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Texas Fed Manufacturing Activity Continues to Expand, Outlook Improves in May
Posted: June 25, 2018 at 10:30 AM (Monday)

The expansion in Texas factory activity continued in June, albeit at a slower pace than in May, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, declined 12 points to 23.3, signaling a deceleration in output growth.

Some other indexes of manufacturing activity also indicated slower growth in June. The capacity utilization and shipments indexes posted double-digit declines, falling to 21.7 and 25.5, respectively. However, demand improved further in June as the new orders index edged up to 29.6, its highest level this year.

Perceptions of broader business conditions were even more positive in June than in May. The general business activity index rose 10 points to 36.5, and the company outlook index rose five points to 33.2, its highest reading since 2006.

Labor market measures suggested robust growth in employment and longer work hours in June. The employment index stayed near last month’s six-year high at 23.9. Thirty-one percent of firms noted net hiring, compared with 7 percent noting net layoffs. The hours worked index remained highly positive but edged down to 20.2.

Price and wage pressures increased markedly in June. The raw materials prices index rose 10 points to 53.6, its highest reading since 2011. The finished goods prices index moved up to a 10-year high of 26.2. Compensation costs also accelerated, with the wages and benefits index rising seven points to 31.4.

Expectations regarding future business conditions remained largely optimistic in June. The indexes of future general business activity and future company outlook moved up to 35.9 and 38.7, respectively, with both readings significantly above average. Other indexes of future manufacturing activity showed mixed movements but remained in solidly positive territory.


New Home Sales in May at annual rate of 689,000
Posted: June 25, 2018 at 10:00 AM (Monday)

New Home Sales
Sales of new single-family houses in May 2018 were at a seasonally adjusted annual rate of 689,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 6.7 percent (±14.1 percent)* above the revised April rate of 646,000 and is 14.1 percent (±19.9 percent)* above the May 2017 estimate of 604,000.

Sales Price
The median sales price of new houses sold in May 2018 was $313,000. The average sales price was $368,500.

For Sale Inventory and Months’ Supply
The seasonally-adjusted estimate of new houses for sale at the end of May was 299,000. This represents a supply of 5.2 months at the current sales rate.


Chicago Fed National Activity Points to Slower Economic Growth in May
Posted: June 25, 2018 at 08:30 AM (Monday)

Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) fell to –0.15 in May from +0.42 in April. Two of the four broad categories of indicators that make up the index decreased from April, and two of the four categories made negative contributions to the index in May. The index’s three-month moving average, CFNAI-MA3, decreased to +0.18 in May from +0.48 in April.

The CFNAI Diffusion Index, which is also a three-month moving average, moved down to +0.10 in May from +0.23 in April. Thirty-nine of the 85 individual indicators made positive contributions to the CFNAI in May, while 46 made negative contributions. Forty-three indicators improved from April to May, while 42 indicators deteriorated. Of the indicators that improved, 17 made negative contributions.

Production-related indicators contributed –0.29 to the CFNAI in May, down from +0.33 in April. Manufacturing industrial production decreased 0.7 percent in May after increasing 0.6 percent in April. In contrast, the sales, orders, and inventories category made a contribution of +0.05 to the CFNAI in May, up from a neutral contribution in April. The Institute for Supply Management’s Manufacturing New Orders Index increased to 63.7 in May from 61.2 in April.

Employment-related indicators contributed +0.13 to the CFNAI in May, up slightly from +0.12 in April. Nonfarm payrolls rose by 223,000 in May after increasing by 159,000 in April. The contribution of the personal consumption and housing category to the CFNAI edged down to –0.04 in May from –0.03 in April. Housing permits decreased to 1,301,000 annualized units in May from 1,364,000 in April, but housing starts increased to 1,350,000 annualized units in May from 1,286,000 in the previous month.

The CFNAI was constructed using data available as of June 21, 2018. At that time, May data for 51 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index. The April monthly index value was revised to +0.42 from an initial estimate of +0.34, and the March monthly index value was revised to +0.26 from last month’s estimate of +0.32. Revisions to the monthly index 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 revisions to both the April and March monthly index values were primarily due to the former.


U.S. Leading Economic Index increased 0.2% in May
Posted: June 21, 2018 at 10:00 AM (Thursday)

The Conference Board Leading Economic Index® (LEI)for theU.S. increased 0.2 percent in May to 109.5 (2016 = 100), following a 0.4 percent increase in April, and a 0.4 percent increase in March.

“While May’s increase in the U.S. LEI was slower than in recent months, the improvements in a majority of its components offset the declines in leading indicators of labor markets and residential construction,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “The U.S. LEI still points to solid growth but the current trend, which is moderating, indicates that economic activity is not likely to accelerate.”

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.2 percent in May to 103.7 (2016 = 100), following a 0.2 percent increase in April, and a 0.3 percent increase in March.

The Conference Board Lagging Economic Index® (LAG) for the U.S. increased 0.5 percent in May to 105.2 (2016 = 100), following a 0.4 percent increase in April, and a 0.2 percent decrease in March.


Philadelphia Fed Outlook Reported Activity Suggest Continuing Growth in June
Posted: June 21, 2018 at 08:30 AM (Thursday)

Results from the June Manufacturing Business Outlook Survey suggest continued expansion of the region’s manufacturing sector. All the broad indicators remained positive, although the indicators for general activity and new orders fell notably. The firms continued to report higher prices for purchased inputs and their own manufactured goods. Expectations for the next six months continued to moderate but remain positive overall.

Current Indicators Suggest Continuing Growth
The diffusion index for current general activity remained positive but decreased 15 points this month (see Chart 1). Almost 37 percent of the manufacturers reported increases in overall activity this month, while 17 percent reported decreases. The new orders index fell nearly 23 points this month. While 38 percent of the firms reported an increase in orders, 20 percent reported declines. The current shipments index increased 3 points. The unfilled orders index suggested that firms’ backlogs diminished: The index fell 18 points and registered its first negative reading (-2.7) since January. The delivery times index remained positive but fell 9 points to its lowest reading in four months.

The firms continued to report overall increases in employment. Nearly 34 percent of the responding firms reported increases in employment this month, while 3 percent reported decreases. The current employment index, at 30.4, was virtually unchanged from May. The current average workweek index, however, decreased 10 points.

Price Increases Remain Widespread
The firms continued to report higher prices for both purchased inputs and their own manufactured goods, although the survey’s price indicators fell modestly from their May readings. Price increases for purchased inputs were reported by 54 percent of the manufacturers this month, but the prices paid diffusion index edged 1 point lower (see Chart 2). The current prices received index, reflecting the manufacturers’ own prices, decreased 3 points but remains at a high reading of 33.2. Nearly 34 percent of the firms reported higher prices for their manufactured goods.

