Last updateFri, 30 Sep 2016 3pm


U.S. Second Quarter GDP Growth Revised Up

Real GDP in the U.S. increased at an annual rate of 1.4% in the second quarter of 2016, up from 1.1% in the last estimate, according to the Department of Commerce. In the first quarter, real GDP increased 0.8%.

The most notable change from the last estimate to this one is that nonresidential fixed investment increased in the second quarter; in the previous estimate, nonresidential fixed investment decreased. Private inventory investment and exports were also revised upward in this most recent estimate. 

Durable Goods Orders Unchanged in August

New orders for manufactured durable goods in August were little changed at $226.9 billion, the U.S. Department of Commerce announced, following a 3.6% July increase. Economists were predicting a 1.5% decrease in August. Excluding transportation, new orders decreased 0.4%. Excluding defense, new orders decreased 1.0%.

“Business investment is just incredibly sluggish,” said Omair Sharif, senior U.S. economist at Societe Generale in New York. “We’re on track for it to be a drag on third-quarter growth. There’s very little impetus for businesses to go out and make capital investments.” 

U.S. Consumer Confidence Surges to Nine-Year High

The Conference Board Consumer Confidence Index, which had increased in August, improved further in September. The Index now stands at 104.1, up from 101.8 in August. The 104.1 figure is the highest since August 2007.

“Consumer confidence increased in September for a second consecutive month and is now at its highest level since the recession,” said Lynn Franco, director of economic indicators at The Conference Board. “Consumers’ assessment of present-day conditions improved, primarily the result of a more positive view of the labor market. Looking ahead, consumers are more upbeat about the short-term employment outlook, but somewhat neutral about business conditions and income prospects. Overall, consumers continue to rate current conditions favorably and foresee moderate economic expansion in the months ahead.” 

Texas Manufacturing Strengthened in September

Texas factory activity increased markedly in September, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose 12 points to 16.7, suggesting output picked up at a notably faster pace this month.

Some other measures of current manufacturing activity also reflected faster expansion, while the survey's demand indicators dipped back into negative territory. The capacity utilization and shipments indexes posted double-digit gain to reach 13.5 and 20.1, respectively. These reading represent the highest readings for these indexes in roughly two years.

Perceptions of broader business conditions were mixed. The general business activity index remained negative for a 21st consecutive month, although it edged up to -3.7. The company outlook index reflected optimism as it pushed into positive territory for the first time since November 2015, coming in at 6.7. 

Manufacturing Growth Eases Again in September

At 51.4 in September, the seasonally adjusted Markit Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) was down from 52.0 in August and pointed to the weakest improvement in overall business conditions since June. The latest PMI reading marked seven years of continuous growth across the manufacturing sector. However, the headline index was below the average seen over this period (54.0) and remained close to the post-crisis low recorded in May (50.7).

Manufacturers indicated the slowest overall rise in new business intakes so far this year, which contributed to relatively subdued job hiring and ongoing efforts to reduce inventory levels. Meanwhile, factory gate charges were reduced slightly in September, despite another marginal increase in input costs at manufacturing firms. 


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