Federal Reserve Bank of Philadelphia (10/15/15)

Manufacturing conditions in the Philadelphia region continued to weaken in October, according to the Federal Reserve Bank of Philadelphia. The diffusion index for current activity remained negative for the second consecutive month, although it edged slightly higher from -6.0 in September to -4.5. The indexes for current new orders and shipments showed notable deterioration this month, with both indexes falling below zero, marking the first negative reading for the new orders index since May 2013.

The survey’s indicators for labor market conditions suggest slightly weaker employment. The percentage of firms reporting declines in employment (15%) was slightly greater than the percentage reporting increases (13%). The employment index declined nearly 12 points, from 10.2 to -1.7. Firms also reported overall declines in average work hours in October, and the workweek index was negative for the first time since May.

Wall Street Journal (10/16/15) Josh Mitchell; Kate Davidson

U.S. industrial production declined a seasonally adjusted 0.2% from August to September, according to the U.S. Federal Reserve. Capacity utilization declined from 77.8% in August to 77.5% in September. Prior to the recession, capacity utilization was approximately 80%. Economists polled by the Wall Street Journal had forecast a 0.2% decline in industrial production and capacity use of 77.3% in September.

Overall industrial production rose 0.4% from a year ago, and factory output increased 1.4%.

Bloomberg (10/15/15) Luke Kawa

A number of Wall Street economists and individuals inside the U.S. Federal Reserve are concluding that recent job numbers indicate the economy is losing slack—not steam. Employment growth numbers have come in below expectations. Over the next few years, the growth of the working-age population in the U.S.—individuals between the ages of 15 and 64—likely will decline to 0.4% and is trending to go even lower, according to Jacob Oubina, an RBC Capital Markets senior economist.

“The pace of monthly job growth that is consistent with a stable unemployment rate right now is probably around 75,000,” says Michael Feroli, JPMorgan chief economist. Conor Sen, portfolio manager at New River Investments, adds that “There are three factors driving headline nonfarm payrolls here. The magnitude of economic growth, pace of retirements, and how much a stronger job market and faster wage growth can get new entrants into the job market.”