The only information on the U.S. economy worth mentioning this morning is a report from the Federal Reserve Bank of Philadelphia which showed that manufacturing activity in the Mid-Atlantic region of the country deteriorated this month. Specifically, the general business conditions index fell from -1.6 to -1.8 in May, a relatively small decline but much worse than the rebound to +3.0 that economists had expected and the 8th negative (contractionary) reading in the past nine months. Under the hood, gauges of shipments, total employment, and hours worked all improved this month but these metrics remained below zero and therefore continued to signal an overall slowdown in activity. Elsewhere in the report, outlooks on business conditions over the next six months deteriorated but capital expenditure plans rose markedly. Managers in this month’s survey were also asked a series of special questions about their inflation expectations for 2016. Overall, respondents see prices received rising by 2.0 percent this year, in line with recent CPI data, and managers expect that worker compensation will increase by 3.0 percent in 2016.
Sources: Econoday, Bloomberg, Twitter, ZH, U.S. DoL, FRBP, FRBSLPost author: Charles Couch