Chicago Business Barometer Highest Level Since January
The Chicago Business Barometer at highest level since January, rose to 64.1 in June. New orders were up for the second straight month while prices paid reached their highest level since May 2011. Lead times and backlogs also increased in June.
Texas Factory Activity Continued in June
The Federal Reserve Bank of Dallas released its Texas Manufacturing Outlook Survey for June 2018 and reports Texas factory activity continued in June, albeit at a slower pace than in May. The production index declined 12 points, signaling a deceleration in output growth. However, perceptions of broader business conditions were even more positive in June than in May.
Declines in Production-Related Indicators Led to Fall in CFNAI
Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) fell to -0.15 in May from +0.42 in April. Two of the four broad categories of indicators that make up the index decreased from April. The index’s three month moving average (CFNAI-MA3) decreased to -0.18 in May from +0.48 in April.
What do the numbers mean?
A zero value for the monthly index has been associated with the national economy expanding at its historical trend (average) rate of growth; negative values with below-average growth (in standard deviation units); and positive values with above-average growth.
Periods of economic expansion have historically been associated with values of the CFNAI-MA3 above -0.70 and the CFNAI Diffusion Index above -0.35. Conversely, periods of economic contraction have historically been associated with values of the CFNAI-MA3 below -0.70 and the CFNAI Diffusion Index below -0.35.
An increasing likelihood of a period of sustained increasing inflation has historically been associated with values of the CFNAI-MA3 above +0.70 more than two years into an economic expansion. Similarly, a substantial likelihood of a period of sustained increasing inflation has historically been associated with values of the CFNAI-MA3 above +1.00 more than two years into an economic expansion.
New home sales jumped 6.7 percent in May, now running at a 689,000 annual pace. Wells Fargo
Manufacturing Continued to Expand in June
The Federal Reserve Bank of Richmond released its Fifth District Survey of Manufacturing Activity and reports manufacturing continued to expand in June. Shipments, new orders and employment all increased. Firms also saw an increase in order backlogs as the index rose to its highest value of this year. Firms continue to struggle to find the skilled employees they need.
Consumer Confidence Index Retreated in June
The Conference Board Consumer Confidence Index retreated in June following an increase in May. The Present Situation Index was flat, and the Expectations Index declined.
US Census Bureau Monthly Advance Report on Manufacturers’ Shipments, Inventories and Orders May 2018
- New orders for manufactured durable goods in May decreased 0.6 percent. The decrease, down two consecutive months, followed a 1.0 percent April decrease.
- Shipments of manufactured durable goods in May, down following nine consecutive monthly increases, decreased 0.1 percent following a virtually unchanged April increase.
- Inventories of manufactured durable goods in May, up eighteen of the last nineteen months, increased 0.3 percent, following a 0.3 percent April increase.
US Raw Steel Production Rebounded Last Week
US raw steel production rebounded a healthy 1.8% last week as mills operated at an ACUR of 75.6%. in the corresponding week last year mills operated at an ACUR of 74.9%. thus far this year mills have produced prox 43,833,000 tons compared to the prox 43, 091,000 tons produced in the like period last year.
Domestic Hot-Rolled Coil Prices Will Decline by End of 2018
“NEW YORK – Domestic hot-rolled coil (HRC) prices in the United States will decline by an estimated $200 per ton by the end of 2018, according to a forecast by World Steel Dynamics Inc (WSD).
Still, a price drop of that magnitude would leave fob mill prices well above the cost of production for most US steelmakers, WSD analysts said at the Steel Success Strategies XXXIII conference in New York, co-sponsored by American Metal Market and WSD.
A large factor in the price decline will be the eventual realization among traders that they can bring imported steel into the country on a commercially viable basis, even with the 25% tariff associated with the Section 232 tariffs. Import volumes will continue to be depressed for two more months, but then overseas bookings will come roaring back, according to WSD managing partner Peter Marcus.
We’re going to have an avalanche of foreign steel entering our country, probably in September,” he said at the gathering on Tuesday June 26.
American Metal Market’s hot-rolled coil index<http://www.amm.com/pricing/Steel/Hot-rolled-coil-index-US-domestic-Midwest-FOB-mill-USCWT-qs7l6lwdq6gv> stands at 45.52 per hundredweight ($910.40 per ton), the highest level since 2008.
Using the metric measurement, WSD put current prices at about $980 per ton. A $200-per-tonne decline would cut the US domestic price to $780 per ton, still healthily above WSD’s current estimate of $480 per ton for domestic steelmakers’ mean production costs.
That margin would support a continuation of domestic production at high levels in the short term, therefore implying steady demand for scrap, WSD chief executive officer Philipp Englin. The longer-term outlook for scrap is riskier, though. “
Reprinted from an article in American Metal Market 6/27/18
What it means to me is that as the steel market digests the Sec. 232 tariffs, any quotas etc. and the playing field levels out, business will resume normally…but the playing field will be level, which is good for America, good for American workers. Everyone getting their shorts in a twist about the tariffs are worried about nothing.
As I have said before, EVERY trading partner on the planet needs access to the American consumer or they will die on the vine like an old grape. Huff and puff as they will, in the end President Trump is on the correct path. Yes, there will be a cost as prices will rise, but (aside from during a recession) when are prices not rising?
Automotive Outlook Symposium Forecast Economic Improvement
According to participants in the Chicago Fed’s annual Automotive Outlook Symposium (AOS), the nation’s economic growth is forecast to improve this year and then moderate close to its long-term average in 2019.
Midwest Economy Index Edged Down in May
Meanwhile the Midwest Economy Index (MEI) edged down to +0.51 in May from +0.55 in April. Contributions to the May MEI from two of the four broad sectors of non-farm business activity and two of the five Seventh Federal Reserve District states decreased from April.
Infrastructure X (Keystone & Dakota pipelines) Regulation Reform XX 1 in 2 out
Individual Tax Reform XX Entitlement Reform
Business Tax Reform XX Education Reform X
Healthcare Reform Veterans Administration Reform X
Rebuild our Military X Trade Reform X
Secure our Borders (The Wall) XX Lead the world from the front XX
Help for the poor XX Drain the swamp X as we speak
Peace through unmatchable strength Support Israel X
Destroy ISIS XX Extreme Vetting XX
Conservative Supreme Court nominees XX American Jobs XX
I will track these campaign promises and will check them off as each is accomplished adding those I have missed as they become apparent. This is quite an agenda and will be difficult to achieve all in one term but I believe the American people are behind him and know these things need to be done. Now, if he can get our legislators to support him instead of fighting him….
“MAKE AMERICA GREAT AGAIN”
Have a great weekend…. God bless America!
Buy American made products whenever you can, it’s good for you, good for your friends and neighbors and good for our country.
If you are hiring…try to hire a veteran…. they are loyal, disciplined, hardworking…and they deserve our support.
By the way, if you wish to comment on my rants or offer any other insights you may have, you are encouraged to email me.
TEDDY ROOSEVELT ON IMMIGRANTS IN AMERICA…1907
In the first place, we should insist that if the immigrant who comes here in good faith becomes an American and assimilates himself to us, he shall be treated on an exact equality with everyone else for it is an outrage to discriminate against any such man because of creed, or birthplace, or origin. But this is predicated upon the person’s becoming in every facet an American and nothing but an American. There can be no divided allegiance here. Any man who says he is an American, but something else also, isn’t an American at all. We have room for but one flag, the American flag…We have room for but one language here and that is the English language…and we have room for but one sole loyalty and that is a loyalty to the American people.”