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NAM: Monday Economic Report

With each week, the full extent of the economic damage from COVID-19 and the abrupt decline in activity can be seen in greater detail. The severe drops in data are unprecedented. Here are the highlights of last week’s reports:

  • Manufacturing production fell sharply by a record-setting 13.7% in April to the lowest level since July 28, with durable and nondurable goods output plummeting 19.3% and 8.2%, respectively. All 19 major manufacturing sectors experienced declines in April. Capacity utilization in the sector fell to 61.1%, a new all-time low.

  • In the first regional sentiment survey of May, the New York Federal Reserve Banks’s monthly report continued to reflect steep declines in new orders and shipments, but employment stabilized somewhat (though it remained negative). Respondents were cautiously positive that activity would rebound over the next six months.  

  • Retail spending fell 16.4% in April, the largest monthly decline since the series began in 1992 and extending the 8.3% decrease seen in March. On a year-over-year basis, retail spending was down 21.6%, with a decline of 16% if automobiles and gasoline are excluded. Nonstore retailers were the only bright spot, with sales up 8.4% in April and 21.6% year-over-year as Americans purchased more online.

  • After falling to the lowest level since December 2011, the Index of Consumer Sentiment edged up from 71.8 in April to 73.7 in May, according to preliminary data from the University of Michigan and Thomson Reuters. Financial conditions of respondents were the lowest in six years despite the continued issuance of CARES Act relief checks.

  • There were 2,981,000 initial unemployment claims for the week ending May 9, with 36,471,000 filers over the past seven weeks. (Connecticut over-reported its claims for the week, which will lead to a revision in next week’s release.) At the same time, there were 22,833,000 Americans, or 15.7% of the workforce, receiving unemployment insurance the week of May 2,.

  • There were 320,000 manufacturing job openings in March, the slowest pace since November 2016 and down from 422,000 in February. Net hiring was -433,000 in March. Quits in the manufacturing sector slowed to their lowest since June 2016, but layoffs rose from 113,000 to 566,000.

  • After experiencing more job openings than the number of people looking for work for 24 straight months, the abrupt stoppage of economic activity amid the COVID-19 outbreak sharply reversed that trend, starting in March.

  • The National Federation of Independent Business said that the Small Business Optimism Index fell to its lowest level since March 2013, declining from 96.4 in March to 90.9 in April. The measure for real sales expectations fell to the lowest level in the 46-year history of the survey, and the top “single most important problem” was poor sales, supplanting hiring difficulties, which had been the primary concern for two straight years.

  • Consumer and producer prices fell 0.8% and 1.3%, respectively, in April, both the largest monthly declines since the Great Recession, prompting worries about deflation in the economy. More importantly, producer prices for final demand goods plunged 3.3% in April, pulled lower by a whopping 19% decrease in energy costs on oil price shocks. Year-over-year rates of growth for consumer and producer prices were the lowest since late 2015.




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