IQMS Blog for Manufacturing ERP Expertise

U.S. Trade Deficit Rises Slightly Higher in May
The U.S. trade deficit edged slightly higher in May, from $40.7 billion in April to $41.87 billion, according to the Bureau of Economic Analysis and the Census Bureau. The May decline was largely a result of a decrease in goods exports that more than offset the decrease in goods imports, demonstrating again how much manufacturers have struggled from global headwinds through the first five months of this year. The deficit has been volatile so far this year, but the year-to-date average of $42.57 billion in May is nearly identical to the $42.36 billion average observed in 2014. To learn more, visit here.

Manufacturers Add 4,000 New Workers in June
Manufacturing employment increased by 4,000 net new workers in June, according to the Bureau of Labor Statistics. Though slightly lower than the 7,000 employees added in May, the good news is that manufacturing job gains have been positive the past two months after a flat April. The largest employment increases were seen in the food manufacturing, electrical equipment and appliances, furniture and motor vehicles and parts sectors. Overall, the unemployment rate declined from 5.5 percent to 5.3 percent, its lowest level since April 2008. To learn more, visit here.

Durable Goods Orders Decline in May Because of Lower Aircraft Sales
After a 1.5 percent decrease in new durable goods orders in April, the Census Bureau reported another decline of 1.8 percent in May. But unlike April’s decline, which reflected a broader softness in the market, May’s decline is directly tied to reduced aircraft sales for the month. Aircraft orders are often bulked together in batches, making them more volatile, as May demonstrated with its 5.4 percent drop in transportation equipment orders. On a positive note, we should experience an uptick in this category in June, with aircraft sales lifted by the recent Paris Air Show. To learn more, visit here.

Housing Permits Rise to Fastest Pace Since August 2007
Housing starts were somewhat lower in May than expected, but housing permits rose to their fastest pace since August 2007, according to the Census Bureau and the U.S. Department of Housing and Urban Development. The new housing starts decline was a result of lower activity for both single-family and multi-family units, but fortunately, new housing permits soared to 1,275,000 units in May. Despite the decline in starts, this report offered some reassurance that the housing market has stabilized, with the promise of increased activity moving forward. To learn more, visit here.

Small Business Optimism Rises for Second Straight Month
The Small Business Optimism Index rose for the second straight month from 96.9 in April to 98.3 in May, according to the National Federation of Independent Business (NFIB). At its highest level so far in 2015, this increase suggests that small business owners have begun to move beyond the recent lull in confidence. This mostly positive report includes key indicator growth in areas such as expansion, sales and hiring, but also includes data suggesting some lingering caution from anxieties about the economy. To learn more, visit here.

Personal Spending Was Flat in April
Falling back after growing 0.5 percent in March, personal spending was flat in April, according to the Bureau of Economic Analysis. This less than desirable level of spending mirrors consumer anxieties about income and labor market growth, translating to sluggish spending on durable and non-durable goods (down 0.7 percent and 0.5 percent in April). But despite overall softer purchase levels over the past six months, personal spending is still experiencing a modest pace of growth. To learn more, visit here.

Short-Term Interest Rate Increase Possibly Delayed
The minutes from late April’s Federal Open Market Committee (FOMC) meeting highlighted that despite the United States’ slowing economic growth, its outlook remained mostly unchanged for the rest of the year. The Federal Reserve projects growth of 2.3 to 2.7 percent in 2015 and the unemployment rate to fall to right around 5 percent. With this in mind, it is possible that the Federal Reserve’s increase of short-term interest rates might not occur at the June meeting as planned, but rather in September. To learn more, visit here.

April Housing Starts Grow at Fastest Pace in Eight Years
Residential construction activity rebounded strongly in April, according to the Census Bureau and the U.S. Department of Housing and Urban Development. New housing starts jumped from an annualized 944,000 in March to 1,135,000 in April, the fastest pace since November 2007 (the month before the start of the Great Recession). Both single-family and multi-family housing starts were higher in April, giving comfort that residential construction is beginning to stabilize. To learn more, visit here.

Consumer Spending in April Softened After March Rebound
Consumers remained cautious in their spending in April, according to the Census Bureau. Retail sales were unchanged for the month and overall spending has decelerated significantly since the start of the new year, down from a year-over-year rate of 4.7 percent in November to 0.9 percent in April. But the longer-term view may be encouraging, as the number above includes gasoline station sales, which have fallen 22.0 percent since April of last year. Excluding gasoline sales, retail sales grew 3.6 percent year-over-year. To learn more, visit here.

Hiring in the Manufacturing Sector Decreases Again in April
For the second straight month, hiring in the manufacturing sector was negative, according to the ADP. This decrease of 10,000 workers in April makes employment growth essentially flat since the start of the year. In the larger economy, nonfarm private businesses added 169,000 employees on net in April, with small and medium-sized businesses (those with less than 500 employees) contributing all but 5,000 of the increase in nonfarm private business employment gains. To learn more, visit here.