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Wednesday, August 31, 2016

ADP: 177,000 Jobs added in August

The non-farm private sector added 177,000 jobs in August, according to the ADP National Employment Report, a decrease from July’s revised growth of 194,000. Service-providing jobs accounted for all of the month’s growth, while goods-producing employment declined for the fifth consecutive month.


Small businesses with fewer than 50 employees added 63,000 jobs, down from 68,000 in July. Medium-sized businesses wish 50-499 employees added 44,000 jobs, down from 71,000 last month. Large businesses added 70,000 jobs, up from 56,000 in July.

Service-providing employment rose by 183,000 jobs, 53,000 of which were in the professional and business services sector. In contrast, goods-producing employment fell for the fifth consecutive month, shedding 6,000 jobs amid cuts in the construction industry.

“The American job machine continues to hum along,” said Mark Zandi, chief economist of Moody’s Analytics. “Job creation remains strong, with most industries and companies of all sizes adding solidly to their payrolls. The U.S. Economy will soon be at full employment.”

Read the ADP release.
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Tuesday, August 30, 2016

Consumer Confidence Improved in August

The Conference Board’s Consumer Confidence Index increased to 101.1 in August, up 4.4 points from July.


The Present Situation index rose 4.2 points to 123.0, while the Expectations Index increased 4.4 points to 86.4.

“Consumers’ assessment of both current business and labor market conditions was considerably more favorable than last month,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Short-term expectations regarding business and employment conditions, as well as personal income prospects, also improved, suggesting the possibility of a moderate pick-up in growth in the coming months.”

The labor market outlook also improved in August. The share of consumers expecting more jobs in the coming months rose 0.7 points to 14.2%, while the share anticipating fewer jobs remained unchanged at 17.5%. Income expectations improved, as 18.8% expected their incomes to increase in the coming months, down from 17.1% in July.

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Home Price Growth Continued in June

The 20-City CoreLogic Case-Shiller Composite Index increased 5.1% year-over-year in June, down from 5.3% in May. The 10-City Composite Index increased 4.3% annually, down from 4.4% in the previous month. The National Index, which covers all nine Census divisions increased by 5.1%, unchanged from last month.


On a seasonally adjusted monthly basis, both the 10 and 20-City Composites increased by 0.8%, while the National Index increased 1.0%

“Overall, residential real estate and housing is in good shape,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Sales of existing homes are running at about 5.5 million units annually with inventory levels under five months, indicating a fairly tight market. Sales of new single family homes were at a 654,000 seasonally adjusted annual rate in July, the highest rate since November 2007.”

Monthly home prices rose in nine of the twenty major cities covered by the index. Portland once again saw the largest gain with prices increasing 0.7% on a seasonally adjusted basis. In contrast, prices in Atlanta and Chicago fell 0.6%.

Read the S&P release.
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Monday, August 29, 2016

Fifth Consecutive Monthly Increase in Personal Income

Personal income increased 0.4% ($71.6 billion) in July, according to the Bureau of Economic Analysis, up from a 0.3% increase in June. Personal consumption expenditures also increased, rising 0.3% or $42.0 billion. Real disposable income – personal income less personal taxes – increased 0.4% after rising 0.2% in June.


The personal savings rate – personal savings as a percentage of personal income – was 5.7%, up from the June rate of 5.5%.

The increase in personal income was primarily due to a rise in personal wages and salaries, which rose $43.3 billion in July, up from a $41.7 billion increase in June.

The price index for PCE was unchanged in July. Excluding food and energy, the index increased 0.1%.

Read the BEA release.
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Friday, August 26, 2016

Yellen: Case for Increasing Fed Funds Rate ‘Has Strengthened’

As the U.S. economy continues to expand, Federal Reserve Chairman Janet Yellen said in a Friday speech that she anticipates gradual increases in the federal funds rate over the next few years. She added that the Federal Open Market Committee expects to see continued moderate growth in real GDP, additional strengthening in the labor market and inflation rising to 2 percent over that timeframe.

