07182018Wed
Last updateWed, 18 Jul 2018 2pm

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Leading Economic Indicators Up 0.4% in April

The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.4% in April to 109.4, following a 0.4% increase in March, and a 0.7% increase in February.

April’s increase and continued uptrend in the U.S. LEI suggest solid growth should continue in the second half of 2018. However, the LEI’s six-month growth rate has recently moderated somewhat, suggesting growth is unlikely to strongly accelerate,” said Ataman Ozyildirim, director of business cycles and growth research at The Conference Board. “In April, stock prices and housing permits were the only negative contributors, whereas the labor market components, which made negative contributions in March, improved.” 


U.S. Factory Output Rose in April

Industrial production rose 0.7% in April for its third consecutive monthly increase. The rates of change for industrial production for previous months were revised downward, on net; for the first quarter, output is now reported to have advanced 2.3% at an annual rate.

Manufacturing output moved up 0.5% in April; for the first quarter, the index registered a downwardly revised increase of 1.4% at an annual rate. In April, the indexes for durables and nondurables each gained about 1/2%, while the production of other manufacturing industries rose nearly 1%. 

Manufacturing Technology Orders Up 42% in March

U.S. manufacturing technology orders continued to rise in March, increasing 42% over February 2018 and 23% over March 2017, once again demonstrating strong, sustained growth in the sector, according to the U.S. Manufacturing Technology Orders report from The Association For Manufacturing Technology (AMT). Overall, orders totaled $509 million in March, bringing the year-to-date total orders to $1.2 billion.

In March, every region saw an increase in orders, with the Northeast showing the lowest gain at 3.15%. The Southeast increased the most with a 120% month-over-month jump, returning to a strong growth trajectory after a weaker than expected February. Meanwhile, the North Central-West region saw order rates grow more than 71%. 

Texas Economic Growth Continues at Healthy Pace

The Texas economy remains in a broad-based expansion. Job growth in the first quarter was a robust 3.5%, maintaining the solid gains seen in fourth quarter 2017. The state’s energy sector continues to boom, and areas of the state tied to oil and gas are growing at their strongest pace since 2014. The Dallas Fed’s Texas Business Outlook Surveys suggest sustained growth in the state’s manufacturing and service sectors through April. With this strength, the Dallas Fed projects growth of 3.4% for the year.

Texas job growth moderated in March to a 2.3% annualized rate. However, growth in February was revised up by 1% to 4.2%. Along with January’s healthy pace, this brought overall growth in the first quarter to 3.5%. 

Slower Growth in First Quarter Appears Temporary

The U.S. economy entered 2018 with strong momentum, but it slowed in the first quarter. The advance estimate of 2.3% real gross domestic product (GDP) growth in the quarter trailed previous quarters. Higher, above-potential growth is expected throughout the rest of 2018 and into 2019, given the underlying fundamentals—a tight labor market and robust consumer expectations—appear strong.

Recent data show that headline personal consumption expenditures (PCE) inflation reached 2% year over year in March, matching the Federal Reserve’s target and up from 1.7% in February. Core inflation also advanced in March to 1.9% year over year from 1.6% in February. Still, long-term inflation expectations remain firmly anchored. 

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