November 4,2014
Economic activity in the US manufacturing sector expanded in October for the 17th consecutive month, and the overall economy grew for the 65th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.
Meanwhile two other reports suggests we are enjoying the lowest budget deficit since 2008 and highest level of consumer confidence in 15 months.
The ISM report for October PMI® registered 59 percent, an increase of 2.4 percentage points from September’s reading of 56.6 percent, indicating continued expansion in manufacturing. The New Orders Index registered 65.8 percent, an increase of 5.8 percentage points from the 60 percent reading in September, indicating growth in new orders for the 17th consecutive month. The Production Index registered 64.8 percent, 0.2 percentage point above the September reading of 64.6 percent. The Employment Index grew for the 16th consecutive month, registering 55.5 percent, an increase of 0.9 percentage point above the September reading of 54.6 percent. Inventories of raw materials registered 52.5 percent, an increase of 1 percentage point from the September reading of 51.5 percent, indicating growth in inventories for the third consecutive month. Comments from the panel generally cite positive business conditions, with growth in demand and production volumes.”
Of the 18 manufacturing industries, 16 are reporting growth in October in the following order: Plastics & Rubber Products; Textile Mills; Fabricated Metal Products; Miscellaneous Manufacturing; Primary Metals; Electrical Equipment, Appliances & Components; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Chemical Products; Apparel, Leather & Allied Products; Printing & Related Support Activities; Transportation Equipment; Furniture & Related Products; Paper Products; Machinery; and Computer & Electronic Products. The only industry reporting contraction in October is Petroleum & Coal Products.
WHAT RESPONDENTS ARE SAYING …
“Holiday orders are exceeding seasonal forecasts. Customers are demanding additional quantities above prior orders. Fuel costs and other positive signals appear to be creating demand above normal.” (Food, Beverage & Tobacco Products)
“Weakness in commodity prices very positive on our business.” (Fabricated Metal Products)
“We continue to see strong demand across multiple sectors.” (Transportation Equipment)
“Business steady and strong.” (Furniture & Related Products)
“Another strong month in terms of business growth.” (Computer & Electronic Products)
“Most business segments are seeing an upward trend in orders — mostly from existing customers, but also some new customers. Transportation continues to be a major issue.” (Chemical Products)
“Conditions are still basically flat.” (Printing & Related Support Activities)
“Production is oversupplying demand, and prices have softened.” (Wood Products)
“Outer body material changes in the auto industry means new equipment and manufacturing growth.” (Machinery)
“Business conditions are good; sales and production volumes are generally increasing.” (Miscellaneous Manufacturing)
Lower Deficit
Also this week good economic growth has helped push the U.S. budget deficit down to the lowest level since 2008, marking the sharpest turnaround in the government’s fiscal position in at least 46 years. The shortfall of $483.4 billion in the 12 months ended Sept. 30 was 2.8 percent of the nation’s gross domestic product of $17.2 trillion over the same period, according to data compiled by Bloomberg using Commerce Department figures. The figure peaked at 10.1 percent of GDP in December 2009 according to a Bloomberg report.
Gallup Report On Confidence
Also economic confidence among Americans, including, finally, upper income Americans, jumped in October to the highest point in 15 months, according to polling by Gallup Inc. It comes in the final stretch of a year with index readings that, although negative, approached seven-year highs and were remarkably stable. “After months of stagnant confidence, Americans may be becoming more positive in their views of the economy’s current state and future prospects,” Gallup says.With the stock market having ended last month on a positive note and gas prices continuing to drop, it is reasonable to expect the gains made in October to be sustained in November, it adds.Gallup’s U.S. Economic Confidence Index jumped to a monthly reading of -12 in October. This is the most positive score since the -12 of July 2013, although it is still lower than the record high of -7 in May 2013. The three-point increase from September is the largest monthly improvement seen this year so far.
The October reading is the third-highest monthly figure Gallup has found since it began tracking the Economic Confidence Index on a daily basis in 2008.