Yellen cautioned, however, that any decision to raise interest rates would be dependent on the degree to which incoming data continues to confirm the FOMC’s outlook. “As ever, the economic outlook is uncertain, and so monetary policy is not on a preset course,” Yellen said. “Our ability to predict how the federal funds rate will evolve over time is quite limited because monetary policy will need to respond to whatever disturbances may buffet the economy.”

Read the speech.
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Consumer Sentiment Slipped in August

Consumer Sentiment slipped 0.2 points in August to 89.8, according to the University of Michigan Consumer Sentiment Index.


The Current Economic Conditions Index fell 2 points to 107.0, while the Index of Consumer Expectations rose 1.1 point to 78.7.


“Less favorable personal financial prospects were largely offset by a slight improvement in the outlook for the overall economy,” said Richard Curtin, Chief Economist of UM Surveys of Consumers. “Importantly, long term inflation expectations fell to the lowest level ever recorded, with near term inflation expectations anchored to that same low level. Just as low inflation has provided strong support for real income gains, low interest rates have increasingly become the sole driver of large discretionary expenditures.

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Second Quarter GDP Revised to 1.1%

Real GDP for the second quarter of 2016 grew at an annual rate of 1.1%, according to the Bureau of Economic Analysis’s revised estimate, down slightly from the advance estimate of 1.2%. The general picture of economic growth remained the same, as revisions to GDP components were small.


The change in GDP reflected downward revisions for government spending, private inventories and net exports, partially offset by upward revisions for nonresidential fixed investment and PCE.


The revision to government spending was due to lower state and local government investment in structures, while the revision to inventory investment reflected downward revisions to construction, mining and utilities, which were partially offset by an upward revision to wholesale trade.

Net exports were revised based on an upward revision in goods imports. In contrast, stronger than expected consumer spending on motor vehicles and parts increased PCE’s contribution to GDP.

Read the GDP release.
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Thursday, August 25, 2016

Durable Goods Orders Rose in July

New orders for manufactured durable goods rose 4.4% to $228.9 billion in July, following a 4.2% decrease in June, according to the U.S. Census Bureau. Orders for transportation equipment drove the increase, rising 10.5% to $78.9 billion.


New orders excluding defense increased 3.8% on the month, as orders of nondefense capital goods rose 10.2% to $71.6 billion.

Shipments of manufactured durable goods increased 0.2% to $232.9 billion, after rising 0.5% in June.

Inventories of manufactured durable goods rose 0.3% to $383.0 billion, following a 0.1% June decrease. July’s increase followed six consecutive months of decreases.

Read the Census release.
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Wednesday, August 24, 2016

Existing-Home Sales Fell in July

Existing-home sales fell 3.2% to a seasonally adjusted annual rate of 5.39 million in July, according to the National Association of Realtors (NAR). Year-over-year sales fell for the first time since November 2015, down 1.6% from last July. The annual sales rate fell 13.2% in the Northeast, 5.2% in the Midwest and 1.8% in the South. Sales in the West rose 2.5%.


“Severely restrained inventory and the tightening grip it’s putting on affordability is the primary culprit for the considerable sales slump throughout much of the country last month,” said NAR Chief Economist Lawrence Yun. “Furthermore, with new condo construction barely budging and currently making up only a small sliver of multi-family construction, sales suffered last month as condo buyers faced even stiffer supply constraints than those looking to purchase a single-family home.”

Total housing inventory increased 0.9% to 2.13 million homes available for sale, while the median existing-home price moved up 5.3% from a year ago to $244,100.

Distressed sales comprised 5% of sales in July, the lowest share since NAR began tracking them in 2008. Four percent of sales were foreclosures and 1% were short sales. On average, foreclosures and short sales sold for discounts of 18% and 16% respectively.

Read the NAR release.
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Tuesday, August 23, 2016

New Home Sales Surged in July

New single-family home sales rose to a seasonally adjusted annual rate of 654,000 in July, according to the U.S. Census Bureau and the Department of Housing and Urban Development. The July rate was 12.4% above the revised June rate of 582,000 and 31.3% above the July 2015 estimate.


Sales grew in most regions, rising 40.0% in the Northeast, 18.1% in the South, and 1.2% in the Mid-West. Sales were unchanged in the West.

The median price of a new home was $294,600, down 5.1% from June. The average price was $355,800, an increase of less than 1.0% from the previous month.

