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Category: Research - Topic: Economics



NAHB Builder Confidence edged one point lower to 74 in February
Posted: February 18, 2020 at 10:00 AM (Tuesday)

Builder confidence in the market for newly-built single-family homes edged one point lower to 74 in February, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The last three monthly readings mark the highest sentiment levels since December 2017.

Steady job growth, rising wages and low interest rates are fueling housing demand in a market that lacks inventory, particularly at the entry-level. At a time when demand is on the rise, regulatory constraints along with a shortage of construction workers and a dearth of lots are hindering the production of affordable housing in local communities across the nation. And while lower mortgage rates have improved housing affordability in recent months, accelerating price growth due to limited inventory may offset some of that effect. Price growth in excess of income growth harms affordability.

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

The HMI index gauging current sales conditions fell one point to 80, the component measuring sales expectations in the next six months was one point lower at 79 and the gauge charting traffic of prospective buyers also decreased one point to 57.

Looking at the three-month moving averages for regional HMI scores, the Northeast rose one point to 63, the Midwest increased one point to 67 and the South moved two points higher to 78. The West fell one point to 83.


Empire State Manufacturing Survey Conditions grew at a faster pace in February
Posted: February 18, 2020 at 08:30 AM (Tuesday)

Business activity picked up in New York State, according to firms responding to the February 2020 Empire State Manufacturing Survey. The headline general business conditions index moved up eight points to 12.9. The new orders index shot up 16 points to 22.1, and the shipments index climbed to 18.9. Delivery times lengthened, and inventories increased significantly. Employment expanded only modestly, and the average workweek was little changed. Input price increases slowed somewhat, and selling price increases picked up a touch. Optimism about the six-month outlook continued to be somewhat subdued, and capital spending plans remained firm.

Growth Picks Up
Manufacturing firms in New York State reported that business activity grew at a faster pace than in recent months. The general business conditions index increased eight points to 12.9, its highest level since May of last year. Thirty-four percent of respondents reported that conditions had improved over the month, while 21 percent reported that conditions had worsened. The new orders index climbed 16 points to 22.1, its highest level in well over a year, indicating that orders rose significantly. The shipments index rose ten points to 18.9. Delivery times were longer, and inventories climbed.

Labor Market Indicators Soft
The index for number of employees edged down to 6.6, indicating that employment grew to a small degree. The average workweek held near zero, a sign that the average workweek was little changed. The prices paid index moved down seven points to 25.0, pointing to a slower pace of input price increases this month, while the prices received index edged up two points to 16.7.

Optimism Remains Somewhat Subdued
Indexes assessing the six-month outlook suggested that optimism about future conditions was somewhat restrained. The index for future business conditions was little changed at 22.9. The indexes for future new orders and future shipments edged lower. Employment and hours worked are expected to grow modestly in the months ahead. The capital expenditures index came in at 22.0, and the technology spending index was little changed at 21.2.


Business Inventories up 0.1% in December
Posted: February 14, 2020 at 10:00 AM (Friday)

The combined value of distributive trade sales and manufacturers’ shipments for December, adjusted for seasonal and trading day differences but not for price changes, was estimated at $1,461.0 billion, down 0.1 percent (±0.2 percent)* from November 2019, but was up 1.7 percent (±0.4 percent) from December 2018.

Manufacturers’ and trade inventories for December, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $2,040.0 billion, up 0.1 percent (±0.1 percent)* from November 2019 and were up 2.2 percent (±0.4 percent) from December 2018.

The total business Inventories/Sales Ratio based on seasonally adjusted data at the end of December was 1.40. The December 2018 ratio was 1.39.


University of Michigan Consumer Confidence Preliminary February Results rose to 100.9
Posted: February 14, 2020 at 10:00 AM (Friday)

Consumer sentiment rose to 100.9 in early February to nearly match the expansion peak of 101.4, set two years ago in March 2018. The Expectations Index, the main gauge of future economic conditions, rose to 92.6, also its second highest level in this long expansion. Both measures were still significantly below the levels recorded twenty years ago when the Sentiment Index reached a peak of 112.0 and the Expectations Index peaked at 108.6. The early February gain was not uniform, however. Current personal finances as well as evaluations of the national economy each posted large gains, while consumers' views on buying conditions for household durables posted a significant loss. The overall balance still moved the Sentiment and Expectations Indexes higher. Net gains in household income and wealth were reported more frequently in early February than at any prior time since 1960 (see the chart). These gains in consumers' economic assessments have also been accompanied by a faint stirring of two powerful sources of uncertainty. First, the coronavirus was mentioned by just 7% when asked to explain their economic expectations in early February. Second, the runup to the presidential election is likely to focus on the vast changes to taxes and spending programs; in early February, only 10% of all consumers mentioned some aspect of the election as having a potential impact on their economic expectations.


Phila Fed Forecasters See Stronger Output Growth and Higher Job Gains in 2020
Posted: February 14, 2020 at 10:00 AM (Friday)

The U.S. economy in 2020 looks stronger now than it did three months ago, according to 37 forecasters surveyed by the Federal Reserve Bank of Philadelphia. The panel predicts real GDP will grow at an annual rate of 1.7 percent this quarter, down from 1.9 percent in the last survey. However, for each of the next three quarters, the panel sees higher output growth than they predicted previously. On an annual-average over annual-average basis, the forecasters expect real GDP to grow 2.0 percent in each of the next four years. The current projection for 2020 growth is up from 1.8 percent in the last survey.

A brighter outlook for the labor market accompanies the outlook for growth. The forecasters predict the unemployment rate will average between 3.6 percent and 3.9 percent from 2020 to 2023. Notably, the projections for 2020, 2021, and 2022 are below those of the last survey.

On the employment front, the forecasters have revised upward their estimates for job gains in 2020. The projections for the annual-average level of nonfarm payroll employment suggest job gains at a monthly rate of 168,500 in 2020, up from 143,800 projected three months ago. (These annual-average estimates are computed as the year-to-year change in the annual-average level of nonfarm payroll employment, converted to a monthly rate.)

Median Forecasts for Selected Variables in the Current and Previous Surveys
Real GDP (%)
Unemployment Rate (%)
Payrolls (000s/month)
Previous
New
Previous
New
Previous
New
Quarterly data:
2020:Q1 1.9 1.7 3.6 3.6 133.1 178.2
2020:Q2 1.7 2.1 3.6 3.5 159.4 168.6
2020:Q3 1.7 2.0 3.7 3.5 122.5 132.8
2020:Q4 1.9 2.1 3.7 3.6 127.3 116.7
2021:Q1 N.A. 2.2 N.A. 3.6 N.A. 114.5
Annual data (projections are based on annual-average levels):
2020 1.8 2.0 3.7 3.6 143.8 168.5
2021 2.0 2.0 3.7 3.6 N.A. 125.2
2022 2.0 2.0 3.9 3.7 N.A. N.A.
2023 N.A. 2.0 N.A. 3.9 N.A. N.A.

The charts below provide some insight into the degree of uncertainty the forecasters have about their projections for the rate of growth in the annual-average level of real GDP. Each chart presents the forecasters’ previous and current estimates of the probability that growth will fall into each of 11 ranges. The charts show the forecasters have revised upward their estimates of the probability that real GDP will grow 2.0 percent or more in 2020 and 2021.

The forecasters’ density projections for unemployment, shown below, shed light on uncertainty about the labor market over the next four years. Each chart presents the forecasters’ current estimates of the probability that unemployment will fall into each of 10 ranges. The charts show the panelists are raising their density estimates for an unemployment rate below 4.0 percent for the next three years, especially in 2020 and 2021.

Lower Inflation in the Current Quarter

The forecasters expect current-quarter headline CPI inflation to average 2.0 percent, down from 2.2 percent in the last survey. Headline PCE inflation for the current quarter will be 1.7 percent, down 0.3 percentage point from the previous estimate.

The forecasters’ projections for inflation beyond the current quarter are little changed compared with the previous survey.

Over the next 10 years, 2020 to 2029, the forecasters expect headline CPI inflation to average 2.20 percent at an annual rate. The corresponding estimate for 10-year annual-average PCE inflation is 2.00 percent.

Median Short-Run and Long-Run Projections for Inflation (Annualized Percentage Points)
Headline CPI
Core CPI
Headline PCE
Core PCE
Previous
Current
Previous
Current
Previous
Current
Previous
Current
Quarterly
2020:Q1 2.2 2.0 2.3 2.1 2.0 1.7 2.0 1.9
2020:Q2 2.1 2.0 2.2 2.1 2.0 1.8 2.0 1.9
2020:Q3 2.2 2.2 2.2 2.1 1.9 1.9 2.0 1.9
2020:Q4 2.1 2.2 2.2 2.2 1.9 2.0 2.0 1.9
2021:Q1 N.A. 2.2 N.A. 2.2 N.A. 2.0 N.A. 1.9
Q4/Q4 Annual Averages
2020 2.1 2.0 2.3 2.2 1.9 1.9 2.0 1.9
2021 2.2 2.2 2.2 2.1 2.0 2.0 1.9 1.9
2022 N.A. 2.3 N.A. 2.2 N.A. 2.0 N.A. 1.9
Long-Term Annual Averages
2019-2023 2.20 N.A. N.A. N.A. 1.90 N.A. N.A. N.A.
2020-2024 N.A. 2.20 N.A. N.A. N.A. 2.00 N.A. N.A.
2019-2028 2.20 N.A. N.A. N.A. 2.00 N.A. N.A. N.A.
2020-2029 N.A. 2.20 N.A. N.A. N.A. 2.00 N.A. N.A.

The charts below show the median projections (the red line) and the associated interquartile ranges (gray areas around the red line) for the projections for 10-year annual-average CPI and PCE inflation. The charts highlight unchanged projections for the long-term inflation rate, compared with those of the last survey.

The figures below show the probabilities that the forecasters are assigning to each of 10 possible ranges for fourth-quarter over fourth-quarter core PCE inflation in 2020 and 2021. For 2020, the forecasters have increased the probability that core PCE inflation will be below 2.0 percent.

Lower Risk of a Negative Quarter

The forecasters have revised downward the chance of a contraction in real GDP in any of the next four quarters. For the current quarter, the forecasters predict a 12.5 percent chance of negative growth, down from 18.1 percent in the survey of three months ago.

Risk of a Negative Quarter (%)
Survey Means
Quarterly data: Previous New
2020:Q1
18.1
12.5
2020:Q2
20.8
14.9
2020:Q3
22.6
18.4
2020:Q4
25.1
21.3
2021:Q1
N.A.
25.7

Forecasters State Their Views on House Price Growth over the Next Two Years

In a special question in this survey, panelists were asked to provide their forecasts for fourth-quarter over fourth-quarter growth in house prices, as measured by a number of alternative indices. The panelists were allowed to choose their measure from a list of indices or to write in their own index. For each index of their choosing, the panelists provided forecasts for growth in 2020 and 2021.

Sixteen panelists answered the special question. Some panelists provided projections for more than one index. The table below provides a summary of the forecasters’ responses. The number of responses (N) is low for each index. The median estimates for the six house-price indices listed in the table below range from 3.5 percent to 4.3 percent in 2020 and from 2.8 percent to 4.0 percent in 2021.

Projections for Growth in Various Indices of House Prices
Q4/Q4, Percentage Points
2020
(Q4/Q4 Percent Change)
2021
(Q4/Q4 Percent Change)
Index
N
Mean
Median
N
Mean
Median
S&P CoreLogic Case-Shiller: U.S. National
5
4.2
4.2
5
3.7
3.4
S&P CoreLogic Case-Shiller: Composite 10
2
4.2
4.2
2
4.0
4.0
S&P CoreLogic Case-Shiller: Composite 20
5
3.5
3.5
5
3.3
2.8
FHFA: Purchase Only (U.S. Total)
10
4.1
4.1
10
3.9
3.9
CoreLogic: National HPI, incl. Distressed Sales (Single Family Combined)
4
4.2
4.3
4
3.8
3.8
NAR Median: Total Existing
2
3.8
3.8
2
3.7
3.7

Stable 10-Year Growth in Output and Productivity and Lower Returns to Financial Assets

In our first-quarter surveys, the forecasters provide their 10-year annual-average projections for an expanded set of variables, including growth in output and productivity, as well as returns on financial assets.

As the table below shows, the projection for the annual-average rate of growth in real GDP over the next 10 years is nearly unchanged. Currently, the forecasters expect real GDP to grow at an annual-average rate of 2.00 percent over the next 10 years, almost identical to their projection of 1.99 percent in the first-quarter survey of 2019. Ten-year annual-average productivity growth is now expected to be 1.40 percent, up slightly from 1.35 percent previously.

Downward revisions to the return on financial assets accompany the current outlook. The forecasters predict the S&P 500 returning an annual-average 5.00 percent over the next 10 years, down from 5.35 percent. The forecasters see the rate on 10-year Treasuries averaging 2.70 percent over the next 10 years, down from 3.50 percent in last year’s first-quarter survey. Three-month Treasury bills will return an annual-average 2.02 percent over the next 10 years, down from 2.75 percent.

Median Long-Term (10-Year) Forecasts (%)
First Quarter 2019 Current Survey
Real GDP Growth
1.99
2.00
Productivity Growth
1.35
1.40
Stock Returns (S&P 500)
5.35
5.00
Rate on 10-Year Treasury Bonds
3.50
2.70
Bill Returns (3-Month)
2.75
2.02

Technical Notes

Moody's Aaa and Baa Historical Rates

The historical values of Moody's Aaa and Baa rates are proprietary and, therefore, not available in the data files on the Bank’s website or on the tables that accompany the survey’s complete write-up in the PDF.