Six-Month Indicators Continue to Moderate
The diffusion index for future general activity decreased for the third consecutive month, falling from 38.7 in May to 34.8 this month (see Chart 1). Nearly 48 percent of the firms expect increases in activity over the next six months, while 13 percent expect declines. The future new orders index decreased 2 points, and the future shipments index decreased 10 points. Nearly 67 percent of the firms expect price increases for purchased inputs over the next six months. Fifty-seven percent expect higher prices for their own manufactured goods, up from 36 percent last month. The future employment index decreased 9 points to a reading of 34.1, with more than 38 percent of the firms expecting to add workers over the next six months.

Firms Expect Production Increases to Continue
In this month’s special questions (see Special Questions), firms were asked to estimate their total production growth for the second quarter ending this month along with expected growth for the third quarter. The share of firms reporting expected increases in third-quarter production (67 percent) was greater than the share reporting decreases (16 percent). Looking ahead to the third quarter, 58 percent of the firms expect acceleration in the rate of production, while 28 percent of the firms expect deceleration. For those firms expecting an increase in production, 39 percent expect to hire additional workers. The remaining firms indicated that they would increase the work hours of current workers (25 percent) or increase the productivity of current workers (27 percent) rather than increasing the number of workers.

Summary
Responses to the June Manufacturing Business Outlook Survey indicate continued expansion for the region’s manufacturing sector, although indicators for general activity and new orders fell notably from last month. The firms reported continued increases in employment, and the indexes for prices paid and received continued to reflect widespread price pressures. Looking ahead six months, the firms remain optimistic overall, but the survey’s future indicators continued to moderate.


Weekly Initial Unemployment Claims Decrease 3,000 to 218,000
Posted: June 21, 2018 at 08:30 AM (Thursday)

In the week ending June 16, the advance figure for seasonally adjusted initial claims was 218,000, a decrease of 3,000 from the previous week's revised level. The previous week's level was revised up by 3,000 from 218,000 to 221,000. The 4-week moving average was 221,000, a decrease of 4,000 from the previous week's revised average. The previous week's average was revised up by 750 from 224,250 to 225,000.

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending June 9, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending June 9 was 1,723,000, an increase of 22,000 from the previous week's revised level. The previous week's level was revised up 4,000 from 1,697,000 to 1,701,000. The 4-week moving average was 1,722,500, a decrease of 4,750 from the previous week's revised average. This is the lowest level for this average since December 8, 1973 when it was 1,715,500. The previous week's average was revised up by 1,000 from 1,726,250 to 1,727,250.


Existing-Home Sales Decreased 0.4% in May
Posted: June 20, 2018 at 10:00 AM (Wednesday)

Existing-home sales fell back for the second straight month in May, as only the Northeast region saw an uptick in activity, according to the National Association of Realtors®.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 0.4 percent to a seasonally adjusted annual rate of 5.43 million in May from downwardly revised 5.45 million in April. With last month’s decline, sales are now 3.0 percent below a year ago and have fallen year-over-year for three straight months.

Lawrence Yun, NAR chief economist, says a solid economy and job market should be generating a much stronger sales pace than what has been seen so far this year. “Closings were down in a majority of the country last month and declined on an annual basis in each major region,” he said. “Incredibly low supply continues to be the primary impediment to more sales, but there’s no question the combination of higher prices and mortgage rates are pinching the budgets of prospective buyers, and ultimately keeping some from reaching the market.”

See and share the May 2018 Housing Snapshot Infographic

The median existing-home price2 for all housing types in May was $264,800, an all-time high and up 4.9 percent from May 2017 ($252,500). May’s price increase marks the 75th straight month of year-over-year gains.

Total housing inventory3 at the end of May climbed 2.8 percent to 1.85 million existing homes available for sale, but is still 6.1 percent lower than a year ago (1.97 million) and has fallen year-over-year for 36 consecutive months. Unsold inventory is at a 4.1-month supply at the current sales pace (4.2 months a year ago).

Properties typically stayed on the market for 26 days in May, unchanged from April and down from 27 days a year ago. Fifty-eight percent of homes sold in May were on the market for less than a month.

“Inventory coming onto the market during this year’s spring buying season – as evidenced again by last month’s weak reading – was not even close to being enough to satisfy demand,” added Yun. “That is why home prices keep outpacing incomes and listings are going under contract in less than a month – and much faster – in many parts of the country.”

Realtor.com®’s Market Hotness Index , measuring time-on-the-market data and listings views per property, revealed that the hottest metro areas in May were Midland, Texas; Boston-Cambridge-Newton, Mass.; San Francisco-Oakland-Hayward, Calif.; Columbus, Ohio; and Vallejo-Fairfield, Calif.

According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage increased for the seventh straight month to 4.59 percent in May (highest since 4.64 percent in May 2011) from 4.47 percent in April. The average commitment rate for all of 2017 was 3.99 percent.

“The abrupt hike in mortgage rates this spring, along with price appreciation and competition being the strongest in the entry-level part of the market, is why first-time buyers are not as active as they should be and their participation remains below its historical average,” said Yun.

First-time buyers were 31 percent of sales in May, which is down from 33 percent both last month and a year ago. NAR’s 2017 Profile of Home Buyers and Sellers – released in late 20174 – revealed that the annual share of first-time buyers was 34 percent.

“Realtors® in many parts of the country say their seller clients are dealing with a seesaw of emotions when deciding to put their home on the market,” said NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty. “While they’re thrilled that they will immediately find multiple buyers interested in their listing, many fear they’ll have extreme difficulty finding another home to buy. Some have even decided to hold off until inventory conditions start improving, which is actually only exacerbating supply shortages.”

All-cash sales were 21 percent of transactions in May, which is unchanged from April and down from 22 percent a year ago. Individual investors, who account for many cash sales, purchased 15 percent of homes in May, unchanged from last month and down from 16 percent a year ago.

Distressed sales5 – foreclosures and short sales – were 3 percent of sales in May (lowest since NAR began tracking in October 2008), down from 4 percent last month and 5 percent a year ago. Two percent of May sales were foreclosures and 1 percent were short sales.
Single-family and Condo/Co-op Sales

Single-family home sales declined 0.6 percent to a seasonally adjusted annual rate of 4.81 million in May from 4.84 million in April, and are 3.0 percent below the 4.96 million sales pace a year ago. The median existing single-family home price was $267,500 in May, up 5.2 percent from May 2017.

Existing condominium and co-op sales increased 1.6 percent to a seasonally adjusted annual rate of 620,000 units in May, but are still 3.1 percent below a year ago. The median existing condo price was $244,100 in May, which is 2.5 percent above a year ago.
Regional Breakdown

May existing-home sales in the Northeast increased 4.6 percent to an annual rate of 680,000, and but are 11.7 percent below a year ago. The median price in the Northeast was $275,900, which is down 1.8 percent from May 2017.

In the Midwest, existing-home sales declined 2.3 percent to an annual rate of 1.26 million in May, and are now 2.3 percent below a year ago. The median price in the Midwest was $209,900, up 4.2 percent from a year ago.

