April 2016 Economic Indicators

Melanie Garza - Director of Strategy & Growth


Durable Goods Falls

While new orders for durable goods shot up in January, they fell -3% in February.  The index now posts a decline in 3 of the last 4 months. New orders for durable goods are up 1.3% from a year ago.

Industrial machinery orders fell -1.6% in February, following a 4% gain in January.  Industrial equipment orders are up 22.7% from a year ago.  Metal working machinery equipment fell 2.1% following an increase of -5.8% in January, with orders up 21% over the last 12 months.  Power equipment also fell -5.8% following a surge of 17.8% in January.  Material handling equipment dipped slightly at -0.4% last month and is 23.7% over the last year.

Transportation equipment, also down three of the last four months, led the decrease at -6.2% and is now 10.7% over the last 12 months. Nondefense aircraft and parts dropped -27.2 % in January following a sharp increase of 48.7% in January.  Aircraft equipment orders are 1.8% higher over the last 12 months.

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CEO Confidence Improves

The Conference Board Measure of CEO Confidence™, which had declined in the fourth quarter of 2015, increased in the first quarter of this year. The Measure now reads 47, up slightly from 45 in the final quarter of last year (a reading of more than 50 points reflects more positive than negative responses).

CEOs’ appraisals of current economic conditions improved, with about 19% saying conditions are better compared to six months ago, up from 14% last quarter. Likewise, business leaders’ assessments of conditions in their own industries was also more positive, with 18% claiming conditions in their own industries have improved, versus just 11% in the previous quarter.

CEOs are less pessimistic regarding the short-term outlook, with 18% expecting that economic conditions will improve over the next six months, up from 16% last quarter. The outlook for their own industries was also better, with 22% anticipating an improvement in the next six months, versus approximately 19% in the fourth quarter.

“CEO Confidence improved in early 2016, but sentiment about the economy remains somewhat guarded,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “The short-term outlook for the U.S, Europe and India improved from last quarter, but expectations for China and Brazil declined further. Regarding the employment outlook, nearly thirty percent foresee employment increases in their industry, while 40 percent foresee declines. Regulation, litigation and health care costs were cited as major obstacles to hiring new workers.”

 

Questions or comments? Please contact Melanie Garza at mgarza@teamCOACT.com.