Tuesday, August 4, 2020

Roundup of Principal Economic Indicators: March 30-April 3

By on April 3, 2020

SAN JUAN — The following is a breakdown of the principal U.S. economic indicators reported during the week of March 30-April 3 and a brief explanation of what they measure. 

Purchasing Managers’ Index (PMI)

The Purchasing Managers Index is a diffusion index summarizing economic activity in the manufacturing sector. The index is based on a survey of manufacturing supply executives conducted by the Institute of Supply Management (ISM).

Participants are asked to gauge activity in several categories such as new orders, inventories and production, and these sub-indices are then combined to create the PMI. A PMI above 50 would designate an overall expansion of the manufacturing economy, whereas a PMI below 50 signifies a shrinking of the manufacturing economy.

  • ISM Manufacturing Index: Reported 04/01 at a current level of 49.1, a decrease of 1 point, or 2%, from last month. This is a decrease of 6.2 points, or 11.21%, from last year and is lower than the long term average of 52.87.

Jobless Claims

The initial jobless claims count is published by the U.S. Department of Labor. It provides underlying data about how many new people filed for unemployment benefits the previous week. Given this, one can gauge the employment-related conditions in the economy. 

  • U.S. Initial Jobless Claims: Reported on 04/02  with 6.648 Million new claims, an increase of 3.341 Million, or 101.0% from last week. This is an increase of 6.436 Million or 3,040% from last year and is higher than the long term average. 

Trade Deficit

A trade deficit occurs when the value of a country’s imports exceeds the value of its exports, with imports and exports referring both to goods or physical products and services. In simple terms, a trade deficit means a country is buying more goods and services than it is selling. An overly simplistic understanding means that this would generally hurt job creation and economic growth in the deficit-running country.

  • U.S. Trade Deficit: Reported 04/02 at a current level of 39.93 billion, down from 45.48 billion last month and 51.25 billion a year ago. This is a minus-12.2% change from the previous month and minus-22.09% from one year ago.
  • 30-Year Mortgage Rate: Reported on 04/02, stood at 3.5%, compared to 3.65% the week prior and 4.28% last year. This is lower than the long-term average of 7.98%

Manufacturing Shipments

Manufacturing Shipments measures the dollar value of products sold by manufacturing establishments and are based on net selling values, f.o.b. (free on board) plant after discounts and allowances are excluded.

  • U.S. Manufacturing Shipments: Reported on 04/02 at 500.35 billion, down from 501.17 billion last month. This represents a monthly annualized rate of minus-1.96%, compared with a long-term average annualized rate of 2.92%.

Manufacturing New Orders

The figure reflects a change in the new orders of industrial companies. A higher number of new orders in the manufacturing sector points to an increase in consumer demand and allows forecasting a near-term rise in production activity.

  • U.S. Manufacturing New Orders: Reported on 04/02 is at 497.43 billion, down from 497.49 billion last month. This represents a monthly annualized rate of minus-0.14%, compared with a long term average annualized growth rate of 3.19%.

We expect this number will continue to contract for the next quarter.

Nonfarm Payroll

 The indicator measures the number of workers in the economy, excluding proprietors, private household employees, unpaid volunteers, farm employees, and the unincorporated self-employed.

  • Total Nonfarm Payroll: Reported on 04/03 is at 151.79 million, down from 152.49 million last month. This represents a monthly annualized growth (Decrease) rate of -5.52%, compared to a long-term average annualized growth rate of 2.01%.

Francisco Rodríguez-Castro is president & CEO of Birling Capital.

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