Existing-home sales in the South inched backward 0.4 percent to an annual rate of 2.32 million in May, and are unchanged from a year ago. The median price in the South was $233,100, up 4.5 percent from a year ago.


1Q2018 Current Account Deficit Increased
Posted: June 20, 2018 at 08:30 AM (Wednesday)

The U.S. current-account deficit increased to $124.1 billion (preliminary) in the first quarter of 2018 from $116.1 billion (revised) in the fourth quarter of 2017, according to statistics released by the Bureau of Economic Analysis (BEA). The deficit was 2.5 percent of current-dollar gross domestic product (GDP) in the first quarter, up from 2.4 percent in the fourth quarter.

The $8.0 billion increase in the current-account deficit reflected an $8.1 billion increase in the deficit on goods and relatively small and nearly offsetting changes in the balances on services, primary income, and secondary income.

Exports of goods and services and income receipts

Exports of goods and services and income receipts increased $23.0 billion in the first quarter to $913.4 billion.

* Primary income receipts increased $9.8 billion to $258.8 billion, reflecting increases in direct investment income, portfolio investment income, and other investment income. For more information on direct investment income, see the box “Effects of the 2017 Tax Cuts and Jobs Act on Components of Direct Investment.”

* Goods exports increased $9.5 billion to $411.4 billion, mostly reflecting increases in automotive vehicles, parts, and engines, in consumer goods, primarily jewelry and collectibles, and in nonmonetary gold.

Imports of goods and services and income payments

Imports of goods and services and income payments increased $30.9 billion in the first quarter to $1,037.5 billion.

* Goods imports increased $17.6 billion to $631.9 billion, mostly reflecting increases in
industrial supplies and materials, primarily petroleum and products, and in consumer goods,
primarily medicinal, dental, and pharmaceutical products.

* Primary income payments increased $10.2 billion to $196.8 billion, reflecting increases in direct investment income, portfolio investment income, and other investment income.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: June 20, 2018 at 07:00 AM (Wednesday)

Mortgage applications increased 5.1 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending June 15, 2018.

The Market Composite Index, a measure of mortgage loan application volume, increased 5.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3 percent compared with the previous week. The Refinance Index increased 6 percent from the previous week. The seasonally adjusted Purchase Index increased 4 percent from one week earlier. The unadjusted Purchase Index increased 1 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 36.8 percent of total applications from 35.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.0 percent of total applications.

The FHA share of total applications decreased to 10.1 percent from 10.6 percent the week prior. The VA share of total applications decreased to 10.2 percent from 10.7 percent the week prior. The USDA share of total applications decreased to 0.7 percent from 0.8 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) remained unchanged at 4.83 percent, with points decreasing to 0.48 from 0.53 (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 $453,100) increased to 4.79 percent from 4.74 percent, with points decreasing to 0.36 from 0.37 (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 decreased to 4.82 percent from 4.83 percent, with points increasing to 0.84 from 0.78 (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 4.27 percent from 4.23 percent, with points increasing to 0.53 from 0.51 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs decreased to 4.06 percent from 4.11 percent, with points decreasing to 0.54 from 0.56 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


May Housing Starts increased 5.0%, Permits down 4.6%
Posted: June 19, 2018 at 08:30 AM (Tuesday)

Building Permits
Privately-owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 1,301,000. This is 4.6 percent (±1.4 percent) below the revised April rate of 1,364,000, but is 8.0 percent (±1.3 percent) above the May 2017 rate of 1,205,000. Single-family authorizations in May were at a rate of 844,000; this is 2.2 percent (±1.0 percent) below the revised April figure of 863,000. Authorizations of units in buildings with five units or more were at a rate of 421,000 in May.

Housing Starts
Privately-owned housing starts in May were at a seasonally adjusted annual rate of 1,350,000. This is 5.0 percent (±10.2 percent) above the revised April estimate of 1,286,000 and is 20.3 percent (±14.4 percent) above the May 2017 rate of 1,122,000. Single-family housing starts in May were at a rate of 936,000; this is 3.9 percent (±10.6 percent) above the revised April figure of 901,000. The May rate for units in buildings with five units or more was 404,000.

Housing Completions
Privately-owned housing completions in May were at a seasonally adjusted annual rate of 1,291,000. This is 1.9 percent (±13.7 percent) above the revised April estimate of 1,267,000 and is 10.4 percent (±12.1 percent) above the May 2017 rate of 1,169,000. Single-family housing completions in May were at a rate of 890,000; this is 11.0 percent (±12.7 percent) above the revised April rate of 802,000. The May rate for units in buildings with five units or more was 389,000.


Builder Confidence fell 2 points to 68 in June
Posted: June 18, 2018 at 10:00 AM (Monday)

Builder confidence in the market for newly-built single-family homes fell two points to 68 in June on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The decline was due in large part to sharply elevated lumber prices, although sentiment remains on solid footing.

Improved economic growth, continued job creation and solid housing demand should spur additional single-family construction in the months ahead. However, builders do need access to lumber and other construction materials at reasonable costs in order to provide homes at competitive price points, particularly for the entry-level market where inventory is most needed.

Builders are optimistic about housing market conditions as consumer demand continues to grow. However, builders are increasingly concerned that tariffs placed on Canadian lumber and other imported products are hurting housing affordability. Record-high lumber prices have added nearly $9,000 to the price of a new single-family home since January 2017.

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

All three HMI indexes inched down a single point in June. The index measuring current sales conditions fell to 75, the component gauging expectations in the next six months dropped to 76, and the metric charting buyer traffic edged down to 50.

Looking at the three-month moving averages for regional HMI scores, the Northeast rose two points to 57 while the West and Midwest remained unchanged at 76 and 65, respectively. The South fell one point to 71.


Treasury International Capital Data for April 2018
Posted: June 15, 2018 at 04:00 PM (Friday)

The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for April 2018. The sum total in April of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a net TIC inflow of $138.7 billion. Of this, net foreign private inflows were $163.5 billion, and net foreign official outflows were $24.8 billion.

Foreign residents increased their holdings of long-term U.S. securities in April; net purchases were $22.5 billion. Net purchases by private foreign investors were $65.9 billion, while net sales by foreign official institutions were $43.5 billion. U.S. residents decreased their holdings of long-term foreign securities, with net sales of $71.4 billion.

Taking into account transactions in both foreign and U.S. securities, net foreign purchases of long-term securities were $93.9 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 $80.2 billion in April.

Foreign residents decreased their holdings of U.S. Treasury bills by $5.5 billion. Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities increased by $8.6 billion. Banks’ own net dollar-denominated liabilities to foreign residents increased by $50.0 billion.


