Economic Report: Conference Board Consumer Confidence Index, 2007-2017
Friday, December 8, 2017
Posted by: Alyce Ryan
Written By: Chad Moutray, Ph.D., CBE
AICC, through its membership in the Council of Manufacturing Associations, is pleased to present the "Monday Economic Report” from the NATIONAL ASSOCIATION OF MANUFACTURERS (NAM).
Economic reports released last week continued to reflect health in the manufacturing sector. For instance, the Institute for Supply Management (ISM) reported that manufacturing activity expanded robustly in November, even as it pulled back for the second straight month from September’s reading, which was the fastest pace since May 2004. The ISM Manufacturing Purchasing Managers’ Index decreased from 58.7 in October to 58.2 in November. Even with some easing in the headline number, the underlying data remained promising, with respondents citing strong growth in demand and an optimistic outlook for next year. Indeed, production accelerated at its fastest pace since March 2011. New orders, employment, and exports also signified hardy increases in November, with the labor market reflecting overall tight conditions.
Regional surveys also indicate healthy growth in activity for the sector, including the latest surveys from the Dallas and Richmond Federal Reserve Banks. The composite index of general business assessment from the latter found that manufacturing activity expanded at its fastest rate in November since the introduction of the Richmond Federal Reserve survey in late 1993, with the Dallas Federal Reserve’s headline index pulling back from its 11-and-a-half-year high in October but remaining quite elevated. Both releases found strong gains in new orders, shipments, capacity utilization, and employment, with Texas manufacturers once again noting difficulties in attracting qualified labor, and in some special questions, two-thirds of respondents echoed the struggles in finding workers. Moving forward, respondents to both surveys continue to be very upbeat in their outlook for the next six months.
In addition, the Bureau of Economic Analysis reported that the U.S. economy grew by an annualized 3.3 percent in the third quarter, up slightly from its earlier estimate of 3.0 percent growth and extending the 3.1 percent gain in the second quarter. The revision came from slightly better data on business and state and local government spending than earlier thought. My current forecast is for 3.5 percent real GDP growth in the fourth quarter, with 2.3 percent growth in the U.S. economy for 2017 as a whole. This is a slight improvement from the 2.1 percent average growth rate since the Great Recession, but I am also estimating 2.8 percent growth for 2018. I continue to believe there is upward potential in the forecast, especially for next year and beyond, if pro-growth policies are enacted, including comprehensive tax reform.
Meanwhile, we learned that consumer confidence grew to its highest point since December 2000, with Americans more upbeat in their economic outlook and about job prospects. Of course, optimistic consumers are more likely to open their pocketbooks, helping to boost manufacturing activity and the overall economy. Indeed, the most recent data on retail sales and personal spending suggested that Americans were buying more, with solid year-over-year growth in both reports. New personal consumption expenditures data for October will be released on Thursday, with November retail sales figures out on December 14.
Even before those data come out, there have been several releases reporting healthy increases in holiday spending over the long Thanksgiving weekend. The National Retail Federation (NRF) reported that more than 174 million Americans shopped over the holiday weekend, spending $335.47 on average per person. Millennials spent even more, averaging $419.52 per person. More importantly for the sector, retailers benefited from technology. More than 64 million Americans shopped both in-store and online, with another 58 million spending their dollars online only. Unfortunately, the NRF changed its methodology, making historical comparisons not possible.
Other sources, however, indicate that holiday spending accelerated strongly from previous years. For instance, Adobe Analytics reported that Americans spent $50 billion from November 1 to November 27 online, up 16.8 percent over the previous year, with total spending for the holidays expected to exceed $100 billion. Cyber Monday sales alone accounted for $6.59 billion, a new all-time high.
This week, new data on the labor market, which has tightened significantly over the past year, will be released. The unemployment rate fell to 4.1 percent in October, its lowest level since December 2000. Manufacturers added 24,000 workers in October, with net hiring in the sector averaging 13,800 year to date per month so far in 2017, and the November data should continue that trend. Other highlights this week include new figures for consumer credit, consumer confidence, factory orders and shipments, international trade and labor productivity.