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NAM: Monday Economic Report

  1. Nonfarm job openings reached another new all-time high in January, with 7,581,000 postings for the month. In addition, there were more job openings in the U.S. economy than the number of people looking for work (6,535,000 in January and 6,235,000 in February) for the 12th straight month.

  2. Moreover, there were 3,490,000 quits in the U.S. economy—also a record level—which likely suggests that Americans are switching jobs in light of the tight labor market. This has been a large factor in explaining why manufacturers continue to report difficulties in finding talent as their top concern.

  3. Job openings in the manufacturing sector rose from 435,000 in January to 452,000 in February, with increased activity for both durable and nondurable goods firms. With that said, the pace of job postings has pulled back somewhat from 501,000 in December, which matched the record high in August. Still, over the past 12 months, manufacturing job openings have been a solid 467,000 each month.

  4. Manufacturing production has softened in the past two months since reaching the best output levels since June 2008 in December, down 0.4 percent in February. In February, production decreased in 12 of the 19 major sectors for the month. With some disappointing data in February, manufacturing production grew just 1.0 percent over the past 12 months. At the same time, manufacturing capacity utilization has dropped from 76.2 percent in December, the best reading since July 2015, to 75.4 in February, a nine-month low.

  5. Manufacturers in the New York Federal Reserve Bank’s district reported that activity continued to grow modestly in March, slowing from the pace in February. New orders and shipments slowed but hiring strengthened for the month. More importantly, respondents remained upbeat about the next six months. This is the first of the regional Federal Reserve district surveys for March.

  6. New durable goods orders rose 0.4 percent in January, increasing for the third straight month. Encouragingly, new orders for core capital goods (or nondefense capital goods excluding aircraft)—a proxy for capital spending in the U.S. economy—increased 0.8 percent in January to $68.8 billion, ending two months of declines. New durable goods orders have jumped 8.4 percent over the past 12 months, with core capital goods orders up 4.1 percent year-over-year.

  7. There was mixed news on the consumer front last week. On the positive side, confidence rebounded for the second straight month, with Americans more upbeat in their income prospects. At the same time, retail spendingremained somewhat disappointing despite edging higher in January. Nonetheless, retail sales have risen a modest 2.3 percent over the past 12 months, and I would expect further strengthening of spending in the coming months.

  8. Consumer and producer prices rose slightly in February, but overall, core inflation continues to reflect some deceleration in pricing pressures in recent months. That moderation in price growth should provide some flexibility to the Federal Reserve, allowing it to pause on future rate hikes until it sees stronger economic conditions warrant further actions.

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