June 2014 Economic Indicators
Melanie Garza - Director of Operations
Winter Hits GDP Hard
The winter months took its toll on GDP as the Bureau of Economic Analysis revised its first quarter estimate showing the economy actually declined 1% versus the first reported mere gain of 0.1%. Economists report that despite the numbers, incoming data from several other indicators are showing the economy is poised for steady growth.
Aside from the weather, a larger decrease in private inventory investment and nonresidential investment were also seen as major contributors to the revised estimate. While real nonresidential fixed investment grew at 5.7% over the fourth quarter, it fell 1.6% in Q1. Spending for nonresidential structures plummeted 7.5% while investment in equipment fell 3.5% and grew 10.5% in the fourth quarter. Investment in intellectual property products continues to climb posting a 5.1% in Q1 and 4.0% in the fourth quarter. Federal government spending grew 0 .7% in early 2014.
Economist say unemployment, consumer spending and orders for durable goods are seeding for a jump in GDP in the second quarter. GDP is expected to pick up 3% in the coming months.
Manufacturing Posts Solid Growth
The manufacturing sector has reported a full year of growth, even with the harsh winter. Since June 2013, the PMI index has measured over 50%, signaling confidence in the economy. The May PMI® registered 55.4%, following 5 straight months of month-over-month increases. The index dropped sharply over the winter months, but has resumed to the levels reported last fall.
Overall every category in manufacturing is showing growth including production, new orders and pricing which are also growing at a rapid pace. Inventory levels remained constant from April to May. Areas of concern with employers are supplier deliveries which have slowed the last 12-months, along with rate of employment.
The Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee is predicting that if the PMI® for May is annualized, it would show a 4.0% increase in real GDP this year.
Questions? Please contact Melanie Garza at mgarza@teamCOACT.com