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Kansas City Fed Manufacturing Activity expanded at a moderate pace in May
Posted: May 25, 2017 at 10:00 AM (Thursday)

Tenth District manufacturing activity continued to expand at a moderate pace in May, and expectations for future activity increased strongly. Price indexes were mixed, but recorded little change overall.

The month-over-month composite index was 8 in May, up from 7 in April but down from 20 in March. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Activity at durable manufacturing plants eased slightly but remained positive, while nondurable activity improved, particularly for plastics and chemicals. Month-over-month indexes were mixed with little change overall. The production and shipments indexes edged slightly lower, while the employment and order backlog indexes inched higher. The new orders and new orders for exports indexes were both basically unchanged. The finished goods inventory index fell from 8 to 0, while the raw materials inventory index was stable.

Most year-over-year factory indexes were up slightly from the previous month. The composite year-over-year index rose from 13 to 18, and the production, new orders, and order backlog indexes also edged up. The employment index increased from 14 to 18, its highest level since December 2014, and the capital expenditures index jumped from 5 to 16. The raw materials inventory index increased from 3 to 8, and the finished goods inventory index grew markedly.

Expectations for future factory activity rebounded to strong levels. The future composite index increased from 17 to 30, and the future production, shipments, new orders, and order backlog indexes also rose considerably. The future capital spending index climbed from 11 to 23, while the future employment index eased slightly. Both inventory indexes increased modestly.

Price indexes were mixed in May. The month-over-month finished goods price index inched higher from 5 to 8, while the raw materials price index decreased moderately. The year-over-year finished goods price index fell from 29 to 16, and the raw materials price index also eased. The future raw materials price index edged down from 45 to 37, while the future finished goods price index was basically unchanged.


Weekly Initial Unemployment Claims Increase 1,000 to 234,000
Posted: May 25, 2017 at 08:30 AM (Thursday)

In the week ending May 20, the advance figure for seasonally adjusted initial claims was 234,000, an increase of 1,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 232,000 to 233,000. The 4-week moving average was 235,250, a decrease of 5,750 from the previous week's revised average. This is the lowest level for this average since April 14, 1973 when it was 232,750. The previous week's average was revised up by 250 from 240,750 to 241,000.

The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending May 13, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending May 13 was 1,923,000, an increase of 24,000 from the previous week's revised level. The previous week's level was revised up 1,000 from 1,898,000 to 1,899,000. The 4-week moving average was 1,930,250, a decrease of 16,000 from the previous week's revised average. This is the lowest level for this average since January 19, 1974 when it was 1,920,750. The previous week's average was revised up by 250 from 1,946,000 to 1,946,250.


Existing-Home Sales Slip 2.3% in April
Posted: May 24, 2017 at 10:00 AM (Wednesday)

Stubbornly low supply levels held down existing-home sales in April and also pushed the median number of days a home was on the market to a new low of 29 days, according to the National Association of Realtors®.

Total existing-home sales, https://www.nar.realtor/topics/existing-home-sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, dipped 2.3 percent to a seasonally adjusted annual rate of 5.57 million in April from a downwardly revised 5.70 million in March. Despite last month's decline, sales are still 1.6 percent above a year ago and at the fourth highest pace over the past year.

Lawrence Yun, NAR chief economist, says every major region except for the Midwest saw a retreat in existing sales in April. "Last month's dip in closings was somewhat expected given that there was such a strong sales increase in March at 4.2 percent, and new and existing inventory is not keeping up with the fast pace homes are coming off the market," he said. "Demand is easily outstripping supply in most of the country and it's stymieing many prospective buyers from finding a home to purchase."

The median existing-home price for all housing types in April was $244,800, up 6.0 percent from April 2016 ($230,900). April's price increase marks the 62nd straight month of year-over-year gains.

Total housing inventory at the end of April climbed 7.2 percent to 1.93 million existing homes available for sale, but is still 9.0 percent lower than a year ago (2.12 million) and has fallen year-over-year for 23 consecutive months. Unsold inventory is at a 4.2-month supply at the current sales pace, which is down from 4.6 months a year ago.

"Realtors® continue to voice the frustration their clients are experiencing because of the insufficient number of homes for sale," added Yun. "Homes in the lower- and mid-market price range are hard to find in most markets, and when one is listed for sale, interest is immediate and multiple offers are nudging the eventual sales prices higher."

Properties typically stayed on the market for 29 days in April, which is down from 34 days in March and 39 days a year ago, and surpasses last May (32 days) as the shortest timeframe since NAR began tracking in May 2011. Short sales were on the market the longest at a median of 88 days in April, while foreclosures sold in 46 days and non-distressed homes took 28 days. Fifty-two percent of homes sold in April were on the market for less than a month (a new high).

Inventory data from realtor.com® reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in April were San Jose-Sunnyvale-Santa Clara, Calif., 23 days; San Francisco-Oakland-Hayward, Calif., 25 days; Denver-Aurora-Lakewood, Colo., 27 days; and Seattle-Tacoma-Bellevue, Wash., 28 days.

According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage declined for the first time in six months, dipping to 4.05 percent in April from 4.20 percent in March. The average commitment rate for all of 2016 was 3.65 percent.

"Mortgage rates have been stuck in a holding pattern in recent months, which is a relief for spring homebuyers," said Yun. "With price growth showing little sign of slowing, prospective first-time buyers will be the most sensitive to any sudden uptick in rates in the months ahead."

Matching the highest percentage since last September, first-time buyers were 34 percent of sales in April, which is up from 32 percent both in March and a year ago. NAR's 2016 Profile of Home Buyers and Sellers – released in late 2016 – revealed that the annual share of first-time buyers was 35 percent.

President William E. Brown, a Realtor® from Alamo, California, says it's not only prospective homebuyers who are facing housing issues; many middle-income homeowners who benefit from the mortgage interest deduction could be slapped with a tax increase if some of the tax reform proposals currently being discussed go through. A recently released study commissioned by NAR titled, "Impact of Tax Reform Options on Owner-Occupied Housing," (link is external) estimated taxes would rise on average by $815 each year for homeowners with adjusted gross incomes between $50,000 and $200,000. Furthermore, home values could shrink by an average of more than 10 percent, with areas with higher property taxes or state income taxes experiencing an even steeper decline.

"Realtors® support tax reform, but any plan that effectively nullifies the current tax benefits of owning a home is a non-starter for the roughly 75 million homeowners and countless prospective first-time buyers that see owning a home as part of their American Dream," said Brown. Thousands of Realtors® took this message to Capitol Hill last week during NAR's annual legislative meetings in Washington, D.C.

All-cash sales were 21 percent of transactions in April, down from 23 percent in March and 24 percent a year ago. Individual investors, who account for many cash sales, purchased 15 percent of homes in April, unchanged from March but up from 13 percent a year ago. Fifty-seven percent of investors paid in cash in April.

Distressed sales – foreclosures and short sales – were 5 percent of sales in April, down from 6 percent in March and 7 percent a year ago. Three percent of April sales were foreclosures and 2 percent were short sales. Foreclosures sold for an average discount of 18 percent below market value in April (16 percent in March), while short sales were discounted 12 percent (14 percent in March).

Single-family and Condo/Co-op Sales
Single-family home sales decreased 2.4 percent to a seasonally adjusted annual rate of 4.95 million in April from 5.07 million in March, but are still 1.6 percent above the 4.87 million pace a year ago. The median existing single-family home price was $246,100 in April, up 6.1 percent from April 2016.

Existing condominium and co-op sales declined 1.6 percent to a seasonally adjusted annual rate of 620,000 units in April, but are still 1.6 percent higher than a year ago. The median existing condo price was $234,600 in April, which is 5.6 percent above a year ago.

Regional Breakdown
April existing-home sales in the Northeast dipped 2.7 percent to an annual rate of 730,000, and are now 2.7 percent below a year ago. The median price in the Northeast was $267,700, which is 1.6 percent above April 2016.

In the Midwest, existing-home sales increased 3.8 percent to an annual rate of 1.36 million in April, but are 0.7 percent below a year ago. The median price in the Midwest was $194,500, up 7.8 percent from a year ago.

Existing-home sales in the South in fell 5.0 percent to an annual rate of 2.30 million, but are still 3.6 percent above April 2016. The median price in the South was $217,700, up 7.9 percent from a year ago.

Existing-home sales in the West declined 3.3 percent to an annual rate of 1.18 million in April, but are still 3.5 percent above a year ago. The median price in the West was $358,600, up 6.8 percent from April 2016.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: May 24, 2017 at 07:00 AM (Wednesday)

Mortgage applications increased 4.4 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending May 19, 2017.

The Market Composite Index, a measure of mortgage loan application volume, increased 4.4 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 11 percent from the previous week to its highest level since March 2017. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 3 percent higher than the same week one year ago.

The refinance share of mortgage activity increased to 43.9 percent of total applications from 41.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 8.2 percent of total applications.