At the end of July there was an estimated supply of 4.3 months at the current sales rate, down from a 4.9 month supply in June.

Read the Census/HUD release.
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Tuesday, August 16, 2016

Industrial Production Rose 0.7% in July, Largest Gain Since November 2014

Industrial production rose 0.7% in July after moving up 0.4% in June, according to the Federal Reserve. The July increase was the largest since November 2014. Despite the large July increase, industrial production is 0.5% lower than a year ago.


Manufacturing output increased 0.5% in July, its largest gain in 12 months. The gain was broadly spread across durable goods, nondurable goods, and other manufacturing.

Capacity utilization for manufacturing increased 0.4% to 75.4%, which is 3.1% below its long-run average.

The mining index increased 0.7% in July, as declines in oil and gas extraction were more than offset by increases in the indexes for oil well drilling and servicing and for coal.

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Housing Starts Increased in July

Housing starts rose to a seasonally adjusted annual rate of 1.211 million in July, 2.1% above the revised June estimate of 1.186 million and 5.6% above the July 2015 rate.


Housing activity increased in most regions, rising 15.5% in the Northeast, 3.5% in the South and 2.3% in the Midwest. Starts fell 5.9% in the West region.


New building permits slipped during the month, falling 0.1% to 1.152 million. Permits rose year-over-year, rising 0.9% from July 2015.

Housing completions were at a seasonally adjusted rate of 1.026 million, down 8.3% from June’s estimate but 3.2% above the July 2015 rate.

Read the Census release.
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CPI Unchanged in July

The Consumer Price Index was unchanged in July on a seasonally adjusted basis. The index for all items less food and energy rose, but posted its smallest increase since March. Over the last 12 months, the all-items index rose 0.8% before seasonal adjustment.


The energy index fell 1.6% in July after rising in the four previous months. The decline was due to a 4.7% fall in the gasoline index; other energy indexes were mixed.

The food index was unchanged after falling 0.1% in June. Prices for food at home fell 0.2%, while prices for food away from home increased 0.2%. Over the past year, the food index has increased 0.2%.

Prices for all items less food and energy increased 0.1% in July, down from a 0.2% June increase. The index rose 2.2% over the past 12 months ending in July, a slightly smaller increase than the 2.3% rise for the 12 months ending in June.

Read the BLS release.
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Monday, August 15, 2016

Builder Confidence Improved in August

The National Association of Home Builders/Wells Fargo Housing Market Index rose 2 points to 60 in August, after falling 2 points in July. Over the past seven months the index has held within a range of 58 and 60 points.

“Builder confidence remains solid in the aftermath of weak GDP reports that were offset by positive job growth in July,” said NAHB Chief Economist Robert Dietz. “Historically low mortgage rates, increased household formations and a firming labor market will help keep housing on an upward path during the rest of the year.”

Two of the three index components posted gains in August. The component measuring sales conditions increased 2 points to 65, while the component measuring sales expectations increased 1 point to 67. The buyer traffic component fell 1 point to 44.

The three-month moving averages varied. The Northeast and South both rose 2 points to 41 and 63 respectively. The West was unchanged at 69, while the Midwest fell 2 points to 55.

Read the NAHB release.
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Friday, August 12, 2016

Retail Sales Unchanged in July

There were $457.7 billion in retail and food service sales in July, virtually unchanged from the previous month, according to the U.S. Census Bureau.


Core retail sales – excluding automobiles and parts – fell 0.3% after rising 0.9% in June. Year-over-year core sales increased 2.2%.

Retail trade sales were virtually unchanged in July but rose 1.9% from a year ago. In contrast, sales at nonstore retailers increased during the month, rising 1.3%. Year-over-year sales at nonstore retailers have increased by 14.1%.

Gasoline station sales continued to fall, dropping 2.7% during the month and 11.0% from a year ago.

Read the Census release.

Producer Prices fell 0.4% in July

Producer prices fell 0.4% in July, seasonally adjusted, after rising 0.5% in June, according to the U.S. Bureau of Labor Statistics. The majority of the July decrease was attributable to a fall in prices for final demand services. Year over year, producer prices have fallen 0.2%.


