Economics
Economic Trends for Manufacturers
Tracking Current Economic Indicators and Analyzing Data that Impacts the Industry
There were celebrations among market watchers in early July when it was announced that the June Consumer Price Index (CPI) had declined by 0.1%, marking the first monthly decline since 2020. This news sparked speculation that the Federal Reserve might consider two rate cuts in 2024. But, the Producer Price Index (PPI) for final demand rose by 0.2%, with a year-over-year average of 2.6%, higher than analysts had expected. Added to that, the Institute for Supply Management’s PMI index dropped again in June for the third straight month, remaining in contraction territory at 48.5%. The index has only been above 50 (expansion territory) once in the past 12 months. This could be linked to the fact that manufacturing output has remained below 100 (the 2017 baseline that the Federal Reserve Board uses) each month this year.
The “soft landing” that seems to be occurring in the U.S. economy is best reflected in manufacturing through its employment numbers. Manufacturing employment remained relatively stable in June, with a loss of only 8,000 workers after monthly gains of 7,000 in April and 0 in May. Meanwhile, manufacturing job quits remain around the 200,000 level, far lower than during the pandemic years, while job openings climbed slightly month-over-month to 600,000.