The Federal Reserve Bank of Philadelphia thanks the following forecasters for their participation in recent surveys:

Lewis Alexander, Nomura Securities; Scott Anderson, Bank of the West (BNP Paribas Group); Robert J. Barbera, Johns Hopkins University Center for Financial Economics; Peter Bernstein, RCF Economic and Financial Consulting, Inc.; Wayne Best and Michael Brown, Visa, Inc.; Jay Bryson, Wells Fargo; J. Burton, G. Ehrlich, D. Manaenkov, W. Song, and A. Thapar, RSQE, University of Michigan; Christine Chmura, Ph.D., and Xiaobing Shuai, Ph.D., Chmura Economics & Analytics; Gary Ciminero, CFA, GLC Financial Economics; Gregory Daco, Oxford Economics USA, Inc.; Rajeev Dhawan, Georgia State University; Bill Diviney, ABN AMRO Bank NV; Michael R. Englund, Action Economics, LLC; Michael Gapen, Barclays Capital; Sacha Gelfer, Bentley University; James Glassman, JPMorgan Chase & Co.; Jan Hatzius, Goldman Sachs; Brian Higginbotham, U.S. Chamber of Commerce; Peter Hooper, Deutsche Bank Securities, Inc.; Fred Joutz, Benchmark Forecasts; Sam Kahan, Kahan Consulting Ltd. (ACT Research LLC); N. Karp, BBVA Research USA; Walter Kemmsies, Jones Lang LaSalle; Jack Kleinhenz, Kleinhenz & Associates, Inc.; Thomas Lam, Sim Kee Boon Institute, Singapore Management University; John Lonski, Moody’s Capital Markets Group; IHS Markit; Robert McNab, Old Dominion University; R. Anthony Metz, Pareto Optimal Economics; R. M. Monaco, TitanRM; Michael Moran, Daiwa Capital Markets America; Joel L. Naroff, Naroff Economic Advisors; Mark Nielson, Ph.D., MacroEcon Global Advisors; Brendon Ogmundson, BC Real Estate Association; Philip Rothman, East Carolina University; Chris Rupkey, MUFG Union Bank; Sean M. Snaith, Ph.D., University of Central Florida; Constantine G. Soras, Ph.D., CGS Economic Consulting/Montclair State University; Stephen Stanley, Amherst Pierpont Securities; Charles Steindel, Ramapo College of New Jersey; Susan M. Sterne, Economic Analysis Associates, Inc.; James Sweeney, Credit Suisse; Thomas Kevin Swift, American Chemistry Council; Maira Trimble, Eaton Corporation; Mark Zandi, Moody's Analytics; Ellen Zentner, Morgan Stanley.

This is a partial list of participants. We also thank those who wish to remain anonymous.


Industrial Production declined 0.3%
Capacity Utilization fell to 76.8%

Posted: February 14, 2020 at 09:15 AM (Friday)

Industrial production declined 0.3 percent in January, as unseasonably warm weather held down the output of utilities and as a major manufacturer significantly slowed production of civilian aircraft. The index for manufacturing edged down 0.1 percent in January; excluding the production of aircraft and parts, factory output advanced 0.3 percent. The index for mining rose 1.2 percent. At 109.2 percent of its 2012 average, total industrial production was 0.8 percent lower in January than it was a year earlier. Capacity utilization for the industrial sector fell 0.3 percentage point in January to 76.8 percent, a rate that is 3.0 percentage points below its long-run (1972–2019) average.

Market Groups
The major market groups posted mixed results in January. The output of business equipment declined 2.6 percent as a result of the slowdown in the production of aircraft. The step-down in the index for utilities contributed to decreases for consumer energy products and energy materials. The index for consumer durables rose, supported by an increase of 2.8 percent in the output of automotive products.

Industry Groups
Manufacturing output decreased 0.1 percent in January to a level 0.8 percent below its year-earlier reading. The production of durable goods moved down 0.5 percent in January, as drops for aerospace and miscellaneous transportation equipment and for machinery were partially offset by a gain for motor vehicles and parts. The output of nondurable manufacturing rose 0.3 percent, and almost all of its component categories posted gains. The indexes for petroleum and coal products and for plastics and rubber products recorded increases of more than 1 percent, whereas only the index for apparel and leather recorded a decrease of more than 1 percent.

Mining output advanced 1.2 percent in January and stood 3.1 percent above its level of a year earlier. The output of utilities fell 4.0 percent in January, with electric and natural gas utilities posting declines of 3.2 percent and 7.7 percent, respectively.

Capacity utilization for manufacturing edged down 0.1 percentage point in January to 75.1 percent, 3.1 percentage points below its long-run average. The utilization rate for mining rose to 90.7 percent and remained well above its long-run average of 87.2 percent. The operating rate for utilities fell to 70.6 percent, a rate that is about 15 percentage points below its long-run average.


U.S. Import Price Index was unchanged in January
Posted: February 14, 2020 at 08:30 AM (Friday)

U.S. import prices were unchanged in January, the U.S. Bureau of Labor Statistics reported today, following 0.2-percent advances the 2 previous months. In January, falling fuel prices offset increasing prices for nonfuel imports. Prices for U.S. exports advanced 0.7 percent in January, after declining 0.2 percent the previous month.

Imports
Import prices were unchanged in January, after rising in December and November. Prices for U.S. imports rose 0.3 percent from January 2019 to January 2020. The price index for overall imports advanced on a 12-month basis for the second consecutive month, after not recording an over-the-year increase since the index rose 0.1 percent for the year ended March 2019.

Fuel Imports: Prices for import fuel declined 2.2 percent in January, led by lower prices for both petroleum and natural gas. The January decrease was the largest monthly drop since the index fell 4.2 percent in August. Petroleum prices fell 1.7 percent in January following a 1.0-percent increase in December and a 0.9-percent advance in November. The price index for natural gas declined 11.7 percent in January, after rising 141.3 percent over the previous 5 months. Despite the decline in January, import fuel prices increased 11.3 percent over the past 12 months, driven by an 11.3-percent advance in petroleum prices and a 15.7-percent rise in natural gas prices.

All Imports Excluding Fuel: The price index for nonfuel imports increased 0.2 percent for the second consecutive month in January. Prior to December, the most recent advance in the index occurred in February 2019 when the index ticked up 0.1 percent. Higher prices for finished goods; nonfuel industrial supplies and materials; and foods, feeds, and beverages all contributed to the January advance. Despite the recent increases, nonfuel import prices fell 0.9 percent over the past year and have not increased on an over-the-year basis since December 2018.

Nonfuel Industrial Supplies and Materials: Prices for nonfuel industrial supplies and materials rose 0.3 percent in January following no change the previous month. The January advance was primarily driven by a 2.2-percent rise in unfinished metals prices.

Finished Goods: Finished goods prices increased in January. Automotive vehicles prices advanced 0.5 percent in January, led by rising prices for passenger cars. The increase in automotive vehicles prices was the largest monthly gain since the index rose 0.5 percent in January 2018. The price indexes for capital goods and consumer goods both ticked up 0.1 percent for the second consecutive month in January.

Foods, Feeds, and Beverages: Foods, feeds, and beverages prices advanced 0.5 percent in January, after rising 1.1 percent in December. Higher prices for fish and shellfish more than offset declining meat prices.

Exports
U.S. export prices rose 0.7 percent in January, the largest monthly advance since the index increased 0.7 percent in March. In January, rising prices for both agricultural and nonagricultural exports contributed to the overall increase. Prices for exports also advanced on a 12-month basis, increasing 0.5 percent in January. The rise in January was the first 12-month advance since the index increased 0.2 percent for the year ended in April.

Agricultural Exports: The price index for agricultural exports advanced 2.0 percent in January following a decrease of 0.1 percent in December and increases of 2.4 percent in November and 1.7 percent in October. Rising prices for vegetables, soybeans, wheat, and corn in January more than offset lower prices for fruit, meat, and nuts. Prices for agricultural exports also advanced over the past 12 months, rising 3.1 percent from January 2019 to January 2020.

All Exports Excluding Agriculture: Nonagricultural export prices increased 0.7 percent in January, after falling 0.2 percent the previous month. In January, advancing prices for nonagricultural industrial supplies and materials; finished goods; and nonagricultural foods all contributed to the increase in nonagricultural export prices. The price index for nonagricultural exports advanced 0.2 percent for the year ended in January, the first 12-month increase since rising 0.5 percent in April.

Nonagricultural Industrial Supplies and Materials: Prices for nonagricultural industrial supplies and materials advanced 1.1 percent in January following a 0.5-percent drop the previous month. The January increase was led by a 1.5-percent rise in fuel prices, a 3.0-percent advance in nonferrous metals prices, and a 0.6-percent increase in chemicals prices.

Finished Goods: Finished goods prices were mostly up in January. The price index for export capital goods rose 0.4 percent, as higher prices for capital goods excluding computers more than offset lower prices for computers, peripherals, and semiconductors. Prices for automotive vehicles increased 0.5 percent in January, driven by advancing prices for engines and nonengine parts and accessories. The January increase for capital goods prices was the largest advance since January 2019 and the rise in automotive vehicles prices was the largest 1-month increase since February 2019. Consumer goods prices were unchanged in January.

Measures of Import and Export Prices by Locality
Imports by Locality of Origin: The price index for imports from China declined 0.2 percent in January, after no change in December. The January decline was the largest drop since September and the index has not risen on a monthly basis since May 2018. Prices for imports from China declined 1.7 percent over the past year. In contrast, import prices from Japan rose 0.2 percent in January, the largest monthly increase since August. The January advance was led by higher prices for machinery manufacturing. The price index for imports from Canada fell 0.8 percent in January, driven by lower fuel prices. Prices for imports from Mexico also decreased in January, falling 0.2 percent following a 0.4-percent increase the previous month. Import prices from the European Union rose 0.4 percent in January, the largest monthly advance since the index increased 0.6 percent in April 2018.

Exports by Locality of Destination: Prices for exports to China increased 0.3 percent in January, after ticking up 0.1 percent in each of the 2 previous months. The January rise was the largest 1-month advance since the index increased 0.6 percent in July. Despite the recent advances, export prices to China fell 0.2 percent from January 2019 to January 2020. The price index for exports to Japan rose 0.1 percent in January following no change in December. Prices for exports to Japan increased 1.8 percent over the past 12 months. Export prices to Canada and Mexico both advanced in January, rising 0.6 percent and 1.1 percent, respectively. The price index for exports to the European Union rose 0.7 percent in January, the largest monthly increase since July.

Terms of Trade Indexes: Terms of Trade indexes are based on country, region, or grouping and measure the change in the purchasing power of exports relative to imports. The index for the U.S. terms of trade with China advanced 0.5 percent in January, the largest 1-month rise since July. Lower import prices from China and higher export prices to China each contributed to the January increase. The index for U.S. terms of trade with Japan edged down 0.1 percent in January as rising import prices from Japan more than offset higher export prices to Japan. The U.S. terms of trade with Canada and the U.S. terms of trade with Mexico each advanced 1.3 percent in January. The index for the U.S. terms of trade with the European Union also increased in January, rising 0.3 percent, the first monthly advance for the index since a 0.6-percent increase in July.

Import and Export Services
Imports: Import air passenger fares fell 8.8 percent in January following a 12.3-percent advance for the fourth quarter of 2019. The January drop was led by lower Asian and Latin American/Caribbean fares. Import air passenger fares decreased 9.6 percent for the year ended in January, the largest 12-month drop since April. Import air freight prices declined 2.4 percent in January, the first monthly decrease since September. Prices for import air freight also fell over the past year, declining 4.6 percent.

Exports: The index for export air passenger fares rose 8.4 percent in January, after declining 0.7 percent in December. The January advance was driven by a 17.4-percent increase in Asian fares, and was the largest rise in overall export air passenger fares since December 2013. Despite the January advance, export air passenger fares decreased 1.2 percent over the past year. Prices for export air freight rose 2.7 percent in January, the largest 1-month advance since the index increased 5.4 percent in October 2017. The January rise led export air freight prices up 2.2 percent over the past 12 months.


U.S. Retail Sales for January Increased 0.3%, Ex-Auto up 0.3%
Posted: February 14, 2020 at 08:30 AM (Friday)

Advance estimates of U.S. retail and food services sales for January 2020, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $529.8 billion, an increase of 0.3 percent (±0.4 percent)* from the previous month, and 4.4 percent (±0.7 percent) above January 2019. Total sales for the November 2019 through January 2020 period were up 4.4 percent (±0.5 percent) from the same period a year ago. The November 2019 to December 2019 percent change was revised from up 0.3 percent (±0.4 percent)* to up 0.2 percent (±0.2 percent)*.

Retail trade sales were up 0.1 percent (±0.4 percent)* from December 2019, and 4.0 percent (±0.7 percent) above last year. Gasoline stations were up 10.4 percent (±1.2 percent) from January 2019, and nonstore retailers were up 8.4 percent (±1.4 percent) from last year.


Real Average Hourly Earnings increased 0.1% in January
Posted: February 13, 2020 at 08:30 AM (Thursday)

Real average hourly earnings for all employees increased 0.1 percent from December to January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from an increase of 0.2 percent in average hourly earnings combined with an increase of 0.1 percent in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings increased 0.1 percent over the month due to the change in real average hourly earnings combined with no change in the average workweek.

Real average hourly earnings increased 0.6 percent, seasonally adjusted, from January 2019 to January 2020. The change in real average hourly earnings combined with a 0.6-percent decrease in the average workweek resulted in essentially no change in real average weekly earnings over this period.

Production and nonsupervisory employees
Real average hourly earnings for production and nonsupervisory employees were unchanged from December to January, seasonally adjusted. This result stems from a 0.1-percent increase in average hourly earnings combined with an increase of 0.1 percent in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Real average weekly earnings increased 0.3 percent over the month due to the unchanged real average hourly earnings being combined with a 0.3-percent increase in average weekly hours.

From January 2019 to January 2020, real average hourly earnings increased 0.7 percent, seasonally adjusted. The change in real average hourly earnings combined with a 0.6-percent decrease in the average workweek resulted in a 0.1-percent increase in real average weekly earnings over this period.


