According to Chad Moutray, Chief Economist at the National Association of Manufacturers (NAM), manufacturing production rebounded for the second straight month, rising by 3.8 percent and 7.2 percent in May and June, respectively.
“In June, all 19 major manufacturing sectors had increases in production, as the industry attempts to recover from steep declines since February,” said Moutray. “Yet, it will take a while for output to get back to prerecession levels. On a year-over-year basis, manufacturing has declined 11.2 percent, with durable and nondurable goods output down 14.3 percent and 7.4 percent, respectively.”
Manufacturing capacity utilization registered 60.0 percent in April, the lowest rate in the data’s history, which dates to January 1948, and it increased to 62.3 percent in May and 66.9 percent in June. It registered 75.2 percent in February.
Regionally, manufacturers in the New York and Philadelphia Federal Reserve Bank districts both reported expanding activity in July, with rebounding new orders and employment.
With the motor vehicle sector continuing to come back online, Michigan created the most net new manufacturing jobs in June. Other states with notable employment growth for the month included Ohio, Kentucky, California, Illinois and Indiana. Even with better data in May and June, however, there continue to be sizable declines in manufacturing employment due to COVID-19.
Consumer spending at retailers rose 7.5 percent in June, extending the robust 18.2 percent gain in May. This suggests that Americans have continued to return to stores to make purchases after stay-at-home orders sent sales plummeting. With that said, the July data will be closely watched, as further expansion of the COVID-19 virus has led to renewed restrictions and closures in some areas of the country, which could lead to reduced demand and increased hesitance for many consumers.
Along those lines, consumer confidence dipped in July as Americans “reassess the likely economic impact from the coronavirus on their personal finances and on the overall economy.”
Consumer prices jumped 0.6 percent in June, led by higher prices for energy and food. Excluding food and energy, consumer prices increased 0.2 percent for the month. Overall, even with higher consumer costs in June, the data continue to reflect deflationary effects due to the COVID-19 outbreak and a global recession. Core inflation has risen 1.2 percent since June 2019, the same rate as in May and remaining the lowest since March 2011.