Last updateTue, 25 Feb 2020 5pm

Leading Economic Indicators Down for Third Straight Month

The Conference Board Leading Economic Index (LEI) for the U.S. declined for the third consecutive month in October, after a slight downward revision in September. As a result, the LEI’s six-month growth has slipped slightly into negative territory, for the first time since May 2016. Negative contributions from the ISM New Orders Index, average weekly hours in manufacturing and unemployment claims, were not enough to offset the large gain in building permits.

Manufacturing Sector Improved for Third Straight Month

Goods producers signaled a stronger improvement in operating conditions in November, as signaled by a rise in the IHS Markit Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) to 52.2, up from 51.3 in October. The rate of overall growth was the fastest since April, albeit moderate overall.

The improvement in the health of the manufacturing sector was supported by sharper and solid expansions in production and new orders. The rate of increase in the former reached a ten-month high amid reports of stronger client demand.

Manufacturers registered the first increase in backlogs since June, with firms responding to greater pressure on capacity by increasing staffing levels at the steepest pace since March.

Texas Economy Still Growing at Moderate Pace

According to the Federal Reserve Bank of Dallas, the Texas economy continues to grow at a moderate pace. Job growth ticked up in October, and the September growth rate was revised up. The unemployment rate remained at a record low, indicating continued tightness in the labor market. The Texas Leading Index edged up, and firms responding to the Texas Business Outlook Surveys reported increases in capital expenditures on net.

Small Business Optimism Rose in October

The small business half of the economy posted a 0.6 point gain in October’s NFIB Small Business Optimism Index. The 102.4 reading was buoyed by eight of the 10 Index components advancing, as talk of a recession waned in October. The Uncertainty Index declined 4 points but remains historically high heading into an election year. One quarter of the owners selected “finding qualified labor” as their top business problem, more than cited taxes or regulations.

Manufacturing Production Down 0.6% in October

Industrial production fell 0.8% in October after declining 0.3% in September. Manufacturing production decreased 0.6% in October. Much of this decline was due to a strike at a major manufacturer of motor vehicles. The strike contributed to a drop of 1.2% for durables. Excluding motor vehicles and parts, the output of durables moved down 0.2%. The indexes for electrical equipment, appliances, and components and for miscellaneous manufacturing each moved down more than 1%.


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