surges as Production, Outlook and Wages Return to Positive Territory
Dallas, Tx. (PPD) — The Texas Manufacturing Outlook Survey rebounded strongly in June, far more than expected after posting record or near record declines. The Federal Reserve Bank of Dallas reported the key production index soared from -28.0 to 13.6.
The general business activity index rose from -49.2 to -6.1 after rising from -74.0 to -49.2 in May. Forecasts ranged from a low of -35.0 to a high of -5.0. The consensus forecast was -26.0.
The company outlook index climbed back into positive territory, from -34.6 to 2.7, with 29% of manufacturers noting improved outlooks, up from 12% last month. The wages and benefits index returned to positive territory at 6.8.
Data were collected June 16–24, and 115 Texas manufacturers responded to the survey. The next release is scheduled for Monday, July 27.
Regional Manufacturing Surveys Rebound in June
The Texas Manufacturing Outlook Survey is one of several regional surveys of factory activity conducted by their respective Federal Reserve Bank. The Federal Reserve reported total industrial production rose 1.4% in May on the back of manufacturing growth and after posting the largest monthly drop in the 101-year history of the index in April.
The New York Federal Reserve Empire State Manufacturing Survey rose 48 points in June to -0.2, and optimism soared to the highest level in over a decade. While the general conditions index remained slightly negative, it’s far off the all-time low in April.
The Philadelphia Federal Reserve’s Manufacturing Business Outlook Survey unexpectedly rebounded strongly in June, far off the low in April. The diffusion index for current general activity soared from -43.1 in May to 27.5, the first positive reading since February.
Pending Home Sales Index (PHSI) Post Record Gain, Recovering More than Record Loss in April
Washington, D.C. (PPD) — The National Association of Realtors (NAR) reported pending home sales posted the largest gain on record in May, recovering more than the record loss in April. The record gain both in month-over-month and year-over-year contract activity occurred in every major region and represents a rebound post-coronavirus (COVID-19).
The Pending Home Sales Index (PHSI) rose 44.3% to 99.6 in May, the largest month-over-month gain for the index since NAR started this series in January 2001. Year-over-year, contract signings fell 5.1%.
“This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their evergreen desire for homeownership,” said Lawrence Yun, NAR’s chief economist. “This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”
Forecasts ranged from a low of 6.8% to a high of 25.0%. The consensus forecast was 11.3%. An index of 100 is equal to the level of contract activity in 2001.
“More listings are continuously appearing as the economy reopens, helping with inventory choices,” Mr. Yun added. “Still, more home construction is needed to counter the persistent underproduction of homes over the past decade.”
NAR now expects existing home sales to hit 4.93 million units in 2020 and new home sales to hit 690,000. Mr. Yun said sales are forecast to rise to 5.35 million units for existing homes and 800,000 for new homes in 2021, barring no large change in public policy.
Pending Home Sales Regional Breakdown
In May, each of the four regional indices posted month-over-month gains after all were down in April 2020.
The Northeast PHSI skyrocketed 44.4% to 61.5, though the traditionally weakest region remains down 33.2% from a year ago. In the Midwest, the index soared 37.2% to 98.8, down only 1.4% from May 2019.
In the South, pending home sales shot 43.3% higher to an index of 125.5, up and are now up 1.9% from May 2019. The index in the West gained by 56.2% in May to 89.2, and is now down 2.5% from a year ago.
Housing Set to Lead Rebound If Allowed
If calls for a prolonged pausing of states’ economies — let alone shutting them down again — succeed across the nation succeed, the economic rebound could be jeopardized. As of now, housing is set to lead the V-Shaped recovery.
New home sales unexpectedly soared 16.6% (±15.5%) to a seasonally adjusted annual rate of 676,000 in May, easily beating the consensus forecast. This month of April was revised down to a rate of 580,000, when most businesses and government were operating on a limited capacity or had ceased operations totally.
The NAHB Housing Market Index (HMI) reported builder confidence unexpectedly surged 21 points to 58 in June. New residential construction statistics for housing starts and building permits rose in May, despite lingering effects due to coronavirus (COVID-19).
Joe Biden Appears Not to Have Been Truthful, Was Directly Involved in Persecution of Michael Flynn
Washington, D.C. (PPD) — Newly unsealed documents further implicate Joe Biden in the inappropriate investigation into former National Security Advisor Lt. General Michael Flynn. Indeed, Mr. Biden appears to have “personally raised the idea” of using the Logan Act.
The court filings include handwritten notes from now-disgraced and fired F.B.I. Agent Peter Strzok. They detail how the investigation — dubbed “Crossfire Razor” — was ordered by then-President Barack Obama and the strategy was engineered by Mr. Biden in the Oval Office on January 5, 2017.
A partially redacted copy of the notes attached to the filing includes a mention that appears to say: “VP: ‘Logan Act.’” The documents also reveal Mr. Obama told top administration officials that “the right people” should investigate Lt. General Flynn, who also served as the Director of National Intelligence (DNI) under the former president.