The FHA share of total applications increased to 10.8 percent from 10.6 percent the week prior. The VA share of total applications decreased to 10.5 percent from 10.7 percent the week prior. The USDA share of total applications remained unchanged at 0.8 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to its lowest level since November 2016, 4.17 percent, from 4.23 percent, with points increasing to 0.39 from 0.37 (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 $424,100) decreased to its lowest level since November 2016, 4.11 percent, from 4.23 percent, with points increasing to 0.31 from 0.30 (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 4.07 percent from 4.11 percent, with points decreasing to 0.34 from 0.37 (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 its lowest level since November 2016, 3.45 percent, from 3.51 percent, with points increasing to 0.38 from 0.33 (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 decreased to 3.27 percent from 3.30 percent, with points increasing to 0.35 from 0.21 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


New Home Sales in April at annual rate of 569,000
Posted: May 23, 2017 at 10:00 AM (Tuesday)

Sales of new single-family houses in April 2017 were at a seasonally adjusted annual rate of 569,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 11.4 percent (±10.5 percent) below the revised March rate of 642,000, but is 0.5 percent (±11.3 percent)* above the April 2016 estimate of 566,000.

The median sales price of new houses sold in April 2017 was $309,200. The average sales price was $368,300. The seasonally-adjusted estimate of new houses for sale at the end of April was 268,000. This represents a supply of 5.7 months at the current sales rate.


Richmond Fed's Current Activity Index lost 19 points to a reading of 1
Posted: May 23, 2017 at 10:00 AM (Tuesday)

Manufacturers in the Fifth District were somewhat less upbeat in May than in the prior three months, according to the latest survey by the Federal Reserve Bank of Richmond. The index for shipments and the index for new orders decreased notably, with the shipments index falling to slightly below 0. The index for employment was relatively flat, but the decline in the other two indexes resulted in a decline in the composite index from 20 in April to 1 in May. The majority of firms continued to report higher wages, but more firms reported a decline in the average workweek than reported an increase.

Looking six months ahead, manufacturing executives remained generally optimistic, although the only index to increase was expected capital expenditures. Nonetheless, the expected shipments index had a strong reading of 39 in May (from 42 in April) and the expected new orders index remained relatively high at a reading of 35.

Survey respondents reported that growth in both prices paid and prices received moderated somewhat.


Philadelphia NonManufacturing Activity Indicators continued to expand in May
Posted: May 23, 2017 at 08:30 AM (Tuesday)

Responses to the Nonmanufacturing Business Outlook Survey suggest that business activity continued to expand in May. However, all of the diffusion indexes moderated from the prior month, and almost all are now nearer to their historical averages. Most noteworthy, the index of general activity at the firm level registered its lowest reading in six months. The indexes for new orders and full-time employment showed larger declines. The indicators for prices paid and prices received suggest a modest increase in both the costs of inputs and the prices for respondents’ own goods and services. Both future activity indexes declined, falling to their lowest readings of the current year; however, respondents remained optimistic about growth over the next six months.

Current Indicators Are Near Historical Averages
The diffusion index for current general activity at the firm level fell 9 points to 25.8 (see Chart). This is the lowest reading for this index since December 2016, and the index now stands below its historical average of 28.4. More than 44 percent of the firms reported an increase in activity in May, while 19 percent of the firms reported a decrease. Firms’ perceptions of current activity in the region moderated as well. The regional activity index fell nearly 5 points, to 25.6, but remained above its historical average of 23.1.

New Orders and Sales/Revenues Indicators Weaken
The indicators for new orders and sales/revenues fell. The new orders index dropped 18 points to 15.0. Almost 30 percent of the respondents reported an increase in new orders in May, while 15 percent reported a decrease. The sales/revenues index fell 9 points to 25.5. The percentage of firms that reported an increase in sales fell 10 points from April (50 percent) to May (40 percent).

Employment Conditions Moderate
The full-time employment index fell 17 points in May to 9.3, which is below its historical average of 14.2. Although most firms (60 percent) reported no change in full-time employment, the percentage of firms reporting an increase (20 percent) was almost twice the percentage reporting a decrease (11 percent). The part-time employment index fell 4 points to 20.2. The wage and benefit costs indicator fell 9 points to 30.6. The decline was primarily due to a smaller share of firms reporting increases in wage and benefit costs than in the prior month.

Price Pressures Abate
The prices paid index decreased 15 points to 16.6. Almost 22 percent of the respondents reported increases in input prices compared with the 5 percent who reported decreases. The prices received index fell 7 points, to 17.4, in May. Although 51 percent of the firms reported no change in prices received for their own goods and services, the percentage of firms that reported a decrease rose from 2 percent in April to 9 percent in May.

Firms’ Expectations of U.S. Consumer Inflation Rise
In this month’s special questions, firms were asked to forecast the changes in the prices of their own products and services and for U.S. consumers over the next four quarters (see Special Questions). The median forecast was for an increase in their own prices of 2.5 percent, unchanged from when the same questions were last asked in February of 2017. Firms forecast an increase in compensation per employee of 3.0 percent over the next year. When asked about the average rate of inflation for U.S. consumers over the next year, the median response was 3.0 percent, up from 2.0 percent in the previous forecast. The firms also provided a 10-year inflation forecast, and the median remained at 3.0 percent.

Firms Continue to Expect Growth
The respondents to this month’s survey remained optimistic about future activity over the next six months. However, the index readings returned to near their historical averages after being above their averages for five consecutive months. The diffusion index for future activity at the firm level fell 9 points to 49.9 (see Chart). Nonetheless, the share of firms that expect to see an increase in activity at their firms over the next six months was 59 percent, while the share that expect a decline was only 9 percent. The forecasts for growth in the region also dampened, with the future regional activity index falling 4 points to 43.9.

Summary
Results from this month’s Nonmanufacturing Business Outlook Survey suggest continued but slower business expansion, as almost every indicator dropped from above its historical average to near its historical average. The respondents remain optimistic about growth over the next six months.


Chicago Fed National Activity Growth increased in April
Posted: May 22, 2017 at 08:00 AM (Monday)

The CFNAI Diffusion Index, which is also a three-month moving average, moved to +0.16 in April from +0.06 in March. Forty-six of the 85 individual indicators made positive contributions to the CFNAI in April, while 39 made negative contributions. Forty indicators improved from March to April, while 44 indicators deteriorated and one was unchanged. Of the indicators that improved, nine made negative contributions.

The contribution from production-related indicators to the CFNAI rose to +0.46 in April from +0.01 in March. Total industrial production increased 1.0 percent in April after moving up 0.4 percent in March, and manufacturing production increased 1.0 percent in April after decreasing 0.4 percent in the previous month. The sales, orders, and inventories category made a neutral contribution to the CFNAI in April, down from +0.07 in March.

Employment-related indicators contributed +0.10 to the CFNAI in April, up from +0.05 in March. Nonfarm payrolls rose by 211,000 in April after increasing by 79,000 in March. The civilian unemployment rate ticked down to 4.4 percent in April from 4.5 percent in the previous month.

The contribution of the personal consumption and housing category to the CFNAI ticked down to –0.08 in April from –0.06 in March. Housing starts decreased to 1,172,000 annualized units in April from 1,203,000 in March, and housing permits decreased to 1,229,000 annualized units in April from 1,260,000 in the previous month.

The CFNAI was constructed using data available as of May 18, 2017. At that time, April data for 51 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index. The March monthly index value was revised to +0.07 from an initial estimate of +0.08, and the February monthly index value was revised to +0.15 from last month’s estimate of +0.27. Revisions to the monthly index value can be attributed to two main factors: revisions in previously published data and differences between the estimates of previously unavailable data and subsequently published data. The revision to the March monthly index value was primarily due to the former, while the revision to the February monthly index value was primarily due to the latter.


U.S. Leading Economic Index increased 0.3% in April
Posted: May 18, 2017 at 10:00 AM (Thursday)

The Conference Board Leading Economic Index® (LEI)for the U.S. increased 0.3 percent in April to 126.9 (2010 = 100), following a 0.3 percent increase in March, and a 0.5 percent increase in February.

“The recent trend in the U.S. LEI, led by the positive outlook of consumers and financial markets, continues to point to a growing economy, perhaps even a cyclical pickup,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “First quarter’s weak GDP growth is likely a temporary hiccup as the economy returns to its long-term trend of about 2 percent. While the majority of leading indicators have been contributing positively in recent months, housing permits followed by average workweek in manufacturing have been the sources of weakness among the U.S. LEI components.”

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.3 percent in April to 115.2 (2010 = 100), following a 0.3 percent increase in March, and a 0.1 percent increase in February.

The Conference Board Lagging Economic Index® (LAG) for the U.S. increased 0.3 percent in April to 124.1 (2010 = 100), following a 0.1 percent increase in March and a 0.2 percent increase in February.


Weekly Initial Unemployment Claims Decrease 4,000 to 232,000
Posted: May 18, 2017 at 08:30 AM (Thursday)

In the week ending May 13, the advance figure for seasonally adjusted initial claims was 232,000, a decrease of 4,000 from the previous week's unrevised level of 236,000. The 4-week moving average was 240,750, a decrease of 2,750 from the previous week's unrevised average of 243,500.

