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Growth in Texas Manufacturing Rebounds Strongly

Texas factory activity rose markedly in April after posting slower growth in March, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, increased 11 points to 25.3.

Other indexes of manufacturing activity also rose sharply in April. The new orders and growth rate of orders indexes jumped to their highest readings this year, 27.9 and 18.9, respectively. The capacity utilization index climbed eight points to 18.7, and the shipments index rose nine points to 19.3.

Perceptions of broader business conditions remained highly positive on net in April. The general business activity index was largely unchanged at 21.8, and the company outlook index edged up four points to 23.6. Both indexes remained far above their average levels. 


U.S. Economy Grew 2.3% in First Quarter

Real gross domestic product (GDP) increased at an annual rate of 2.3% in the first quarter of 2018, according to the advance estimate released by the Department of Commerce. In the fourth quarter, real GDP increased 2.9%.

The increase in real GDP in the first quarter reflected positive contributions from nonresidential fixed investment, personal consumption expenditures (PCE), exports, private inventory investment, federal government spending, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP growth in the first quarter reflected decelerations in PCE, residential fixed investment, exports, and state and local government spending. These movements were partly offset by an upturn in private inventory investment. Imports, which are a subtraction in the calculation of GDP, decelerated.

Durable Goods Orders Increased 2.6% in March

New orders for manufactured durable goods in March increased $6.4 billion or 2.6% to $254.9 billion, the U.S. Department of Commerce announced this week. This increase, up four of the last five months, followed a 3.5% February increase. Excluding transportation, new orders were virtually unchanged. Excluding defense, new orders increased 2.8%. Transportation equipment, also up four of the last five months, drove the increase, $6.4 billion or 7.6% to $91.4 billion. 

40% of Small Manufacturers Likely to Add Staff this Year

Xometry released the findings of its quarterly Small Manufacturing Index, showing that 40% of small manufacturers surveyed are likely to hire more employees this year as business confidence has risen from a year ago. Additionally, 28% of those surveyed stated they have hired more employees since Q1 2017.

The majority of small manufacturers in the U.S. are more optimistic about the market in the near future than they were a year ago. 60% of small manufacturers surveyed said that their business would either mildly or strongly increase this month vs. the same month last year. 

IHS Markit U.S. Manufacturing Index Rose in April

Manufacturers reported the greatest improvement in overall business conditions since September 2014 in April. This was highlighted by the seasonally adjusted IHS Markit Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) rising from 55.6 in March to 56.5.

Stronger growth in new orders drove a solid increase in the level of outstanding business at manufacturers. Robust client demand and signs of sustained pressure on capacities did not, however, lead to improved employment growth. The rate of job creation eased to an eight-month low as firms reportedly pushed for greater efficiency. 

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