Last updateTue, 25 Feb 2020 5pm

Consumer Confidence Down in December

Consumer spending is unlikely to gain momentum in early 2020. The Conference Board Consumer Confidence Index decreased marginally in December, following a slight increase in November. The Index now stands at 126.5, down from 126.8 (an upward revision) in November.

“Consumer confidence declined marginally in December, following a slight improvement in November,” said Lynn Franco, director of economic indicators at The Conference Board. “While consumers’ assessment of current conditions improved, their expectations declined, driven primarily by a softening in their short-term outlook regarding jobs and financial prospects. While the economy hasn’t shown signs of further weakening, there is little to suggest that growth, and in particular consumer spending, will gain momentum in early 2020.”

Tariffs Leading to U.S. Manufacturing Job Losses

In terms of economic significance, a new report from the Federal Reserve finds that the increase in tariffs is associated with a reduction in manufacturing employment of 1.4%, with the positive contribution from the import protection effects of tariffs (0.3%) more than offset by the negative effects associated with rising input costs (-1.1%) and retaliatory tariffs(-0.7%).

For producer prices, the report finds that an interquartile shift in exposure to rising input costs is associated with a 4.1% increase in factory-gate prices.

Texas Manufacturing Activity Expands Modestly

Growth in Texas factory activity resumed in December, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rebounded to 3.6 after dipping into negative territory last month. Perceptions of broader business conditions were mixed in December.

Most other measures of manufacturing activity also rebounded in December. The new orders index rose from -3.0 to 1.6. The growth rate of orders index moved up but remained in negative territory for a third consecutive month, coming in at -5.0. The capacity utilization index shot up 13 points to 7.8, and the shipments index rose from -4.5 to 3.0.

NAM Survey: Manufacturing Stabilizes in Fourth Quarter

The National Association of Manufacturers released the results of the Manufacturers’ Outlook Survey for the fourth quarter of 2019. The survey shows that manufacturing optimism has stabilized with nearly 68% of manufacturers reporting a positive outlook for their business, essentially the same rate as the third quarter release. The inability to attract and retain a quality workforce remained manufacturers’ top business concern (63.8%) for the ninth straight quarter. The survey was conducted prior to announced agreements on the U.S.–Mexico–Canada Agreement, “phase one” trade deal with China and long-term reauthorization of the Export-Import Bank—important progress that will boost certainty for manufacturers entering the new year.

Manufacturing Production Rose More Than Expected

Industrial production and manufacturing production both rebounded 1.1% in November after declining in October. Manufacturing output rose in November after having been held down in September and October by the strike in the motor vehicle industry. An increase of 2.2% for durables primarily reflected a jump of 12.4% for motor vehicles and parts, but even excluding motor vehicles and parts, the output of durables moved up 0.6%.


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