University of Michigan Consumer Confidence Preliminary June Results at 99.3
Posted: June 15, 2018 at 10:00 AM (Friday)

Consumer sentiment rose slightly in early June due to consumers' more favorable assessments of their current financial situation and more favorable views of current buying conditions for household durables. The Expectations Index, in contrast, declined to its lowest level since the start of the year due to less favorable prospects for the overall economy. The sharpest divide was between the record number of households who mentioned recent income gains and the highest expected year-ahead inflation rate since 2015. At some point in every economic expansion, favorable income and job prospects act to offset higher inflation and interest rate expectations. Only when inflation and interest rates are expected to persistently exceed income and job prospects will consumers begin to curtail their discretionary spending. Indeed, greater certainty about future income and job prospects have become the main drivers of more favorable purchase plans. The importance of favorable job prospects for discretionary spending on durables is highlighted in the chart, which shows the correspondence between consumers' unemployment expectations and the annual per capita change in expenditures on durable goods from BEA accounts. The unemployment rate during the year ahead was more often expected to decline than increase (29% versus 23%), with most (48%) expecting it to remain unchanged at its current low, which should modestly accelerate purchases. Moreover, the continued small declines that are now anticipated in the unemployment rate, as well as more robust gains in household income, will bolster real personal consumption expenditures during the year ahead.


Industrial Production edged down 0.1%
Capacity Utilization dipped to 77.9%

Posted: June 15, 2018 at 09:15 AM (Friday)

Industrial production edged down 0.1 percent in May after rising 0.9 percent in April. Manufacturing production fell 0.7 percent in May, largely because truck assemblies were disrupted by a major fire at a parts supplier. Excluding motor vehicles and parts, factory output moved down 0.2 percent. The index for mining rose 1.8 percent, its fourth consecutive month of growth; the output of utilities moved up 1.1 percent. At 107.3 percent of its 2012 average, total industrial production was 3.5 percent higher in May than it was a year earlier. Capacity utilization for the industrial sector decreased 0.2 percentage point in May to 77.9 percent, a rate that is 1.9 percentage points below its long-run (1972–2017) average.


Empire State Manufacturing Survey Conditions expanded at an even faster pace in June
Posted: June 15, 2018 at 08:30 AM (Friday)

Business activity continued to grow strongly in New York State, according to firms responding to the June 2018 Empire State Manufacturing Survey. The headline general business conditions index climbed five points to 25.0, indicating a faster pace of growth than in May. Both the new orders index and the shipments index showed ongoing solid growth, with the former rising five points to 21.3 and the latter moving up four points to 23.5. Delivery times continued to lengthen, and inventories edged higher. Labor market indicators pointed to a substantial increase in employment and longer workweeks. The prices paid index remained close to last month’s multiyear high, indicating continued significant input price increases, and the prices received index remained elevated. Looking ahead, firms were more optimistic about the six-month outlook than they were last month.

Business Activity Continues to Expand
Manufacturing firms in New York State reported that business activity expanded at a faster pace than in May. The general business conditions index rose five points to 25.0, its highest level in several months. Thirty-eight percent of respondents reported that conditions had improved over the month, while 13 percent reported that conditions had worsened. The new orders index advanced five points to 21.3 and the shipments index rose four points to 23.5—readings that reflected strong growth. Unfilled orders increased, inventories edged higher, and delivery times continued to lengthen.

Hiring Picks Up
The index for number of employees climbed ten points to 19.0, its highest level thus far in 2018, pointing to a pickup in employment levels. The average workweek index was little changed at 12.0, indicating an increase in hours worked. Price increases remained elevated. The prices paid index was little changed from last month’s multiyear high, and the prices received index held steady at 23.3, suggesting ongoing moderate selling price increases.

Firms More Optimistic
After slipping in April, optimism about the six-month outlook increased for a second consecutive month. The index for future business conditions climbed eight points to 38.9. Employment was expected to increase in the months ahead, and the indexes for future prices remained elevated. The capital expenditures index edged down two points to 27.1, and the technology spending index fell six points to 17.1.


Business Inventories 0.3% in April
Posted: June 14, 2018 at 10:00 AM (Thursday)

The combined value of distributive trade sales and manufacturers’ shipments for April, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,425.9 billion, up 0.4 percent (±0.1 percent) from March 2018 and was up 6.7 percent (±1.1 percent) from April 2017.

Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,930.0 billion, up 0.3 percent (±0.1 percent) from March 2018 and were up 4.4 percent (±1.3 percent) from April 2017.

The total business inventories/sales ratio based on seasonally adjusted data at the end of April was 1.35. The April 2017 ratio was 1.38.


U.S. Import Price Index Increased 0.6% in May
Posted: June 14, 2018 at 08:30 AM (Thursday)

Prices for U.S. imports increased 0.6 percent for the second consecutive month in May, the U.S. Bureau of Labor Statistics reported today. Rising fuel and nonfuel prices contributed to the advances in both months. U.S. export prices rose 0.6 percent for the second consecutive month in May.

Imports
All Imports: Import prices increased 0.6 percent in May, continuing the upward trend that began in August 2017. The May advance followed a 0.6-percent rise the previous month. The price index for overall imports increased 4.3 percent for the year ended in May, the largest 12-month advance since the index rose 4.7 percent in February 2017. The May over-the-year advance was largely driven by higher fuel prices although nonfuel prices also increased over the past year.

Fuel Imports: Import fuel prices rose 4.9 percent in May, after a 4.1-percent advance in April. The May rise was the largest monthly increase since the index rose 9.8 percent in November 2017. In May, the advance in fuel prices was led by a 5.9-percent increase in petroleum prices which more than offset a 19.5 percent drop in natural gas prices. Prices for import fuel increased 28.6 percent over the past 12 months, driven by a 31.9 percent rise in petroleum prices. In contrast, natural gas prices fell 18.5 percent over the past year.

All Imports Excluding Fuel: Nonfuel import prices increased 0.2 percent for the second consecutive month in May and have not recorded a monthly decline since the index decreased 0.2 percent in December 2017. The May advance was driven by higher prices for nonfuel industrial supplies and materials; consumer goods; and foods, feeds, and beverages. The price indexes for capital goods and automotive vehicles both fell in May. Nonfuel prices advanced 1.9 percent over the past year, primarily led by higher prices for nonfuel industrial supplies and materials.

Exports
All Exports: Prices for U.S. exports rose 0.6 percent for the second consecutive month in May, led by higher prices for both agricultural and nonagricultural exports. Export prices have not recorded a monthly decline since the index edged down 0.1 percent in June 2017. The price index for overall exports advanced 4.9 percent between May 2017 and May 2018, the largest 12-month increase since the index rose 6.3 percent in October 2011.

Agricultural Exports: The price index for agricultural exports advanced 1.6 percent in May following a 1.2-percent decline the previous month. The May increase was driven by a 10.1-percent advance in wheat prices, a 4.4-percent rise in corn prices, and a 1.8-percent increase in soybean prices. Prices for agricultural exports also rose over the past 12 months, advancing 4.9 percent.

All Exports Excluding Agriculture: Nonagricultural export prices advanced 0.5 percent in May and have not recorded a monthly drop since the index fell 0.1 percent in October 2017. The increase was driven by higher prices for nonagricultural industrial supplies and materials, although rising prices for capital goods and automotive vehicles also contributed to the May rise. Prices for overall nonagricultural exports increased 4.9 percent for the year ended in May.