The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending May 6, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending May 6 was 1,898,000, a decrease of 22,000 from the previous week's revised level. This is the lowest level for insured unemployment since November 5, 1988 when it was 1,898,000. The previous week's level was revised up 2,000 from 1,918,000 to 1,920,000. The 4-week moving average was 1,946,000, a decrease of 20,000 from the previous week's revised average. This is the lowest level for this average since January 19, 1974 when it was 1,920,750. The previous week's average was revised up by 500 from 1,965,500 to 1,966,000.


Philadelphia Fed Outlook Reported Activity continued to expand in May
Posted: May 18, 2017 at 08:30 AM (Thursday)

Results from the May Manufacturing Business Outlook Survey suggest that regional manufacturing activity continued to expand this month. The diffusion indexes for general activity and shipments improved notably from their April readings. The indexes for new orders and employment, however, fell modestly from last month but remained at high readings. Although most of the survey’s future indicators fell this month, the readings suggest that most firms still expect growth to continue over the next six months.

Current Indicators Reflect Continued Growth
The index for current manufacturing activity in the region increased from a reading of 22.0 in April to 38.8 this month. The index has been positive for 10 consecutive months. This month, the index recovered some of the declines of the previous two months, but it still remains slightly below its high reading of 43.3 in February. Fifty-one percent of the firms indicated increases in activity in May, while 13 percent reported decreases. The current new orders and shipments indexes remained at high readings. The shipments index increased 16 points, while the new orders index declined 2 points. Both the delivery times and unfilled orders indexes were positive for the seventh consecutive month, suggesting longer delivery times and increases in unfilled orders.

Firms reported an increase in manufacturing employment this month, but the current employment index fell 3 points. The index has remained positive for six consecutive months. The percentage of firms reporting an increase in employment was 23 percent, lower than the 27 percent that reported increases in April. Firms also reported an increase in work hours this month: The average workweek index remained positive for the seventh consecutive month and increased 3 points.

Price Pressures Moderate
The survey’s diffusion indexes for prices remained positive but decreased from their readings in April. On the cost side, 31 percent of the firms reported increases in the prices paid for inputs, compared with 36 percent in April, and the prices paid index decreased 10 points to 24.2. With respect to prices received for firms’ own manufactured goods, 21 percent of the firms reported higher prices, and 6 percent reported lower prices. The prices received index decreased 1 point.

Firms Expect Growth, but Optimism Falls
Most of the survey’s six-month indicators decreased further from the higher readings seen at the beginning of the year. The diffusion index for future general activity decreased from 45.4 in April to 34.8 this month, its second consecutive decline (see Chart 1). Forty-five percent of the manufacturers expect increases in activity over the next six months, while 10 percent expect declines. The indexes for future new orders and shipments also fell, decreasing 9 points and 6 points, respectively. The future employment diffusion index, at 29.2, fell 8 points. Thirty-seven percent of the firms expect to increase employment over the next six months, down from 46 percent last month.

Firms Expect Price Increases for Their Own Products to Match Inflation
In this month’s special questions, firms were asked to forecast the changes in the prices of their own products and for U.S. consumers over the next four quarters (see Special Questions). The median forecast was for an increase in their own prices of 2.0 percent, the same as when the question was last asked in February of 2017. When asked about the rate of inflation for U.S. consumers over the next year, the firms’ median forecast was 2.0 percent, a decrease from the previous forecast of 2.2 percent in February. Firms expect their employee compensation costs (wages plus benefits on a per employee basis) to rise at a pace of 3.0 percent over the next four quarters. Firms’ forecast for the long-run (10-year average) inflation rate fell from 3.0 percent to 2.5 percent this quarter.

Summary
Responses to the May Manufacturing Business Outlook Survey suggest continued growth for the region’s manufacturing sector. All the broad indicators either improved or remained at high positive readings, suggesting continued expansion. The survey’s employment indexes continued to show a rise in overall employment and work hours. The indicators reflecting firms’ expectations for the next six months, however, continued to retreat from recent highs but on balance suggest that growth is still expected to continue.


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: May 17, 2017 at 07:00 AM (Wednesday)

Mortgage applications decreased 4.1 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending May 12, 2017.

The Market Composite Index, a measure of mortgage loan application volume, decreased 4.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4 percent compared with the previous week. The Refinance Index decreased 6 percent from the previous week. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 9 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 41.1 percent of total applications, the lowest level since September 2008, from 41.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 8.1 percent of total applications. The average loan size for purchase applications reached a survey high at $322,300.

The FHA share of total applications increased to 10.6 percent from 10.5 percent the week prior. The VA share of total applications decreased to 10.7 percent from 10.8 percent the week prior. The USDA share of total applications remained unchanged at 0.8 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) remained unchanged at 4.23 percent, with points increasing to 0.37 from 0.31 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) increased to 4.23 percent from 4.22 percent, with points increasing to 0.30 from 0.28 (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 4.11 percent from 4.09 percent, with points increasing to 0.37 from 0.28 (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 3.51 percent from 3.50 percent, with points decreasing to 0.33 from 0.40 (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 decreased to 3.30 percent from 3.36 percent, with points increasing to 0.21 from 0.15 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


Industrial Production increased 1.0%
Capacity Utilization increased to 76.7%

Posted: May 16, 2017 at 09:15 AM (Tuesday)

Industrial production advanced 1.0 percent in April for its third consecutive monthly increase and its largest gain since February 2014. Manufacturing output rose 1.0 percent as a result of widespread increases among its major industries. The indexes for mining and utilities posted gains of 1.2 percent and 0.7 percent, respectively. At 105.1 percent of its 2012 average, total industrial production in April was 2.2 percent above its year-earlier level. Capacity utilization for the industrial sector increased 0.6 percentage point in April to 76.7 percent, a rate that is 3.2 percentage points below its long-run (1972–2016) average.


April Housing Starts down 2.6%, Permits down 2.5%
Posted: May 16, 2017 at 08:30 AM (Tuesday)

Building Permits
Privately-owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 1,229,000. This is 2.5 percent (±1.1 percent) below the revised March rate of 1,260,000, but is 5.7 percent (±1.4 percent) above the April 2016 rate of 1,163,000. Single-family authorizations in April were at a rate of 789,000; this is 4.5 percent (±0.8 percent) below the revised March figure of 826,000. Authorizations of units in buildings with five units or more were at a rate of 403,000 in April.

Housing Starts
Privately-owned housing starts in April were at a seasonally adjusted annual rate of 1,172,000. This is 2.6 percent (±8.8 percent)* below the revised March estimate of 1,203,000, but is 0.7 percent (±7.0 percent)* above the April 2016 rate of 1,164,000. Single-family housing starts in April were at a rate of 835,000; this is 0.4 percent (±8.6 percent)* above the revised March figure of 832,000. The April rate for units in buildings with five units or more was 328,000.

Housing Completions
Privately-owned housing completions in April were at a seasonally adjusted annual rate of 1,106,000. This is 8.6 percent (±10.8 percent)* below the revised March estimate of 1,210,000, but is 15.1 percent (±12.2 percent) above the April 2016 rate of 961,000. Single-family housing completions in April were at a rate of 784,000; this is 4.5 percent (±10.6 percent)* below the revised March rate of 821,000. The April rate for units in buildings with five units or more was 299,000.


Treasury International Capital Data for March 2017
Posted: May 15, 2017 at 04:00 PM (Monday)

The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for March 2017. The sum total in March of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC outflow of $0.7 billion. Of this, net foreign private inflows were $25.4 billion, and net foreign official outflows were $26.1 billion.

Foreign residents increased their holdings of long-term U.S. securities in March; net purchases were $30.8 billion. Net purchases by private foreign investors were $41.5 billion, while net sales by foreign official institutions were $10.7 billion. U.S. residents decreased their holdings of long-term foreign securities, with net sales of $29.0 billion.

Taking into account transactions in both foreign and U.S. securities, net foreign purchases of long-term securities were $59.8 billion. After including adjustments, such as estimates of unrecorded principal payments to foreigners on U.S. asset-backed securities, overall net foreign purchases of long-term securities are estimated to have been $45.7 billion in March.

Foreign residents decreased their holdings of U.S. Treasury bills by $2.6 billion. Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities decreased by $21.0 billion. Banks' own net dollar-denominated liabilities to foreign residents decreased by $25.4 billion.


Builder Confidence rose 2 points to 70 in May
Posted: May 15, 2017 at 10:00 AM (Monday)

In a further sign that the housing market continues to strengthen, builder confidence in the market for newly-built single-family homes rose two points in May to a level of 70 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This is the second highest HMI reading since the downturn.

“This report shows that builders’ optimism in the housing market is solidifying, even as they deal with higher building material costs and shortages of lots and labor,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas.

“The HMI measure of future sales conditions reached its highest level since June 2005, a sign of growing consumer confidence in the new home market,” said NAHB Chief Economist Robert Dietz. “Especially as existing home inventory remains tight, we can expect increased demand for new construction moving forward.”

Two of the three HMI components registered gains in May. The index charting sales expectations in the next six months jumped four points to 79 while the index gauging current sales conditions increased two points to 76. Meanwhile, the component measuring buyer traffic edged one point down to 51.