Consumer Price Index rose 0.1% in January, Ex Fd & Engy rose 0.2%
Posted: February 13, 2020 at 08:30 AM (Thursday)

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent in January on a seasonally adjusted basis, after rising 0.2 percent in December, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.5 percent before seasonal adjustment.

The index for shelter accounted for the largest part of the increase in the seasonally adjusted all items index, with the indexes for food and for medical care services also rising. These increases more than offset a decrease in the gasoline index, which fell 1.6 percent in January. The energy index declined 0.7 percent, and the major energy component indexes were mixed. The index for food rose 0.2 percent in January with the indexes for both food at home and food away from home increasing over the month.

The index for all items less food and energy rose 0.2 percent in January after increasing 0.1 percent in December. Along with the indexes for shelter and medical care, the indexes for apparel, recreation, education, and airline fares all increased in January. The indexes for used cars and trucks, prescription drugs, motor vehicle insurance, and household furnishings and operations were among those to decline.

The all items index increased 2.5 percent for the 12 months ending January, the largest 12-month increase since the period ending October 2018. The index for all items less food and energy rose 2.3 percent over the last 12 months, the same 12-month increase as reported in the previous 3 months. The food index rose 1.8 percent over the last 12 months, while the energy index increased 6.2 percent over that period.

Food
The food index increased 0.2 percent in January, the same as in December. The index for food at home rose 0.1 percent, and four of the six major grocery component indexes increased in January. The index for other food at home rose 0.2 percent in January while the index for nonalcoholic beverages increased 0.4 percent. The indexes for dairy and related products and for fruits and vegetables also increased over the month.

In contrast, the index for cereals and bakery products declined 0.4 percent in January after falling 0.3 percent in December. The index for meats, poultry, fish, and eggs was unchanged over the month.

The index for food away from home rose 0.4 percent in January after rising 0.3 percent in December. The indexes for limited service meals and full service meals both increased 0.4 percent over the month.

The food at home index increased 0.7 percent over the last 12 months. Five of the six major grocery store food group indexes rose over the past 12 months, with increases ranging from 0.3 percent (cereals and bakery products) to 2.7 percent (dairy and related products). The fruits and vegetables index declined over the span, falling 1.0 percent. The index for food away from home rose 3.1 percent over the last year. The index for full service meals increased 3.4 percent and the index for limited service meals rose 2.9 percent.

Energy
The energy index declined 0.7 percent in January, after rising 1.6 percent in December. The gasoline index fell 1.6 percent in January, following a 3.1 percent increase in December. (Before seasonal adjustment, gasoline prices fell 0.8 percent in January.) The electricity index increased over the month, rising 0.4 percent after falling in December. The index for natural gas increased 1.0 percent in January.

The energy index increased 6.2 percent over the past 12 months, with its major component indexes mixed. The gasoline index increased 12.8 percent, while the electricity index advanced 0.5 percent over the last 12 months. However, the index for natural gas fell 3.2 percent over the same period.

All items less food and energy
The index for all items less food and energy increased 0.2 percent in January, after rising 0.1 percent in December. The shelter index rose 0.4 percent in January, with the rent index increasing 0.4 percent and the owners’ equivalent rent index rising 0.3 percent. The medical care index rose 0.2 percent in January, with the index for hospital services increasing 0.8 percent. However, the index for physicians’ services fell 0.4 percent, and the index for prescription drugs also declined 0.4 percent over the month.

The apparel index rose 0.7 percent in January following a 0.1-percent increase in December. The recreation index increased 0.3 percent over the month, as did the education index. The index for personal care advanced 0.7 percent in January after declining 0.2 percent the previous month. The airline fares index rose 0.7 percent, after declining in each of the 3 previous months. The index for new vehicles was unchanged in January.

The index for used cars and trucks continued to decline, decreasing 1.2 percent in January after falling 0.4 percent in December. The index for motor vehicle insurance fell 0.2 percent in January. The index for household furnishings and operations also declined in January, decreasing 0.1 percent.

The index for all items less food and energy rose 2.3 percent over the past 12 months. The shelter index rose 3.3 percent over the 12-month span, and the medical care index rose 4.5 percent. Used cars and trucks (-2.0 percent) and apparel (-1.3 percent) were among the few indexes to decline over the last year.

Not seasonally adjusted CPI measures
The Consumer Price Index for All Urban Consumers (CPI-U) increased 2.5 percent over the last 12 months to an index level of 257.971 (1982-84=100). For the month, the index increased 0.4 percent prior to seasonal adjustment.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 2.5 percent over the last 12 months to an index level of 251.361 (1982-84=100). For the month, the index increased 0.4 percent prior to seasonal adjustment.

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) increased 2.3 percent over the last 12 months. For the month, the index increased 0.4 percent on a not seasonally adjusted basis. Please note that the indexes for the past 10 to 12 months are subject to revision.


Weekly Initial Unemployment Claims Increase 2,000 to 205,000
Posted: February 13, 2020 at 08:30 AM (Thursday)

In the week ending February 8, the advance figure for seasonally adjusted initial claims was 205,000, an increase of 2,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 202,000 to 203,000. The 4-week moving average was 212,000, unchanged from the previous week's revised average. The previous week's average was revised up by 250 from 211,750 to 212,000.

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending February 1, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending February 1 was 1,698,000, a decrease of 61,000 from the previous week's revised level. The previous week's level was revised up 8,000 from 1,751,000 to 1,759,000. The 4-week moving average was 1,726,750, a decrease of 17,500 from the previous week's revised average. The previous week's average was revised up by 2,000 from 1,742,250 to 1,744,250.


Conference Board Help Wanted OnLine Index increased in January to 102.7
Posted: February 12, 2020 at 10:00 AM (Wednesday)

The Conference Board®-Burning Glass® Help Wanted OnLine™ (HWOL) Index increased slightly in January and now stands at 102.7 (July 2018=100), up from 102.4 in December. The Index increased 0.6 percent from November to December, but is down 2.2 percent from a year ago.

The HWOL Index has been on a slight downward trend in the past year but remains at a high level. Together with other leading labor market indicators, the HWOL Index suggests that employment growth will remain solid in the coming months.

The Help Wanted OnLine™ Index is produced in collaboration with Burning Glass Technologies, the global pioneer in real-time labor market data and analysis. This new collaboration enhances the Help Wanted OnLine™ program by providing additional insights into important labor market trends.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: February 12, 2020 at 07:00 AM (Wednesday)

Mortgage applications increased 1.1 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending February 7, 2020.

The Market Composite Index, a measure of mortgage loan application volume, increased 1.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3 percent compared with the previous week. The Refinance Index increased 5 percent from the previous week and was 207 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 6 percent from one week earlier. The unadjusted Purchase Index increased 0.3 percent compared with the previous week and was 16 percent higher than the same week one year ago.

"The mortgage market continues to be active in early 2020, as applications increased for the third straight week. Rates also rose, but still remained close to their lowest levels since October 2016," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "The refinance index climbed to its highest level since June 2013, and refinance loan sizes also increased as a result of an active jumbo lending market."

Added Kan, "Last month was the strongest January for purchase applications since 2009, which is perhaps a sign that mild weather brought out prospective buyers earlier than normal. Despite a decline last week, purchase activity was still up almost 16 percent from a year ago."

The refinance share of mortgage activity increased to 65.5 percent of total applications from 64.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.2 percent of total applications.

The FHA share of total applications increased to 9.7 percent from 9.6 percent the week prior. The VA share of total applications decreased to 10.1 percent from 10.2 percent the week prior. The USDA share of total applications remained unchanged from 0.4 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 3.72 percent from 3.71 percent, with points remaining unchanged at 0.28 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate remained unchanged from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) increased to 3.75 percent from 3.70 percent, with points decreasing to 0.17 from 0.19 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.84 percent from 3.80 percent, with points remaining unchanged at 0.26 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.20 percent from 3.19 percent, with points increasing to 0.27 from 0.23 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.21 percent from 3.23 percent, with points decreasing to 0.13 from 0.15 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


Job Openings fell to 6.4 million in December
Posted: February 11, 2020 at 10:00 AM (Tuesday)

The number of job openings fell to 6.4 million (-364,000) on the last business day of December, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were little changed at 5.9 million and 5.7 million, respectively. Within separations, the quits rate and layoffs and discharges rate were unchanged at 2.3 percent and 1.2 percent respectively. This release includes estimates of the number and rate of job openings, hires, and separations for the total nonfarm sector, by industry, and by four geographic regions.

Job Openings
On the last business day of December, the job openings level fell to 6.4 million (-364,000), and the job openings rate decreased to 4.0 percent. Over the year, the job openings level declined by 14.9 percent. Over the month, the number of job openings decreased for total private (-332,000) and was little changed for government. The largest decreases for job openings were in transportation, warehousing, and utilities (-88,000), real estate and rental and leasing (-34,000), and educational services (-34,000). The number of job openings fell in the South region.

Hires
The number of hires was little changed at 5.9 million in December. The hires rate was little changed at 3.9 percent. The hires level increased in accommodation and food services (+69,000). The number of hires increased in the West region.

Separations
Total separations includes quits, layoffs and discharges, and other separations. Total separations is referred to as turnover. Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. Layoffs and discharges are involuntary separations initiated by the employer. Other separations includes separations due to retirement, death, disability, and transfers to other locations of the same firm.

In December, the number of total separations was little changed at 5.7 million and the rate was little changed at 3.8 percent. The number of total separations decreased in retail trade (-118,000) but increased in other services (+57,000). The total separations level increased in the South region.

The number of quits was little changed in December at 3.5 million and the rate was unchanged at 2.3 percent. Quits decreased in retail trade (-111,000) and arts, entertainment, and recreation (-20,000). The number of quits was little changed in all four regions.

The number of layoffs and discharges was little changed in December at 1.9 million and the rate was unchanged at 1.2 percent. Layoffs and discharges increased in other services (+61,000) and arts, entertainment, and recreation (+47,000). The number of layoffs and discharges decreased in state and local government, excluding education (-15,000) and federal government (-3,000). The layoffs and discharges level increased in the South region.

The number of other separations was little changed in December. Other separations decreased in other services (-18,000). The number of other separations was little changed in all four regions.

Net Change in Employment
Large numbers of hires and separations occur every month throughout the business cycle. Net employment change results from the relationship between hires and separations. When the number of hires exceeds the number of separations, employment rises, even if the hires level is steady or declining. Conversely, when the number of hires is less than the number of separations, employment declines, even if the hires level is steady or rising.

Over the 12 months ending in December, hires totaled 70.0 million and separations totaled 67.8 million, yielding a net employment gain of 2.2 million. These totals include workers who may have been hired and separated more than once during the year.


NFIB Small Business Optimism Index rose 1.6 points to 104.3 in January
Posted: February 11, 2020 at 07:00 AM (Tuesday)

The small business Optimism Index started the New Year in the top 10% of all readings in the 46-year history of the survey, rising 1.6 points to 104.3 in the month of January. Six of the 10 Index components improved, two declined, and two were unchanged, with the Uncertainty Index edging up slightly. Owners expecting better business conditions dipped slightly, but sales expectations and earnings trends improved significantly. As was reported last week, actual job creation surged in January.

“2020 is off to an explosive start for the small business economy, with owners expecting increased sales, earnings, and higher wages for employees,” said NFIB Chief Economist William Dunkelberg. “Small businesses continue to build on the solid foundation of supportive federal tax policies and a deregulatory environment that allows owners to put an increased focus on operating and growing their businesses.”

The net percent of owners expecting higher real sales volumes increased 7 points to 23 percent with owners a bit more certain of future sales growth prospects. A net 7% of all owners (seasonally adjusted) reported higher nominal sales in the past three months, down 2 points from December.

The NFIB Uncertainty Index moved up 1 point from December to 81, but well below the spike to 86 seen in last January’s Index, following the government shutdown. A net 14% of owners expect better business conditions.

The frequency of reports of positive profit trends reversed half of December’s decline, increasing 5 points in January. Thirty-three percent of those reporting weaker profits blamed weak sales, 27 percent blamed usual seasonal change, and 8 percent cited labor costs, 6 percent cited materials costs, and 4 percent cited price changes. For those reporting higher profits, 61 percent credited sales volumes. 17 percent credited usual seasonal change.

As reported in last week’s NFIB’s monthly jobs report, new job creation jumped in January, with an average addition of 0.49 workers per firm, the highest level since March 2019. Twenty-six percent of owners reported finding qualified workers as their number one problem, 1 point below August’s record high. Fifty-six percent reported hiring or trying to hire (up 3 points), but 49 percent reported few or no “qualified” applicants for the positions they were trying to fill.

Historically high percentages of owners plan to raise worker compensation, as they seek to fill open positions. Seasonally adjusted, a net 36 percent reported raising compensation (up 7 points) and a net 24 percent plan to do so in the coming months, unchanged from December. Eight percent cited labor costs as their top problem.

“Finding qualified labor continues to eclipse taxes or regulations as a top business problem. Small business owners will likely continue offering improved compensation to attract and retain qualified workers in this highly competitive labor market,” Dunkelberg concluded. “Compensation levels will hold firm unless the economy weakens substantially as owners do not want to lose the workers that they already have.”

The net percent of owners raising average selling prices rose 1 point to a net 15 percent, seasonally adjusted, continuing a measured upward trend since September. Price hikes were most frequent in retail (24 percent higher, 6 percent lower) and wholesale (20 percent higher, 8 percent lower). Seasonally adjusted, a net 24 percent plan price hikes (up 4 points).