Import Prices
Imports by Locality of Origin: Prices for imports from China ticked up 0.1 percent in May, after falling 0.1 percent the previous month. Import prices from China advanced 0.3 percent over the past 12 months, the largest over-the-year increase since the index rose 0.3 percent in July 2014. The price index for imports from Japan ticked up 0.1 percent in May, the same advance as recorded in April. Prices for imports from Japan increased 0.2 percent over the past year. Import prices from Canada, the European Union, and Mexico all rose in May, led in part by rising fuel prices. Import prices from Canada increased 1.9 percent, from the European Union 0.4 percent, and from Mexico 0.3 percent.

Nonfuel Industrial Supplies and Materials: Nonfuel industrial supplies and materials prices rose 0.8 percent in May following a 0.6-percent advance the previous month. In May, higher prices for metals and selected building materials more than offset lower chemicals prices.

Finished Goods: Finished goods prices were mixed in May. Prices for capital goods and automotive vehicles each edged down 0.1 percent. The decline in capital goods prices was the first monthly drop since a 0.1-percent decrease in November 2017. In contrast, prices for consumer goods ticked up 0.1 percent, led by higher prices for medicinal, dental, and pharmaceutical materials.

Foods, Feeds, and Beverages: Foods, feeds, and beverages prices increased 0.4 percent in May, after falling 0.3 percent in April. Rising prices for fruit and grains were the largest contributors to the May advance.

Transportation Services: Import air passenger fares declined 2.5 percent in May following a 2.8-percent rise in April. The May decrease was driven by lower European and Latin American/Caribbean fares which more than offset rising Asian fares. Despite the May decrease, import air passenger fares rose 1.2 percent over the past 12 months. The price index for import air freight advanced 1.6 percent in May and 18.2 percent over the past year.

Export Prices
Nonagricultural Industrial Supplies and Materials: The price index for nonagricultural industrial supplies and materials advanced 1.6 percent in May, after rising 1.3 percent in April. Both increases were led by advancing fuel prices which rose 4.6 percent in May and 3.4 percent the previous month.

Finished Goods: Export finished goods prices recorded little movement in May. Capital goods prices ticked up 0.1 percent following a 0.6-percent rise in April. Prices for capital goods have not recorded a monthly decline since the index edged down 0.1 percent in October 2016. The price index for export automotive vehicles also rose 0.1 percent in May. In contrast, consumer goods prices fell 0.1 percent.

Transportation Services: The index for export air passenger fares fell 11.4 percent in May following a 16.2-percent increase the previous month. The May decline was driven by lower Asian and European fares. Export air passenger fares advanced 9.3 percent for the year ended in May. Prices for export air freight rose 0.7 percent in May and 3.0 percent over the past 12 months.


U.S. Retail Sales for May Increase 0.8%, Ex-Auto up 0.8%
Posted: June 14, 2018 at 08:30 AM (Thursday)

Advance estimates of U.S. retail and food services sales for May 2018, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $502.0 billion, an increase of 0.8 percent (±0.5 percent) from the previous month, and 5.9 percent (±0.5 percent) above May 2017. Total sales for the March 2018 through May 2018 period were up 5.2 percent (±0.5 percent) from the same period a year ago. The March 2018 to April 2018 percent change was revised from up 0.2 percent (±0.7 percent)* to up 0.4 percent (±0.2 percent).

Retail trade sales were up 0.8 percent (±0.5 percent) from April 2018, and 6.0 percent (±0.5 percent) above last year. Gasoline Stations were up 17.7 percent (±1.6 percent) from May 2017, while Nonstore Retailers were up 9.1 percent (±1.4 percent) from last year.


Weekly Initial Unemployment Claims Decrease 4,000 to 218,000
Posted: June 14, 2018 at 08:30 AM (Thursday)

In the week ending June 9, the advance figure for seasonally adjusted initial claims was 218,000, a decrease of 4,000 from the previous week's unrevised level of 222,000. The 4-week moving average was 224,250, a decrease of 1,250 from the previous week's unrevised average of 225,500.

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending June 2, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending June 2 was 1,697,000, a decrease of 49,000 from the previous week's revised level. This is the lowest level for insured unemployment since December 1, 1973 when it was 1,692,000. The previous week's level was revised up 5,000 from 1,741,000 to 1,746,000. The 4-week moving average was 1,726,250, a decrease of 3,750 from the previous week's revised average. This is the lowest level for this average since December 8, 1973 when it was 1,715,500. The previous week's average was revised up by 1,250 from 1,728,750 to 1,730,000.


FOMC target funds rate increased to 1.75% - 2.00%
Posted: June 13, 2018 at 02:30 PM (Wednesday)

Information received since the Federal Open Market Committee met in May indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate. Job gains have been strong, on average, in recent months, and the unemployment rate has declined. Recent data suggest that growth of household spending has picked up, while business fixed investment has continued to grow strongly. On a 12-month basis, both overall inflation and inflation for items other than food and energy have moved close to 2 percent. Indicators 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 expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective over the medium term. Risks to the economic outlook appear roughly balanced.

In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 1-3/4 to 2 percent. The stance of monetary policy remains accommodative, thereby supporting strong 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 maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

Voting for the FOMC monetary policy action were Jerome H. Powell, Chairman; William C. Dudley, Vice Chairman; Thomas I. Barkin; Raphael W. Bostic; Lael Brainard; Loretta J. Mester; Randal K. Quarles; and John C. Williams.


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: June 13, 2018 at 09:57 AM (Wednesday)

Mortgage applications decreased 1.5 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending June 8, 2018. Last week's results included an adjustment for the Memorial Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 9 percent compared with the previous week. The Refinance Index decreased 2 percent from the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index increased 9 percent compared with the previous week and was 0.2 percent lower than the same week one year ago.

The refinance share of mortgage activity remained unchanged from the previous week at 35.6 percent of total applications. The adjustable-rate mortgage (ARM) share of activity decreased to 6.8 percent of total applications.

The FHA share of total applications increased to 10.6 percent from 9.7 percent the week prior. The VA share of total applications increased to 10.7 percent from 10.1 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 ($453,100 or less) increased to 4.83 percent from 4.75 percent, with points increasing to 0.53 from 0.46 (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 $453,100) increased to 4.74 percent from 4.70 percent, with points increasing to 0.37 from 0.35 (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 4.83 percent from 4.77 percent, with points increasing to 0.78 from 0.70 (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 4.23 percent from 4.21 percent, with points increasing to 0.51 from 0.50 (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 4.11 percent from 4.08 percent, with points increasing to 0.56 from 0.41 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


Producer Price Index increased 0.5% in May, ex Fd & Engy up 0.3%
Posted: June 13, 2018 at 08:30 AM (Wednesday)

The Producer Price Index for final demand rose 0.5 percent in May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.1 percent in April and 0.3 percent in March. On an unadjusted basis, the final demand index moved up 3.1 percent for the 12 months ended in May, the largest 12-month increase since climbing 3.1 percent in January 2012.