The three-month moving averages for HMI scores posted gains in three out of the four regions. The Northeast and South each registered three-point gains to 49 and 71, respectively, while the West rose one point to 78. The Midwest was unchanged at 68.


Empire State Manufacturing Survey Conditions were little changed in May
Posted: May 15, 2017 at 08:30 AM (Monday)

Business activity leveled off in New York State, according to firms responding to the May 2017 Empire State Manufacturing Survey. The headline general business conditions index fell six points to -1.0. The new orders index dropped to -4.4, suggesting a small decline in orders, and the shipments index edged down to 10.6, indicating that shipments increased at a slightly slower pace than in April. Labor market indicators pointed to a modest increase in both employment and hours worked, and input prices and selling prices rose at a more moderate pace. Indexes assessing the six-month outlook were close to last month’s levels, and continued to convey a high degree of optimism about future conditions.

Business Activity Flattens Out after Six-Month Run
Manufacturing firms in New York State reported that business activity was little changed in May. On the heels of positive readings for the prior six months, the general business conditions index retreated six points to -1.0. Twenty-six percent of respondents—down roughly 10 percentage points from the corresponding share in April—reported that conditions had improved over the month, while 27 percent reported that conditions had worsened. The new orders index fell below zero for the first time in several months, and at -4.4, pointed to a small decline in orders. The shipments index slipped to 10.6, indicating that shipments increased at a slower pace. The unfilled orders index tumbled sixteen points to -3.7. The delivery time index fell nine points to 6.7, a sign that delivery times continued to increase, though less so than last month, and the inventories index fell to -0.7, suggesting that inventory levels were stable.

Employment Continues to Expand
Employment indexes remained positive, pointing to continued improvement in labor market conditions. The index for number of employees edged down to 11.9, and the average workweek index was little changed at 7.5. Price increases slowed: The prices paid index fell twelve points to 20.9, its lowest level since November, and the prices received index moved down eight points to 4.5.

Firms Remain Optimistic
Indexes assessing the six-month outlook suggested that firms remained optimistic about future conditions. The index for future business conditions held steady at 39.3, and indexes for future new orders and shipments were somewhat higher. Employment was expected to increase in the months ahead. The capital expenditures index fell fourteen points to 13.4, and the technology spending index also came in at 13.4.


Business Inventories up 0.2% in March
Posted: May 12, 2017 at 10:00 AM (Friday)

The combined value of distributive trade sales and manufacturers’ shipments for March, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,361.0 billion, virtually unchanged (±0.1 percent)* from February 2017, but was up 6.5 percent (±0.4 percent) from March 2016.

Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,840.8 billion, up 0.2 percent (±0.1 percent) from February 2017 and were up 2.6 percent (±0.3 percent) from March 2016.

The total business Inventories/Sales Ratio based on seasonally adjusted data at the end of March was 1.35. The March 2016 ratio was 1.40.


University of Michigan Consumer Confidence Preliminary May Results at 97.7
Posted: May 12, 2017 at 10:00 AM (Friday)

Consumer sentiment remained on the high plateau established following Trump's election, with the early May figure nearly identical with the December to May average of 97.4. The Trump bump was relatively small given that the Sentiment Index averaged 91.8 in the comparable six month period a year ago and 94.5 in the same period two years ago. The recent stability in consumer sentiment, however, masks two important underlying shifts in the components as well as in the partisan divide. More favorable income gains and low inflation meant that consumers held the most favorable real income expectations in a dozen years. Buying plans, however, were mixed: household durables rose to a decade peak, while vehicle buying conditions slipped to a three year low. Home buying conditions were viewed less favorably, but were offset by the most favorable views about home selling in more than a decade. The partisan difference in the Expectations Index is still huge, but the gap between Democrats and Republicans narrowed slightly to 55 Index points from 65 three months ago, mainly due to Democrats expressing diminished fears of an immediate recession and lessened concerns about personal financial setbacks. Overall, personal consumption expenditures are expected to advance at about a 2.3% pace in 2017.


Forecasters Predict real GDP will grow at a faster pace
Posted: May 12, 2017 at 10:00 AM (Friday)

The U.S. economy over the next four quarters looks slightly stronger now than it did three months ago, according to 37 forecasters surveyed by the Federal Reserve Bank of Philadelphia. The forecasters predict real GDP will grow at an annual rate of 3.1 percent this quarter, up from the previous estimate of 2.3 percent. Quarterly growth over the following three quarters also looks improved. On an annual-average over annual-average basis, the forecasters predict real GDP will grow 2.1 percent in 2017, 2.5 percent in 2018, 2.1 percent in 2019, and 2.3 percent in 2020.

An improved outlook for the unemployment rate accompanies the outlook for growth. The forecasters predict that the unemployment rate will average 4.5 percent in the current quarter, before falling to 4.4 percent in the next two quarters, and 4.3 percent in the first two quarters of 2018. The projections for the next four quarters (and the next four years) are below those of the last survey, indicating a brighter outlook for unemployment.

The panelists also predict an improvement in near-term employment. The forecasters see nonfarm payroll employment growing at a rate of 177,300 jobs per month this quarter, up from the previous estimate of 167,000. The projections for the following three quarters are also higher than those of the last survey. The forecasters’ projections for the annual-average level of nonfarm payroll employment suggest job gains at a monthly rate of 182,600 in 2017 and 162,800 in 2018. (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.)

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 are holding steady their estimates of uncertainty about growth in the next four years.

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 unemployment less than 4.9 percent over the next four years.

Forecasters Expect Lower Headline Inflation in 2017
The forecasters have revised downward their projections for headline CPI and PCE inflation over the next three quarters in 2017. The forecasters expect current-quarter headline CPI inflation to average 1.6 percent, lower than the last survey’s estimate of 2.3 percent. Similarly, the forecasters predict current-quarter headline PCE inflation of 1.2 percent, also lower than the 2.0 percent predicted three months ago.

Measured on a fourth-quarter over fourth-quarter basis, headline CPI inflation is expected to average about 2.3 percent in each of the next three years, little changed from the last survey. The forecasters have revised downward their projections for headline PCE inflation in 2017 to 1.8 percent, but they pegged the rates for 2018 and 2019 at 2.0 percent, unchanged from the last survey.

Over the next 10 years, 2017 to 2026, the forecasters expect headline CPI inflation to average 2.30 percent at an annual rate, unchanged from the last survey. The corresponding estimate for 10-year annual-average headline PCE inflation is 2.09 percent, little changed from the 2.10 percent predicted in the previous survey.

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 top panel shows an unchanged level of the long-term projection for CPI inflation, at 2.30 percent. The bottom panel depicts the little changed 10-year forecast for PCE inflation, at 2.09 percent.

The figures below show the probabilities that the forecasters are assigning to the possibility that fourth-quarter over fourth-quarter core PCE inflation in 2017 and 2018 will fall into each of 10 ranges. For both years, the forecasters have increased the probability that core PCE inflation will be between 1.5 percent to 1.9 percent, compared with their estimates in the survey of three months ago.

Low and Reduced Risk of a Negative Quarter
The forecasters see a lower chance of a contraction in real GDP in any of the next four quarters. For the current quarter, the forecasters predict an 8.4 percent chance of negative growth, down from 11.2 percent in the last survey.


Consumer Price Index increased 0.2% in April, Ex Fd & Engy rose 0.1%
Posted: May 12, 2017 at 08:30 AM (Friday)

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in April on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.2 percent before seasonal adjustment.

Increases in indexes for shelter, energy, tobacco, and food all contributed to the monthly increase in the all items index. The energy index rose 1.1 percent, with all 3 of its major component indexes rising. The food index rose 0.2 percent, mostly due to a sharp increase in the index for fresh vegetables.

The index for all items less food and energy rose 0.1 percent in April after declining in March. The shelter index increased 0.3 percent, and the tobacco index increased sharply over the month. However, many indexes declined in April, including those for wireless phone services, medical care, motor vehicle insurance, apparel, used cars and trucks, recreation, and new vehicles.

The all items index rose 2.2 percent for the 12 months ending April. While a smaller increase than the 2.4 percent rise for the 12 months ending March, this is still a larger rise than the 1.7 percent average annual increase over the past 10 years. The index for all items less food and energy rose 1.9 percent over the last 12 months; this compares to a 1.8 percent average annual increase over the past decade. The energy index rose 9.3 percent over the last year, while the food index increased 0.5 percent.


Real Average Hourly Earnings increased 0.1% in April
Posted: May 12, 2017 at 08:30 AM (Friday)

Real average hourly earnings for all employees increased 0.1 percent from March to April, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from a 0.3-percent increase in average hourly earnings combined with a 0.2-percent increase in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings increased 0.4 percent over the month due to the increase in real average hourly earnings combined with a 0.3-percent increase in the average workweek.

Real average hourly earnings increased 0.4 percent, seasonally adjusted, from April 2016 to April 2017. The increase in real average hourly earnings combined with no change in the average workweek resulted in a 0.3-percent increase in real average weekly earnings over this period.