LABOR MARKETS
New job creation jumped in January, with an average addition of 0.49 workers per firm, the highest level since March 2019, rebounding back into strong territory. Finding qualified workers remains the top issue for 26 percent reporting this as their number one problem, 1 point below August’s record high. Thirteen percent (up 2 points) reported increasing employment an average of 2.8 workers per firm and 4 percent (unchanged) reported reducing employment an average of 2.8 workers per firm (seasonally adjusted). Fifty-six percent reported hiring or trying to hire (up 3 points), but 49 percent reported few or no “qualified” applicants for the positions they were trying to fill.

A seasonally-adjusted net 19 percent plan to create new jobs, unchanged. Not seasonally adjusted, 24 percent plan to increase total employment at their firm (up 5 points), and 3 percent plan reductions (down 2 points). Thirty percent have openings for skilled workers (up 3 points) and 14 percent have openings for unskilled labor (up 1 points). Twenty-nine percent of owners reported few qualified applicants for their open positions (up 1 point) and 20 percent reported none (down 2 points). Attempting to fill open positions, historically high percentages of owners plan to raise worker compensation. Seasonally adjusted, a net 36 percent reported raising compensation (up 7 points) and a net 24 percent plan to do so in the coming months, unchanged. Eight percent cited labor costs as their top problem.

CAPITAL SPENDING
Sixty-three percent reported capital outlays, unchanged from December’s reading. Of those making expenditures, 45 percent reported spending on new equipment (up 2 points), 27 percent acquired vehicles (up 2 points), and 17 percent improved or expanded facilities (down 1 point). Eight percent acquired new buildings or land for expansion (up 1 point), and 14 percent spent money for new fixtures and furniture (up 1 point). Twenty-eight percent plan capital outlays in the next few months, unchanged from December.

SALES AND INVENTORIES
A net 7 percent of all owners (seasonally adjusted) reported higher nominal sales in the past three months, down 2 points from December. The net percent of owners expecting higher real sales volumes increased 7 points to a net 23 percent of owners. Actual sales volumes are strong, and owners are a bit more certain of future sales growth.

The net percent of owners reporting inventory increases rose 4 points from December’s reading to a net 6 percent. The net percent of owners viewing current inventory stocks as “too low” increased to negative 3 percent, a one point increase from December. The net percent of owners planning to expand inventory holdings increased from December by one point to a net 4 percent, a solid number. Overall, owners feel that the prospects for growth still justify adding to inventory stocks.

COMPENSATION AND EARNINGS
Attempting to fill open positions, historically high percentages of owners plan to raise worker compensation. Seasonally adjusted, a net 36 percent reported raising compensation (up 7 points) and a net 24 percent plan to do so in the coming months, unchanged from December. Eight percent cited labor costs as their top problem. Twentysix percent of the owners selected “finding qualified labor” as their top business problem. The frequency of reports of positive profit trends rose 5 points to a net negative 3 percent reporting quarter on quarter profit improvements, reversing the decline in December. Thirty-three percent of those reporting weaker profits blamed weak sales, 27 percent blamed usual seasonal change, and 8 percent cited labor costs, 6 percent cited materials costs, and 4 percent cited price changes. For those reporting higher profits, 61 percent credited sales volumes. 17 percent credited usual seasonal change.

CREDIT MARKETS
Three percent of owners reported that all their borrowing needs were not satisfied, unchanged and near a record low. Thirty percent reported all credit needs met (up 1 point) and 54 percent said they were not interested in a loan (down 2 points). Four percent reported their last loan was harder to get than in previous attempts, up 1 point and also near a record low. One percent reported that financing was their top business problem (down 1 point). The percent of owners reporting paying a higher rate on their most recent loan was 3 percent, down 2 points. Thirty-one percent of all owners reported borrowing on a regular basis (up 2 points). The average rate paid on short maturity loans fell 40 basis points to 6.0 percent.

INFLATION
The net percent of owners raising average selling prices rose 1 point to a net 15 percent, seasonally adjusted, continuing a measured upward trend since September. Unadjusted, 7 percent (down 3 points) reported lower average selling prices and 21 percent (up 1 point) reported higher average prices. Seasonally adjusted, a net 24 percent plan price hikes (up 4 points).

COMMENTARY
The 2020 small business sector is off to a strong start, continuing the longest economic recovery on record. Small business owners are confidently filling open positions, raising wages, and investing in their business. The current environment is a sharp departure from this time last year when the political disfunction in D.C. created the longest federal government shutdown in U.S. history. About 1/3 of small business owners were negatively impacted and the residual effects of slower payments and lost revenue, for many, lasted months after it ended. But despite the shutdown, recession mumblings, tariffs, and an impeachment, 2019 was still a strong year for small businesses and with most of those issues resolved or muted, 2020 is shaping up to outpace last year. The politicians are out on the campaign trail, debating the issues and promising solutions, often unaffordable, to problems small business owners know are usually best solved through a strong, stable economy. Wages continue to improve, workforce training enhanced, and job openings are still plentiful. Only a major unexpected event can disrupt the economy in the near term, otherwise there is no reason this expansion can’t continue, benefiting small business owners, employees, and consumers.

The current Index is in the top 10 percent of all readings in the 46-year history of the survey. A great position for current small business owners and those just getting their business off and running. U.S. GDP averaged a 2.3 percent growth rate in 2019. The unemployment rate remains historically low at 3.6 percent and the labor force participation rate ticked up over the last year 0.2 points, drawing more people off the sidelines with more attractive opportunities and compensation.

The biggest risk appears to be potential global implications of the Wuhan coronavirus. The Fed has said it’s monitoring the spread of the disease and its impact on China’s economy, deciding in March whether there’s a larger impact that deserves policy action. But if just evaluating the U.S. economy, risks to slower economic growth are low in near term. Small businesses owners remain highly optimistic on continued growth as strong policy fundamentals in D.C. remain supportive of Main Street.


Employment Trends Index increased in January to 110.24
Posted: February 10, 2020 at 10:00 AM (Monday)

The Conference Board Employment Trends Index™ (ETI) increased in January, following a decline in December. The index now stands at 110.24, up from 108.84 (a downward revision) in December. The index is up 0.7 percent from a year ago.

“The Employment Trends Index increased in January, signaling solid job growth in early 2020,” said Gad Levanon, Head of The Conference Board Labor Markets Institute. “The improvement in the ETI, along with Friday’s job report and other indicators, suggest that employment growth has been accelerating after several weak quarters in 2019. The improvement in labor force participation – especially for women – and the noticeable, yet still modest, improvement in labor productivity is providing the US economy with more room to grow in 2020, despite historically tight labor markets.”

January’s increase was fueled by positive contributions from seven of the eight components. From the largest positive contributor to the smallest, these were: Initial Claims for Unemployment Insurance, the Percentage of Respondents Who Say They Find “Jobs Hard to Get,” the Percentage of Firms With Positions Not Able to Fill Right Now, the Ratio of Involuntarily Part-time to All Part-time Workers, Real Manufacturing and Trade Sales, Job Openings, and Industrial Production.


Consumer Credit Increased at an annual rate of 6.25% in December
Posted: February 7, 2020 at 03:00 PM (Friday)

In 2019, consumer credit increased 4-3/4 percent, with revolving and nonrevolving credit increasing 4-1/4 percent and 4-3/4 percent, respectively. Consumer credit increased at a seasonally adjusted annual rate of 5 percent in the fourth quarter and at a rate of 6-1/4 percent in December.


Wholesale Inventories down 0.2% in December 2019
Posted: February 7, 2020 at 10:00 AM (Friday)

December 2019 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading day differences but not for price changes, were $494.4 billion, down 0.7 percent (±0.4 percent) from the revised November level, but were up 0.5 percent (±1.1 percent)* from the revised December 2018 level. The October 2019 to November 2019 percent change was revised from the preliminary estimate of up 1.5 percent (±0.5 percent) to up 0.9 percent (±0.5 percent).

Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $674.5 billion at the end of December, down 0.2 percent (±0.4 percent)* from the revised November level. Total inventories were up 2.1 percent (±1.1 percent) from the revised December 2018 level. The November 2019 to December 2019 percent change was revised from the advance estimate of down 0.1 percent (±0.4 percent)* to down 0.2 percent (±0.4 percent)*.

The December Inventories/Sales Ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.36. The December 2018 ratio was 1.34.


January Employment increased by 225,000
Unemployment Rate up to 3.6%

Posted: February 7, 2020 at 08:30 AM (Friday)

Total nonfarm payroll employment rose by 225,000 in January, and the unemployment rate was little changed at 3.6 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in construction, in health care, and in transportation and warehousing.

This news release presents statistics from two monthly surveys. The household survey measures labor force status, including unemployment, by demographic characteristics. The establishment survey measures nonfarm employment, hours, and earnings by industry. For more information about the concepts and statistical methodology used in these two surveys, see the Technical Note.

Household Survey Data
Both the unemployment rate, at 3.6 percent, and the number of unemployed persons, at 5.9 million, changed little in January. (See table A-1. For information about annual population adjustments to the household survey estimates, see the note at the end of the news release and tables B and C.)

Among the major worker groups, the unemployment rates for adult men (3.3 percent), adult women (3.2 percent), teenagers (12.2 percent), Whites (3.1 percent), Blacks (6.0 percent), Asians (3.0 percent), and Hispanics (4.3 percent) showed little or no change over the month.

Among the unemployed, the number of reentrants to the labor force increased by 183,000 in January to 1.8 million but was little changed over the year. (Reentrants are persons who previously worked but were not in the labor force prior to beginning their job search.)

The number of long-term unemployed (those jobless for 27 weeks or more), at 1.2 million, was unchanged in January. These individuals accounted for 19.9 percent of the unemployed.

After accounting for the annual adjustments to the population controls, the civilian labor force rose by 574,000 in January, and the labor force participation rate edged up by 0.2 percentage point to 63.4 percent. The employment-population ratio, at 61.2 percent, changed little over the month but was up by 0.5 percentage point over the year. (See table A-1. For additional information about the effects of the population adjustments, see table C.)

The number of persons employed part time for economic reasons, at 4.2 million, was essentially unchanged in January. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.

The number of persons marginally attached to the labor force, at 1.3 million, changed little in January. These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey for a variety of reasons, such as belief that no jobs are available for them (referred to as discouraged workers), school attendance, or family responsibilities. Discouraged workers numbered 337,000 in January, little changed over the month.

Establishment Survey Data
Total nonfarm payroll employment increased by 225,000 in January, compared with an average monthly gain of 175,000 in 2019. Notable job gains occurred in construction, in health care, and in transportation and warehousing. (See table B-1. For information about the annual benchmark process, see the note at the end of the news release and table A.)

In January, construction employment rose by 44,000. Most of the gain occurred in specialty trade contractors, with increases in both the residential (+18,000) and nonresidential (+17,000) components. Construction added an average of 12,000 jobs per month in 2019.

Health care added 36,000 jobs in January, with gains in ambulatory health care services (+23,000) and hospitals (+10,000). Health care has added 361,000 jobs over the past 12 months.

Employment in transportation and warehousing increased by 28,000 in January. Job gains occurred in couriers and messengers (+14,000) and in warehousing and storage (+6,000). Over the year, employment in transportation and warehousing has increased by 106,000.

Employment in leisure and hospitality continued to trend up in January (+36,000). Over the past 6 months, the industry has added 288,000 jobs.

Employment continued on an upward trend in professional and business services in January (+21,000), increasing by 390,000 over the past 12 months.

Manufacturing employment changed little in January (-12,000) and has shown little movement, on net, over the past 12 months. Motor vehicles and parts lost 11,000 jobs over the month.

Employment in other major industries, including mining, wholesale trade, retail trade, information, financial activities, and government, changed little over the month.

In January, average hourly earnings for all employees on private nonfarm payrolls rose by 7 cents to $28.44. Over the past 12 months, average hourly earnings have increased by 3.1 percent. Average hourly earnings of private-sector production and nonsupervisory employees were $23.87 in January, little changed over the month (+3 cents).

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.3 hours in January. In manufacturing, the average workweek remained at 40.4 hours, while overtime edged down 0.1 hour to 3.1 hours. The average workweek of private-sector production and nonsupervisory employees edged up by 0.1 hour to 33.6 hours.

The change in total nonfarm payroll employment for November was revised up by 5,000 from +256,000 to +261,000, and the change for December was revised up by 2,000 from +145,000 to +147,000. With these revisions, employment gains in November and December combined were 7,000 higher than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors. The annual benchmark process also contributed to the November and December revisions.) After revisions, job gains have averaged 211,000 over the last 3 months.


Weekly Initial Unemployment Claims Decrease 15,000 to 202,000
Posted: February 6, 2020 at 08:30 AM (Thursday)

In the week ending February 1, the advance figure for seasonally adjusted initial claims was 202,000, a decrease of 15,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 216,000 to 217,000. The 4-week moving average was 211,750, a decrease of 3,000 from the previous week's revised average. The previous week's average was revised up by 250 from 214,500 to 214,750.

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending January 25, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 25 was 1,751,000, an increase of 48,000 from the previous week's unrevised level of 1,703,000. The 4-week moving average was 1,742,250, a decrease of 13,250 from the previous week's unrevised average of 1,755,500.


4Q2019 Productivity Growth Increased 1.4%
Posted: February 6, 2020 at 08:30 AM (Thursday)

Nonfarm business sector labor productivity increased 1.4 percent in the fourth quarter of 2019, the U.S. Bureau of Labor Statistics reported today, as output increased 2.5 percent and hours worked increased 1.1 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the fourth quarter of 2018 to the fourth quarter of 2019, productivity increased 1.8 percent, reflecting a 2.7-percent increase in output and a 0.9-percent increase in hours worked.

Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked by all persons, including employees, proprietors, and unpaid family workers.

Unit labor costs in the nonfarm business sector increased 1.4 percent in the fourth quarter of 2019 as hourly compensation grew at a faster rate (2.8 percent) than productivity (1.4 percent). Unit labor costs increased 2.4 percent over the last four quarters.