In May, 60 percent of the rise in the index for final demand is attributable to a 1.0 percent advance in prices for final demand goods. The index for final demand services moved up 0.3 percent.

Prices for final demand less foods, energy, and trade services edged up 0.1 percent in May, the same as in April. For the 12 months ended in May, the index for final demand less foods, energy, and trade services climbed 2.6 percent.

Final Demand
Final demand goods: The index for final demand goods moved up 1.0 percent in May, the largest advance since a 1.1-percent rise in May 2015. In May 2018, over 80 percent of the broad-based increase in prices for final demand goods can be traced to the index for final demand energy, which jumped 4.6 percent. Prices for final demand goods less foods and energy and for final demand foods rose 0.3 percent and 0.1 percent, respectively.

Product detail: Half of the advance in the index for final demand goods is attributable to a 9.8-percent increase in gasoline prices. The indexes for jet fuel, fresh and dry vegetables, diesel fuel, beef and veal, and light motor trucks also moved higher. In contrast, prices for chicken eggs fell 31.2 percent. The indexes for residential natural gas and for plastic resins and materials also decreased.

Final demand services: Prices for final demand services moved up 0.3 percent in May, the fifth consecutive rise. In May, 80 percent of the advance in the index for final demand services can be traced to margins for final demand trade services, which climbed 0.9 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services increased 0.7 percent. The index for final demand services less trade, transportation, and warehousing was unchanged.

Product detail: One-third of the May advance in prices for final demand services is attributable to a 1.5-percent rise in margins for machinery, equipment, parts, and supplies wholesaling. The indexes for chemicals and allied products wholesaling; outpatient care (partial); apparel, footwear, and accessories retailing; food retailing; and truck transportation of freight also moved higher. Conversely, prices for guestroom rental fell 4.4 percent. The indexes for fuels and lubricants retailing and for hospital inpatient care also moved lower.


Consumer Price Index increased 0.2% in May, Ex Fd & Engy rose 0.2%
Posted: June 12, 2018 at 08:30 AM (Tuesday)

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in May on a seasonally adjusted basis after rising 0.2 percent in April, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.8 percent before seasonal adjustment.

The indexes for gasoline and shelter were the largest factors in the seasonally adjusted increase in the all items index, as they were in April. The gasoline index increased 1.7 percent, more than offsetting declines in some of the other energy component indexes and led to a 0.9-percent rise in the energy index. The medical care index rose 0.2 percent. The food index was unchanged over the month.

The index for all items less food and energy rose 0.2 percent in May. The shelter index rose 0.3 percent in May. The indexes for new vehicles, education and communication, and tobacco increased in May, while the indexes for household furnishing and operations, and used cars and trucks fell. The indexes for apparel, recreation, and personal care were unchanged.

The all items index rose 2.8 percent for the 12 months ending May, continuing its upward trend since the beginning of the year. The index for all items less food and energy rose 2.2 percent for the 12 months ending May. The food index increased 1.2 percent, and the energy index rose 11.7 percent.

Food
The food index was unchanged in May after a 0.3-percent increase in April. The index for food at home fell 0.2 percent. The index for meats, poultry, fish, and eggs declined 0.7 percent, while the fruits and vegetables index fell 0.3 percent in May after increasing 1.0 percent in April. The indexes for other food at home, and dairy and related products also declined.

The index for nonalcoholic beverages and beverage materials showed a 0.4-percent increase in May, while the index for cereals and bakery products was unchanged. The index for food away from home rose 0.3 percent in May following a 0.2-percent increase in April.

Over the last 12 months, the index for food away from home increased 2.7 percent, and the food at home index rose 0.1 percent. The index for meats, poultry, fish, and eggs increased 2.3 percent over the last year; the only one of the six major grocery store food group indexes to increase. The remaining indexes declined over the last 12 months.

Energy
The energy index rose 0.9 percent in May after rising 1.4 percent in April. The gasoline index rose 1.7 percent following a 3.0-percent increase in April. (Before seasonal adjustment, gasoline prices increased 5.9 percent in May.) The electricity index rose 0.1 percent in May, and the index for natural gas fell 0.6 percent.

The energy index increased 11.7 percent over the past year, with three of four major component indexes rising. The gasoline index increased 21.8 percent, the fuel oil index rose 25.3 percent, and the electricity index increased 1.0 percent. The index for natural gas fell 0.8 percent over the year.

All items less food and energy
The index for all items less food and energy increased 0.2 percent in May. The shelter index increased 0.3 percent, with the index for rent increasing 0.3 percent and the index for owners’ equivalent rent increasing 0.2 percent. The index for lodging away from home increased 2.9 percent in May, that index’s largest increase since August 2017.

The medical care index increased 0.2 percent in May, with the index for prescription drugs increasing 1.4 percent, the index for hospital services increasing 0.5 percent, and the index for physicians’ services increasing 0.1 percent. The new vehicles index increased 0.3 percent in May, while the index for motor vehicle insurance increased 0.4 percent after falling 0.2 percent in April. The indexes for tobacco and for education and communication also increased.

The index for household furnishings and operations fell 0.4 percent in May, after increasing by 0.5 percent in April. The index for used cars and trucks continued to decline, falling 0.9 percent in May after a 1.6-percent drop in April. The airline fares index declined 1.9 percent, and the index for alcoholic beverages also declined. The indexes for apparel and recreation were unchanged.

The index for all items less food and energy rose 2.2 percent over the past 12 months, after increasing 2.1 percent in the 12 months ending March and April. The shelter index rose 3.5 percent over the last 12 months, and the medical care index rose 2.4 percent. Indexes that declined over the past 12 months include those for new vehicles, airline fares, used cars and trucks, and communication.

Not seasonally adjusted CPI measures
The Consumer Price Index for All Urban Consumers (CPI-U) increased 2.8 percent over the last 12 months to an index level of 251.588 (1982-84=100). For the month, the index increased 0.4 percent prior to seasonal adjustment.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 3.0 percent over the last 12 months to an index level of 245.770 (1982-84=100). For the month, the index increased 0.5 percent prior to seasonal adjustment.

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) increased 2.6 percent over the last 12 months. For the month, the index increased 0.4 percent on a not seasonally adjusted basis. Please note that the indexes for the past 10 to 12 months are subject to revision.


Real Average Hourly Earnings 0.1% in May
Posted: June 12, 2018 at 08:30 AM (Tuesday)

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

Real average weekly earnings increased 0.1 percent over the month due to the increase in real average hourly earnings combined with the unchanged average workweek.

Real average hourly earnings were unchanged, seasonally adjusted, from May 2017 to May 2018. Combined with a 0.3-percent increase in the average workweek, real average weekly earnings increased by 0.3 percent over this period.

Production and nonsupervisory employees
Real average hourly earnings for production and nonsupervisory employees increased 0.1 percent from April to May, seasonally adjusted. 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 Urban Wage Earners and Clerical Workers (CPI-W).

