June 27, 2011
Unlike the previous week, there were only a handful of major economic releases last week. Federal Reserve Chairman Ben Bernanke acknowledged that the economic recovery is not growing at the pace he would like, much to his frustration.
Chairman Bernanke feels some challenges, such as supply disruptions and rising energy and commodity prices, are temporary, while others are more pervasive. Data on new and existing home sales for May, which are discussed below, continue to show a prolonged slump in the housing market, and employment remains unacceptably high. Nonetheless, the Fed has a more positive outlook for year's end.
The Fed's statement, following its Federal Open Market Committee (FOMC) meeting, did acknowledge pricing pressures and their impact on economic activity. While maintaining that core prices are currently under control, the Fed will "pay close attention to the evolution of inflation and inflation expectations." The Fed will complete its purchases of $600 billion in long-term Treasury securities by June 30, thereby ending its sometimes controversial second round of quantitative easing (QE2).
Despite this statement, however, I expect – as do many other economists – that the Federal Reserve will begin increasing interest rates later this year. The economy is expected to improve somewhat in the second half of 2011. I am forecasting 2 percent growth in real GDP for the year overall, with 3.3 percent growth next year. Neither figure represents strong growth, but it might be enough to free the Fed to tackle inflation if it senses that core price increases are becoming a problem.
On the positive side, the Census Bureau released advance figures for manufactured durable goods sales for the month of May. Reversing the previous month's decline, new orders were up 1.9 percent, led by healthy increases in the transportation sector. This is a notable sign that we are moving beyond the supply chain issues that have plagued that sector recently. Also notable, though, is that durables increased pretty much across the board, with shipments, unfilled orders and inventories also rising.
This week, I hope that a series of economic indicators provide renewed evidence that manufacturing production is moving back up. On Friday, new numbers from the Institute for Supply Management's (ISM) Purchasing Managers Index will come out, but before that, we will get updates from the Dallas, Kansas City, and Richmond Federal Reserve Banks on manufacturing output in their respective regions. In addition, the ISM will provide local data on both Chicago and New York. Consumers have been squeezed lately by higher prices, and consumer confidence has been falling. New information on personal income and spending will come out this morning.
Chad Moutray
Chief Economist
National Association of Manufacturers
MANUFACTURING EXECUTIVES MEET WITH GOVERNOR’S EDUCTION COMMISSION
As a follow up to the invitation extended from Governor Herbert in a breakfast meeting with the UMA Board of Directors in May to UMA President Tom Bingham to have key manufacturing executives appear before his Excellence in Education Commission, three UMA member company executives explained the needs of manufacturers this morning. Appearing before the 30 member commission, chaired by Governor Herbert, were Scott Bruce, Rio Tinto Kennecott Utah Copper Vice President and UMA chairman; Steve Eiting, Vice President of Manufacturing, L3 Communications; and David Smith, Vice President and CEO, Nucor Steel.
Each executive, in turn explained to the Commission members that while higher education is important and that many jobs require a four year degree, such as engineers, many well paying jobs are going unfilled because they need technically-trained employers with certain skill sets.
Even for L3, who has hired more engineers in Utah in the last several years than any company in the state, Eiting said the critical need is for trained maintenance, assemblers, and other skilled workers.
The Governor’s Education Commission spent their entire agenda today learning about the importance of career and technical education to Utah employers. UMA President Tom Bingham introduced the company executives by telling the commission members they need to develop an new mindset about who the customer of education is; he said,” The customer is these employers here before you today. If you believe the customer of education is the student and you fail to prepare him with the skills these people need, you do him a disservice. The customer is the employer, not the student.”
UMA MEMBER COMPANIES IN THE NEWS:
35 ATTORNEYS FROM HOLLAND & HART'S SALT LAKE CITY OFFICE RECOGNIZED IN MOUNTAIN STATES SUPER LAWYERS 2011
Daily Pulse
Thirty-five attorneys from Holland & Hart's Salt Lake City office have been selected for inclusion in the 2011 Mountain States Super Lawyers publication.
{read more}
WHITE HOUSE MAY BOOST FUEL ECONOMY STANDARD
Today in Manufacturing
The Obama administration is telling American automakers that it would like cars and light trucks to average 56.2 miles per gallon by 2025 ... continue
SAVE A FOREST: PRINT YOUR EMAILS
It's okay to use paper. Trees are renewable, recyclable and sustainable.
