I apologize for misinforming you last week: The LEI will not be released this week, the ISM index was released on Monday.
US factories in May posted their worst month since the end of the recession, as weakness overseas overwhelmed a still shaky manufacturing recovery at home. “
Wall Street Journal
The Institute of Supply Management reported
economic activity in the manufacturing sector contracted in May for the first time since November 2012, and the overall economy grew for the 48th consecutive month. The “PMI” registered 49 percent, a decrease of 1.7 percentage points from April’s reading of 50.7 percent, indicating contraction in manufacturing for the first time since November 2012 and only the second time since July 2009. This month’s PMI reading is at its lowest level since June 2009, when it registered 45.8 percent. The New Orders index decreased by 3.5 percentage points in May and the Production index decreased by 4.9 percentage points.”
Analysis of the ISM numbers from Dr. Ken Mayland, PMPA Economic Consultant offers the following:
According to the ISM, a reading below 50 would typically be associated with a contraction of the manufacturing sector. Furthermore, based on the ISM’s estimates, if the current reading of 49.0 was sustained, it would tend to be consistent with 2.1% real GDP growth (annualized).”
“The decline of the PMI below 50 is a surprise to almost everyone. But it is also the continuation of a trend-at least a temporary one (its third consecutive decrease). Industrial production of manufactured goods for Q1 grew at a 5.0% annualized rate and that was well ahead of and out of line with the 2.4% GDP growth seen for the quarter. And the Q2 GDP growth could be tracking a little less than Q1. Hence, a “production adjustment” appears to have been called for.”
“ClearView Economics’ insightful “inventory dynamic” indicator has been in a negative configuration for what would be historically judged a long period. It is getting due for a “flip” and that could make for a better second half 2013….for now scoring the current factory weakness as a temporary adjustment.”
From the Metals Service Center Institute Advocacy News 06.03.13
“As of October 1, 2013, US employers must provide notice to new employees about eligibility requirements for the health care exchanges and premium tax credits created under the 2010 Affordable Care Act. Starting in 2014, companies will have to pay a new $63 per person fee (really a TAX) for every employee or dependent to whom they already provide coverage. These are just two of the many requirements that will take effect over the next several months and year. Many employers are overwhelmed by the new requirements and confused about which ones apply to them.” We have been notified that our rates will jump 18% next year-for starters.
Top economic data points for the Advocacy News:
- The US Bureau of Economic Analysis (BEA) reduced its estimate for first quarter economic growth from the 2.5% rate it announced last month, to 2.4%.
- Statistics Canada announced late last week the country’s economy expanded 0.6 percent in the first quarter or 2013. 2.5% on an annualized basis.
- The Chicago Purchasing Managers announced last week that the Chicago Business Barometer increased from +49 in April to +58.7 in May. All components increased and the index is now at its highest level in more than 1 year.
- The Conference Board’s index of US consumer confidence rose to 76.2 in May from 69.0 in April. According to the board’s Director of Economic Indicators: “Back to back monthly gains suggest that consumer confidence is on the mend and may be regaining the traction it lost due to the fiscal cliff, payroll tax hike and sequester.”
The US economy added 175,000 jobs in May, signaling the economic recovery remains broadly on track. The Labor Department said the unemployment rate rose slightly to 7.6% from 7.5% in April.
Wall Street Journal 06.07.13
How and/or why they continue to call this a recovery is beyond me. The economy has been expanding, albeit slowly, for 48 consecutive months. According to what I read and hear from those in the industrial manufacturing sector, we will slog it out this year with a mild recession in 2014 and robust growth from 2015 through 2018 or so.
Is everyone getting the idea of how much waste there is in government? Remember the guy in the hot tub with the 2 glasses of wine you paid for in a nice suite at some ineffective conference you also paid for? That was one instance in his department (whose name I cannot recall) of millions of dollars of your money spent to entertain themselves. Now comes the Internal Revenue Service, caught spending some $50 million of your money on more unnecessary conferences in the recent past. Line dancing lessons? Star Trek movies? All while they are targeting American citizens for their political affiliations. What country is this? It sounds like some third world dictators folly. Yesterday was June 6; it has been 69 years since the Normandy Invasion which saved Europe and the world from another dictator’s folly. We must never forget those brave men and women, many of whom lost their lives, to keep democracy and freedom alive. If not for the supreme efforts of the United States of America, all of Europe could be speaking German today.
Have a great weekend,
God Bless America