• In addition, manufacturing capacity utilization increased from 79.3% in June to 79.8% in July, which was not far from April’s reading (80.1%), which was the highest since August 2000.
  • Total industrial production (which includes manufacturing, mining and utilities) increased 0.6% in July after being flat in June, rising to a new record level. On a year-over-year basis, industrial production has increased 3.9%. Total capacity utilization returned to 80.3% in July, matching the pace seen in April, which was the best reading since September 2018.
  • On the manufacturing front, new orders for durable goods were essentially unchanged in the latest data, remaining near a record level. On a year-over-year basis, new durable goods orders have jumped 10.9% since July 2021, or 7.2% with transportation equipment excluded. Core capital goods orders rose 0.4% to a record level, up 8.5% year-over-year.
  • The manufacturing sentiment surveys released last week speak to the challenges faced in the sector, with activity often at the weakest pace in roughly two years. New orders declined in each, for instance. At the same time, manufacturers felt cautiously optimistic for the next six months, with expectations of reduced or moderated pricing pressures.
  • After soaring to a record $126.81 billion in March, the U.S. goods trade deficit edged lower for the fourth straight month, down from $98.59 billion in June to $89.06 billion in July, according to preliminary figures. In July, goods exports edged down from a record $181.35 billion to $180.97 billion, and goods imports dropped from $279.94 billion to $270.03 billion.
  • The July report recorded 834,000 manufacturing job openings, remaining highly elevated. Over the past 12 months, job openings in the sector have averaged nearly 860,600, continuing to be well above pre-pandemic levels.
  • In the larger economy, the July report documented 11,239,000 nonfarm business job openings nationally. At the same time, the July report also recorded 5,670,000 unemployed Americans, which translated into 50.4 unemployed workers for every 100 job openings in the U.S. economy. As such, for every two job openings, there was essentially one unemployed worker in the economy.
  • Manufacturing employment increased by 22,000 in August, continuing to rise solidly. The labor market remained a bright spot in an economy that has seen softening in other areas. Through the first eight months of 2022, the sector has hired 297,000 employees, and the manufacturing sector has 12,852,000 employees, the most since November 2008.
  • The average hourly earnings of production and nonsupervisory workers in manufacturing rose 0.4% from $25.06 in July to $25.13 in August, up 4.6% from one year ago.
  • Meanwhile, nonfarm payroll employment increased by 315,000 in August, continuing to rise steadily. The unemployment rate ticked up from 3.5% in July to 3.7% in August, as the labor force participation rate rose from 62.1% to 62.4%, returning to a pace last seen in March. However, the participation rate remained below pre-pandemic levels, with 63.4% in February 2020.
  • Manufacturing activity expanded very modestly, with the ISM® Manufacturing Purchasing Managers’ Index® unchanged at 52.8 in August, remaining the lowest reading since June 2020. Manufacturers remained challenged by supply chains, workforce shortages, soaring costs and economic and geopolitical uncertainties. Yet, the latest ISM® data (and others) suggested that the sector continued to be surprisingly resilient in the face of such notable headwinds.
  • Private manufacturing construction spending rose 0.6% to $94.05 billion at the annual rate in July—just shy of May’s pace, which was $94.16 billion. Overall, private construction activity in the sector has trended strongly higher since bottoming out at $72.46 billion in February 2021. Over the past 12 months, activity has jumped 19.2%.
  • New orders for manufactured goods fell 1.0% from a record $554.2 billion in June to $548.5 billion in July, the first decline in factory orders in 10 months. With that said, July’s report also recorded sizable decreases in defense aircraft and parts sales, which can be highly volatile from month to month. In contrast, new orders for core capital goods (or nondefense capital goods excluding aircraft)—a proxy for capital spending in the U.S. economy—rose 0.3% to a record $74.4 billion.
  • The long-term trends for manufactured goods orders remained encouraging. New factory orders soared 12.5% year-over-year, or 11.3% with transportation equipment excluded. Core capital goods orders increased a solid 8.4% over the past 12 months.
  • Manufacturing activity declined for the fourth straight month in the Dallas Federal Reserve Bank’s district, but with the composite index of general business conditions improving from -22.3 in July to -12.9 in August. Looking ahead, manufacturers in the Texas district remained negative in their assessments of the economic outlook for the next six months. Pricing pressures were predicted to moderate somewhat.
  • In the Q3 Manufacturers’ Outlook Survey, 75.6% of respondents felt either somewhat or very positive about their company outlook, down from 82.6% in the second quarter. It was the weakest reading since the fourth quarter of 2020, with growth slowing notably across the board. Indeed, sentiment was just marginally above the historical average, which was 75.2%, illustrating just how much manufacturing activity has stalled year to date.
  • At the same time, 63.3% of manufacturing leaders believed that the U.S. economy would officially slip into a recession in either 2022 or 2023. 25.7% are uncertain and 11% say no.
  • Meanwhile, supply chain challenges topped the list of primary business challenges in the third quarter, cited by 78.3% of respondents. Just 10.8% anticipate these disruptions improving by the end of 2022, with 60.7% expecting some abatement in 2023. The other leading concerns included attracting and retaining a quality workforce (76.1%), increased raw material costs (76.1%) and transportation and logistics costs (65.9%).
  • Manufacturing activity expanded at the slowest pace since July 2020 in the Kansas City Federal Reserve Bank’s district, with new orders contracting for the fourth straight month. Respondents cited soaring costs, supply chain issues and workforce challenges in their comments.