Prices for final demand services fell 0.3% in July after increasing for the previous three months. Much of the decline was due to a fall in margins for demand services, which fell 1.3%. In contrast, prices for final demand services less trade, transportation, and warehousing advanced 0.2%.

The index for final demand goods fell 0.4% in July following three straight increases. Nearly half of the decrease was due to prices for final demand foods, which fell 1.1%. Prices for final demand goods less foods and energy were unchanged.

Read the BLS release.
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Tuesday, August 9, 2016

Small Business Optimism Edged up in July

The NFIB Small Business Optimism Index increased 0.1 points in July, rising to 94.6. Four of the ten index components posted gains, while four declined.


Labor market conditions weakened during the month, as 53% of small business owners reported hiring or trying to hire, down 3 points from June. Forty-six percent of workers reported few or no qualified workers (down 2 points from June). Fourteen percent of employers surveyed cited the difficulty of finding qualified workers as their top business problem. A seasonally adjusted net 12% of employers plan to create new jobs, up 1 point from the previous month.

The percent of owners reporting higher sales in the past three months fell 4 points to a net negative 8%. Twelve percent of small business owners reported weak sales as their top business problem, up 1 point from June.

Capital spending increased as 59% of owners reported capital outlays, up 2 points. The percent of owners planning capital outlays in the next 3 to 6 months fell 1 point to 25%.

Credit conditions improved as 3% of owners reported that all their borrowing needs were not met, up 2 points from the previous month. Only 2% of business owners surveyed reported that financing was their top business problem, the same as in June.

Read the NFIB report.

Friday, August 5, 2016

Consumer Credit Grew 4.1% (SAAR) in June

Consumer credit increased at a seasonally adjusted annual rate of 4.1% in June, down from a 6.0% rate in May. Total outstanding credit rose $12.3 billion during the month (compared to $17.9 billion in May) to $3.63 trillion.


Revolving credit rose at an annual rate of 9.7% to $960.8 billion, compared to a 2.2% increase in May.

Non-revolving credit rose at a 2.1% annual rate, or $4.6 billion, compared to May’s rate of 7.3%. Total outstanding non-revolving credit is now $2.67 trillion.


Federal government holdings of student loans continue to be the largest portion of non-revolving credit, comprising approximately 37% or outstanding credit. Depository institutions and finance companies are the secondary and tertiary holders, with 25% and 23%, respectively, of outstanding non-revolving credit.

Read the Federal Reserve release.
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International Trade Balance Widened in June

The international trade deficit widened in June to $44.5 billion, up $3.6 billion from May, according to the U.S. Census Bureau and the Bureau of Economic Analysis. The widening of the deficit was driven by a $4.2 billion increase in imports, partially offset by a $0.6 billion increase in exports.


The goods deficit increased $3.8 billion to $66.0 billion, while the services surplus increased $0.3 billion to $21.5 billion. The petroleum deficit widened to by $2.5 billion to $9.7 billion.

Exports of goods increased $0.5 billion to $120.4 billion in June, driven by an increase in exports of both food and consumer goods. Exports of services increased $0.1 billion, primarily due to increases in financial services and travel-related exports.

Imports of goods increased $4.4 billion to $186.4 billion on account of industrial supplies and materials, along with increased consumer and capital goods. Imports of services fell $0.2 billion to $41.2 billion on account of travel and transport.

Read the Census/BEA release.
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255,000 Jobs Added in July, Unemployment Holds at 4.9%

Total nonfarm payroll employment rose by 255,000 in July, down from June’s upwardly revised figure of 292,000. The national unemployment rate remained unchanged at 4.9%.


The majority of the increase came from professional and business services, which added 70,000 jobs in July, up from 53,000 in June. The sector has added 550,000 jobs over the past 12 months. Healthcare employment increased by 43,000 jobs, with most gains occurring in ambulatory services and hospitals. The financial activities sector rose by 18,000 in July, and has risen by 162,000 over the year.

Mining employment continued to fall as the industry shed 6,000 jobs during the month. Since peaking in September 2014, mining employment has fallen by 220,000 or 26%.