BLS calculates unit labor costs as the ratio of hourly compensation to labor productivity. Increases in hourly compensation tend to increase unit labor costs, and increases in output per hour tend to reduce them.

Manufacturing sector labor productivity decreased 1.2 percent in the fourth quarter of 2019, as output decreased 1.0 percent and hours worked increased 0.2 percent. Total manufacturing sector productivity declined 0.7 percent over the last four quarters, as output decreased 1.2 percent and hours worked decreased 0.5 percent. Productivity decreased 0.8 percent in the durable manufacturing sector in the fourth quarter of 2019, reflecting a 1.6-percent decrease in output and a0.8-percent decrease in hours worked. Productivity decreased 2.2 percent in the nondurable manufacturing sector, as output decreased 0.4 percent and hours worked increased 1.9 percent. Unit labor costs in the total manufacturing sector increased 5.9 percent in the fourth quarter of 2019, and increased 5.3 percent from the same quarter a year ago.

The concepts, sources, and methods used for the manufacturing output series differ from those used in the business and nonfarm business output series; these output measures are not directly comparable. See the Technical Notes for a more detailed explanation.

Revised measures
Revised and previously published measures for the third quarter of 2019 are shown in tables A2 and B1 and cover the following major sectors: nonfarm business, business, manufacturing, and nonfinancial corporations.

Manufacturing output and all related measures--including labor productivity--were revised historically to incorporate revised BLS annual measures of sectoral output from 1987 to 2017. Regular updates of source data from the BLS, the Bureau of Economic Analysis (BEA), and the Board of Governors of the Federal Reserve System are reflected in data for the third and fourth quarters of 2019.

In the third quarter of 2019, nonfarm business productivity decreased 0.2 percent, the same rate as previously reported. Unit labor costs in the nonfarm business sector increased 2.5 percent in the third quarter, also the same rate as previously reported.

In the manufacturing sector, productivity was revised down 0.4 percentage point, to a decrease of 0.3 percent. Manufacturing unit labor costs increased 3.3 percent, a 0.3-percentage point upward revision from the previous estimate.

In the nonfinancial corporate sector, productivity was revised down 0.6 percentage point in the third quarter of 2019, to an increase of 2.4 percent. This downward revision to productivity is the result of a 0.6-percentage point downward revision to output; hours worked increased 0.6 percent as previously reported.

Annual averages
Table C1 presents annual average changes for the most recent 5 years for the nonfarm business sector and the total manufacturing sector. Nonfarm business sector productivity grew 1.7 percent in 2019, as output increased 2.7 percent and hours worked increased 1.0 percent. The 1.7-percent increase in nonfarm business labor productivity is the largest annual increase since 2010, when it increased 3.4 percent. The 1.0-percent increase in hours worked is the smallest increase in the annual series since 2010 (-0.1 percent). The average annual rate of nonfarm business sector productivity growth from 2007 to 2019--corresponding to the current business cycle--is 1.3 percent, which is below the long-term rate from 1947 to 2019 of 2.1 percent.

Unit labor costs in the nonfarm business sector increased 2.0 percent in 2019, reflecting increases of 3.8 percent in hourly compensation and 1.7 percent in productivity. Real hourly compensation, which takes into account changes in consumer prices, increased 1.9 percent in 2019.

In the manufacturing sector, the annual average changes in labor productivity, output, and hours worked were all 0.0 percent in 2019. The average annual rate of manufacturing productivity growth from 2007 to 2019 is 0.4 percent, well below the long-term rate from 1987 to 2019 of 2.5 percent. Unit labor costs increased 3.8 percent in 2019.


Challenger Layoffs announced 67,735 cuts in January
Posted: February 6, 2020 at 07:30 AM (Thursday)

Job cuts announced by U.S.-based employers jumped 106%, from December’s total of 32,843 to 67,735, the highest monthly total since February 2019, according to a report released Thursday from global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc.

Last month’s total is 27.8% higher than the 52,988 cuts announced in the same month last year. It is the highest total since February 2019, when employers announced 76,835 cuts.

Technology companies led in announced job cuts last month with 13,869, 1,828.9% higher than the 719 cuts announced in that sector in December 2019 and 2,073.4% higher than the 638 cuts from Technology firms announced in the same month last year. Technology companies cut 64,166 jobs in 2019, compared to 14,230 in 2018.

“We have seen large Technology companies shed workers as they pivot to new products or services. In some cases, long-standing, bellwether companies are reducing bureaucracy and removing layers of management to become nimbler,” said Andrew Challenger, Vice President of Challenger, Gray & Christmas, Inc.

“Tech is not the only industry embarking on this kind of restructuring. Companies across all industries are reexamining their hierarchies, particularly in Automotive and Retail, where innovations in technology are changing the landscape,” he added.

In fact, Retail announced the second-highest number of cuts, with 10,444, many due to bankruptcies. Of the 3,852 bankruptcy cuts last month, 2,631 were in Retail. Another 6,924 cuts in the sector were due to store closings.

Industrial Goods Manufacturers continue to shed workers, announcing 6,098 cuts in January, 1,740 of which cited the causes as market conditions and financial losses. Companies in this sector announced 70,894 cuts last year.

“Industrial Manufacturing continues to be in recession. This industry has been hit hard by slowing orders, lower corporate investments, and trade concerns over the last 12 months,” said Challenger.
The Automotive sector has felt the impact of trade concerns, technological innovations, and cutting bureaucracy as well. Automotive companies announced 5,437 cuts in January, after cutting 50,776 in all of 2019.

The Media, which announced 25,675 cuts between January 2018 and December 2019, announced 794 cuts in January, the highest monthly total since May 2019, when the industry announced 1,120 job cuts.

Companies cited restructuring for 22,424 job cuts last month. Plant or location closings accounted for 18,943. Financial losses were cited for 2,900 cuts, while market conditions caused 1,155. Tariffs were cited for 108 cuts, and the steel and coal downturns accounted for a combined 482.


ISM Non-Manufacturing Index rose to 55.5% in January
Posted: February 5, 2020 at 10:00 AM (Wednesday)

Economic activity in the non-manufacturing sector grew in January for the 120th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Non-Manufacturing Business Survey Committee: “The NMI® registered 55.5 percent, which is 0.6 percentage point higher than the seasonally adjusted December reading of 54.9 percent. This represents continued growth in the non-manufacturing sector, at a slightly faster rate. The Non-Manufacturing Business Activity Index increased to 60.9 percent, 3.9 percentage points higher than the seasonally adjusted December reading of 57.0 percent, reflecting growth for the 126th consecutive month. The New Orders Index registered 56.2 percent; 0.9 percentage point higher than the seasonally adjusted reading of 55.3 percent in December. The Employment Index decreased 1.7 percentage points in January to 53.1 percent from the seasonally adjusted December reading of 54.8 percent. The Prices Index of 55.5 is 3.8 percentage points lower than the seasonally adjusted December reading of 59.3 percent, indicating that prices increased in January for the 32nd consecutive month. According to the NMI®, 12 non-manufacturing industries reported growth. The non-manufacturing sector exhibited continued growth in January. The respondents remain mostly positive about business conditions and the overall economy. Respondents continue to have difficulty with labor resources.”

The 12 non-manufacturing industries reporting growth in January — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Health Care & Social Assistance; Educational Services; Utilities; Accommodation & Food Services; Finance & Insurance; Retail Trade; Construction; Public Administration; Information; and Professional, Scientific & Technical Services. The six industries reporting a decrease in January — listed in order — are: Transportation & Warehousing; Wholesale Trade; Other Services; Arts, Entertainment & Recreation; Mining; and Real Estate, Rental & Leasing.


Goods and Services Deficit Increased in December 2019
Posted: February 5, 2020 at 08:30 AM (Wednesday)

The nation's international trade deficit in goods and services increased to $48.9 billion in December from $43.7 billion in November (revised), as imports increased more than exports. The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $48.9 billion in December, up $5.2 billion from $43.7 billion in November, revised.

Exports, Imports, and Balance
December exports were $209.6 billion, $1.6 billion more than November exports. December imports were $258.5 billion, $6.8 billion more than November imports. The December increase in the goods and services deficit reflected an increase in the goods deficit of $5.1 billion to $69.7 billion and a decrease in the services surplus of $0.1 billion to $20.8 billion. For 2019, the goods and services deficit decreased $10.9 billion, or 1.7 percent, from 2018. Exports decreased $1.5 billion or 0.1 percent. Imports decreased $12.5 billion or 0.4 percent.

Three-Month Moving Averages
The average goods and services deficit decreased $0.9 billion to $46.6 billion for the three months ending in December.
• Average exports increased $0.9 billion to $208.2 billion in December.
• Average imports decreased less than $0.1 billion to $254.8 billion in December.

Year-over-year, the average goods and services deficit decreased $10.4 billion from the three months ending in December 2018.
• Average exports increased $0.2 billion from December 2018.
• Average imports decreased $10.2 billion from December 2018.


ADP National Employment Report increased by 291,000 jobs in January
Posted: February 5, 2020 at 08:15 AM (Wednesday)

Private sector employment increased by 291,000 jobs from December to January according to the January ADP National Employment Report®.

“The labor market experienced expanded payrolls in January,” said Ahu Yildirmaz, vice president and cohead of the ADP Research Institute. “Goods producers added jobs, particularly in construction and manufacturing, while service providers experienced a large gain, led by leisure and hospitality. Job creation was strong among midsized companies, though small companies enjoyed the strongest performance in the last 18 months.”

Mark Zandi, chief economist of Moody’s Analytics, said, “Mild winter weather provided a significant boost to the January employment gain. The leisure and hospitality and construction industries in particular experienced an outsized increase in jobs. Abstracting from the vagaries of the data underlying job growth is close to 125,000 per month, which is consistent with low and stable unemployment.”


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: February 5, 2020 at 07:00 AM (Wednesday)

Mortgage applications increased 5.0 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending January 31, 2020. The previous week's results included an adjustment for the Martin Luther King Jr. holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 5.0 percent on a seasonally adjusted basis from one week earlier to its highest level since May 2013. On an unadjusted basis, the Index increased 20 percent compared with the previous week. The Refinance Index increased 15 percent from the previous week - its highest level since June 2013 - and was 183 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 10 percent from one week earlier. The unadjusted Purchase Index increased 8 percent compared with the previous week and was 11 percent higher than the same week one year ago.

"The 10-year Treasury yield fell around 20 basis points over the course of last week, driven mainly by growing concerns over a likely slowdown in Chinese economic growth from the spread of the coronavirus. This drove mortgage rates lower, with the 30-year fixed rate decreasing for the fifth time in six weeks to 3.71 percent, its lowest level since October 2016," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Refinance activity jumped as a result, with an increase in the number of applications and a spike in the average loan amount, as homeowners with jumbo loans reacted more resoundingly to lower rates."

Added Kan, "Prospective buyers weren't as responsive to the decline in mortgage rates - likely because of suppressed supply levels. Purchase applications took a step back, but still remained 11 percent higher than a year ago."

The refinance share of mortgage activity increased to 64.5 percent of total applications from 60.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.9 percent of total applications.

The FHA share of total applications decreased to 9.6 percent from 10.7 percent the week prior. The VA share of total applications decreased to 10.2 percent from 11.7 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.71 percent from 3.81 percent, with points remaining unchanged at 0.28 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) decreased to 3.70 percent from 3.78 percent, with points decreasing to 0.19 from 0.20 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.80 percent from 3.82 percent, with points decreasing to 0.26 from 0.27 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.19 percent from 3.24 percent, with points increasing to 0.23 from 0.22 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs increased to 3.23 percent from 3.15 percent, with points increasing to 0.15 from 0.12 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


New orders for manufactured goods increased 2.4% in December
Posted: February 4, 2020 at 10:00 AM (Tuesday)

New Orders
New orders for manufactured durable goods in December increased $5.7 billion or 2.4 percent to $245.5 billion, the U.S. Census Bureau announced today. This increase, up two of the last three months, followed a 3.1 percent November decrease. Excluding transportation, new orders decreased 0.1 percent. Excluding defense, new orders decreased 2.5 percent. Transportation equipment, up following three consecutive monthly decreases, drove the increase, $5.9 billion or 7.6 percent to $82.9 billion.

Shipments
Shipments of manufactured durable goods in December, down six consecutive months, decreased $0.5 billion or 0.2 percent to $250.4 billion. This followed a 0.1 percent November decrease. Transportation equipment, also down six consecutive months, led the decrease, $0.4 billion or 0.4 percent to $83.2 billion.

Unfilled Orders
Unfilled orders for manufactured durable goods in December, down three of the last four months, decreased $0.8 billion or 0.1 percent to $1,156.0 billion. This followed a 0.6 percent November decrease. Machinery, down fourteen consecutive months, led the decrease, $0.5 billion or 0.5 percent to $101.6 billion.

Inventories
Inventories of manufactured durable goods in December, up seventeen of the last eighteen months, increased $2.2 billion or 0.5 percent to $436.0 billion. This followed a 0.4 percent November increase. Transportation equipment, also up seventeen of the last eighteen months, led the increase, $1.7 billion or 1.2 percent to $151.2 billion.

Capital Goods
Nondefense new orders for capital goods in December decreased $4.5 billion or 6.5 percent to $64.5 billion. Shipments increased $0.4 billion or 0.5 percent to $74.8 billion. Unfilled orders decreased $10.3 billion or 1.5 percent to $671.6 billion. Inventories increased $2.2 billion or 1.1 percent to $199.2 billion. Defense new orders for capital goods in December increased $9.1 billion or 90.2 percent to $19.2 billion. Shipments decreased $0.3 billion or 2.5 percent to $12.4 billion. Unfilled orders increased $6.8 billion or 4.3 percent to $165.0 billion. Inventories decreased $0.3 billion or 1.3 percent to $24.0 billion.

