NAM: Monday Economic Report
In the latest NAM Manufacturers’ Outlook Survey, 66.0% of respondents reported a positive outlook for their company in the third quarter, up from 33.9% in the second quarter, which had been the worst reading since the Great Recession. However, the outlook measure remains below the historical average of 74.4%. Weak domestic demand continued to be the top primary business challenge.
Respondents were asked when they expect revenues to return to pre-pandemic levels. Sixty-two percent expect their firm’s revenues will not get back to pre-COVID-19 levels until 2021 or later. Just 17.6% note their revenues had already recovered, with 12.5% predicting them to bounce back in either the third or fourth quarter of 2020.
More than half of manufacturers report higher production in the third quarter than in the second, with 22.7% predicting output will be lower and 24.8% feeling there will be no change. Similarly, 30.0% and 26.8% of those completing the survey anticipate that hiring and capital spending will increase in the third quarter, respectively, with roughly 45% seeing no change in either measure relative to the second quarter.
Manufacturing job openings in July reached 408,000, the best reading since February. This improvement suggests that firms are once again increasing their interest in adding new workers, even as the sector attempts to rebound from the COVID-19 pandemic. Nonetheless, net hiring remained challenged, and the overall labor market has changed dramatically post-pandemic.
Initial unemployment claims totaled 884,000 for the week ending Sept. 5, unchanged from the week ending Aug. 29. Meanwhile, continuing claims edged up from 13,292,000 for the week ending Aug. 22 to 13,385,000 for the week ending Aug. 29, with 9.2% of the workforce receiving unemployment insurance.
The Small Business Optimism Index from the National Federation of Independent Business rose in August above the all-important threshold of 100, which is traditionally consistent with small business growth. Despite some progress, small business owners continued to cite lingering challenges, with an insufficient workforce once again the top “single most important problem.”
U.S. consumer credit outstanding rose 3.6% in July, but revolving credit fell for the fifth straight month, decreasing by 9.1% year-to-date. This decline suggests that Americans have not only reduced their willingness to take on more credit, but they have also paid down some of their existing credit balances.
Consumer and producer prices rose in August, building on gains seen in June and July. Yet, core inflation remains largely in check for now, as recent cost increases have largely reversed the deflationary pressures seen in the spring.