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

From May 2017 to May 2018, real average hourly earnings decreased 0.1 percent, seasonally adjusted. The decrease in real average hourly earnings combined with a 0.6-percent increase in the average workweek resulted in a 0.5-percent increase in real average weekly earnings over this period.


NFIB Small Business Optimism Index increased 3.0 points to 107.8 in May
Posted: June 12, 2018 at 07:00 AM (Tuesday)

The Small Business Optimism Index increased in May to the second highest level in the NFIB survey’s 45-year history. The index rose to 107.8, a three-point gain, with small businesses reporting high numbers in several key areas including compensation, profits, and sales trends.

“Main Street optimism is on a stratospheric trajectory thanks to recent tax cuts and regulatory changes. For years, owners have continuously signaled that when taxes and regulations ease, earnings and employee compensation increase,” said NFIB President and CEO Juanita Duggan.

The May report hit several records:

• Compensation increases hit a 45-year high at a record net 35 percent.
• Positive earnings trends reached a survey high at a net three percent.
• Positive sales trends are at the highest level since 1995.
• Expansion plans are the most robust in survey history.

In another interesting marker, a net 19 percent of small business owners are planning price increases, the highest since 2008 and a signal of a strong economy. A net three percent reported positive profit trends, up four points and the best reading in the survey’s history. In addition, a net 15 percent reported higher nominal sales in the past three months, up an astonishing seven points and the sixth consecutive strong month for sales.

“Small business owners are continuing an 18-month streak of unprecedented optimism which is leading to more hiring and raising wages,” said NFIB Chief Economist Bill Dunkelberg. “While they continue to face challenges in hiring qualified workers, they now have more resources to commit to attracting candidates.”

Small business owners continue to hire with a seasonally-adjusted net 18 percent planning to create new jobs. Twenty-nine percent of owners have job openings for skilled workers, the third highest reading since 2000. Twelve percent have job openings for unskilled workers, with the strongest demand in the transportation, travel, communications, and utilities sector. To compete in the job market, 35 percent of owners reported increases in labor compensation to attract job applicants.

The percentage of owners reporting capital outlays moved up one point to 62 percent, with 47 percent reporting spending on new equipment, 24 percent acquiring vehicles, and 16 percent improving expanded facilities. Thirty percent plan capital outlays in the next few months.

Access to credit continues as a non-issue with 37 percent of owners reporting all credit needs were satisfied and 43 percent saying they were not interested in a loan, down seven points from last month and the lowest reading since 2007. Only one percent reported that financing was their top business problem. Owners planning to build inventories rose three points to a net four percent, the nineteenth positive reading in the past 20 months.

As reported in NFIB’s May jobs report, 23 percent of owners cited the difficulty of finding qualified workers as their Single Most Important Business Problem, followed by taxes at 17 percent and regulations at 13 percent. Fifty-eight percent reported hiring or trying to hire, up one point from last month but 83 percent of those reported few or no qualified workers.

LABOR MARKETS
Reports of employment gains remain strong among small businesses. Owners reported adding a net 0.20 workers per firm on average, slower than earlier in the year but strong. Sixteen percent (unchanged) reported increasing employment an average of 3.4 workers per firm and 8 percent (down 1 point) reported reducing employment an average of 3.2 workers per firm (seasonally adjusted). Fifty-eight percent reported hiring or trying to hire (up 1 point), but 48 percent (83 percent of those hiring or trying to hire) reported few or no qualified applicants for the positions they were trying to fill. Twenty-three percent of owners cited the difficulty of finding qualified workers as their Single Most Important Business Problem (up 1 point), 1 point below the survey record high. Thirty-three percent of all owners reported job openings they could not fill in the current period, down 2 points but historically very high. Twenty-nine percent have openings for skilled workers, the third highest reading since 2000, with the two higher readings occurring in the last 12 months. Twelve percent have openings for unskilled workers, 4 points below the record high of 16 percent reached in March this year. Twelve percent reported using temporary workers, unchanged. A seasonally-adjusted net 18 percent plan to create new jobs, up 2 points from April and very strong.

SALES AND INVENTORIES
A net 15 percent of all owners (seasonally adjusted) reported higher nominal sales in the past three months compared to the prior three months, up a humongous 7 points and the sixth consecutive strong month. Reports of sales gains were most frequent in manufacturing, transportation, and professional services. The net percent of owners expecting higher real sales volumes rose 10 points to a net 31 percent of owners. Owners will have to hire more employees and build inventory or miss out on potential sales.

The net percent of owners reporting inventory increases was unchanged net 4 percent (seasonally adjusted), extending a five month run of substantial inventory building (a boost to GDP growth) in anticipation of stronger real sales. The net percent of owners viewing current inventory stocks as “too low” was unchanged at a negative 4 percent (a negative number means more think stocks are too high than too low). The net percent of owners planning to build inventories rose 3 points to a net 4 percent, the nineteenth positive reading in the past 20 months.

CAPITAL SPENDING
Sixty-two percent of owners reported capital outlays, up 1 point. Of those making expenditures, 47 percent reported spending on new equipment (up 4 points after 4 points in April), 24 percent acquired vehicles (down 3 points), and 16 percent improved or expanded facilities (unchanged). Six percent acquired new buildings or land for expansion (up 1 point) and 13 percent spent money for new fixtures and furniture (down 2 points). Thirty percent plan capital outlays in the next few months, up 1 point. A shortage of “qualified” workers will encourage such investments in the longer run.

INFLATION
The net percent of owners raising average selling prices rose 5 points to a net 19 percent seasonally adjusted, resuming a march to higher average selling prices that started in the fourth quarter of 2016. The Federal Reserve’s target of 2 percent inflation (based on the headline PCE price deflator) has not been reached, but it is close. Seasonally adjusted, a net 26 percent plan price hikes (up 4 points). With reports of increased compensation running at record levels, there is more pressure to pass these costs on in higher selling prices.

COMPENSATION AND EARNINGS
Reports of higher worker compensation pushed 2 points higher to a record net 35 percent of all firms. Plans to raise compensation fell 1 point to a net 20 percent, high but below its recent peak of 24 percent in January. Owners complain at record rates of labor quality issues, with 83 percent of those hiring or trying to hire reporting few or no qualified applicants for their open positions. Twenty-three percent (up 1 point) selected “finding qualified labor” as their top business problem, more than cited taxes, weak sales, or the cost of regulations as their top challenge. The frequency of reports of positive profit trends improved 4 percentage points to a net 3 percent reporting quarter on quarter profit improvements, the best reading in the survey’s 45 year history. Overall, the new tax law and the strong economy are very supportive of profit improvements.