Revised November Data
Revised seasonally adjusted November figures for all manufacturing industries were: new orders, $490.6 billion (revised from $493.0 billion); shipments, $501.7 billion (revised from $502.2 billion); unfilled orders, $1,156.7 billion (revised from $1,158.7 billion) and total inventories, $701.1 billion (revised from $701.0 billion).


Paychex-IHS Small Business Jobs Index up to 98.18 in January
Posted: February 4, 2020 at 08:30 AM (Tuesday)

The Paychex | IHS Markit Small Business Employment Watch shows renewed stability in employment growth and continuous increases in weekly earnings growth over the past quarter.

The latest Paychex | IHS Markit Small Business Employment Watch reflects a continuation of the tight labor market to start 2020. Weekly earnings growth improved for the 13th consecutive month, reaching 3.59 percent in January. Weekly hours worked were up 0.83 percent from last year, contributing to the growth in weekly earnings. The pace of small business employment growth remains consistent, with the national jobs index increasing slightly (0.01 percent) in January to 98.18.

“The national index has been flat since mid-year 2019, signaling a continued tight labor market for small businesses,” said James Diffley, chief regional economist at IHS Markit.

“With election season heating up and the economy top of mind for business owners, this month’s Small Business Employment Watch demonstrates the continuing stability of jobs growth recently, as well as weekly earnings improvement,” said Martin Mucci, Paychex president and CEO. “The data shows consistent employment growth and yet another month of encouraging wage growth, two key indicators that the economy is off to a solid start in 2020.”

Broken down further, the January report showed:

- The South continues to top regions for small business employment growth; the West remains the leading region for hourly earnings growth.
- Tennessee ranks first among states in small business job growth; New York leads in hourly earnings growth.
- Phoenix became the top metro for small business job growth; San Francisco leads metros in hourly earnings growth.
- At 5.12 percent, Leisure and Hospitality leads hourly earnings growth among industry sectors.


New York Purchasing Managers Business Activity rose to 45.8 in January
Posted: February 4, 2020 at 08:30 AM (Tuesday)

In January, New York City purchasing managers reported Current Business Conditions that - while improved - still failed to reach the breakeven point, according to the survey taken by the Institute for Supply Management-New York.

New York Metro
Current Business Conditions rose from the 3.5-year low of 39.1 reported in December to reach 45.8 in January, an improvement of 6.7 points, but not enough to reach the breakeven point of 50.0. The Six-Month Outlook fell to a 3-month low of 57.3 in January, down after three straight months of increases approaching the 64.2 reported in December. The six-month outlook has been a reliable short-run guide for current business conditions over time.

Company Specific
Employment, a seasonally adjusted index, gave back 4.7 of the 14.3-point gain reported in December (60.8), falling to 56.1 in January. Quantity of Purchases continued to edge downward, reaching a 4-month low of 43.1 in January, down from 44.4 in December.

In January, top line and forward revenue guidance once again moved in opposite directions. Current Revenues fell for the second month in a row, reaching a 4-month low of 41.4 in January, down from 52.8 in December. Expected Revenues rose for the second month in a row, rising 14.3 points to 64.3 in January, up from the breakeven point of 50.0 in December. Expected Revenues was the biggest mover in this month's report. Prices Paid rose after three months of decreases, reaching a 4-month high of 68.1, up from 59.4 last month.


Construction Spending decreased 0.2% in December 2019
Posted: February 3, 2020 at 10:00 AM (Monday)

Total Construction
Construction spending during December 2019 was estimated at a seasonally adjusted annual rate of $1,327.7 billion, 0.2 percent (± 0.8 percent)* below the revised November estimate of $1,329.9 billion. The December figure is 5.0 percent (±1.3 percent) above the December 2018 estimate of $1,264.8 billion. The value of construction in 2019 was $1,303.5 billion, 0.3 percent (±1.0 percent)* below the $1,307.2 billion spent in 2018.

Private Construction
Spending on private construction was at a seasonally adjusted annual rate of $991.2 billion, 0.1 percent (±0.5 percent)* below the revised November estimate of $992.2 billion. Residential construction was at a seasonally adjusted annual rate of $540.7 billion in December, 1.4 percent (±1.3 percent) above the revised November estimate of $533.3 billion. Nonresidential construction was at a seasonally adjusted annual rate of $450.5 billion in December, 1.8 percent (±0.5 percent) below the revised November estimate of $458.9 billion.

The value of private construction in 2019 was $974.7 billion, 2.5 percent (±1.0 percent) below the $1,000.2 billion spent in 2018. Residential construction in 2019 was $514.3 billion, 4.7 percent (±2.1 percent) below the 2018 figure of $539.6 billion and nonresidential construction was $460.4 billion, virtually unchanged from (±1.0 percent)* the $460.5 billion in 2018.


ISM Manufacturing Index Decreased to 50.9% in January
Posted: February 3, 2020 at 10:00 AM (Monday)

Economic activity in the manufacturing sector grew in January, and the overall economy grew for the 129th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee: “The January PMI® registered 50.9 percent, an increase of 3.1 percentage points from the seasonally adjusted December reading of 47.8 percent. The New Orders Index registered 52 percent, an increase of 4.4 percentage points from the seasonally adjusted December reading of 47.6 percent. The Production Index registered 54.3 percent, up 9.5 percentage points compared to the seasonally adjusted December reading of 44.8 percent. The Backlog of Orders Index registered 45.7 percent, up 2.4 percentage points compared to the December reading of 43.3 percent. The Employment Index registered 46.6 percent, a 1.4-percentage point increase from the seasonally adjusted December reading of 45.2 percent. The Supplier Deliveries Index registered 52.9 percent, a 1.7-percentage point decrease from the December reading of 54.6 percent. The Inventories Index registered 48.8 percent, a decrease of 0.4 percentage point from the seasonally adjusted December reading of 49.2 percent. The Prices Index registered 53.3 percent, a 1.6-percentage point increase from the December reading of 51.7 percent. The New Export Orders Index registered 53.3 percent, a 6-percentage point increase from the December reading of 47.3 percent. The Imports Index registered 51.3 percent, a 2.5-percentage point increase from the December reading of 48.8 percent.

“Comments from the panel were positive, with sentiment improving compared to December. The PMI® returned to expansion territory for the first time since July 2019. Demand expanded, with (1) the New Orders Index growing at a moderate rate supported by new export order expansion, (2) the Customers’ Inventories Index remaining at ‘too low’ status and (3) the Backlog of Orders Index contracting for the ninth month, but at a slower rate. Consumption (measured by the Production and Employment Indexes) expanded to respond to new order intake, contributing positively (a combined 10.9-percentage point increase) to the PMI® calculation. Inputs — expressed as supplier deliveries, inventories and imports — weakened in January, due primarily to increasing contraction in inventories while supplier deliveries remained in expansion territory, but at a modest rate. Imports expansion returned, but also at a moderate rate. Inputs contributed negatively to the PMI® calculation, a reversal from the previous month. Prices increased for the second month, a positive for 2020.

“Global trade remains a cross-industry issue, but many respondents were positive for the first time in several months. Among the six big industry sectors, Food, Beverage & Tobacco Products remains the strongest, followed closely by Computer & Electronic Products. Petroleum & Coal Products is the weakest. Overall, sentiment this month is moderately positive regarding near-term growth,” says Fiore.

Of the 18 manufacturing industries, eight reported growth in January — listed in order — are: Furniture & Related Products; Wood Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Miscellaneous Manufacturing; Nonmetallic Mineral Products; Chemical Products; and Fabricated Metal Products. The eight industries reporting contraction in January — listed in order — are: Printing & Related Support Activities; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Textile Mills; Transportation Equipment; Primary Metals; and Machinery.


University of Michigan Consumer Confidence increased in December to 99.8
Posted: January 31, 2020 at 10:00 AM (Friday)

Consumer sentiment remained at very positive levels, with the January reading of 99.8 insignificantly below the cyclical peak of 101.4, according to the University of Michigan Surveys of Consumers.

The maintenance of consumer sentiment near cyclical peak levels is surprising given the overall slow pace of economic growth, which was accompanied in January by renewed military engagements in the Mideast, an impeachment trial in the Senate, and a fast spreading coronavirus, said U-M economist Richard Curtin, director of the surveys.

The resilience of consumers is remarkable and due to record low unemployment, record gains in income and wealth, as well as near-record lows in inflation and interest rates, he said. The data currently indicate that consumer spending will keep the economy expanding during the year ahead, although at a moderate pace.

“The most surprising finding in January was the degree of resiliency displayed by consumers in the face of a variety of events that in the past have prompted at least a rise in uncertainty if not outright pessimism,” Curtin said. “These concerns were offset by the favorable assessments of household income and wealth, which matched prior peaks in 2000 and 1966.

“Resilience in the face of recent events is unlike confronting potential shifts in basic economic policies. As the presidential primaries get underway, consumers may confront fundamental changes in tax and spending programs that could reshape the financial prospects for most American households.”

Continued Strength in Personal Finances
Consumers continued to favorably assess recent changes in their personal finances. Improving finances were reported by 53% of all consumers in January, exactly equal to the 2018 and 2019 averages—the highest two years in the past half century. Combined net changes in income and household wealth were cited in 40% of all mentions in January, comparable to the 1966 and 2000 peaks. Just 7% of all households expected their financial situation to worsen in 2020; the all-time low was 3% recorded exactly 20 years ago in January 2000.

Strengthening Economy Expected to Boost Labor Market
Consumers were more likely to expect an uptick in the pace of economic growth during 2020. Six-in-10 consumers thought the economy had already improved, well above last January’s 43%. Just over half of all consumers anticipated good times financially in the economy during the year ahead, and half expected the expansion to continue uninterrupted over the longer term. The improved pace of economic growth meant that nearly 80% of consumers anticipated that the national unemployment rate would be no higher by the end of 2020.

Consumer Sentiment Index
The Consumer Sentiment Index rose to 99.8 in January 2020, just ahead of last month’s 99.3 and significantly above last January’s 91.2. The Expectations Index rose to 90.5 in January, up from 88.9 in December and well above last January’s 79.9. Only one survey in the past three years was slightly higher, at 93.5 in May 2019. The Current Conditions Index slipped to 114.4 in January, down from 115.5 in December, but it remained above last year’s 108.8.

Consumer sentiment remained at very positive levels, with the January reading of 99.8 insignificantly below the cyclical peak of 101.4. The maintenance of consumer sentiment near cyclical peak levels is surprising given the overall slow pace of economic growth, which was accompanied in January by renewed military engagements in the Mideast, an impeachment trial in the Senate, and a fast spreading coronavirus. The resilience of consumers is remarkable and due to record low unemployment, record gains in income and wealth, as well as near record lows in inflation and interest rates. Gains in personal finances were reported by 53% of all consumers in January, exactly equal to the 2018 and 2019 averages--the highest two years in the past half century. Combined net changes in household income and wealth were cited in 40% of all mentions in January, comparable to the 1966 and 2000 peaks (see the chart). The data currently point toward consumer spending maintaining positive growth in the economy as a whole. Nonetheless, as the presidential primaries begin, consumers will have to evaluate the impact on their own finances from the range of fundamental changes in tax and spending programs advocated by the various candidates.


Chicago Purchasing Managers Index down 6.0 points to 42.9 in January
Posted: January 31, 2020 at 09:45 AM (Friday)

The Chicago Business Barometer, produced with MNI, slipped to 42.9 in January, the lowest level since December 2015. After two straight months of gains, the index fell further into contraction, with the three month average falling to 45.9.

All five major components of the headline index saw a monthly decline, with Order Backlogs leading the way lower, followed by New Orders.

Demand weakened in January, highlighted by New Orders falling 6.1 points to 41.5. Production cooled by 3.8 points to 42.7, the lowest level since July 2019.

Order Backlogs slipped to a four-year low in January, showing the largest monthly fall in both points and percentage terms, leaving the index 10.1* points lower at 34.6. Since March 2019, the indicator has only recorded one reading above the 50-mark.

After December’s uptick, Inventories eased by 5.8* points to 40.2, marking the lowest level since May 2016 and the sixth consecutive sub-50 reading.

Employment remained broadly unchanged with the index decreasing by only 0.2 points to 47.0.

Supplier Deliveries edged down to 53.3 in January and it is the only one among the five major components which remains above the 50-mark.

Prices at the factory gate ticked down by 2.1* points to 56.1, registering a two-month low.

January’s special question asked, “Will the signing of the USMCA agreement improve your supplier lines?”. The majority (60%) anticipate no improvement at all, while 40% expect little changes. The second question asked, “What is your planned business activity forecast for 2020?”. The majority (50%) expect average growth to be below 5%, while 43.2% see growth between 5% and 10%. Only 6.8% project growth to be above 10%.

*Reflects individual sector rounded monthly change


Personal Income increased 0.2%, Spending increased 0.3%
Posted: January 31, 2020 at 08:30 AM (Friday)

Personal income increased $40.7 billion (0.2 percent) in December according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $30.6 billion (0.2 percent) and personal consumption expenditures (PCE) increased $46.6 billion (0.3 percent).

Real DPI decreased 0.1 percent in December and Real PCE increased 0.1 percent. The PCE price index increased 0.3 percent. Excluding food and energy, the PCE price index increased 0.2 percent.

The increase in personal income in December primarily reflected increases in compensation of employees and personal interest income that were partially offset by a decrease in farm proprietors’ income (table 3). Farm proprietors’ income decreased $36.2 billion in December, which included a decrease in subsidy payments associated with the Department of Agriculture’s Market Facilitation Program.

The $6.8 billion increase in real PCE in December reflected an increase of $2.5 billion in spending on goods and a $4.4 billion increase in spending on services. Within goods, spending on prescription drugs was the leading contributor to the increase. Within services, the largest contributor to the increase was spending on health care. Detailed information on monthly real PCE spending can be found on Table 2.3.6U.