U.S. Retail Sales for April Increase 0.4%, Ex-Auto up 0.3%
Posted: May 12, 2017 at 08:30 AM (Friday)

Advance estimates of U.S. retail and food services sales for April 2017, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $474.9 billion, an increase of 0.4 percent (±0.5 percent)* from the previous month, and 4.5 percent (±0.9 percent) above April 2016. Total sales for the February 2017 through April 2017 period were up 4.7 percent (±0.7 percent) from the same period a year ago. The February 2017 to March 2017 percent change was revised from down 0.2 percent (±0.5 percent)* to up 0.1 percent (±0.2 percent)*.

Retail trade sales were up 0.4 percent (±0.5 percent)* from March 2017, and up 4.5 percent (±0.7 percent) from last year. Gasoline Stations sales were up 12.3 percent (±1.4 percent) from April 2016, while Nonstore Retailers were up 11.9 percent (±1.8 percent) from last year.


Weekly Initial Unemployment Claims Decrease 2,000 to 236,000
Posted: May 11, 2017 at 08:30 AM (Thursday)

In the week ending May 6, the advance figure for seasonally adjusted initial claims was 236,000, a decrease of 2,000 from the previous week's unrevised level of 238,000. The 4-week moving average was 243,500, an increase of 500 from the previous week's unrevised average of 243,000.

The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending April 29, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending April 29 was 1,918,000, a decrease of 61,000 from the previous week's revised level. This is the lowest level for insured unemployment since November 5, 1988 when it was 1,898,000. The previous week's level was revised up 15,000 from 1,964,000 to 1,979,000. The 4-week moving average was 1,965,500, a decrease of 27,500 from the previous week's revised average. This is the lowest level for this average since February 2, 1974 when it was 1,964,250. The previous week's average was revised up by 3,750 from 1,989,250 to 1,993,000.


Producer Price Index increased 0.5% in April, ex Fd & Engy up 0.7%
Posted: May 11, 2017 at 08:30 AM (Thursday)

The Producer Price Index for final demand advanced 0.5 percent in April, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices edged down 0.1 percent in March and climbed 0.3 percent in February. On an unadjusted basis, the final demand index rose 2.5 percent for the 12 months ended April 2017, the largest increase since moving up 2.8 percent for the 12 months ended February 2012.

In April, almost two-thirds of the advance in the final demand index is attributable to prices for final demand services, which moved up 0.4 percent. The index for final demand goods climbed 0.5 percent.

Prices for final demand less foods, energy, and trade services increased 0.7 percent in April. For the 12 months ended in April, the index for final demand less foods, energy, and trade services climbed 2.1 percent.


U.S. Import Price Index advanced 0.5% in April
Posted: May 10, 2017 at 08:30 AM (Wednesday)

The price index for U.S. imports advanced 0.5 percent in April, the U.S. Bureau of Labor Statistics reported today, after ticking up 0.1 percent the previous month. Higher fuel prices and nonfuel prices each contributed to the increase in April. U.S. export prices rose 0.2 percent in April following a 0.1-percent advance in March. Prices for U.S. exports have not recorded a monthly decline since the index fell 0.8 percent in August 2016.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: May 10, 2017 at 08:30 AM (Wednesday)

Mortgage applications increased 2.4 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending May 5, 2017.

The Market Composite Index, a measure of mortgage loan application volume, increased 2.4 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 3 percent from the previous week. The seasonally adjusted Purchase Index increased 2 percent from one week earlier to its highest level since October 2015. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 6 percent higher than the same week one year ago. The seasonally adjusted Conventional Purchase Index increased 2 percent from the previous week to its highest level since April 2009.

The refinance share of mortgage activity increased to 41.9 percent of total applications from 41.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 8.2 percent of total applications.

The FHA share of total applications increased to 10.5 percent from 10.4 percent the week prior. The VA share of total applications remained unchanged at 10.8 percent from the week prior. The USDA share of total applications remained unchanged at 0.8 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) remained unchanged at 4.23 percent, with points decreasing to 0.31 from 0.32 (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 $424,100) increased to 4.22 percent from 4.18 percent, with points increasing to 0.28 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 30-year fixed-rate mortgages backed by the FHA increased to 4.09 percent from 4.06 percent, with points increasing to 0.28 from 0.24 (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 3.50 percent from 3.51 percent, with points increasing to 0.40 from 0.32 (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 increased to 3.36 percent from 3.29 percent, with points increasing to 0.15 from 0.14 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


Job Openings was little changed at 5.7 million in March
Posted: May 9, 2017 at 10:00 AM (Tuesday)

The number of job openings was little changed at 5.7 million on the last business day of March, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were also little changed at 5.3 million and 5.1 million, respectively. Within separations, the quits and the layoffs and discharges rates were unchanged at 2.1 percent and 1.1 percent, respectively. This release includes estimates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and by four geographic regions.


Wholesale Inventories up 0.4% in March
Posted: May 9, 2017 at 10:00 AM (Tuesday)

March 2017 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 $465.5 billion, virtually unchanged (±0.4 percent) from the revised February level, but were up 9.1 percent (±1.1 percent) from the March 2016 level. The January 2017 to February 2017 percent change was revised from the preliminary estimate of up 0.6 percent (±0.4 percent) to up 0.7 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 $594.6 billion at the end of March, up 0.2 percent (±0.4 percent) from the revised February level. Total inventories are up 3.0 percent (±0.9 percent) from the revised March 2016 level. The February 2017 to March 2017 percent change was revised from the advance estimate of down 0.1 percent (±0.4 percent) to up 0.2 percent (± 0.4 percent).

The March Inventories/Sales Ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.28. The March 2016 ratio was 1.35.


NFIB Small Business Optimism Index fell 0.2 in April to 104.5
Posted: May 9, 2017 at 07:00 AM (Tuesday)

The Index of Small Business Optimism fell 0.2 points to 104.5, sustaining the remarkable surge in optimism that started the day after the election. Five of the 10 Index components posted a gain, three declined, and two were unchanged. The Index has posted historically record high readings for six months, a performance eclipsed only in 1983. The modest decline in the Index was accounted for primarily by declining expectations for business conditions, most likely due to the turmoil in Washington, D.C. and plans to make capital expenditures.

The Affordable Care Act (ACA), Obamacare, was a predictable failed experiment. Sadly, after seven years since it’s passage, the ACA “details” are still being “written” by the bureaucrats. Debate in the house marked by serious doubts among republicans and severe oppopsition by democrates and too little leadship from the White House. The health care vote in the house repairs some of that dynamic but remains to be seen how small business owners will respond to these efforts in next month’s survey.

The first quarter GDP number was weaker than expected, due to changes in inventory investment, slower auto sales and a negative trade gap. The economy is stronger than 0.7 percent growth, capital spending is better and inventory reductions will reverse.

The Federal Reserve may decide that even though the economy is better than “0.7”, the optics of raising rates would not be good and therefore they will defer their two remaining rate hikes to later meetings. There is no chance they will do an “inter-meeting hike” as Greenspan was willing to do. The Fed will continue conduct this “monthly monetary policy” process, refusing to establish a longer term program of more predictable policy. Doing this each month produces much uncertainty in financial markets. Traders love this and much money is made in trading by the big banks rather than in traditional lending. In the meantime, hesitancy at the Fed raises uncertainty about the future of economic growth.

Small business owners have held on to their optimism, and have reported improvements in activities that signal more growth in the real economy, even if modest. If Congress does not disappoint, small firms are ready to bet on a more optimistic future by investing in their businesses and hiring more workers.


Employment Trends Index increased sharply in April to 132.64
Posted: May 8, 2017 at 10:00 AM (Monday)

The Conference Board Employment Trends Index™ (ETI) increased sharply in April, following an increase in March. The index now stands at 132.64, up from 131.58 (an upward revision) in March. The change represents a 4.1 percent gain in the ETI compared to a year ago.

“The Employment Trends Index has been expanding rapidly in 2017, suggesting that robust job growth will continue into the summer,” said Gad Levanon, Chief Economist, North America, at The Conference Board. “A tight labor market is about to get much tighter, with solid employment growth occurring at a time when there is almost no growth in the working-age population.”

April’s increase in the ETI was fueled by positive contributions from seven of the eight components. In order from the largest positive contributor to the smallest, these were: Ratio of Involuntarily Part-time to All Part-time Workers, Percentage of Firms with Positions Not Able to Fill Right Now, Initial Claims for Unemployment Insurance, Industrial Production, Job Openings, Number of Employees Hired by the Temporary-Help Industry, and Real Manufacturing and Trade Sales.


Consumer Credit Increased at an annual rate of 5.25%
Posted: May 5, 2017 at 03:00 PM (Friday)

Consumer credit increased at a seasonally adjusted annual rate of 4-1/4 percent during the first quarter. Revolving credit was little changed, while nonrevolving credit increased at an annual rate of 5-3/4 percent. In March, consumer credit increased at an annual rate of 5-1/4 percent.


