Economy at a Glance :: Federal Reserve Bank of Cleveland

Economy at a Glance

Executive Summary

The incoming data continue to point toward a strengthening recovery despite recent increases in commodity prices.

Recent payroll gains were relatively broad based and not just isolated in temporary help services and health care. On the household side, the unemployment rate has fallen …  Executive Summary
The incoming data continue to point toward a strengthening recovery despite recent increases in commodity prices.

Recent payroll gains were relatively broad based and not just isolated in temporary help services and health care. On the household side, the unemployment rate has fallen 0.9 percentage point to 8.9 percent over the past three months. However, some of this improvement can be linked to individuals leaving the labor force. Over this same time period, a less-noisy measure of labor market health—the employment-to-population ratio—has ticked up just 0.2 percentage point to 58.4 percent.

Recent data on the manufacturing sector suggest that manufacturing output growth is above-trend. Manufacturing production appears to be growing at above-trend rates. Notably, the ISM manufacturing index jumped up to 61.4 in February, a near-seven year high. Moreover, manufacturing production (from IP data) is trending at a three-month annualized growth rate of 5.9 percent through January, slightly above its already robust 5.5 percent year-over-year growth rate.

Data on consumption and business investment have come in a little softer than consensus expectations, tamping down near-term growth projections. Shipments and new orders for nondefense capital goods excluding aircraft fell sharply in January, decreasing 1.9 percent and 6.2 percent, respectively. However, equipment and software investment increased 15.1 percent in 2010, so it’s not too surprising to see some transitory weakness in the incoming data.

On the inflation front, energy and commodity price increases have pushed up the headline CPI in recent months. Still, underlying inflation measures have edged northward only lately and are still trending at relatively low growth rates. Moreover, the latest movements in the underlying price change distribution indicate a return to “normal” inflation rates more than an outright shift toward a higher inflation environment.  [2011-03-07]  Executive Summary

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