Personal outlays increased $51.5 billion in December (table 3). Personal saving was $1.28 trillion in December and the personal saving rate, personal saving as a percentage of disposable personal income, was 7.6 percent.


Employment Cost Index up 0.7% in 4Q2019
Posted: January 31, 2020 at 08:30 AM (Friday)

Compensation costs for civilian workers increased 0.7 percent, seasonally adjusted, for the 3-month period ending in December 2019, the U.S. Bureau of Labor Statistics reported today. Wages and salaries increased 0.7 percent and benefit costs increased 0.5 percent from September 2019.

Civilian Workers
Compensation costs for civilian workers increased 2.7 percent for the 12-month period ending in December 2019, compared to 2.9 percent in December 2018. Wages and salaries increased 2.9 percent over the year and increased 3.1 percent for the 12-month period ending in December 2018. Benefit costs increased 2.2 percent for the 12-month period ending in December 2019. In December 2018, the increase was 2.8 percent.

Private Industry Workers
Compensation costs for private industry workers increased 2.7 percent over the year, compared with a compensation cost increase of 3.0 percent in December 2018. Wages and salaries increased 3.0 percent for the 12-month period ending in December 2019 and increased 3.1 percent in December 2018. The cost of benefits rose 1.9 percent for the 12-month period ending in December 2019 and increased 2.6 percent in December 2018.

Employer costs for health benefits increased 2.2 percent for the 12-month period ending in December 2019. (For further information, see www.bls.gov/web/eci/echealth.pdf.)

Among private industry occupational groups, compensation cost increases for the 12-month period ending in December 2019 ranged from 2.2 percent for management, professional, and related occupations to 3.7 percent for service occupations. (See table 5.)

Among private industry supersectors, compensation cost increases for the 12-month period ending in December 2019 ranged from 1.0 percent for information to 3.5 percent for construction. (See table 5.)

State and Local Government Workers
Compensation costs for state and local government workers increased 2.9 percent for the 12-month period ending in December 2019. In December 2018, the increase was 2.6 percent. Wages and salaries increased 2.5 percent for the 12-month period ending in December 2019 and 2.4 percent a year ago. Benefit costs increased 3.3 percent for the 12-month period ending in December 2019. The prior year increase was 3.1 percent.


4Q2019 GDP advance estimate increased 2.1%
Posted: January 30, 2020 at 08:30 AM (Thursday)

Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the third quarter of 2019 (table 1), according to the "third" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.0 percent.

The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was also 2.1 percent. With the third estimate for the third quarter, upward revisions to personal consumption expenditures (PCE) and nonresidential fixed investment were offset by a downward revision to private inventory investment.

The increase in real GDP in the third quarter reflected positive contributions from PCE, federal government spending, residential investment, exports, and state and local government spending that were partly offset by negative contributions from nonresidential fixed investment and private inventory investment. Imports, which are a subtraction in the calculation of GDP, increased.

The acceleration in real GDP in the third quarter reflected a smaller decrease in private inventory investment and upturns in exports and residential fixed investment that were partly offset by decelerations in PCE, federal government spending, and state and local government spending, and a larger decrease in nonresidential fixed investment.

Real gross domestic income (GDI) increased 2.1 percent in the third quarter, compared with an increase of 0.9 percent in the second quarter. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 2.1 percent in the third quarter, compared with an increase of 1.4 percent in the second quarter.

Current‑dollar GDP increased 3.8 percent, or $202.3 billion, in the third quarter to a level of $21.54 trillion. In the second quarter, GDP increased 4.7 percent, or $241.4 billion.

The price index for gross domestic purchases increased 1.4 percent in the third quarter, compared with an increase of 2.2 percent in the second quarter (table 4). The PCE price index increased 1.5 percent, compared with an increase of 2.4 percent. Excluding food and energy prices, the PCE price index increased 2.1 percent, compared with an increase of 1.9 percent.

Updates to GDP
The percent change in real GDP in the third quarter was unrevised. Upward revisions to PCE and nonresidential fixed investment were offset by a downward revision to private inventory investment.

Corporate Profits
Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) decreased $4.7 billion in the third quarter, in contrast to an increase of $75.8 billion in the second quarter.

Profits of domestic financial corporations decreased $4.7 billion in the third quarter, in contrast to an increase of $2.5 billion in the second quarter. Profits of domestic nonfinancial corporations decreased $5.5 billion, in contrast to an increase of $34.7 billion. Rest-of-the-world profits increased $5.5 billion, compared with an increase of $38.7 billion. In the third quarter, receipts decreased $10.0 billion, and payments decreased $15.5 billion.


Weekly Initial Unemployment Claims Decrease 7,000 to 216,000
Posted: January 30, 2020 at 08:30 AM (Thursday)

In the week ending January 25, the advance figure for seasonally adjusted initial claims was 216,000, a decrease of 7,000 from the previous week's revised level. The previous week's level was revised up by 12,000 from 211,000 to 223,000. The 4-week moving average was 214,500, a decrease of 1,750 from the previous week's revised average. The previous week's average was revised up by 3,000 from 213,250 to 216,250.

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending January 18, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 18 was 1,703,000, a decrease of 44,000 from the previous week's revised level. The previous week's level was revised up 16,000 from 1,731,000 to 1,747,000. The 4-week moving average was 1,755,500, a decrease of 6,250 from the previous week's revised average. The previous week's average was revised up by 4,000 from 1,757,750 to 1,761,750.


FOMC target funds rate maintained at 1.50% - 1.75%
Posted: January 29, 2020 at 02:00 PM (Wednesday)

Information received since the Federal Open Market Committee met in December indicates that the labor market remains strong and that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although household spending has been rising at a moderate pace, business fixed investment and exports remain weak. On a 12‑month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee decided to maintain the target range for the federal funds rate at 1‑1/2 to 1-3/4 percent. The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation returning to the Committee's symmetric 2 percent objective. The Committee will continue to monitor the implications of incoming information for the economic outlook, including global developments and muted inflation pressures, as it assesses the appropriate path of the target range for the federal funds rate.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Patrick Harker; Robert S. Kaplan; Neel Kashkari; Loretta J. Mester; and Randal K. Quarles.


Pending Home Sales Index fell 4.9% in December
Posted: January 29, 2020 at 10:00 AM (Wednesday)

Pending home sales fell in December, taking a step back after increasing slightly in November, according to the National Association of Realtors®. Each of the four major regions reported a drop in month-over-month contract activity, with the South experiencing the steepest fall. However, year-over-year pending home sales activity was up nationally compared to one year ago.

The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, fell 4.9% to 103.2 in December. Year-over-year contract signings increased 4.6%. An index of 100 is equal to the level of contract activity in 2001.

“Mortgage rates are expected to hold under 4% for most of 2020, while net job creation will likely exceed two million,” said Lawrence Yun, NAR’s chief economist. While he noted that these factors are promising for the housing market, Yun cautioned that low inventory remains a significant longer-term concern.

“Due to the shortage of affordable homes, home sales growth will only rise by around 3%,” Yun predicted. “Still, national median home price growth is in no danger of falling due to inventory shortages and will rise by 4%. The new home construction market also looks brighter, with housing starts and new home sales set to rise 6% and 10%, respectively.”

Pointing to data from active listings at realtor.com®, Yun says the markets where listing prices are around $250,000 – an affordable price point in most markets nationally – are drawing some of the most significant buyer attention, including Fort Wayne, Ind., Burlington, N.C., Topeka, Kan., Pueblo, Colo., and Columbus, Ohio.

“The state of housing in 2020 will depend on whether home builders bring more affordable homes to the market,” Yun said. “Home prices and even rents are increasing too rapidly, and more inventory would help correct the problem and slow price gains.”
December Pending Home Sales Regional Breakdown

All regional indices were down in December. The Northeast PHSI slipped 4.0% to 92.4 in December, 0.1% lower than a year ago. In the Midwest, the index dropped 3.6% to 98.8 last month, 1.3% higher than in December 2018.

Pending home sales in the South decreased 5.5% to an index of 118.1 in December, a 7.4% increase from December 2018. The index in the West fell 5.4% in December 2019 to 93.1, an increase of 7.0% from a year ago.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: January 29, 2020 at 07:00 AM (Wednesday)

Mortgage applications increased 7.2 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending January 24, 2020. This week's results include an adjustment for the Martin Luther King Jr. Holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 7.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The Refinance Index increased 8 percent from the previous week and was 146 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 17 percent higher than the same week one year ago.

"Mortgage applications continued their strong start to the year, as borrowers acted on the drop in mortgage rates last week. Rates were driven lower by investors' increased concern about the economic impact from China's coronavirus outbreak, in addition to existing concerns over trade and other geopolitical risks," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "With the 30-year fixed rate at its lowest level since November 2016, refinances jumped 7.5 percent. Purchase applications grew 2 percent and were 17 percent higher than the same week last year. Thanks to low rates and the healthy job market, purchase activity continues to run stronger than in 2019."

The refinance share of mortgage activity decreased to 60.4 percent of total applications from 61.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 4.7 percent of total applications.

The FHA share of total applications decreased to 10.7 percent from 11.3 percent the week prior. The VA share of total applications decreased to 11.7 percent from 13.8 percent the week prior. The USDA share of total applications remained unchanged from 0.5 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.81 percent from 3.87 percent, with points increasing to 0.28 from 0.27 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) decreased to 3.78 percent from 3.87 percent, with points decreasing to 0.2 from 0.21 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.82 percent from 3.78 percent, with points increasing to 0.27 from 0.25 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.24 percent from 3.25 percent, with points remaining unchanged at 0.22 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.15 percent from 3.29 percent, with points decreasing to 0.12 from 0.25 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


Consumer Confidence increased in January to 131.6
Posted: January 28, 2020 at 10:00 AM (Tuesday)

The Conference Board Consumer Confidence Index® increased in January, following a moderate increase in December. The Index now stands at 131.6 (1985=100), up from 128.2 (an upward revision) in December. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – increased from 170.5 to 175.3. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – increased from 100.0 last month to 102.5 this month.

“Consumer confidence increased in January, following a moderate advance in December, driven primarily by a more positive assessment of the current job market and increased optimism about future job prospects,” said Lynn Franco, Senior Director, Economic Indicators, at The Conference Board. “Optimism about the labor market should continue to support confidence in the short-term and, as a result, consumers will continue driving growth and prevent the economy from slowing in early 2020.”

The monthly Consumer Confidence Survey®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was January 15.

Consumers’ assessment of current conditions improved in January. Those claiming business conditions are “good” increased from 39.0 percent to 40.8 percent, while those claiming business conditions are “bad” decreased, from 11.0 percent to 10.4 percent. Consumers’ appraisal of the job market also improved. Those saying jobs are “plentiful” increased from 46.5 percent to 49.0 percent, while those claiming jobs are “hard to get” declined, from 13.0 percent to 11.6 percent.

Consumers were also more optimistic about the short-term outlook. The percentage of consumers expecting business conditions will improve over the next six months was virtually unchanged at 18.8 percent, while those expecting business conditions will worsen declined from 8.8 percent to 8.4 percent.

Consumers’ outlook for the labor market was more upbeat. The proportion expecting more jobs in the months ahead increased from 15.5 percent to 17.2 percent, while those anticipating fewer jobs declined from 13.9 percent to 13.4 percent. Regarding their short-term income prospects, the percentage of consumers expecting an improvement declined from 22.7 percent to 22.0 percent, while the proportion expecting a decrease was virtually unchanged at 7.7 percent.


Richmond Fed's Current Activity Index rose from −5 to 20 in January
Posted: January 28, 2020 at 10:00 AM (Tuesday)

Fifth District manufacturing activity rebounded in January, according to the most recent survey from the Richmond Fed. The composite index rose from −5 in December to 20 in January, as all three components — shipments, new orders, and employment — increased. Local business conditions also improved as this index saw its largest increase since February 2013. Manufacturers were optimistic that conditions would continue to strengthen in the coming months.

Survey results indicate that both employment and wages rose for survey participants in January. However, firms continued to struggle to find workers with the necessary skills. They expected this difficulty to persist but wages and employment to continue to grow in the next six months.

The average growth rates of both price paid and prices received by survey respondents fell in January. Growth of prices received outpaced that of prices paid, but firms expect the growth rate of prices paid to rise and that of prices received to fall in the near future


S&P CoreLogic Case-Shiller Home Price Indices Increased 0.2% in November 2019
Posted: January 28, 2020 at 09:00 AM (Tuesday)

S&P Dow Jones Indices today released the latest results for the S&P CoreLogic Case-Shiller Indices, the leading measure of U.S. home prices. Data released today for November 2019 show that home prices continue to increase at a modest rate across the U.S.

YEAR-OVER-YEAR
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 3.5% annual gain in November, up from 3.2% in the previous month. The 10-City Composite annual increase came in at 2.0%, up from 1.7% in the previous month. The 20-City Composite posted a 2.6% year-over-year gain, up from 2.2% in the previous month.

Phoenix, Charlotte and Tampa reported the highest year-over-year gains among the 20 cities. In November, Phoenix led the way with a 5.9% year-over-year price increase, followed by Charlotte with a 5.2% increase and Tampa with a 5.0% increase. Fifteen of the 20 cities reported greater price increases in the year ending November 2019 versus the year ending October 2019.

MONTH-OVER-MONTH
The National Index posted a month-over-month increase of 0.2%, while the 10-City and 20-City Composites both posted a month-over-month increase of 0.1% before seasonal adjustment in November. After seasonal adjustment, the National Index, 10-City and 20-City Composites all posted a 0.5% increase. In November, 13 of 20 cities reported increases before seasonal adjustment while all 20 cities reported increases after seasonal adjustment.

ANALYSIS
"The U.S. housing market was stable in November,” says Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P Dow Jones Indices. “With the month’s 3.5% increase in the national composite index, home prices are currently 59% above the trough reached in February 2012, and 15% above their pre-financial crisis peak. November’s results were broad-based, with gains in every city in our 20-city composite.

