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Manufacturing & The Economy

GDP Increased 3.7% in Second Quarter

Real GDP in the U.S. rose at an annual rate of 3.7% in the second quarter according to the BEA’s latest estimate, well above the first quarter’s 0.6% pace and the BEA’s initial second-quarter estimate of 2.3% growth. In the second quarter, the increase in GDP growth was led by a faster pace of personal consumption growth than in the first quarter and a shift from negative to positive net export growth. Structures investment, which declined sharply in the first quarter and was previously thought to have declined in the second, is now estimated to have grown. Overall, real GDP has now risen 2.7% over the past four quarters. 

Durable Goods Orders Up 2% in July

New orders for manufactured durable goods in July increased $4.6 billion or 2.0% to $241.1 billion, the U.S. Census Bureau announced today. This increase, up two consecutive months, followed a 4.1% June increase. Excluding transportation, new orders increased 0.6%. Excluding defense, new orders increased 1.0%.

Shipments of manufactured durable goods in July, up two consecutive months, increased $2.3 billion or 1.0% to $243.2 billion. This followed a 0.9% June increase. Inventories of manufactured durable goods in July, down two of the last three months, decreased $0.1 billion or virtually unchanged to $402.1 billion. This followed a 0.4% June increase. 

Consumer Confidence Rebounded in August

The Conference Board Consumer Confidence Index, which had declined in July, rebounded in August. The Index now stands at 101.5 (1985=100), up from 91.0 in July. The Present Situation Index increased from 104.0 last month to 115.1 in August, while the Expectations Index improved to 92.5 from 82.3 in July.

“Consumer confidence rebounded in August, following a sharp decline in July,” said Lynn Franco, director of economic indicators at The Conference Board. “Consumers’ assessment of current conditions was considerably more upbeat, primarily due to a more favorable appraisal of the labor market. The uncertainty expressed last month about the short-term outlook has dissipated and consumers are once again feeling optimistic about the near future. Income expectations, however, were little improved.”

Leading Economic Indicators Down Slightly in July

The Conference Board Leading Economic Index (LEI) for the U.S. declined 0.2% in July to 123.3, following a 0.6% increase in June, and a 0.6% increase in May.

“The U.S. LEI fell slightly in July, after four months of strong gains. Despite a sharp drop in housing permits, the U.S. LEI is still pointing to moderate economic growth through the remainder of the year,” said Ataman Ozyildirim, director of business cycles and growth research at The Conference Board.

“Current conditions, measured by the coincident economic index, have been rising moderately but steadily, driven by rising employment and income, and even industrial production has improved in recent months,” he said. 

NAM Monday Economic Report - August 24, 2015

The Dow Jones Industrial Average reached an all-time high at 18312.39 on May 19. Since peaking three months ago, the stock market has fallen nearly 10 percent, closing at 16549.75 on August 21, and is poised for more losses today. Much of the decline stemmed from worries about global growth, particularly in China. Indeed, the Caixin Flash China General Manufacturing PMI declined from 47.8 in July to 47.1 in August, its lowest level since March 2009. The Chinese manufacturing sector continues to struggle, with its PMI data contracting for the sixth consecutive month and activity down across the board.

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