Chuck Leavell and Carlton Owen (Commentary)
Well-intentioned email taglines inspired by sincere desire to help the planet have become ubiquitous in recent times: "Please don't print this email," "Save trees: Print only when necessary," or "Please consider the environment before printing this email."
However, the World Wildlife Fund has taken this to the extreme with a new nonprintable electronic document. Patterned after the highly successful PDF (Portable Document Format) that has revolutionized electronic document sharing and storage, the WWF format takes the decision away from you.
This tact is sure to frustrate and increase inefficiency, leaving some saying, "Wait a minute, I really needed to print that document!" What many folks don't realize is that it also may indirectly hasten the conversion of forests to other uses like strip malls, parking lots and housing developments—because the nation's forest landowners can't keep growing trees without markets for this natural, organic and renewable product.
Chuck's email tagline reads: "Notice: It's OK to print this email. Paper is a biodegradable, renewable, sustainable product made from trees. Growing and harvesting trees provides jobs for millions of Americans. Working forests are good for the environment and provide clean air and water, wildlife habitat and carbon storage. Thanks to improved forest management, we have more trees in America today than we had 100 years ago."
Now, understand that we don't advocate wanton waste of paper or any other material, but avoiding the print option does absolutely nothing to save the planet or forests. More forests are dying of insect infestation and disease or being paved over across this country right now than could be converted to an email print-out in a thousand years.
Paper is good. Around 105 A.D., man discovered that paper traveled and transcribed better than stone; it became the renewable medium of choice. Frankly, the human eye can only stare at a computer screen for so long.
We appreciate and applaud people who are sensitive to environmental issues. We both love forests and are avid environmentalists. But we are going to continue to print out those necessary emails without guilt.
Honest, it's okay to print. Trees are renewable, recyclable and sustainable.
Mr. Leavell is a musician, tree farmer, environmentalist and author. Mr. Owen is a forester, wildlife biologist and CEO of U.S. Endowment for Forestry and Communities.
LIGHTBULB RULES SPARK POLITICAL FIGHT
Quick Manufacturing News
However, new legislation may not change what manufacturers are doing in creating more efficient bulbs that use halogen, LED or other new technology. Click to continue
MULTIDISCIPLINARY INTERVENTIONS NO MORE EFFECTIVE THAN BRIEF ONES FOR EMPLOYEES WITH LOW BACK PAIN
Quick Manufacturing News
Employees suffering from low back pain who were treated by a team of experts and assigned a case manager who collaborated on a comprehensive rehabilitation plan with the experts and patient did not show better results than employees who received a brief intervention consisting of a clinical examination and advice offered by a rehabilitation physician and a physiotherapist, according to a group of researchers from Denmark. Click to continue
CHINA EYES U.S. ENERGY NEST EGG
Today in Manufacturing
With a growing appetite for oil that may one day surpass that of the U.S., China is ready to spend the dollars for a big piece of Canada's oil reserves ... continue
CONSUMERS SPEND AT WEAKEST PACE IN 20 MONTHS
Today in Manufacturing
When adjusted for inflation, consumer spending dropped 0.1 percent -- the worst result since September 2009 -- Commerce Department said ... continue
Dallas Fed Reports Slow Growth in Manufacturing Output in June
Posted by: Chad Moutray under Economy on June 27, 2011 @ 11:25 am
This week, much of the economic data will focus on manufacturing production, with the Institute for Supply Management (ISM) numbers due out on Friday and surveys from the Dallas, Kansas City, and Richmond Federal Reserve Banks.
THE FIRST OF THESE IS THE TEXAS MANUFACTURING OUTLOOK SURVEY FROM THE DALLAS FED, WHICH REPORTS SLOWER GROWTH IN MANUFACTURING OUTPUT IN JUNE
NAM ShopFloor Blog-Chad Moutray
Its production index fell from 12.7 to 5.6, while still positive it reflects a slower pace than in April. The indices for shipments, capacity utilization, capital expenditures, and employment dropped. However, the number of new orders rose, perhaps boding well for the coming month. Pricing pressures moderated from previous months, but they remain elevated.
