Friday, September 1, 2017

Banks and the Economy Blog Moving to a New Location

The ABA Banks and the Economy blog is moving from its current blogger format to ABA's online Banking Journal. Posts on blogger will be discontinued on Monday, September 4th.

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Manufacturing Index Grew to Six-Year High in August

The ISM Manufacturing Index registered 58.8 points in August, up 2.5 percentage points from the previous month, according to the Institute for Supply Management. August’s reading indicates a twelfth consecutive month of expansion in manufacturing, as readings over 50 points denote expansion. It was the highest reading since April 2011. Of the eighteen manufacturing industries, fourteen reported growth, while three reported contraction. Nine of the ten index components grew, while the customers’ inventories index contracted for the second consecutive month.
The Employment Index decreased 4.7 points to 59.9 in August, indicating expansion for the eleventh consecutive month. Thirteen industries reported expansion, while two reported a decrease in employment.

The New Orders Index decreased 0.1 point to 60.3 in August, indicating growth for the twelfth consecutive month. Twelve industries reported expansion, while four reported a decrease in employment.

Export orders decreased 2.0 points to 55.5, indicating growth for the eighteenth consecutive month. Eight industries reported growth while only two of the eighteen reported a decrease in new export orders.

The inventories index registered 55.5 points, up 5.5 points from the previous month. Eleven industries reported higher inventories, while five reported a decrease.

Read the ISM release.

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Consumer Sentiment Rose in August

Consumer Sentiment rose 3.4 points in August to 96.8, according to the University of Michigan Consumer Sentiment Index. Last month’s figure is 7.8% higher than the August 2016 index.
The Current Economic Conditions Index fell 2.5 points to 110.9 but remained 3.9 points higher than the August 2016 estimate. The Consumer Expectations Index increased 7.2 points to 80.5 after falling 4.1 points in July’s estimate.
“Consumer confidence has remained at a very favorable level, although slipping somewhat from mid-month. The Sentiment Index has been higher during the first eight months of 2017 than in any year since 2000, which was the peak year of the longest expansion in U.S. history,” said Richard Curtin, chief economist of UM Surveys of Consumers. “The renewed strength in 2017 was mainly due to consumers' favorable assessments of their own financial situations. Lows in unemployment, inflation, and interest rates, as well as renewed gains in the value of their homes and stock portfolios, pushed personal financial evaluations to near all-time peaks.”

Read the University of Michigan Surveys of Consumers release.
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Construction Spending Fell to Nine-Month Low in July

Construction spending slowed in July for the third time in four months, landing at a seasonally adjusted annual level (SAAL) of $1,211.5 billion, according to the Census Bureau. June’s spending estimate was revised down to a rate of $1,219.3 billion. July’s figure is 1.8% greater than the July 2016 estimate of $1,189.8 billion.
Total private construction was $945.5 billion SAAL, a 0.4% decrease from the revised June estimate of $949.4 billion. Total private construction is 4.1% higher than the July 2016 figure.

Private residential construction was $517.5 billion SAAL, 0.8% above June’s upwardly revised rate. July’s figure is 11.6% greater than its July 2016 estimate. Private residential construction increased in each of the past three months.

Private nonresidential construction was $428.0 billion, 1.9% below June’s downwardly revised estimate. Declines in commercial construction led the way, falling 4.7% over the month. July’s estimate is 1.1% greater than the July 2016 figure.

Public construction decreased 1.4% to $266.0 billion SAAL. July’s figure is 5.6% below the July 2016 estimate.

Read the Census release.
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156,000 Jobs Added in August

Total nonfarm payroll employment rose by 156,000 in August, a decrease from July’s downwardly revised figure of 189,000, according to the Bureau of Labor Statistics. The national unemployment rate ticked up to 4.4%, staying within a 10 basis point range in the last five months.
Private service-providing industries added a net 95,000 jobs, led by gains in professional and business services, which added 40,000 jobs during the month, and by the health care and social assistance sector, which added 17,000.

Goods-producing employment rose by 70,000 jobs during the month, as gains in durable goods manufacturing and construction led by both adding 28,000 jobs in August.

The civilian labor force participation rate was 62.9%, the same as in July. Workers unemployed for less than 14 weeks increased by 87,000, while the number of long-term unemployed, those jobless for 27 weeks or more, was essentially unchanged and accounted for 24.7% of the unemployed. The number of discouraged workers was 448,000, a 128,000 decrease from a year earlier.

Average hourly earnings increased by 3 cents to $26.39, after a 9-cent increase in July. Over the past year, average hourly earnings have risen by 65 cents, or 2.5%.

Read the BLS release.
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Wednesday, August 30, 2017

Second Quarter GDP Upwardly Revised from 2.6% to 3.0%

Real GDP for the second quarter of 2017 grew at a seasonally adjusted annual rate of 3.0%, according to the Bureau of Economic Analysis’s revised estimate, up from the advance estimate of 2.6%. The general picture of economic growth remained the same. Last quarter’s growth was the strongest since the first quarter of 2015.
The increase in the estimate was mostly due to personal consumption expenditures and nonresidential fixed investment being larger than previously estimated.
The upward revision to consumer spending reflected upward revisions to exports, federal government spending and private inventory investment.

Residential fixed investment and state and local government spending were both downwardly revised, offsetting a larger second quarter increase.

Read the GDP release.
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ADP: 237,000 Jobs Added in August

The non-farm private sector added 237,000 jobs in August, according to the ADP National Employment Report. July’s figure was revised up from 178,000 to 201,000. The trade, transportation and utilities job sector accounted for 23.6% of August’s growth.
Businesses of all sizes saw steady increases. Small businesses with fewer than 50 employees rebounded from added 48,000 jobs, while medium-sized businesses with 50-499 employees created 74,000. Large businesses had an especially strong month, adding 115,000 jobs.

Mark Zandi, chief economist of Moody’s Analytics, said, “The job market continues to power forward. Job creation is strong across nearly all industries, company sizes. Mounting labor shortages are set to get much worse. The initial BLS employment estimate is often very weak in August due to measurement problems, and is subsequently revised higher. The ADP number is not impacted by those problems.”

Service-providing employment rose by 204,000 jobs, driven by the trade, transportation and utilities services sector which added 56,000. The health services sector had a robust report, adding 42,000 jobs. The information sector was the only services industry that didn’t increase, shedding 3,000 jobs. Goods-producing employment grew by 33,000 jobs. The manufacturing industry gained 16,000, while the construction sector led the way, adding 18,000 jobs.

Read the ADP report.
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