April Employment increased by 211,000
Unemployment Rate dipped to 4.4%

Posted: May 5, 2017 at 08:30 AM (Friday)

Total nonfarm payroll employment increased by 211,000 in April, and the unemployment rate was little changed at 4.4 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in leisure and hospitality, health care and social assistance, financial activities, and mining.

Household Survey Data
Both the unemployment rate, at 4.4 percent, and the number of unemployed persons, at 7.1 million, changed little in April. Over the year, the unemployment rate has declined by 0.6 percentage point, and the number of unemployed has fallen by 854,000.

Among the major worker groups, the unemployment rate for adult men declined to 4.0 percent in April. The jobless rates for adult women (4.1 percent), teenagers (14.7 percent), Whites (3.8 percent), Blacks (7.9 percent), Asians (3.2 percent), and Hispanics (5.2 percent) showed little change.

The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 1.6 million in April and accounted for 22.6 percent of the unemployed. Over the year, the number of long-term unemployed was down by 433,000.

The labor force participation rate, at 62.9 percent, changed little in April and hasshown little movement over the past year. The employment-population ratio, at 60.2percent, was also little changed over the month but was up by 0.5 percentage point since December.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) declined by 281,000 to 5.3 million in April. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find full-time jobs. Over the past 12 months, the number of persons employed part time for economic reasons has decreased by 698,000.

In April, 1.5 million persons were marginally attached to the labor force, down by 181,000 from a year earlier. (The data are not seasonally adjusted.) 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.

Among the marginally attached, there were 455,000 discouraged workers in April, down by 113,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.1 million persons marginally attached to the labor force in April had not searched for work for reasons such as school attendance or family responsibilities.

Establishment Survey Data
Total nonfarm payroll employment increased by 211,000 in April. Employment rose in leisure and hospitality, health care and social assistance, financial activities, and mining.

In April, leisure and hospitality added 55,000 jobs. Employment in food services and drinking places continued to trend up over the month (+26,000) and has increased by 260,000 over the year.

Employment in health care and social assistance increased by 37,000 in April. Health care employment continued to trend up over the month (+20,000). This is in line with the industry's average monthly job growth during the first quarter of this year but below the average gain of 32,000 per month in 2016. Social assistance added 17,000 jobs in April, with all of the gain in individual and family services.

In April, financial activities added 19,000 jobs, with insurance carriers and related activities accounting for most of the gain (+14,000). Over the year, financial activities has added 173,000 jobs.

Employment in mining rose by 9,000 in April, with most of the increase in support activities for mining (+7,000). Since a recent low in October 2016, mining has added 44,000 jobs, with three-fourths of the gain in support activities for mining.

Employment in professional and business services continued to trend up in April (+39,000). The industry has added 612,000 jobs over the past 12 months.

Employment in other major industries, including construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, and government, showed little change over the month.

The average workweek for all employees on private nonfarm payrolls increased by 0.1 hour to 34.4 hours in April. In manufacturing, the workweek edged up by 0.1 hour to 40.7 hours, and overtime edged down by 0.1 hour to 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged up by 0.1 hour to 33.7 hours.

In April, average hourly earnings for all employees on private nonfarm payrolls rose by 7 cents to $26.19. Over the year, average hourly earnings have risen by 65 cents, or 2.5 percent. In April, average hourly earnings of private-sector production and nonsupervisory employees increased by 6 cents to $21.96.

The change in total nonfarm payroll employment for February was revised up from +219,000 to +232,000, and the change for March was revised down from +98,000 to +79,000. With these revisions, employment gains in February and March combined were 6,000 lower than previously reported. Monthly revisions result from additional reports received from businesses since the last published estimates and from the recalculation of seasonal factors. Over the past 3 months, job gains have averaged 174,000.


New orders for manufactured goods increased 0.2% in March
Posted: May 4, 2017 at 10:00 AM (Thursday)

New orders for manufactured goods in March, up eight of the last nine months, increased $0.8 billion or 0.2 percent to $478.2 billion, the U.S. Census Bureau reported today. This followed a 1.2 percent February increase. Shipments, down following seven consecutive monthly increases, decreased $0.5 billion or 0.1 percent to $478.8 billion. This followed a 0.2 percent February increase. Unfilled orders, up two consecutive months, increased $2.9 billion or 0.3 percent to $1,119.6 billion. This followed a 0.1 percent February increase. The unfilled orders-to-shipments ratio was 6.52, down from 6.54 in February. Inventories, down following five consecutive monthly increases, decreased $0.1 billion or virtually unchanged to $629.7 billion. This followed a 0.2 percent February increase. The inventories-to-shipments ratio was 1.32, up from 1.31 in February.

New orders for manufactured durable goods in March, up three consecutive months, increased $2.1 billion or 0.9 percent to $239.4 billion, up from the previously published 0.7 percent increase. This followed a 2.4 percent February increase. Transportation equipment, also up three consecutive months, drove the increase, $2.2 billion or 2.6 percent to $83.6 billion. New orders for manufactured nondurable goods decreased $1.3 billion or 0.5 percent to $238.7 billion.


Weekly Initial Unemployment Claims Decrease 19,000 to 238,000
Posted: May 4, 2017 at 08:30 AM (Thursday)

In the week ending April 29, the advance figure for seasonally adjusted initial claims was 238,000, a decrease of 19,000 from the previous week's unrevised level of 257,000. The 4-week moving average was 243,000, an increase of 750 from the previous week's unrevised average of 242,250.

The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending April 22, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending April 22 was 1,964,000, a decrease of 23,000 from the previous week's revised level. This is the lowest level for insured unemployment since April 15, 2000 when it was 1,962,000. The previous week's level was revised down by 1,000 from 1,988,000 to 1,987,000. The 4-week moving average was 1,989,250, a decrease of 17,750 from the previous week's revised average. This is the lowest level for this average since November 26, 1988 when it was 1,978,250. The previous week's average was revised down by 250 from 2,007,250 to 2,007,000.


Goods and Services Deficit Decreased in March 2017
Posted: May 4, 2017 at 08:30 AM (Thursday)

The Nation's international trade deficit in goods and services decreased to $43.7 billion in March from $43.8 billion in February (revised), as imports decreased more than exports.

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $43.7 billion in March, down $0.1 billion from $43.8 billion in February, revised. March exports were $191.0 billion, $1.7 billion less than February exports. March imports were $234.7 billion, $1.7 billion less than February imports.

The March decrease in the goods and services deficit reflected an increase in the goods deficit of $0.4 billion to $65.5 billion and an increase in the services surplus of $0.4 billion to $21.8 billion.

Year-to-date, the goods and services deficit increased $9.4 billion, or 7.5 percent, from the same period in 2016. Exports increased $38.0 billion or 7.1 percent. Imports increased $47.5 billion or 7.1 percent.


1Q2017 Productivity Growth Decreased 0.6%
Posted: May 4, 2017 at 08:30 AM (Thursday)

Nonfarm business sector labor productivity decreased at a 0.6-percent annual rate during the first quarter of 2017, the U.S. Bureau of Labor Statistics reported today, as output increased 1.0 percent and hours worked increased 1.6 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the first quarter of 2016 to the first quarter of 2017, productivity increased 1.1 percent, reflecting increases in output and hours worked of 2.4 percent and 1.3 percent, respectively.

Unit labor costs in the nonfarm business sector increased 3.0 percent in the first quarter of 2017, reflecting a 2.4-percent increase in hourly compensation and a 0.6-percent decline in productivity. Unit labor costs increased 2.8 percent over the last four quarters.

Manufacturing sector labor productivity increased 0.4 percent in the first quarter of 2017, as output increased 2.8 percent and hours worked increased 2.4 percent. Output per hour decreased 1.1 percent in the durable goods manufacturing sector and increased 3.2 percent in the nondurable goods sector. Over the last four quarters, manufacturing sector productivity increased 0.3 percent, as output increased 0.9 percent and hours worked increased 0.7 percent. Unit labor costs in manufacturing increased 2.1 percent in the first quarter of 2017 and rose 4.3 percent from the same quarter a year ago.

Preliminary fourth quarter and annual 2016 measures were announced today for the nonfinancial corporate sector. Productivity decreased 1.0 percent in the fourth quarter of 2016 and increased 1.4 percent over the last four quarters. Annual average productivity increased 0.6 percent from 2015 to 2016. The historical average annual rate of productivity growth in the nonfinancial corporate sector between 1947 and 2016 is 2.2 percent.

Revised measures
In the fourth quarter of 2016, nonfarm business sector productivity increased 1.8 percent--a larger increase than reported March 8--reflecting an upward revision to output. Unit labor costs increased 1.3 percent, a smaller increase than previously reported. Total manufacturing sector productivity increased 2.0 percent in the fourth quarter of 2016, the same as previously reported. Unit labor costs in the manufacturing sector increased 2.2 percent during the fourth quarter. Fourth-quarter 2016 labor productivity was revised up 0.3 percentage point in the durable goods sector to an increase of 1.8 percent, and was revised down 0.4 percentage point in the nondurable goods sector to an increase of 2.3 percent. (See table B1.) The annual average rate of manufacturing productivity growth for 2016 was revised down slightly from 0.3 percent to 0.2 percent, and the rate for 2015 was revised down from 0.2 percent to negative 0.6 percent. (See table 3.) The average annual rate of productivity growth in the manufacturing sector from 1987 to 2016 was unchanged at 3.2 percent.


