Last updateWed, 12 Aug 2020 9pm

Producer Prices See Largest Increase in Nearly Two Years

The Producer Price Index for final demand increased 0.6% in July, seasonally adjusted, the U.S. Department of Labor reported. This rise followed a 0.2% decline in June and a 0.4% advance in May. The July increase is the largest rise since a 0.7% advance in October 2018. On an unadjusted basis, the final demand index moved down 0.4% for the 12 months ended in July.

Dallas Fed: Uneven Economic Recovery Likely in Texas

With the unusual economic shocks following COVID-19, traditional measures of economic activity have not been timely enough to capture the latest changes in the economy and are likely subject to greater revision than usual. In this environment, surveying businesses on real-time economic conditions becomes even more valuable.

The Dallas Fed’s Texas Business Outlook Surveys show that while recovery continued in some sectors in July, it faltered in others as new COVID-19 cases surged across the state. The surveys have a well-established track record of reliably informing the nation about economic conditions in Texas, and they reflect a large and robust sample, in fact reaching record response numbers amid the pandemic.

U.S. Added Nearly 1.8 Million Jobs in July

Total nonfarm payroll employment rose by 1.763 million in July, and the unemployment rate fell to 10.2%, the U.S. Department of Labor reported today. These improvements in the labor market reflected the continued resumption of economic activity that had been curtailed due to the coronavirus (COVID-19) pandemic and efforts to contain it. In July, notable job gains occurred in leisure and hospitality, government, retail trade, professional and business services, other services, and health care.

Manufacturing employment increased by 26,000 in July. An employment gain in motor vehicles and parts (+39,000) was partially offset by losses in fabricated metal products (-11,000), machinery (-7,000), and computer and electronic products (-6,000). Although manufacturing has added 623,000 jobs over the past 3 months, employment is 740,000 lower than in February.

ISM: Manufacturing Expands to Highest Level in Over a Year

Manufacturing grew in July, as the PMI registered 54.2%, 1.6% higher than the June reading of 52.6%. “The PMI signaled a continued rebuilding of economic activity in July and reached its highest level of expansion since March 2019, when the index registered 54.6%. Four of the big six industry sectors expanded. The New Orders and Production indexes returned to strong expansion levels. The Supplier Deliveries Index remained at a more normal level of tension between supply and demand. Seven of the 10 subindexes registered expansion, up from five in June,” says Timothy R. Fiore, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.

U.S. Economy Shrinks by Record 32.9%

U.S. GDP decreased at an annual rate of 32.9% in the second quarter of 2020, according to the U.S. Department of Commerce. In the first quarter, real GDP decreased 5.0%. The decline in second quarter GDP reflected the response to COVID-19, as "stay-at-home" orders issued in March and April were partially lifted in some areas of the country in May and June, and government pandemic assistance payments were distributed to households and businesses. This led to rapid shifts in activity, as businesses and schools continued remote work and consumers and businesses canceled, restricted, or redirected their spending. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the second quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified.

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