The civilian labor force participation rate was 62.8%, up 10 basis points from the previous month. The number of long-term unemployed, those jobless for 27 weeks or more, was unchanged from the previous month and accounted for 26.6% of the unemployed. The number of discouraged workers, those who gave up looking for work, was 591,000, little changed from the previous year.

Average hourly earnings increased 8 cents to $25.69. Hourly earnings have risen by 2.6% over the past year.

Read the BLS release.
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Thursday, August 4, 2016

Manufactured Goods Orders fell 1.5% in June

New orders for manufactured goods fell 1.5% to $447.4 billion in June, following a 1.2% May decrease, according to the U.S. Census Bureau.


New orders for manufactured durable goods fell 3.9% to $219.8 billion, following a 2.9% May decrease. Orders for transportation equipment led the decrease, falling 10.5% to $72.1 billion.

Shipments of manufactured durable goods, up two of the last three months, increased 0.4% to $232.4 billion. Transportation equipment led the increases, rising 1.4% to $81.1 billion. Excluding transportation, shipments increased 0.5% compared to a 0.2% increase in May.

Inventories of manufactured durable goods, down eleven of the last twelve months, fell 0.3% to $381.3 billion, following a 0.4% decrease in May.

Read the Census release.
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Energy-Related Job Cuts Surged in July

Employers announced plans to cut 45,346 jobs in July, according to a report issued by Challenger Gray & Christmas. July’s announced cuts were 19% higher than June’s total. To date, employers have announced 359,100 layoffs, down 8.7% from a year ago.

“While job cuts were up last month, compared to June, the total was still lower than the July average recorded since the end of the recession,” said John A. Challenger, CEO of Challenger Gray & Christmas. “We did see a resurgence in energy-sector job cuts. This was somewhat unexpected in light of recent projections of increased oil price and possible labor shortages in the industry.”

Energy-sector cuts increased dramatically in July, rising to 17,725 (up from 1,979 in June), the largest figure since April. Year-to-date, the energy sector has announced 94,936 cuts, up 37% from 2015.

“Even as some oil-industry firms continued to reduce their headcounts in July, a report appearing in an industry publication OilPrice.com noted that the number of oil rigs rebounded in May and predicted that firms will have a difficult time ramping up operations if and when oil and gas prices go up,” said Challenger.

Read the Challenger Gray & Christmas release.
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Wednesday, August 3, 2016

ISM: Non-Manufacturing Sector Continues Expansion

The ISM Non-Manufacturing Index registered 55.5 points in July, down 1 point from the previous month. Despite the decline in the index, July marked the 78th consecutive month of growth as indicated by readings over 50. Fifteen non-manufacturing industries reported growth in July, while three reported contraction.


Growth in the Business Activity Index slipped to 59.3 points, down 0.2 points from June’s reading. Respondents reported increased business enterprise sales and business expansion. Fifteen of the eighteen industries reported growth, while two industries, Other Services, and Agriculture, Forestry, Fishing & Hunting, reported contraction.

Non-manufacturing employment grew in July for the second consecutive month, albeit at a slower pace. The index slipped 1.3 points to 51.4. Some respondents reported adding new sales and administrative staff, while others reported downsizing to maintain profit margins. Twelve industries reported increasing employment during the month, while five industries including Information, Agriculture, and Utilities reported contraction.

The New Orders Index registered 60.3 points, up 0.4 from June. Respondents attributed growth to new fiscal year spending and increased marketing and development opportunities. Thirteen industries reported growth in new orders, while four reported contraction.

Supplier deliveries slowed for the seventh consecutive month, as the index registered 51.0 points (readings above 50 for this index indicate slowed deliveries). Seven industries reported slower deliveries, while six reported faster deliveries.

Read the ISM release.
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ADP: 179,000 Jobs added in July

The non-farm private sector added 179,000 jobs in July according to the ADP National Employment Report, an increase from June’s revised growth of 176,000. Service-providing employment provided all of the month’s growth, while goods producing employment shed jobs during the month.


Small businesses with fewer than 50 employees added 61,000 jobs, down from 86,000 in June. Medium-sized businesses with 50-499 employees added 68,000 jobs, up from 56,000 last month. Large businesses added 50,000 jobs, up from 34,000 in June.