Challenger Layoffs decreased to 36,602 jobs in April
Posted: May 4, 2017 at 07:30 AM (Thursday)

The pace of downsizing decreased in April, as US-based employers announced workforce reductions totaling 36,602 during the month, according to the latest report released Thursday from global outplacement consultancy Challenger, Gray & Christmas, Inc.

The April figure represents a 15 percent decrease from March, when employers announced 43,310 planned layoffs. Last month’s job cuts were 43 percent lower than the 64,141 recorded in April 2016*.

Employers have announced a total of 162,803 planned job cuts through the first four months of 2017. That is down 35 percent from the 249,061 job cuts tracked during the same period a year ago. It is the lowest January-April total since 2014, when the opening four months of the year saw 161,639 job cuts.

“Although restructuring in the retail sector continues to shed jobs, we aren’t seeing the wide scale layoffs in other sectors, like energy or tech,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

The retail industry announced 11,669 job cuts in April, the highest total among all industries, bringing the year-to-date total to 50,133. That is up 36 percent from the 36,977 retail-sector job cuts announced in the first four months of 2016.

Computer firms announced 840 job cuts during the month, 95 percent lower than the 17,015 cuts in that sector in April 2016. To date, computer firms have cut 5,734 cuts, 83 percent lower than the 34,017 cuts announced in the first four months of 2016.

Meanwhile, the energy sector, which at this point last year had shed 67,660 jobs, has announced 8,725 to date, an 87 percent decrease. Just 459 cuts were announced in the energy sector last month.

The telecommunications sector has announced 10,269 jobs through April this year, a 70 percent increase from the 6,023 cuts through this point last year.

“The FCC is expected to lift a ban on merger talks in the telecom industry which will likely result in companies paring down to make themselves more attractive in these deals. We could see even more cuts in the coming months from this sector,” said Challenger.

“The economy seems to be in a holding pattern. The government jobs report saw lower-than-expected job creation in March with 98,000 jobs added, and consumer spending has been sluggish in the first quarter. Companies may be waiting for the outcome of President Trump’s tax reform before making any major decisions,” said Challenger.


FOMC target funds rate reaffirmed at 3/4 to 1%
Posted: May 3, 2017 at 02:00 PM (Wednesday)

Information received since the Federal Open Market Committee met in March indicates that the labor market has continued to strengthen even as growth in economic activity slowed. Job gains were solid, on average, in recent months, and the unemployment rate declined. Household spending rose only modestly, but the fundamentals underpinning the continued growth of consumption remained solid. Business fixed investment firmed. Inflation measured on a 12-month basis recently has been running close to the Committee's 2 percent longer-run objective. Excluding energy and food, consumer prices declined in March and inflation continued to run somewhat below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee views the slowing in growth during the first quarter as likely to be transitory and continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labor market conditions will strengthen somewhat further, and inflation will stabilize around 2 percent over the medium term. Near-term risks to the economic outlook appear roughly balanced. The Committee continues to closely monitor inflation indicators and global economic and financial developments.

In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 3/4 to 1 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

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 objectives of maximum employment and 2 percent inflation. 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. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Patrick Harker; Robert S. Kaplan; Neel Kashkari; and Jerome H. Powell.


Help Wanted OnLine Labor Demand decreased 26,100 to 4,613,600 in April
Posted: May 3, 2017 at 10:05 AM (Wednesday)

Online advertised vacancies decreased 26,100 to 4,613,600 in April, according to The Conference Board Help Wanted OnLine® (HWOL) Data Series,released today. The March Supply/Demand rate stands at 1.55 unemployed for each advertised vacancy, with a total of 2.6 million more unemployed workers than the number of advertised vacancies. The number of unemployed was approximately 7.2 million in March.

The Professional occupational category saw losses in Computer/Math (-7.8), Business and Finance (-2.6) and small gains in Healthcare Practitioners (4.3). The Services/Production occupational category saw losses in Sales (-15.7) and Office and Administrative Support (-8.7).


ISM Non-Manufacturing Index increased to 57.5% in April
Posted: May 3, 2017 at 10:00 AM (Wednesday)

Economic activity in the non-manufacturing sector grew in April for the 88th consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The NMI® registered 57.5 percent, which is 2.3 percentage points higher than the March reading of 55.2 percent. This represents continued growth in the non-manufacturing sector at a faster rate. The Non-Manufacturing Business Activity Index increased to 62.4 percent, 3.5 percentage points higher than the March reading of 58.9 percent, reflecting growth for the 93rd consecutive month, at a faster rate in April. The New Orders Index registered 63.2 percent, 4.3 percentage points higher than the reading of 58.9 percent in March. The Employment Index decreased 0.2 percentage point in April to 51.4 percent from the March reading of 51.6 percent. The Prices Index increased 4.1 percentage points from the March reading of 53.5 percent to 57.6 percent, indicating prices increased for the 13th consecutive month, at a faster rate in April. According to the NMI®, 16 non-manufacturing industries reported growth. In April the non-manufacturing sector reflected strong growth after a slowing in the rate from the previous month. Respondents’ comments are mostly positive about business conditions and the overall economy.

INDUSTRY PERFORMANCE
The 16 non-manufacturing industries reporting growth in April — listed in order — are: Wholesale Trade; Utilities; Arts, Entertainment & Recreation; Mining; Retail Trade; Construction; Professional, Scientific & Technical Services; Information; Management of Companies & Support Services; Public Administration; Health Care & Social Assistance; Real Estate, Rental & Leasing; Other Services; Finance & Insurance; Accommodation & Food Services; and Transportation & Warehousing. The only industry reporting contraction in April is Agriculture, Forestry, Fishing & Hunting.


ADP National Employment Report increased by 177,000 jobs in April
Posted: May 3, 2017 at 08:15 AM (Wednesday)

Private sector employment increased by 177,000 jobs from March to April according to the April ADP National Employment Report®.

“In April we saw a moderate slowdown from the strong pace of hiring in the first quarter,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Despite a dip in job creation, the growth is more than strong enough to accommodate the growing population as the labor market nears full employment. Looking across company sizes, midsized businesses showed persistent growth for the past six months.”

Mark Zandi, chief economist of Moody’s Analytics said, “Job growth slowed in April due to a pullback in construction and retail jobs. The softness in construction is continued payback from outsized growth during the mild winter. Brick-and-mortar retailers cut jobs in response to withering competition from online merchants.”


Purchase Apps up, Refi's down in Latest MBA Weekly Survey
Posted: May 3, 2017 at 07:00 AM (Wednesday)

Mortgage applications decreased 0.1 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending April 28, 2017.

The Market Composite Index, a measure of mortgage loan application volume, decreased 0.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 1 percent compared with the previous week. The Refinance Index decreased 5 percent from the previous week. The seasonally adjusted Purchase Index increased 4 percent from one week earlier. The unadjusted Purchase Index increased 5 percent compared with the previous week and was 5 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 41.6 percent of total applications from 44.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 8.4 percent of total applications.

The FHA share of total applications increased to 10.4 percent from 10.0 percent the week prior. The VA share of total applications decreased to 10.8 percent from 10.9 percent the week prior. The USDA share of total applications remained unchanged at 0.8 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) increased to 4.23 percent from 4.20 percent, with points decreasing to 0.32 from 0.37 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) increased to 4.18 percent from 4.15 percent, with points decreasing to 0.23 from 0.27 (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 4.06 percent from 4.03 percent, with points decreasing to 0.24 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.51 percent from 3.46 percent, with points decreasing to 0.32 from 0.50 (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 increased to 3.29 percent from 3.22 percent, with points decreasing to 0.14 from 0.18 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


Paychex-IHS Small Business Jobs Index dipped to 100.50 in April
Posted: May 2, 2017 at 08:30 AM (Tuesday)

The Paychex | IHS Markit Small Business Employment Watch for April shows a decline in small business jobs growth, but continued rising wages for workers. According to the report, the Small Business Jobs Index declined 0.22 percent in April to 100.50, losing gains from the first quarter of the year. National hourly earnings in April were $25.67, increasing 2.73 percent ($0.68) year-over-year.

"The acceleration of job gains in the first quarter of 2017 has been short-lived, but small business expansion remains a healthy 0.50 percent above its baseline," said James Diffley, chief regional economist at IHS Markit.

"The decline in the April index mirrors what was reported last month by BLS, which showed deceleration of job growth," said Martin Mucci, Paychex president and CEO. "At the same time, the wage report shows continued growth in both hourly earnings and hours worked over the past year."


New York Purchasing Managers Business Activity dipped in April to 55.8
Posted: May 2, 2017 at 08:30 AM (Tuesday)

New York City purchasing managers demonstrated a small but directional shift in perspective in April, according to the survey taken by the Institute for Supply Management-New York. While all indices moved in a desirable direction in March, April's findings all moved in the opposite direction with the exception of Quantity of Purchases, the only index to cross below the breakeven point this month.