“At a regional level, Phoenix retains the top spot for the sixth consecutive month, with a gain of 5.9% for November. Charlotte and Tampa rose by 5.2% and 5.0% respectively, leading the Southeast region. The Southeast has led all regions since January 2019.”

“As was the case last month, after a long period of decelerating price increases, the National, 10-city, and 20-city Composites all rose at a modestly faster rate in November than they had done in October. This increase was broad-based, reflecting data in 15 of 20 cities. It is, of course, still too soon to say whether this marks an end to the deceleration or is merely a pause in the longer-term trend.”

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, which covers all nine U.S. census divisions, recorded a 3.5% annual gain in November 2019. The 10-City and 20-City Composites reported year-over-year increases of 2.0% and 2.6%, respectively. As of November 2019, average home prices for the MSAs within the 10-City and 20-City Composites are back to their winter 2007 levels.


December New Orders for Durable Goods Increased 2.4%, Ex-Trans down 0.1%
Posted: January 28, 2020 at 08:30 AM (Tuesday)

New Orders
New orders for manufactured durable goods in December increased $5.7 billion or 2.4 percent to $245.5 billion, the U.S. Census Bureau announced today. This increase, up two of the last three months, followed a 3.1 percent November decrease. Excluding transportation, new orders decreased 0.1 percent. Excluding defense, new orders decreased 2.5 percent. Transportation equipment, up following three consecutive monthly decreases, drove the increase, $5.9 billion or 7.6 percent to $82.9 billion.

Shipments
Shipments of manufactured durable goods in December, down six consecutive months, decreased $0.5 billion or 0.2 percent to $250.4 billion. This followed a 0.1 percent November decrease. Transportation equipment, also down six consecutive months, led the decrease, $0.4 billion or 0.4 percent to $83.2 billion.

Unfilled Orders
Unfilled orders for manufactured durable goods in December, down three of the last four months,decreased $0.8 billion or 0.1 percent to $1,156.0 billion. This followed a 0.6 percent November decrease. Machinery, down fourteen consecutive months, led the decrease, $0.5 billion or 0.5 percent to $101.6 billion.

Inventories
Inventories of manufactured durable goods in December, up seventeen of the last eighteen months, increased $2.2 billion or 0.5 percent to $436.0 billion. This followed a 0.4 percent November increase. Transportation equipment, also up seventeen of the last eighteen months, led the increase, $1.7 billion or 1.2 percent to $151.2 billion.

Capital Goods
Nondefense new orders for capital goods in December decreased $4.5 billion or 6.5 percent to $64.5 billion. Shipments increased $0.4 billion or 0.5 percent to $74.8 billion. Unfilled orders decreased $10.3 billion or 1.5 percent to $671.6 billion. Inventories increased $2.2 billion or 1.1 percent to $199.2 billion. Defense new orders for capital goods in December increased $9.1 billion or 90.2 percent to $19.2 billion. Shipments decreased $0.3 billion or 2.5 percent to $12.4 billion. Unfilled orders increased $6.8 billion or 4.3 percent to $165.0 billion. Inventories decreased $0.3 billion or 1.3 percent to $24.0 billion.

Revised November Data
Revised seasonally adjusted November figures for all manufacturing industries were: new orders, $490.6 billion (revised from $493.0 billion); shipments, $501.7 billion (revised from $502.2 billion); unfilled orders, $1,156.7 billion (revised from $1,158.7 billion) and total inventories, $701.1 billion (revised from $701.0 billion).


Texas Fed Manufacturing Activity Accelerated in January
Posted: January 27, 2020 at 10:30 AM (Monday)

Growth in Texas factory activity accelerated in January, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose seven points to 10.5, suggesting stronger output growth than last month.

Other measures of manufacturing activity also pointed to an acceleration in January. The new orders index shot up 16 points to 17.6, its highest reading in 15 months. The growth rate of orders index returned to positive territory, rising from -5.0 to 6.1. The capacity utilization and shipments indexes pushed further positive, coming in at 11.5 and 8.6, respectively.

Perceptions of broader business conditions were largely unchanged in January. The general business activity index came in at zero, with three-fourths of respondents noting no change this month and the rest split between improved and worsened activity. The January company outlook index reading was 1.9, with 78 percent of respondents noting no change in their outlooks. The index measuring uncertainty regarding companies’ outlooks edged down further to 2.7, a 20-month low.

Labor market measures suggested slower employment growth and no change in workweek length this month. The employment index retreated from 6.2 to 1.9, indicative of an abatement in hiring. Sixteen percent of firms noted net hiring, while 14 percent noted net layoffs. The hours worked index came in at zero.

Price pressures eased in January, while wage pressures inched up. The raw materials prices index declined five points to 9.5, a reading well below average. The finished goods prices index slipped into negative territory at -1.9, though the near-zero reading suggests no meaningful change in selling prices. The wages and benefits index ticked up to 16.3.

Expectations regarding future business conditions were slightly more optimistic in January. The indexes of future general business activity and future company outlook edged up to 7.6 and 15.6, respectively. Most other indexes for future manufacturing activity also pushed a bit further into positive territory.


New Home Sales in December 2019 at annual rate of 694,000
Posted: January 27, 2020 at 10:09 AM (Monday)

New Home Sales
Sales of new single‐family houses in December 2019 were at a seasonally adjusted annual rate of 694,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 0.4 percent (±15.1 percent)* below the revised November rate of 697,000, but is 23.0 percent (±20.0 percent) above the December 2018 estimate of 564,000. An estimated 681,000 new homes were sold in 2019. This is 10.3 percent (±6.4 percent) above the 2018 figure of 617,000.

Sales Price
The median sales price of new houses sold in December 2019 was $331,400. The average sales price was $384,500.

For Sale Inventory and Months’ Supply
The seasonally‐adjusted estimate of new houses for sale at the end of December was 327,000. This represents a supply of 5.7 months at the current sales rate.


Kansas City Fed Manufacturing Activity was nearly flat in January
Posted: January 23, 2020 at 11:00 AM (Thursday)

Tenth District manufacturing activity was nearly flat in January while expectations for future activity expanded. The month-over-month prices for raw materials increased, while prices for finished products declined from a month ago. District firms continued to expect higher prices in the next 6 months.

Factory Activity Nearly Flat in January The month-over-month composite index was -1 in January, slightly higher than -5 in December and -2 in November. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The slight decrease in district manufacturing activity was driven by declines in: nonmetallic mineral products, primary metal, fabricated metal products, computer and electronic products, beverage and tobacco products, and printing manufacturing, while several other industries improved. Most month-over-month indexes remained slightly negative in January, and inventories continued to decline. However, the month-over-month employment index rose back into positive territory for the first time in over six months and the supplier delivery time index was also slightly positive. Year-over-year factory indexes dropped further in January, and the composite decreased from -4 to -7. On the other hand, the future composite index grew from 9 to 14 in January.

Special Questions
This month contacts were asked special questions about the labor market. Over 62 percent of District manufacturing contacts reported workers were in short supply, down slightly from July 2019 when more than 77 percent of District firms reported workers were in short supply. Nearly 54 percent of firms reported they were raising wages more than normal to attract or keep workers in January 2020, compared to over 61 percent of firms that reported having to raise wages more than normal in July 2019.


U.S. Leading Economic Index declined 0.3% in December
Posted: January 23, 2020 at 10:00 AM (Thursday)

The Conference Board Leading Economic Index® (LEI)for the U.S. declined 0.3 percent in December to 111.2 (2016 = 100), following a 0.1 percent increase in November, and a 0.2 percent decline in October.

“The US LEI declined slightly in December, driven by large negative contributions from rising unemployment insurance claims and a drop in housing permits,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “The LEI has now declined in four out of the last five months. Its six-month growth rate turned slightly more negative in the final quarter of 2019, with the manufacturing indicators pointing to continued weakness in the sector. However, financial conditions and consumers’ outlook for the economy remain positive, which should support growth of about 2 percent through early 2020.”

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.1 percent in December to 107.2 (2016 = 100), following a 0.3 percent increase in November, and a 0.1 percent decline in October.

The Conference Board Lagging Economic Index® (LAG) for the U.S. declined 0.1 percent in December to 108.8 (2016 = 100), following a 0.4 percent increase in November, and a 0.2 percent increase in October.


Weekly Initial Unemployment Claims Increase 6,000 to 211,000
Posted: January 23, 2020 at 08:30 AM (Thursday)

In the week ending January 18, the advance figure for seasonally adjusted initial claims was 211,000, an increase of 6,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 204,000 to 205,000. The 4-week moving average was 213,250, a decrease of 3,250 from the previous week's revised average. The previous week's average was revised up by 250 from 216,250 to 216,500.

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending January 11, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 11 was 1,731,000, a decrease of 37,000 from the previous week's revised level. The previous week's level was revised up 1,000 from 1,767,000 to 1,768,000. The 4-week moving average was 1,757,750, an increase of 2,000 from the previous week's revised average. The previous week's average was revised up by 250 from 1,755,500 to 1,755,750.


Existing-Home Sales increased 3.6% in December
Posted: January 22, 2020 at 10:00 AM (Wednesday)

Existing-home sales grew in December, bouncing back after a slight fall in November, according to the National Association of Realtors®. Although the Midwest saw sales decline, the other three major U.S. regions reported meaningful growth last month.

Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 3.6% from November to a seasonally-adjusted annual rate of 5.54 million in December. Additionally, overall sales took a significant bounce, up 10.8% from a year ago (5.00 million in December 2019).

On a full-year basis, total existing-home sales ended at 5.34 million, the same level as in 2018, as sales in the South region (+2.2%) offset declines in the West (-1.8%) and Midwest (-1.6%), as the Northeast remained unchanged.

Lawrence Yun, NAR’s chief economist, said home sales fluctuated a great deal last year. “I view 2019 as a neutral year for housing in terms of sales,” Yun said. “Home sellers are positioned well, but prospective buyers aren’t as fortunate. Low inventory remains a problem, with first-time buyers affected the most.”

The median existing-home price2 for all housing types in December was $274,500, up 7.8% from December 2018 ($254,700), as prices rose in every region. November’s price increase marks 94 straight months of year-over-year gains. “Price appreciation has rapidly accelerated, and areas that are relatively unaffordable or declining in affordability are starting to experience slower job growth,” Yun said. “The hope is for price appreciation to slow in line with wage growth, which is about 3%.”

NAR’s Home Affordability Index Ranking and Payroll Job Growth report found that affordability rankings declined in 81 metro areas, 34 of which saw non-farm job growth fall faster in 2019 Q3 than the national rate over the previous five years.

Total housing inventory3 at the end of December totaled 1.40 million units, down 14.6% from November and 8.5% from one year ago (1.53 million). Unsold inventory sits at a 3.0-month supply at the current sales pace, down from the 3.7-month figure recorded in both November and December 2018. Unsold inventory totals have dropped for seven consecutive months from year-ago levels, taking a toll on home sales.

Properties typically remained on the market for 41 days in December, seasonally up from 38 days in November, but down from 46 days in December 2018. Forty-three percent of homes sold in December 2019 were on the market for less than a month.

First-time buyers were responsible for 31% of sales in December, moderately down from the 32% seen in both November and in December 2018. NAR’s 2019 Profile of Home Buyers and Sellers – released in late 20194 – revealed that the annual share of first-time buyers was 33%.

Individual investors or second-home buyers, who account for many cash sales, purchased 17% of homes in December 2019, up from both 16% in November and 15% in December 2018. All-cash sales accounted for 20% of transactions in December, unchanged from November and down slightly from 22% in December 2018.

Distressed sales5 – foreclosures and short sales – represented 2% of sales in December, unchanged from both November 2019 and December 2018.

Yun said conditions for buying are favorable and will likely continue in 2020. “We saw the year come to a close with the economy churning out 2.3 million jobs, mortgage rates below 4% and housing starts ramp up to 1.6 million on an annual basis,” he said. “If these factors are sustained in 2020, we will see a notable pickup in home sales in 2020.”

According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage increased to 3.72% in December, up from 3.70% in November. The average commitment rate across all of 2019 was 3.94%.

“NAR is expecting 2020 to be a great year for housing,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco, California. “Our leadership team is hard at work to secure policies that will keep our housing market moving in the right direction, like promoting infrastructure reform, strengthening fair housing protections and ensuring mortgage capital remains available to responsible, mortgage-ready Americans.
Single-family and Condo/Co-op Sales

Single-family home sales sat at a seasonally-adjusted annual rate of 4.92 million in December, up from 4.79 million in November, and up 10.6% from a year ago. The median existing single-family home price was $276,900 in December 2019, up 8.0% from December 2018.

Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 620,000 units in December, up 10.7% from November and 12.7% higher than a year ago. The median existing condo price was $255,400 in December, which is an increase of 6.0% from a year ago.
Regional Breakdown

Compared to last month, December sales increased in the Northeast, South and West regions, while year-over-year sales are up in each of the four regions. Median home prices in all regions increased from one year ago, with the Midwest region showing the strongest price gain.

December 2019 existing-home sales in the Northeast grew 5.7% to an annual rate of 740,000, up 8.8% from a year ago. The median price in the Northeast was $304,400, up 7.4% from December 2018.

Existing-home sales decreased 1.5% in the Midwest to an annual rate of 1.30 million, which is up 9.2% from a year ago. The median price in the Midwest was $208,500, a 9.2% jump from last December.

Existing-home sales in the South grew 5.4% to an annual rate of 2.36 million in December, up 12.4% from a year ago. The median price in the South was $240,500, a 6.7% increase from this time last year.

Existing-home sales in the West rose 4.6% to an annual rate of 1.14 million in December, a 10.7% increase from a year ago. The median price in the West was $411,800, up 8.1% from December 2018.



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