05242017Wed
Last updateWed, 24 May 2017 2pm

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Manufacturing Technology Orders Continue to Make Gains

Manufacturing technology orders continued to make gains in March, according to the latest U.S. Manufacturing Technology Orders report from The Association For Manufacturing Technology (AMT). Orders were up 34.8% compared to February, and up 3.3% compared to March 2016.

Leading indicators show that promising gains for manufacturing are likely to continue. Consumer sentiment is on the rise, which will lead to more purchases of durable goods like cars, appliances, electronics, and housing. Cutting tool shipments have grown, a marker of increased productivity. Machine shop spending for capital equipment has also been on the rise, indicating that manufacturers are using their services for excess capacity. 


Construction Spending Loses Steam in April

The Dodge Momentum Index fell 5.1% in April to 133.8 from its revised March reading of 140.9. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. April’s decline was due to a 12.0% drop for the institutional component of the Momentum Index, while the commercial component rose a meager 0.1%. Since early 2016, the Momentum Index has gained substantial ground, albeit in a saw-tooth pattern, increasing by over 20% through March this year. Despite April’s decline, the broad upward trend for the Momentum Index remains present, suggesting that construction activity still has further room to grow in 2017. The planning data’s strengthening over the past year stands in stark contrast to the 2014-2015 period, when the Momentum Index saw little improvement, gaining just 4.0% in that 24-month span. 

Unemployment Rate Falls to 10-Year Low

Total nonfarm payroll employment increased by 211,000 in April, and the unemployment rate fell to a 10-year low of 4.4%, the U.S. Department of Labor reported today. Economists were expecting an increase in the range of 185,000. Job gains occurred in leisure and hospitality, health care and social assistance, financial activities and mining. Employment in manufacturing was little changed.

Employment in mining rose by 9,000 in April, with most of the increase in support activities for mining (+7,000). Since a recent low in October 2016, mining has added 44,000 jobs, with three-fourths of the gain in support activities for mining. 

ISM: Manufacturing Grew for Eighth Straight Month

According to the April 2017 Manufacturing ISM Report on Business, manufacturing expanded in April as the PMI registered 54.8%, a decrease of 2.4% from the March reading of 57.2%, indicating growth in manufacturing for the eighth consecutive month.

“While the ISM’s April measures of new orders and factory employment cooled from a month earlier, the report showed overseas markets are doing better. The group’s index of export orders climbed in April to the highest level since November 2013. What’s more, a gauge of customer inventories dropped to the lowest level since July 2015, a sign bookings and production will remain strong,” Bloomberg reports

Business Investment Improved Over Last Three Quarters

“Business investment -- which was in recession from the fourth quarter of 2015 through the second quarter of 2016 -- has improved significantly over the past three quarters,” Bloomberg reports. “Equipment purchases rose by 9.1% -- the fastest pace since the third quarter of 2015. This confirms what the ISM Manufacturing Index and the MHI Business Activity Index surveys have been showing: Business are betting on more growth, and they are making investments to prove it.” 

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