June 2016 Economic Indicators

Melanie Garza - Director of Strategy & Growth


Industrial production in the U.S. continues to tick upwards in the second quarter of 2016.  The May PMI reading registered at 51.3%, up 0.5% over April.  A reading over 50% indicates growth.

Despite the encouraging numbers, both the New Orders and Production Index are continuing to expand, but at a slower rate with New Orders at 55.7%, dipping 0.1% from April and the Production Index falling 1.6% to a reading of 52.6%.  The Employment Index remained unchanged in April. The Prices Index posted a 4.5% increase in May to 63.5%, indicating higher raw materials prices for the third consecutive month.  The Backlog of Orders Index also fell 3.5% in May to a reading of 47%.

Manufacturing registered growth in May for the third consecutive month, as 14 of the 18 industries reported an increase in new orders in May (down from 15 in April), and 12 of the 18 industries reported an increase in production in May (down from 15 in April).

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Consumers More Optimistic

Consumer Sentiment shot up nearly 5% in May with an index of 94.7% compared to 89% in April.

Consumers polled were more optimistic even with the meager GDP Q1 performance and higher inflation rate.  Vehicle and home sales also climbed in May.  Economists predict consumers will focus on maintaining a precautionary savings as the presidential election nears, which may bring economic policy changes.  Although small stock gains are anticipated, household wealth is more likely to benefit from rising home prices, with gains now more frequent than in a decade.

Overall, the data indicate that inflation-adjusted consumer expenditures can be expected to rise by 2.5% in 2016 and 2.7% in 2017.

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