The broader perception of business conditions reflects weakness, with the index for general business conditions declining from -7.4 to -17.5. With that said, respondents reported a slight improvement in their company’s output, with the index rising from 3.2 to 7.2. Expectations of future growth are positive, but less so than in prior surveys.
In a series of special questions, government regulations and an uncertain business outlook were “relatively major problems,” with both garnering over 50 percent of responses. Other top concerns were weak sales, tax, and input costs. More than 60 percent suggested that employee benefits per employee were up at least 2.5 percent in 2011, with respondents evenly split on whether or not these increases were anticipated and budgeted for.
Access to credit was not a problem for 57.1 percent of those taking this survey. It is notable, though, that 14.3 percent of businesses said that it was a major problem.
MODEST GROWTH IN PERSONAL INCOME IN MAY, BUT SPENDING IS UNCHANGED
NAM ShopFloor Blog-Chad Moutray
Americans experienced a 0.3 percent increase in personal income and a 0.2 percent gain in disposable income in May, according to numbers released this morning from the Bureau of Economic Analysis. Consumer spending, though, was virtually unchanged from April, suggesting that slow job growth and increased prices are having an impact despite the higher incomes.
Consumers purchased $17.5 billion fewer durable goods and $8.2 billion fewer nondurable goods in May, down 1.5 percent and 0.3 percent, respectively. Real consumer spending fell 0.1 percent, much as it did the previous month.
Manufacturing wages and salaries rose by $2.9 billion, or 0.4 percent, in May after being unchanged in April. This continues a longer trend of manufacturing compensation inching up, with year-to-date wages and salaries up 2.4 percent.
Prices for consumer items were up 0.2 percent in May, with the core inflation rate – which excludes food and energy – rising 0.3 percent. Consumer prices are 2.5 percent higher than in May 2010, and the year-over-year core inflation rate stands at 1.2 percent. Core inflation, while low, has steadily risen over the past few months. Energy costs fell in the month of May, reflecting lower recent gasoline prices, but food costs continued to rise.
The personal savings rate now stands at 5 percent, up slightly from April’s reading of 4.9 percent but below the 5.4 percent rate of December 2010.
Unlike the previous week, there were only a handful of major economic releases last week. Federal Reserve Chairman Ben Bernanke acknowledged that the economic recovery is not growing at the pace he would like, much to his frustration.
Chairman Bernanke feels some challenges, such as supply disruptions and rising energy and commodity prices, are temporary, while others are more pervasive. Data on new and existing home sales for May, which are discussed below, continue to show a prolonged slump in the housing market, and employment remains unacceptably high. Nonetheless, the Fed has a more positive outlook for year's end.
The Fed's statement, following its Federal Open Market Committee (FOMC) meeting, did acknowledge pricing pressures and their impact on economic activity. While maintaining that core prices are currently under control, the Fed will "pay close attention to the evolution of inflation and inflation expectations." The Fed will complete its purchases of $600 billion in long-term Treasury securities by June 30, thereby ending its sometimes controversial second round of quantitative easing (QE2).
Despite this statement, however, I expect – as do many other economists – that the Federal Reserve will begin increasing interest rates later this year. The economy is expected to improve somewhat in the second half of 2011. I am forecasting 2 percent growth in real GDP for the year overall, with 3.3 percent growth next year. Neither figure represents strong growth, but it might be enough to free the Fed to tackle inflation if it senses that core price increases are becoming a problem.
On the positive side, the Census Bureau released advance figures for manufactured durable goods sales for the month of May. Reversing the previous month's decline, new orders were up 1.9 percent, led by healthy increases in the transportation sector. This is a notable sign that we are moving beyond the supply chain issues that have plagued that sector recently. Also notable, though, is that durables increased pretty much across the board, with shipments, unfilled orders and inventories also rising.
This week, I hope that a series of economic indicators provide renewed evidence that manufacturing production is moving back up. On Friday, new numbers from the Institute for Supply Management's (ISM) Purchasing Managers Index will come out, but before that, we will get updates from the Dallas, Kansas City, and Richmond Federal Reserve Banks on manufacturing output in their respective regions. In addition, the ISM will provide local data on both Chicago and New York. Consumers have been squeezed lately by higher prices, and consumer confidence has been falling. New information on personal income and spending will come out this morning.
