10192018Fri
Last updateFri, 19 Oct 2018 1pm

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Mid-Year 2018 GDP Outlook Strengthens

SIFMA unveiled the results of its twice annual survey of chief U.S. economists. They predict that the U.S. economy will strengthen to 2.9% for the remainder of 2018, up from 2.5% in the previous forecast. The median mid-year forecast calls for 2018 GDP to grow by 2.9% on both a year-over-year basis and on a fourth-quarter-to-fourth-quarter basis, stronger than the 2.5% year-over-year and the 2.3% fourth-quarter-to-fourth-quarter predicted in the 2017 year-end survey. For 2019, the mid-year forecast calls for GDP to grow by 2.6% year-over-year.

Employment is expected to continue improving, and on a slightly stronger basis than expected at end-2017. Survey respondents predict the unemployment rate to average 3.9% in 2018 (compared to 4.0% in the end-year 2017 survey), falling to 3.6% in 2019. Expectations for job growth were also stronger, with employers expected to add 2.2 million workers to payrolls in 2018 (from 2.1 million expected in the end-year 2017 survey) and 1.8 million in 2019. 


Small Business Optimism Now Second-Highest Ever

The Small Business Optimism Index increased in May to the second highest level in the survey’s 45-year history. The index rose to 107.8, a three-point gain, with small businesses reporting high numbers in several key areas including compensation, profits and sales trends.

A net 19% of small business owners are planning price increases, the highest since 2008 and a signal of a strong economy. A net three% reported positive profit trends, up four points and the best reading in the survey’s history. In addition, a net 15% reported higher nominal sales in the past three months, up an astonishing seven points and the sixth consecutive strong month for sales. 

Quality of IT Key to Retaining Skilled Workers

According to a Harvard Business Review Analytic Services report commissioned by Insight Enterprises, 58% of respondents say their organization’s technology offerings factor into a candidate’s decision to take the position. Yet 51% say outdated and inadequate office technology impedes their ability to retain employees with high-value skills and experience.

The primary hurdle to arming the workforce with the best technology is budget (55%), followed by on-premise legacy systems that don’t mesh easily with new tech (44%) and security concerns (34%). Nearly a third (30%) also believe IT is too busy supporting legacy tech to introduce new technology. 

Manufacturing Productivity Down in First Quarter

The U.S. Department of Labor reports that manufacturing sector labor productivity decreased 1.2% in the first quarter of 2018, as output increased 1.7% and hours worked increased 2.9%. Productivity declined 0.8% in the durable manufacturing sector, as output rose 3.3% and hours worked increased 4.2%. Over the last four quarters, total manufacturing sector productivity increased 0.3%, as output increased 2.0% and hours worked increased 1.7%. Unit labor costs in manufacturing increased 5.2% in the first quarter of 2018 and rose 2.5% from the same quarter a year ago. 

U.S. Factory Orders Fell 0.8% in April

New orders for manufactured goods in April, down following two consecutive monthly increases, decreased $4.0 billion or 0.8% to $494.4 billion, the U.S. Department of Commerce reported. This followed a 1.7% March increase.

Shipments, up eleven of the last twelve months, increased $0.1 billion or virtually unchanged to $492.8 billion. This followed a 0.7% March increase. Unfilled orders, up five of the last six months, increased $5.4 billion or 0.5% to $1,153.1 billion. This followed a 0.8% March increase. 

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