|
August 28, 2003 -- Improved indices and other data released over this past
month are offering encouraging signs that the economy is tracking upwards.
GDP, boosted by greater defense spending, and durable goods orders posted
solid gains and indicate that business spending is on the rise. Consumer
confidence is also making a comeback, and the ISM Manufacturing Report
showed positive manufacturing activity for the first time since February.
While lackluster employment is still a concern, higher business spending
and low inventory levels could spur more hiring in the coming months. Read
this month's e-newsletter for more detailed information on where the
economy is headed.
Some of the articles listed below require the Adobe Acrobat Reader. Click here to download it for free. |
|
Federal Funds Rate: 1.0%, unchanged in August
The Federal Open Market Committee (FOMC) consists of the Federal Reserve Governors and Reserve Bank Presidents, but only five of the 12 presidents vote with the governors on rate changes. The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight. The federal funds rate is at its lowest level since 1958. At the August 12 FOMC meeting, the Committee cautioned that deflation is possible and that it will keep monetary policy loose for the foreseeable future. The next Beige Book will be released in September. To view past reports, go to: http://www.federalreserve.gov/FOMC/BeigeBook/2003/20030730/default.htm. (Federal Open Market Committee of the Federal Reserve Board) Click here for more information |
|
Real Gross Domestic Product (GDP): Growth rate of 3.1% for 2003Q2,
preliminary (1.4% in 2003Q1)
Gross Domestic Product measures the total production and consumption of goods and services in the United States on a quarterly basis. This month’s estimate was higher than anticipated and is 0.7% higher than the advance number released in July. Major contributors to growth in the second quarter of 2003 included: personal consumption (3.8% from 2.0% previously), federal defense spending (45.9% from -3.5% previously), and nonresidential fixed (business) investment (8.0% from -4.4% previously) . Real final sales of domestic product grew 4.0% after growing 2.3% the previous quarter. Corporate profits were up $88.3 billion, welcome news that could mean the return of capital spending and hiring. (Bureau of Economic Analysis) Click here for more information |
|
Personal Consumption Expenditures: Growth rate of 3.8% for 2003Q2,
preliminary (2.0% in 2003Q1)
Personal Consumption Expenditures (PCE) measures consumer-spending activity. This month’s estmiate was 0.5% higher than July's advance figure. Both durable and nondurable goods sales numbers were revised upwards: durable goods surged 24.1% after falling 2.0% last quarter and nondurable goods expenditures increased 1.1% after last quarter's stronger 6.1% rate. Services grew 1.5% versus 0.9% in the first quarter. Among durable goods, motor vehicle sales gains were positively revised to reflect $28.1 billion in sales versus a loss of $7.9 billion the previous quarter. Among nondurable goods, sales of clothing and shoes ($5.0 billion), other goods ($3.2 billion) and food ($1.9 billion) made up for the other, negative growth segments. Services sector growth was again fueled primarily by medical care growth ($10.6 billion) and housing ($3.9 billion), with recreation ($2.2 billion) also adding to growth. (Bureau of Economic Analysis) Click here for more information |
|
Industrial Production: 110.0% (of 1997 average), up 0.5% in July
The industrial production (IP) index measures the change in output since 1997 (base year) in manufacturing, mining, and electric and gas utilities in the United States. Once again, this past month’s figure was better than last month's revised zero growth figure and beat expectations. Growth appears to be broad-based. Products grew 0.5% to 107.0, non-industrial supplies grew 0.4% to 113.7, and materials also edged up 0.4% to 111.6. Of the major industry groups, manufacturing grew 0.2%, mining declined by 0.4%, and utilities increased by 3.9% after last month's fall by 3.3%. Capacity utilization was 74.5% and is 1.1% higher than it was a year ago. Year-over-year production overall was lower by 1.4%. (Federal Reserve Board) Click here for more information |
|
Manufacturing ISM Report on Business: 51.8%, up 2.0% in July
The Institute for Supply Management surveys 400 purchasing managers nationwide representing 20 industries regarding manufacturing activity to create this index. Index values above 50 indicate an expanding manufacturing economy, while values below 50 indicate manufacturing contraction. The index was inline with expectations for growth after months of declining productivity. The big improvement was due mostly to an increase in new orders, which grew 4.4% to 56.6%, the production index, which rose 0.4% to 53.3%, and the backlog of orders, which rose 1.0% to 51.0%. Employment continues to contract, by 0.1% to 46.1%. Twelve of the 20 industries within the Index reported growth: leather; glass, stone, and aggregate; tobacco; paper; wood and wood products; miscellaneous; furniture; food; electronic components and equipment; instruments and photographic equipment; printing and publishing; and transportation and equipment. (Institute for Supply Management) Click here for more information |
|
Non-Manufacturing ISM Report on Business: 65.1%, up 4.5% in July
The Non-Manufacturing Business Activity Index is based on the results of a monthly survey of 370 purchasing and supply executives in 62 different industries. Percentages above 50 generally indicate an expanding non-manufacturing economy, while those below 50 indicate a non-manufacturing decline. The Index jumped in July, far beyond expectations, to set a new record high. New orders roared higher by 9.4% to 66.9%, employment edged up 0.4% to 50.7%, the backlog of orders grew 3.0% to 54.5% and inventories rose 2.5% to 49.5%. Those sectors reporting the highest growth included: construction; agriculture; finance and banking; retail trade; and communication. Health Services was the only sector to report a decline in activity level. (Institute for Supply Management) Click here for more information |
