Last updateThu, 20 Sep 2018 3pm


Durable Goods Orders Decreased in May

New orders for manufactured goods in May, up three of the last four months, increased $1.8 billion or 0.4% to $498.2 billion, the U.S. Department of Commerce reported this week.

New orders for manufactured durable goods in May, down two consecutive months, decreased $0.9 billion or 0.4% to $249.2 billion, up from the previously published 0.6% decrease. This followed a 1.0% April decrease. Transportation equipment, also down two consecutive months, drove the decrease, $0.9 billion or 1.1% to $86.1 billion. 

Mid-America Business Conditions Index Growth Slows

The June Creighton University Mid-America Business Conditions Index, an economic indicator for the nine-state region stretching from Arkansas to North Dakota, fell to a healthy level continuing to point to strong growth for the next three to six months. The Business Conditions Index, which ranges between 0 and 100, declined to 61.8 from May’s 67.3. This is the 19th straight month the index has remained above growth neutral 50.0.

Tariffs contributed to elevated inflationary pressures at the wholesale level. Those pressures point to at least one more Federal Reserve rate hike before the end of September. 

AGC: Lack of Trained Workers Threatens Employment Gains

Construction employment increased in 263 (73%) out of 358 metro areas between May 2017 and May 2018, declined in 47 (13%) and was unchanged in 48, according to a new analysis of federal employment data released by the Associated General Contractors of America (AGC). Association officials warned that the supply of qualified workers is dwindling and urged members of Congress to support proposed legislation to reform, and increase funding for, the federal career and technical education program.

“The growth of industry employment in so many locations is good news, but it also highlights the challenge contractors face in finding qualified workers,” said Ken Simonson, AGC’s chief economist. “As more cities hit new highs in construction employment and new lows in unemployment, the risk is growing that some projects will be delayed for lack of workers.” 

May Construction Starts Climb 15%

At a seasonally adjusted annual rate of $783.6 billion, new construction starts in May advanced 15% from April, according to Dodge Data & Analytics. The increase follows a 12% decline in April, and shows total construction activity reaching the highest level reported over the past eight months. The lift in May came from substantial gains for nonbuilding construction, up 39%; and nonresidential building, up 18%; as both sectors benefitted from the start of several very large projects. Nonbuilding construction, and specifically its public works segment, was boosted by the start of three large natural gas pipelines with a combined construction start cost of $4.6 billion. 

Texas Manufacturing Continues to Expand, Outlook Improves

The expansion in Texas factory activity continued in June, albeit at a slower pace than in May, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, declined 12 points to 23.3, signaling a deceleration in output growth. Perceptions of broader business conditions were even more positive in June than in May.

Some other indexes of manufacturing activity also indicated slower growth in June. The capacity utilization and shipments indexes posted double-digit declines, falling to 21.7 and 25.5, respectively. However, demand improved further in June as the new orders index edged up to 29.6, its highest level this year. 

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