NAM: Monday Economic Report
Manufacturers had to adjust to the realities of COVID-19 in 2020. The percentage of employees in the sector working from home jumped from 18.9% in 2019 to 29.9% in 2020, according to the latest American Time Use Survey from the Bureau of Labor Statistics. (It is always fascinating to see how the typical American uses his or her time each day, so I would encourage a deeper dive into this resource.)
The IHS Markit Flash U.S. Manufacturing PMI expanded at another record pace, buoyed by stronger growth and a very upbeat outlook, despite lingering supply chain challenges and soaring prices. Raw material costs and output prices soared once again to all-time high rates.
Manufacturing activity in the Kansas City Federal Reserve Bank’s district strengthened to a three-month high in July, with growth in exports rising at the fastest pace in 13 years and a robust outlook for the next six months. However, the backlog of orders also jumped to a new record, and respondents once again cited supply chain, inflation and workforce concerns.
Meanwhile, with more COVID-19 restrictions being lifted, the IHS Markit Flash Eurozone PMI jumped to the highest reading since July 2000. At the same time, the IHS Markit Flash Eurozone Manufacturing PMI slipped from a record 63.4 to 62.6, with supply chain issues holding back even stronger growth.
New residential construction activity rose 6.3% to 1,643,000 units at the annual rate in June, the best reading in six months. Housing starts remain healthy, despite rising construction costs and difficulties in finding talent.
Builders remain optimistic about growth over the coming months, despite sharply higher costs. Housing permits pulled back for the third straight month, declining 5.1% to 1,598,000 units in June. While this remains a solid figure, it is perhaps a sign that rising costs have dampened the market for construction activity somewhat.
Ending four straight months of declines, existing home sales rose 1.4% to 5.86 million units in June, boosted by increased inventories of homes for sale. The median sales price for existing homes has jumped 23.4% year-over-year, up to $363,300 in June, a new record high.
The Leading Economic Index increased 0.7% in June. In the first half of 2021, the LEI rose by a robust 5.0%, with the U.S. economy continuing to rebound from COVID-19 pandemic challenges. Overall, these data point to solid growth over the coming months.
Editor’s Note:I am excited to announce that Jordan Vickers, the director of economics at Eaton Corporation, will be the guest author for the Monday Economic Report on August 2. This will give us an opportunity to gain insights from a well-respected industrial economist with on-the-ground expertise in the sector.