Employment, manufacturing, construction spending and exports all soared in the last two months, signaling a strong finish to 2017, but the looming question now is whether or not the rosy economic climate can continue into next year and beyond.
Manufacturing was the big winner in the September and October reports. The manufacturing sector expanded last month, according to supply executives in the latest Manufacturing ISM Report on Business.
Specifically, new orders for manufactured goods increased 1.4 percent to $478.5 billion in September, according to the U.S. Census Bureau, which followed a 1.2 percent August increase. And manufacturing jobs increased by 24,000 in October after stalling in September, according to the U.S. Bureau of Labor Statistics. Manufacturing has added 156,000 jobs since a recent employment low in November 2016.
The overall economy saw a similar bump in jobs growth. Total nonfarm payroll employment rose by 261,000 in October after changing little in September. The unemployment rate edged down to 4.1 percent and the number of unemployed persons decreased by 281,000 to 6.5 million.
The Conference Board Employment Trends Index also increased sharply in October, after declining in September and August. The index now stands at 135.57, up from 132.86 (an upward revision) in September. The change represents a 5.4 percent gain in the ETI compared to a year ago.
Other positive reports released in the last week include September U.S. Exports and Imports Increase and September Construction Spending Up 2% Year-Over-Year.
Distribution has some tailwinds behind it one month into the fourth quarter. Despite some hurricane-related disruptions in 3Q, distributors averaged 3.9 percent revenue growth in the third quarter, according to the most recent MDM-Baird Distribution Survey.
Survey respondents expect similar growth in 4Q and 2018, but look for things to slow at some point next year, according to Alan Beaulieu of ITR Economics. He projects the U.S. industrial production index to peak in the second month of 2018 and for the economy to taper off the rest of the year before turning more sharply downward in 2019.