Wall Street Journal (06/15/15) Eric Morath

Industrial production fell in May, due to tepid global demand and a strong U.S. dollar. Industrial production fell a seasonally adjusted 0.2% from April, according to the U.S. Federal Reserve. Meanwhile, capacity utilization, a measure of slack in the industrial sector, declined two-tenths of a percentage point to 78.1%. Capacity utilization now is two percentage points below the long-run average recorded since 1972. Economists polled by the Wall Street Journal had forecast a 0.2% increase in industrial production and a capacity utilization rate of 78.3%.

The fall in industrial production belies recent hiring and consumer spending data that suggest the economy has improved in recent months.

Federal Reserve Bank of New York (06/15/15)

Business conditions worsened slightly for New York manufacturers, according to the June 2015 Empire State Manufacturing Survey. The general business conditions index fell five points to -2.0, its second negative reading in the past three months. The new orders index fell six points to -2.1, and the shipments index edged down to 12.0.

Labor market conditions pointed to a modest increase in employment and a small increase in hours worked. The index for number of employees edged up three points to 8.7, and the average workweek index climbed six points to 3.9.

Wall Street Journal (06/12/15) Kathleen Madigan

Consumers have grown more optimistic about the economy, due to expectations of bigger pay increases. The University of Michigan preliminary June sentiment index rose from 90.7 at the end of May to 94.6 in June. Economists polled by the Wall Street Journal had forecast the early June index would rise to 91.5.

“The June gain was due to the most favorable personal financial prospects since 2007, with households expecting the largest wage gains since 2008,” says Richard Curtin, chief economist at Michigan’s Survey of Consumers.

The preliminary current conditions index climbed from 100.8 at the end of May to 106.8 in June, and the expectations index rose from 84.2 to 86.8.

Bloomberg (06/15/15) Rich Miller

U.S. Federal Reserve officials face the challenge of determining who is correct about the state of the job market: economists or staffing firm executives dealing with companies on Main Street. Citing growing wage pressures, some economists make the case that the U.S. economy has returned to full employment, with little or no slack. Staffing executives, meanwhile, say the reality is more complicated than the numbers suggest. They say the improving job outlook will bring more people into the labor market, preventing wages from rising too quickly.

If the economists are correct, the Fed runs the risk of sparking unwanted inflation the longer it waits to raise interest rates. But if staffing firms are correct, the Fed can afford to wait. Making the call isn’t easy, because labor market improvements aren’t uniform. The increase in wages partially is being driven by competition for job applicants with specialized skills. However, there are millions of people with outmoded job skills stuck in part-time work or on the sidelines.

There certainly is “a war for talent,” says Paul McDonald, a senior executive director at Robert Half International Inc., which has led in some cases to wage increases of 10% to 20%. However, the demand for employees is “not across the board. It’s still a specialist market.” Jeffrey Joerres, executive chairman of ManpowerGroup Inc., says that while wages are starting to increase, companies are wary of the economic outlook, so he doesn’t expect a surge in salaries.