Chad Moutray
Chief Economist
National Association of Manufacturers
MANUFACTURING EXECUTIVES MEET WITH GOVERNOR’S EDUCTION COMMISSION
As a follow up to the invitation extended from Governor Herbert in a breakfast meeting with the UMA Board of Directors in May to UMA President Tom Bingham to have key manufacturing executives appear before his Excellence in Education Commission, three UMA member company executives explained the needs of manufacturers this morning. Appearing before the 30 member commission, chaired by Governor Herbert, were Scott Bruce, Rio Tinto Kennecott Utah Copper Vice President and UMA chairman; Steve Eiting, Vice President of Manufacturing, L3 Communications; and David Smith, Vice President and CEO, Nucor Steel.
Each executive, in turn explained to the Commission members that while higher education is important and that many jobs require a four year degree, such as engineers, many well paying jobs are going unfilled because they need technically-trained employers with certain skill sets.
Even for L3, who has hired more engineers in Utah in the last several years than any company in the state, Eiting said the critical need is for trained maintenance, assemblers, and other skilled workers.
The Governor’s Education Commission spent their entire agenda today learning about the importance of career and technical education to Utah employers. UMA President Tom Bingham introduced the company executives by telling the commission members they need to develop an new mindset about who the customer of education is; he said,” The customer is these employers here before you today. If you believe the customer of education is the student and you fail to prepare him with the skills these people need, you do him a disservice. The customer is the employer, not the student.”
UMA MEMBER COMPANIES IN THE NEWS:
35 ATTORNEYS FROM HOLLAND & HART'S SALT LAKE CITY OFFICE RECOGNIZED IN MOUNTAIN STATES SUPER LAWYERS 2011
Daily Pulse
Thirty-five attorneys from Holland & Hart's Salt Lake City office have been selected for inclusion in the 2011 Mountain States Super Lawyers publication.
{read more}
WHITE HOUSE MAY BOOST FUEL ECONOMY STANDARD
Today in Manufacturing
The Obama administration is telling American automakers that it would like cars and light trucks to average 56.2 miles per gallon by 2025 ... continue
SAVE A FOREST: PRINT YOUR EMAILS
It's okay to use paper. Trees are renewable, recyclable and sustainable.
Chuck Leavell and Carlton Owen (Commentary)
Well-intentioned email taglines inspired by sincere desire to help the planet have become ubiquitous in recent times: "Please don't print this email," "Save trees: Print only when necessary," or "Please consider the environment before printing this email."
However, the World Wildlife Fund has taken this to the extreme with a new nonprintable electronic document. Patterned after the highly successful PDF (Portable Document Format) that has revolutionized electronic document sharing and storage, the WWF format takes the decision away from you.
This tact is sure to frustrate and increase inefficiency, leaving some saying, "Wait a minute, I really needed to print that document!" What many folks don't realize is that it also may indirectly hasten the conversion of forests to other uses like strip malls, parking lots and housing developments—because the nation's forest landowners can't keep growing trees without markets for this natural, organic and renewable product.
Chuck's email tagline reads: "Notice: It's OK to print this email. Paper is a biodegradable, renewable, sustainable product made from trees. Growing and harvesting trees provides jobs for millions of Americans. Working forests are good for the environment and provide clean air and water, wildlife habitat and carbon storage. Thanks to improved forest management, we have more trees in America today than we had 100 years ago."
Now, understand that we don't advocate wanton waste of paper or any other material, but avoiding the print option does absolutely nothing to save the planet or forests. More forests are dying of insect infestation and disease or being paved over across this country right now than could be converted to an email print-out in a thousand years.
Paper is good. Around 105 A.D., man discovered that paper traveled and transcribed better than stone; it became the renewable medium of choice. Frankly, the human eye can only stare at a computer screen for so long.
We appreciate and applaud people who are sensitive to environmental issues. We both love forests and are avid environmentalists. But we are going to continue to print out those necessary emails without guilt.
Honest, it's okay to print. Trees are renewable, recyclable and sustainable.
Mr. Leavell is a musician, tree farmer, environmentalist and author. Mr. Owen is a forester, wildlife biologist and CEO of U.S. Endowment for Forestry and Communities.
