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New Factory Orders Stalled in Past Three Months
- New orders for manufactured goods were essentially flat in the latest data, with 0.2% growth with transportation equipment sales excluded. More importantly, new factory orders appear to have stalled over the past three months, rising 0.7%, or just 0.1% with transportation equipment excluded.
- However, there were also signs of surprising resilience once again in the data despite numerous challenges in the U.S. and global economy. New orders for core capital goods—a proxy for capital spending in the U.S. economy—rose 1.4% to a record $75.72 billion in August. In addition, new factory orders have soared 11.2% year-over-year, or 10.5% with transportation equipment excluded, illustrating that the longer-term picture remained more reassuring.
- Manufacturing activity expanded just slightly, with the ISM® Manufacturing Purchasing Managers’ Index® dropping from 52.8 in August to 50.9 in September, the lowest reading since May 2020. The underlying data were mixed but weak overall. Of interest to the Federal Reserve, prices (down from 52.5 to 51.7) decelerated once again in September, with that reading growing at the slowest pace since June 2020.
- Meanwhile, manufacturing employment increased by 22,000 in September, continuing to rise solidly. Through the first three quarters of 2022, the sector hired 325,000 employees, building on the 365,000 workers added in calendar year 2021, the most since 1994. Currently, the manufacturing sector has 12,880,000 employees, the most since November 2008.
- The average hourly earnings of production and nonsupervisory workers in manufacturing rose 0.4% from $25.11 in August to $25.22 in September, up 4.6% from one year ago.
- Meanwhile, there were 6,014,000 unemployed Americans in August, which translated into 59.8 unemployed workers for every 100 job openings in the U.S. economy. As such, there continues to be more job openings than people actively looking for work
- Manufacturers cite rising raw material costs as a top challenge, along with supply chain and workforce challenges, with the very significant pace of price growth in this data over the past year helping to explain why.
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