It always amazes me that good economic news is always ‘unexpected’ when a Republican is in the White House. Well, last month’s economic news also fits that pattern. Breitbart reported yesterday that factory activity in the U.S. surged higher than expected in June. That always makes me wonder who expected what.
The article reports:
The Institute for Supply Management’s index of manufacturing activity jumped 9.5 percentage points to 52.6 in June. The gauge of new orders rose 24.6 points to 56.4, the largest ever monthly increase. The production component of the index also rose by more than 24 points to 57.3.
…Economists had expected a reading of 49, with the highest estimate in those surveyed by Econoday 51.5. June’s score was the best since April of 2019.
“The manufacturing sector is reversing the heavy contraction of April, with the PMI increasing month-over-month at a rate not seen since August 1980, with several other indexes also posting gains not seen in modern times,” ISM’s Timothy Fiore said in a statement.
The article further reports:
“US manufacturers have reported a marked turnaround in business conditions through the second quarter, with collapsing production and demand in April at the height of the COVID-19 lockdown turning rapidly to stabilisation by June. The PMI posted a record 10-point rise in June amid unprecedented gains in the survey’s output, employment and order book gauges,” Chris Williamson, Chief Business Economist at IHS Markit, said.
Williamson said:
“The record rise in the New Orders Index, coupled with low inventory holdings, bodes well for a further improvement in production momentum in July. A record upturn in business sentiment about the year ahead likewise hints that business spending and employment will start to revive. However, while the PMI currently points to a strong v-shaped recovery, concerns have risen that momentum could be lost if rising numbers of virus infections lead to renewed restrictions and cause demand to weaken again.”
The Bureau of Labor Statistics also reported that the workforce participation rate for June was 61.5, up from 60.8 in May. In February the workforce participation rate was 63.4, so we have a ways to go to get back to where we were before the coronavirus shutdown.