There are a few new reports on the U.S. economy worth mentioning this morning. First, data from the Federal Reserve Bank of Richmond showed that manufacturing activity in the Mid-Atlantic region of the country rebounded this month, with the composite index rising from +1.0 to +7.0, in line with economists’ expectations. Current measures of shipments, new orders, and capacity utilization all improved in June but gauges of total employment, hours worked, compensation, and capital expenditure plans deteriorated. A similar report was released by the Kansas City Fed this month, with several surveyed managers citing concerns about labor shortages and rising wage pressures:
- “Business remains very strong and our sales revenue is mostly constrained by serious lack of labor in all our manufacturing locations.”
- “Labor competition for the right entry level personnel is more significant than for higher-paid, longer-tenure personnel, which is why our emphasis is on raising our starting pay for qualified candidates.”
- “We continue to find methods to increase production without increasing head count. Automation and efficient scheduling are leading the way.”
Elsewhere, the consumer confidence index from The Conference Board lifted to 118.9 in June, a much larger rebound than anticipated. Under the hood, surveyed Americans’ general appraisals of current economic conditions improved this month to a nearly 16-year high while outlooks on the future deteriorated, albeit only slightly. More importantly, the percentage of surveyed consumers saying that business conditions are “good” increased to 30.8 percent in June, and those stating that jobs are "plentiful" rose to 32.8 percent. Further, the percentage of consumer respondents expecting an improvement in their income lifted to 22.2 percent this month, a sentiment which could lead to an uptick in real (inflation-adjusted) consumer spending later this year.
Sources: Econoday, Bloomberg, Twitter, ZH, FRBR, FRBKC, The Conference Board, Advisor Perspectives, FRBSLPost author: Charles Couch