New York Metro
Current Business Conditions came in at 55.8 in April, a small adjustment from the 56.5 reported in March. The Six-Month Outlook decreased to 73.2 in April, moving slightly off of the 3-year high seen in March but staying squarely in growth territory. The six-month outlook has been a reliable short-run guide for current business conditions over time.

Company Specific
Employment, a seasonally adjusted index, decreased to 45.1 in April, staying below the breakeven point for the third month in a row. Quantity of Purchases fell to 48.4 in April, coming in below the breakeven point for the eighth time in twelve months. News for the top line and forward guidance are where we note the greatest change in April. Current Revenues were 55.0 in April, falling from the 20-month high of 65.0 in March. Expected Revenues fell to 65.0 after reaching 80.0 in March's 19-month high.Prices Paid increased for the first time since November 2016, rising to 54.7 in April. In March, Prices Paid fell below the breakeven point for the first time in seven months.


April Manufacturing ISM registered 54.8
Posted: May 1, 2017 at 10:00 AM (Monday)

Economic activity in the manufacturing sector expanded in April, and the overall economy grew for the 95th consecutive month, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®.

The April PMI® registered 54.8 percent, a decrease of 2.4 percentage points from the March reading of 57.2 percent. The New Orders Index registered 57.5 percent, a decrease of 7 percentage points from the March reading of 64.5 percent. The Production Index registered 58.6 percent, 1 percentage point higher than the March reading of 57.6 percent. The Employment Index registered 52 percent, a decrease of 6.9 percentage points from the March reading of 58.9 percent. Inventories of raw materials registered 51 percent, an increase of 2 percentage points from the March reading of 49 percent. The Prices Index registered 68.5 percent in April, a decrease of 2 percentage points from the March reading of 70.5 percent, indicating higher raw materials prices for the 14th consecutive month, but at a slower rate of increase in April compared with March. Comments from the panel generally reflect stable to growing business conditions; with new orders, production, employment and inventories of raw materials all growing in April over March.

Of the 18 manufacturing industries, 16 reported growth in April in the following order: Electrical Equipment, Appliances & Components; Textile Mills; Nonmetallic Mineral Products; Furniture & Related Products; Plastics & Rubber Products; Fabricated Metal Products; Printing & Related Support Activities; Machinery; Paper Products; Chemical Products; Food, Beverage & Tobacco Products; Primary Metals; Miscellaneous Manufacturing; Computer & Electronic Products; Petroleum & Coal Products; and Transportation Equipment. The only industry that reported contraction in April compared to March is Apparel, Leather & Allied Products.


Construction Spending decreased 0.2% in March
Posted: May 1, 2017 at 10:00 AM (Monday)

Construction spending during March 2017 was estimated at a seasonally adjusted annual rate of $1,218.3 billion, 0.2 percent (±2.1 percent)* below the revised February estimate of $1,220.7 billion. The March figure is 3.6 percent (±1.5 percent) above the March 2016 estimate of $1,176.4 billion. During the first 3 months of this year, construction spending amounted to $259.5 billion, 4.9 percent (±1.6 percent) above the $247.5 billion for the same period in 2016.

Private Construction
Spending on private construction was at a seasonally adjusted annual rate of $940.2 billion, nearly the same as (± 3.3 percent)* the revised February estimate of $940.1 billion. Residential construction was at a seasonally adjusted annual rate of $503.4 billion in March, 1.2 percent (±1.3 percent)* above the revised February estimate of $497.4 billion. Nonresidential construction was at a seasonally adjusted annual rate of $436.8 billion in March, 1.3 percent (± 3.3 percent)* below the revised February estimate of $442.6 billion.

Public Construction
In March, the estimated seasonally adjusted annual rate of public construction spending was $278.1 billion, 0.9 percent (±2.0 percent)* below the revised February estimate of $280.7 billion. Educational construction was at a seasonally adjusted annual rate of $70.2 billion, 2.0 percent (±2.6 percent)* below the revised February estimate of $71.6 billion. Highway construction was at a seasonally adjusted annual rate of $91.5 billion, 0.5 percent (±4.9 percent)* above the revised February estimate of $91.1 billion.


Personal Income increased 0.2%, Spending decreased 0.2%
Posted: May 1, 2017 at 08:30 AM (Monday)

Personal income increased $40.0 billion (0.2 percent) in March according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $35.0 billion (0.2 percent) and personal consumption expenditures (PCE) increased $5.7 billion (less than 0.1 percent).

Real DPI increased 0.5 percent in March and Real PCE increased 0.3 percent. The PCE price index decreased 0.2 percent. Excluding food and energy, the PCE price index decreased 0.1 percent.


University of Michigan Consumer Confidence increased in April to 97.0
Posted: April 28, 2017 at 10:00 AM (Friday)

Consumer sentiment has traveled on the high plateau established following Trump’s election, with only minor deviations from its five month average of 97.4. There is widespread agreement among consumers on their very positive assessments of the current state of the economy as well as widespread disagreement on future economic prospects. Although the partisan divide has narrowed in April, it still reflects a very pessimistic economic outlook among Democrats and a very optimistic outlook among Republicans. Partisanship has never had such a significant influence on expectations household incomes, inflation, and unemployment. The data indicate that spending will advance by 2.5% in 2017, but those gains will be uneven over time and across products.

Partisan Impact on Personal Finances
Improved finances were reported by half of all households in the past two months—the best record in more than fifteen years. Importantly, there was no partisan difference in how consumers viewed their current financial situation. In contrast, partisanship had a significant impact on how consumers judged their financial prospects: improving finances were anticipated in the year ahead by 48% of Republicans but just 31% of Democrats.

Partisan Economic Outlook
When consumers were asked about future prospects for the national economy, an improved economy was expected by 66% of Republicans but by just 18% of Democrats. This sharp partisan difference of 48 percentage points represented a significant improvement over last month’s 68 point difference. Unemployment expectations were the most favorable since 1984, primarily due to the 59% of Republicans who expected the unemployment rate would fall below its already low rate of 4.5%; just 15% of Democrats anticipated falling joblessness.

The Consumer Sentiment Index was 97.0 in the April 2017 survey, just above the 96.9 in March, and well above last April’s 89.0. The Current Conditions Index was 112.7 in April, nearly equal to March’s decade high of 113.2, and above last April’s 106.7. The Expectations Index was 87.0 in April, just ahead of the 86.5 in the prior two months, and well above last April’s 77.6.

Selective perception of economic news is the driving force behind the partisan divide. Favorable economic developments were cited by nearly every Republican in the April survey, while three-quarters of Democrats report-ed hearing negative news about the economy. The re-lease of 1st quarter GDP and assessments of Trump’s first 100 days are more likely to encourage continued selective perceptions rather than to reduce the preva-lence of extreme partisan views. Optimism among Inde-pendents, who may be less susceptible to the sway of political ideologies and account for 42% of all consumers, have posted strong gains in the past few months. While the partisan extremes will heighten uncertainty, Independents will help to stabilize the pace of growth.


Chicago Purchasing Managers Index up by 0.6 points to 58.3 in April
Posted: April 28, 2017 at 09:45 AM (Friday)

The MNI Chicago Business Barometer increased to 58.3 in April from 57.7 in March, the highest level since January 2015.

Optimism among firms about business conditions rose for the third month in a row. Three of the five Barometer components led April’s increase, with Production and Order Backlogs receding.

Demand continued to gain ground in April, rising for the third consecutive month. New orders rose by 5.5 points, to touch almost a three-year high. Off the back of two consecutive rises, the Production indicator fell 2.2 points to 59.5 from 61.7 in March. Order Backlogs contracted for the fifth consecutive month, although at a much faster rate than in recent months. Suppliers took longer to deliver key inputs, with the respective indicator 1.6 points higher at 56.0 in April.

Amid rising orders, demand for labor picked up. The Employment indicator leapt out of contraction territory after a brief dip below 50 last month. Although the indicator has expanded only seven times in last 24 months, it is showing tentative signs of a pick-up, sitting above 50 in two of the last three months.

April’s special question asked firms about the impact of an interest rate hike by the Federal Reserve in the next six months on their business. More than half of respondents expected to remain unaffected, 22% expected to be negatively impacted, 18% were unsure while only 6% expected to benefit from a rate hike. When a similar question was posed in April last year, 36% of respondents expected no impact and an equal proportion were unsure of the affect.

The Federal Reserve raised interest rates in March for only the third time in a decade and are projected to hike two more times this year. Firms in our panel were more confident about higher rates and appear to have already estimated the impact on their financing costs. Factory gate prices eased for the second consecutive month, though remain elevated. Prices Paid were up almost 14% on the year and continue to trend upwards, although the growth rate has eased recently.

“The April Chicago report showcased another impressive month, with firms reporting solid growth. Rising demand and firm production led to a pick-up in hiring by firms. Although the employment indicator has been bumpy, in and out of contraction, if the current month’s rise is sustained, it could provide a boost to the labor market,” said Shaily Mittal, senior economist at MNI Indicators.


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