LIGHTBULB RULES SPARK POLITICAL FIGHT
Quick Manufacturing News
However, new legislation may not change what manufacturers are doing in creating more efficient bulbs that use halogen, LED or other new technology. Click to continue
MULTIDISCIPLINARY INTERVENTIONS NO MORE EFFECTIVE THAN BRIEF ONES FOR EMPLOYEES WITH LOW BACK PAIN
Quick Manufacturing News
Employees suffering from low back pain who were treated by a team of experts and assigned a case manager who collaborated on a comprehensive rehabilitation plan with the experts and patient did not show better results than employees who received a brief intervention consisting of a clinical examination and advice offered by a rehabilitation physician and a physiotherapist, according to a group of researchers from Denmark. Click to continue
CHINA EYES U.S. ENERGY NEST EGG
Today in Manufacturing
With a growing appetite for oil that may one day surpass that of the U.S., China is ready to spend the dollars for a big piece of Canada's oil reserves ... continue
CONSUMERS SPEND AT WEAKEST PACE IN 20 MONTHS
Today in Manufacturing
When adjusted for inflation, consumer spending dropped 0.1 percent -- the worst result since September 2009 -- Commerce Department said ... continue
Dallas Fed Reports Slow Growth in Manufacturing Output in June
Posted by: Chad Moutray under Economy on June 27, 2011 @ 11:25 am
This week, much of the economic data will focus on manufacturing production, with the Institute for Supply Management (ISM) numbers due out on Friday and surveys from the Dallas, Kansas City, and Richmond Federal Reserve Banks.
THE FIRST OF THESE IS THE TEXAS MANUFACTURING OUTLOOK SURVEY FROM THE DALLAS FED, WHICH REPORTS SLOWER GROWTH IN MANUFACTURING OUTPUT IN JUNE
NAM ShopFloor Blog-Chad Moutray
Its production index fell from 12.7 to 5.6, while still positive it reflects a slower pace than in April. The indices for shipments, capacity utilization, capital expenditures, and employment dropped. However, the number of new orders rose, perhaps boding well for the coming month. Pricing pressures moderated from previous months, but they remain elevated.
The broader perception of business conditions reflects weakness, with the index for general business conditions declining from -7.4 to -17.5. With that said, respondents reported a slight improvement in their company’s output, with the index rising from 3.2 to 7.2. Expectations of future growth are positive, but less so than in prior surveys.
In a series of special questions, government regulations and an uncertain business outlook were “relatively major problems,” with both garnering over 50 percent of responses. Other top concerns were weak sales, tax, and input costs. More than 60 percent suggested that employee benefits per employee were up at least 2.5 percent in 2011, with respondents evenly split on whether or not these increases were anticipated and budgeted for.
Access to credit was not a problem for 57.1 percent of those taking this survey. It is notable, though, that 14.3 percent of businesses said that it was a major problem.
MODEST GROWTH IN PERSONAL INCOME IN MAY, BUT SPENDING IS UNCHANGED
NAM ShopFloor Blog-Chad Moutray
Americans experienced a 0.3 percent increase in personal income and a 0.2 percent gain in disposable income in May, according to numbers released this morning from the Bureau of Economic Analysis. Consumer spending, though, was virtually unchanged from April, suggesting that slow job growth and increased prices are having an impact despite the higher incomes.
Consumers purchased $17.5 billion fewer durable goods and $8.2 billion fewer nondurable goods in May, down 1.5 percent and 0.3 percent, respectively. Real consumer spending fell 0.1 percent, much as it did the previous month.
Manufacturing wages and salaries rose by $2.9 billion, or 0.4 percent, in May after being unchanged in April. This continues a longer trend of manufacturing compensation inching up, with year-to-date wages and salaries up 2.4 percent.
Prices for consumer items were up 0.2 percent in May, with the core inflation rate – which excludes food and energy – rising 0.3 percent. Consumer prices are 2.5 percent higher than in May 2010, and the year-over-year core inflation rate stands at 1.2 percent. Core inflation, while low, has steadily risen over the past few months. Energy costs fell in the month of May, reflecting lower recent gasoline prices, but food costs continued to rise.
The personal savings rate now stands at 5 percent, up slightly from April’s reading of 4.9 percent but below the 5.4 percent rate of December 2010.
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