“According to Strzok’s notes, it appears that Vice President Biden personally raised the idea of the Logan Act,” defense lawyers Jesse Binnall and Sidney Powell wrote.
Last week, the U.S. Court of Appeals for the District of Columbia (D.C.) ordered District Judge Emmet Sullivan to approve the Justice Department (DOJ) motion to dismiss the case against Lt. General Flynn. The 2-1 ruling granted a writ of mandamus — an order for a government official to carry out a duty.
In May, the Justice Department revealed it was dropping its case. The development came after “newly discovered and disclosed information” that raised serious questions about the nature of the investigation, which led to Special Counsel Robert Mueller.
Of the initial two trances of documents totaling 15 pages, the first four unsealed pages contained clear evidence the investigation and prosecution — code name “Crossfire Razor” — was a setup for a perjury trap.
The documents — inappropriately withheld from the defense — contained handwritten notes from Bill Priestap, then-Assistant Director of the Counterintelligence Division for the F.B.I. The notes state agents aimed “to get him [Flynn] to lie so we can prosecute him or get him fired.”
On January 24, 2017, federal agents interviewed Lt. General Flynn under false pretenses and without counsel about a conversation he had with Russian Ambassador Sergey Kislyak. At the time of the conversation, Lt. General Flynn was the top foreign policy adviser to then-president-elect.
The note-taker wrote that one objective of the interview was to “get [Flynn] to admit breaking the Logan Act,” a 1799 law widely viewed as unconstitutional. It intends to prohibit private citizens from having “any correspondence or intercourse with any foreign government” about official U.S. policy. It has only led to two indictments — one in 1803 and another in 1852 — the law has never been successfully used in a prosecution against anyone, ever.
But Judge Sullivan refused and took unusual, unprecedented steps to keep the case from being dismissed. Defense counsel responded by asking the U.S. Court of Appeals in D.C. for the writ of mandamus, which was granted.
Earlier in June, DNI John Ratcliffe made public the transcripts from the wiretapped calls between Lt. General Flynn and Ambassador Kislyak. Even fired former F.B.I. Director James Comey acknowledged the calls with Ambassador Kislyak “appear legit”, but it didn’t stop the previous administration from using Mr. Biden’s idea.
In May, former Acting-DNI Richard Grenell declassified a list of Obama Administration officials who sought to unmask Lt. General Flynn. It included Mr. Biden on numerous occasions before and after the phone calls with Ambassador Kislyak.
The declassified list was the first indication Mr. Biden was not being truthful when asked about his knowledge of the now-disgraced investigation. In an interview with George Stephanopoulos on Good Morning America, he denied knowingly anything about it.
“I know nothing about those moves to investigate Michael Flynn,” Mr. Biden claimed.
Given the declassified list and now the newly unsealed documents, it’s clear that was not the case. In fact, the administration submitted unmasking requests on numerous occasions before the call with Ambassador Kislyak. The list also names former Central Intelligence Agency (CIA) Director John Brennan, former DNI James Clapper, former U.S. Ambassador to the United Nations (UN) Samantha Powers and Mr. Comey.
Of note regarding the list are both the sheer number of unmasking requests submitted to the National Security Agency (NSA) and the dates those requests were made.
The request from Mr. Biden on January 12, 2017, was made the same day David Ignatious revealed content of the leaked transcripts in The Washington Post. The request by Chief of Staff McDonough was made on January 5, 2017, also the same day of the now-infamous meeting, which was memorialized in an email by Susan Rice.
Previously obtained text messages between Mr. Strzok and Ms. Page also shed light on and raised questions over Mr. Obama’s role in and knowledge of these controversial investigations. Ms. Page wrote to Mr. Strzok on September 2, 2016, she was preparing talking points on their scandalous handling of the Clinton email investigation because “potus wants to know everything we’re doing. [sic]”
In May 2019, Attorney General William Barr assigned U.S. Attorney John Durham in Connecticut to investigate the origins of and potential wrongdoings in the probe. The two men enjoyed bipartisan praise and impeccable reputations before they threatened to expose the previous administration’s activities.
Personal Saving Rate Remained Historically High Despite Largest Gain in Consumer Spending
Washington, D.C. (PPD) — Personal income fell $874.2 billion (4.2%), consumer spending (outlays) rose $994.5 billion (8.2%) in May. Personal saving remained very high despite the gain in personal consumption expenditures (PCE), also known as consumer spending.
Forecasts for personal income ranged from a low of -10.0% to a high of -2.0%, with the consensus -6.2%. Forecasts for personal outlays ranged from a low of 3.0% to a high of 14.0%, with the consensus 8.6%.
The decline in personal income for May was primarily driven by a decrease in government social benefits from the federal economic recovery programs in response to the COVID-19 pandemic. The decline in payments from April was only partially offset by an increase in unemployment insurance benefits.
Personal outlays rose a total $989.9 billion in May, while personal saving was $4.12 trillion. The personal saving rate — personal saving as a percentage of disposable personal income — was 23.2%, down from a record high 33% in April.
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