June 2013 Economic Indicators
Melanie Garza - Director of Operations
Consumer Spending Drives GDP for 1st Quarter
June 2013 – The U.S. Department of Commerce reported 1st quarter real GDP ended with a modest 2.4% annual growth rate, slightly lower than originally forecast; but much higher than the 0.4% growth realized in the final quarter of 2012. Economists are estimating the second quarter will settle in around 2%.
Driving first quarter results were increases in personal consumption expenditures (PCE) which grew at the fastest pace in more than 2 years with a 3.4% growth rate. Anticipated hiring, mounting home prices and a healthy stock market are expected to keep consumer spending on the rise.
Businesses are continuing to spend less in equipment and technology improvements. First quarter spending only grew at 4.6% compared to an 11.8% figure in fourth quarter 2012.
Federal, state and local government spending remained as the weakest area of the economy continuing a 10 out of 11 quarter trend due to drops in defense spending and other cutbacks.
PMI Index Reflects a Flat Outlook
The Institute on Supply Management reported that the May Manufacturing PMI index declined to 49, its lowest reading since June 2009, from April’s 50.7. Panel members are indicating a tempering in demand due to the slow recovering economy in the U.S. and globally. A reading above 50 indicates that the manufacturing economy is generally expanding, while a PMI in greater than 42.2, over a period of time, generally indicates an expansion of the overall economy.
May’s reports shows the following industries are shrinking: Miscellaneous Manufacturing; Transportation Equipment; Chemical Products; Plastics & Rubber Products; Computer & Electronic Products; and Primary Metals. Growth continues in Printing; Nonmetallic Mineral Products; Fabricated Metal Products; Wood Products; Furniture and Related Products; Apparel, Leather and Allied Products; Food, Beverage and Tobacco Products; Electrical Equipment, Appliances & Components; Machinery; and Paper Products.