Posts for June 1, 2010

June 1, 2010

Last week's economic news was an improvement from the prior week and generally positive. Of the 10 major indicators, six improved, three grew (but moderated) and only one declined. (To read all of last week's indicators, see the Latest Economic Reports section below.)

The expiration of the homebuyer tax credit fueled housing activity in April. Durable goods orders in rose March, but mainly due to aircraft orders. Outside of aircraft, orders were down, signaling that the manufacturing recovery could be decelerating. This prognosis was buttressed by two regional manufacturing reports showing that industrial activity eased a bit in May. In addition, solid income growth in April and rising consumer confidence in May signal that labor market conditions, while still weak, continue to improve.

Last week the Commerce Department released its advanced report on GDP by industry for 2009. The report shows that the overall 2.4-percent decline in GDP last year (see blue bars in chart) was driven by declines in construction GDP (-9.9 percent), manufacturing (-5.9 percent), AERAF (-3.1 percent), business services (-3 percent), wholesale/retail trade and transportation (-2.8 percent) and finance and real estate (-2.4 percent). These declines more than offset increases in agriculture (+4.6 percent), mining and utilities (+3.4 percent), government (+1.9 percent), information (+1.6 percent) and education and healthcare (+1.4 percent).

As a share of GDP, the manufacturing sector fell to 11 percent last year from 11.6 in 2008 (see black line in chart) and 15.1 percent a decade earlier. The 2009 decline was due to manufacturing output decreasing more than overall GDP. The likelihood that this decrease will be reversed in 2010 is high, however. During the three most recent quarters, manufacturing output grew more than twice as fast as overall GDP. If this trend continues, manufacturing's share of GDP could increase to 11.4 percent in 2010.

Dave Huether

Chief Economist

National Association of Manufacturers

APPEALS COURT DROPS GREENHOUSE GASES LAWSUIT

June 1, 2010 – Today in Manufacturing.net
Federal appeals court has dismissed an appeal of lawsuit that alleged that greenhouse gas emissions from energy and chemical companies contributed to global warming ... continue

CHINA’S WORKERS FIGHT FOR BETTER WAGES, CONDITIONS

June 1, 2010 – Today in Manufacturing.net
Global manufacturers struggling with life-or-death pressures to control costs are finding that the legions of low-wage Chinese workers they rely on have limits ... continue

COULD EUROPEAN CRISIS HURT U.S. ECONOMY?

June 1, 2010 – Today in Manufacturing.net
President of the Federal Reserve Bank of Richmond says the uncertainty and financial crisis in Europe could have an impact on the U.S. economy ... continue

ISM: U.S. MANUFACTURING EXPANDS IN MAY

June 1, 2010 – Today in Manufacturing.net
Private trade group says its manufacturing index fell to 59.7 in May from 60.4 in April, but the reading still indicates that the sector expanded for 10th consecutive month ... continue

WHITE HOUSE GETS HEAT FOR OIL SPILL

June 1, 2010 – Today in Manufacturing.net
The government had left much of the cleanup to BP, but now that the White House faces a growing environmental disaster, some say Washington and President Obama must do more to help ... continue