Service-providing employment rose by 185,000 jobs, 59,000 of which were in professional and business services. In contrast, goods-producing employment fell for the fourth consecutive month, shedding 6,000 jobs amid cuts in the construction industry.

“This month’s employment number falls short of the 12-month average primarily because of slowing in small business hiring,” said Ahu Yuldirmaz, vice president and head of the ADP Research Institute. “As the labor market continues to tighten, small businesses may increasingly face challenges when it comes to offering wages that can compete with larger businesses.”

Read the ADP release.

Tuesday, August 2, 2016

Personal Income and Consumption Rose in June

Personal income increased 0.2% ($29.3 billion) in June, according to the Bureau of Economic Analysis, the same increase as in May. Personal consumption expenditures also increased, rising 0.4% or $53.0 billion. Real disposable income – personal income less personal taxes – increased 0.1%, after remaining unchanged in May.


The personal savings rate – personal savings as a percentage of personal income – was 5.3%, down from 5.5% in the previous month.

The increase in personal income was primarily due to a rise in personal wages and salaries, which increased by $25.4 billion in June, up from a $19.5 billion May increase.

The price index for PCE increased 0.1%, compared with a 0.2% May increase. Excluding food and energy, the index also increased 0.1%.

Read the BEA release.
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Monday, August 1, 2016

C&I Lending Standards Tighten, Mortgage Standards Unchanged

Over the past three months, banks reported tightening lending standards for C&I and CRE loans, according to the July 2016 Senior Loan Officer Opinion Survey on Bank Lending Practices. The survey results also indicated that demand for C&I loans was little changed during the second quarter of 2016, while demand for CRE loans had strengthened on net.

Although most bank standards remained unchanged, a net 8.5% of banks reported tightening standards for C&I lending to large and middle market firms, while a net 7.1% reported tightening lending standards for smaller firms.

Most respondents who tightened standards reported a less favorable or more uncertain outlook, worsening of industry-specific problems and reduced tolerance for risk. In contrast, the banks who eased standards cited increased competition from nonbank lenders as a reason for doing so.

Regarding household loans, lending standards for all types of residential real estate mortgages were little changed on balance, with the exception of GSE eligible loans, for which a moderate net fraction of banks reported easing standards, and for subprime residential mortgages, for which a moderate net fraction of banks reported tightening standards.

Read the survey release.
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Manufacturing Expands for Fifth Consecutive Month

The ISM Manufacturing Index registered 52.6 points in July. Although the index was 0.6 points lower than in June, July’s reading marked the fifth consecutive month of growth in the manufacturing sector as readings above 50 indicate expansion. Of the eighteen manufacturing industries, eleven reported growth during the month.


The Employment Index fell 1 point to 49.4, indicating employment contraction. Seven industries including textile mills, printing and related support activities, and miscellaneous manufacturing reported contraction, while eight industries reported expansion.

The New Orders Index slipped 0.1 points to 56.9. Twelve industries reported growth in new orders including textile mills, manufacturing, and printing and related support activities. Five industries, including apparel and electrical equipment reported declines in new orders for the month.

Export orders fell 1 point to 52.5 in July. Eight industries reported growth in exports, while six industries including apparel, nonmetallic mineral products, and primary metals reported declines in export orders.

The Inventories Index increased 1 point to 49.5, indicating that raw materials inventories are contracting at a slower pace. July marks the 13th consecutive month of contraction in inventories.

Read the ISM release.
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Construction Spending fell 0.6% in June

Construction spending fell 0.6% in June to a seasonally adjusted annual rate of $1,133.5 billion. May’s spending estimate was revised down to $1,140.9. During the first six months of this year, construction spending amounted to $539.8 billion, up 6.2% from the first six months of 2015.


Total private construction fell to a rate of $851.0 billion, down 0.6% from the revised May estimate of $856.6 billion.

Private residential construction was at a seasonally adjusted annual rate of $445.8 billion, almost unchanged from May.

Private nonresidential construction fell 1.3% to a rate of $405.2 billion, largely due to slowdowns in manufacturing related construction projects.

Public construction fell 0.6% to a rate of $282.5 billion, in large part due to declines in both educational and highway construction.

Read the Census release.
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