|
Durable Goods Orders: $174.0 billion, up 1.0% in July
The Census Bureau measures the dollar amount of new factory orders received by U.S. manufacturers. Durable goods are industrial products expected to last more than one year, such as steel, lumber, electronic components, finished industrial machinery and equipment, and finished consumer durable goods. This month’s increase met expectations and continues the trend of growing orders. Shipments of durable goods grew 2.6% to $181.4 billion while unfilled orders shrank 0.4% to $485.5.2 billion and inventories fell again, down 0.9% to $263.9 billion. Nondefense capital goods orders improved 1.2% to $58.2 billion, while defense orders fell 12.2 % to $7.4 billion after a double-digit climb in June -- defense orders are expected to remain volatile over the next several months. Year-over-year, orders for durable goods were down 0.1%. (U.S. Census Bureau) Click here for more information |
|
Producer Price Index (PPI): up 0.1% in July
The Bureau of Labor Statistics takes a random sampling of various industries in the mining, manufacturing, agriculture, fishing, forestry, services and utility sectors to measure the average change in selling prices for domestically produced goods and services. July's figure was consistent with expectations for moderate growth. Excluding food and energy, wholesale prices rose 0.2% in July (food prices decreased 0.2% while energy prices advanced 0.3%). Crude goods prices fell 2.9% while intermediate goods rose 0.2% although within these two indices, prices were mixed. Year-over-year growth is 3.0%. (Bureau of Labor Statistics) Click here for more information |
|
Consumer Price Index (CPI): 183.9 (SA), up 0.2% in July
The Consumer Price Index (CPI-U) is a measurement of the average change over time in the prices paid by all urban consumers for specific consumer goods and services, commonly referred to as the rate of inflation. July's results were not surprising. Excluding food and energy, prices were also up 0.2%. Items within the index showing the most growth included medical care and education and communication, both of which grew 0.5%. Among the special Indexes, Energy rose 0.4% while Food grew a mere 0.1%. Year-over-year, inflation grew 2.1%. (Bureau of Labor Statistics) Click here for more information |
|
Composite Index of Leading Economic Indicators: 112.5 (1996=100), up 0.4%
in July
The Composite Leading Index is constructed as a weighted average of ten key economic data series designed to predict economic conditions in the near term. The index generally turns down before a recession and turns up before an expansion. July's results were not surprising and continue the upward trend for this index. The strongest components to July’s growth were interest rate spread, real money supply, average weekly initial claims for unemployment insurance (inverted), vendor performance, and stock prices. The coincident index (current economic situation) increased 0.1% to 115.2 and the lagging indicator (past situation) increased by 0.1 to 98.2. (The Conference Board) Click here for more information |
|
Consumer Confidence Index (1985=100, SA): 81.3%, up 4.3% in August
The Consumer Confidence Survey measures consumer attitude about the performance of the economy using a monthly representative sample of 5,000 U.S. households. Confidence is gauged on respondents’ assessment of such key factors as the business, employment, inflation and income outlook. Consumer confidence regained some of the ground lost last month, coming in above expectations. Those consumers rating the economy as “good” slipped to 15.9% from 16.5%, while those rating the economy as “bad” grew to 30.9% from 30.2%. While more consumers report that jobs are harder to come by (34.1% versus 32.7% in July), more consumers also think the job market will improve. The present situation index again dipped, from 63.0% to 61.6%, and expectations jumped 8.1% to 94.4%. Compared to July, more consumers plan to purchase a home or a major appliance in the next six months but fewer consumers plan to purchase a car. (The Conference Board) Click here for more information |
|
Retail Sales: $317.2 billion, up 1.4% in July
Retail sales include merchandise sold (for cash or credit at retail or wholesale) by establishments primarily engaged in retail trade. Services that are incidental to the sale of merchandise, and excise taxes that are paid by the manufacturer or wholesaler and passed along to the retailer, are also included. Retail sales jumped this past month, well ahead of analysts' expectations. Excluding autos and gas, core retail sales grew 0.8%. Big winners in July included motor vehicle and parts sales (3.2%), gas station sales (1.6%), building materials (1.3%), and electronics and appliance sales (1.2%). Total year-over-year growth was up by 5.6%. (U.S. Census Bureau) Click here for more information |
|
Employment Situation: 129.9 billion employed in July (Unemployment rate:
6.2%)
The Department of Labor conducts the Current Population Survey (CPS) to obtain information about the labor force, employment, and unemployment. The U.S. Census Bureau conducts the survey, which is a random sample of 60,000 households, for the Bureau of Labor Statistics. The civilian labor force had 556,00 fewer workers, while non-farm payroll shed 44,000 jobs, far more than anticipated. The unemployment rate fell 0.2% due largely to fewer job seekers in the market. Manufacturing jobs fell again, by 71,000 jobs. Meanwhile, service-producing jobs grew by 23,000. There are few signs that indicate that job growth will improve substantially anytime soon, and only modest growth is expected by the end of the year. (U.S. Department of Labor) Click here for more information |
|
For more information about Greater Louisville, go to: http://www.greaterlouisville.com/economic/default.htm Contact Lisa Itamura with comments or suggestions.
Click here to
unsubscribe
The programming and hosting for
this eNewsletter provided by
|