CREDIT MARKETS
Four percent of owners reported that all their borrowing needs were not satisfied, unchanged and historically low. Thirty-seven percent reported all credit needs met (up 5 points) and 43 percent said they were not interested in a loan, down 7 points and the lowest reading since April 2007. If sustained, this will mark a shift from the borrowing sidelines that has plagued lending markets since the recession. Only 1 percent reported that financing was their top business problem compared to 17 percent citing taxes and 23 percent the availability of qualified labor. A net 5 percent reported loans “harder to get,” historically low. Thirty-four percent of all owners reported borrowing on a regular basis (up 3 points). The average rate paid on short maturity loans was unchanged at 6.4 percent.

COMMENTARY
A vibrant democracy depends on a strong, free, private sector. The Administration and Congress have implemented important policy changes that strengthen the private sector. The new tax code is returning money to the private sector where history makes clear it will be better invested than by a government bureaucracy. Regulatory costs, as significant as taxes, are being reduced.

The private sector must not be deprived of its right to manage its economic affairs. History has proven that governments cannot deliver the success that a free economy can. There is much more work to be done. Rising healthcare costs have not been addressed and tax code complexity continues to burden small business owners, but we are on the right path.

These “big picture” developments are supporting a Main Street economy that is on fire. Hiring is proceeding as fast as labor supply issues allow, compensation is at record high levels, and capital spending the strongest in decades as owners feel it is once again a good time to expand their firms. Sales are historically strong and positive profit trends at the best level in the survey’s history. Accounting for about half of the economy, Main Street is definitely driving economic growth and employment to higher levels.


Consumer Credit Increased at an annual rate of 3.00%
Posted: June 7, 2018 at 03:00 PM (Thursday)

In April, consumer credit increased at a seasonally adjusted annual rate of 3 percent. Revolving credit increased at an annual rate of 2-1/2 percent, while nonrevolving credit increased at an annual rate of 3 percent.


Weekly Initial Unemployment Claims Decrease 1,000 to 222,000
Posted: June 7, 2018 at 08:30 AM (Thursday)

In the week ending June 2, the advance figure for seasonally adjusted initial claims was 222,000, a decrease of 1,000 from the previous week's revised level. The previous week's level was revised up by 2,000 from 221,000 to 223,000. The 4-week moving average was 225,500, an increase of 2,750 from the previous week's revised average. The previous week's average was revised up by 500 from 222,250 to 222,750. Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending May 26, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending May 26 was 1,741,000, an increase of 21,000 from the previous week's revised level. The previous week's level was revised down by 6,000 from 1,726,000 to 1,720,000. The 4-week moving average was 1,728,750, a decrease of 13,250 from the previous week's revised average. This is the lowest level for this average since December 8, 1973 when it was 1,715,500. The previous week's average was revised down by 1,500 from 1,743,500 to 1,742,000.


Goods and Services Deficit Decreased in April 2018
Posted: June 6, 2018 at 10:00 AM (Wednesday)

The nation's international trade deficit in goods and services decreased to $46.2 billion in April from $47.2 billion in March (revised), as exports increased and imports decreased.

GOODS AND SERVICES

Exports were $211.2 billion in April, up from $210.7 billion in March. Goods were $141.2 billion in April, up from $141.0 billion in March. Services were $70.0 billion in April, up from $69.7 billion in March.
Imports were $257.4 billion in April, down from $257.9 billion in March. Goods were $209.5 billion in April, down from $210.2 billion in March. Services were $47.9 billion in April, up from $47.6 billion in March.
For goods, the deficit was $68.3 billion in April, down from $69.3 billion in March. For services, the surplus was $22.1 billion in April, down less than $0.1 billion from March.


1Q2018 Productivity Growth Increased 0.4%
Posted: June 6, 2018 at 08:30 AM (Wednesday)

Nonfarm business sector labor productivity increased 0.4 percent during the first quarter of 2018, the U.S. Bureau of Labor Statistics reported today, as output increased 2.7 percent and hours worked increased 2.3 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the first quarter of 2017 to the first quarter of 2018, productivity increased 1.3 percent, reflecting a 3.6-percent increase in output and a 2.3-percent increase in hours worked.

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

Unit labor costs in the nonfarm business sector increased 2.9 percent in the first quarter of 2018, reflecting a 3.3-percent increase in hourly compensation and a 0.4-percent increase in productivity. Unit labor costs increased 1.3 percent over the last four quarters. (See tables A1 and 2.)

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

Manufacturing sector labor productivity decreased 1.2 percent in the first quarter of 2018, as output increased 1.7 percent and hours worked increased 2.9 percent. Productivity declined 0.8 percent in the durable manufacturing sector, as output rose 3.3 percent and hours worked increased 4.2 percent. In the non-durable goods manufacturing sector, a 0.9-percent decrease in productivity reflected no change in output and a 0.9-percent increase in hours worked. Over the last four quarters, total manufacturing sector productivity increased 0.3 percent, as output increased 2.0 percent and hours worked increased 1.7 percent. Unit labor costs in manufacturing increased 5.2 percent in the first quarter of 2018 and rose 2.5 percent from the same quarter a year ago. (See tables A1 and 3.)

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

Preliminary first-quarter 2018 measures were announced today for the nonfinancial corporate sector. Productivity increased 1.9 percent in the first quarter of 2018 and increased 1.7 percent over the last four quarters. Unit profits of nonfinancial corporations fell at a 9.5 percent annual rate in the first quarter of 2018 and increased 1.7 percent over the last four quarters.

Revised measures
Measures released today are based on more recent source data than were available for the preliminary report. Table B1 presents previous and revised productivity and related measures for the business, nonfarm business, and manufacturing sectors for the first quarter of 2018.

In the first quarter of 2018, nonfarm business productivity rose 0.4 percent, rather than 0.7 percent as reported May 3, the combined effect of a 0.1-percentage point downward revision to output and a 0.2 percentage point upward revision to hours worked. Unit labor costs were revised up--due primarily to the downward revision to productivity--and increased 2.9 percent. In the manufacturing sector, productivity was revised down from an increase of 0.5 percent to a decrease of 1.2 percent, due almost entirely to a 1.6-percentage point downward revision to output. Hourly compensation was revised up 0.7 percentage point. As a result of the downward revision to productivity and the upward revision to hourly compensation, unit labor costs increased 5.2 percent rather than 2.7 percent as previously reported.

Table B2 shows previous and revised productivity and related measures for the business, nonfarm business, manufacturing, and nonfinancial corporate sectors for the fourth quarter of 2017.

In the fourth quarter of 2017, labor productivity in the nonfarm business sector increased at the same 0.3-percent rate reported May 3. Hourly compensation was revised up, and increased 2.9 percent. As a result, unit labor costs increased 2.5 percent in the fourth quarter of 2017, rather than increasing 2.1 percent. Total manufacturing sector productivity increased 4.3 percent in the fourth quarter of 2017, a smaller increase than previously reported. Hourly compensation was revised up 2.3 percentage points; and when combined with the small downward revision to productivity this led to an upward revision to unit labor costs, which rose 0.2 percent rather than decreasing 2.2 percent.

Manufacturing output and all related measures--including labor productivity--were revised back as far as 2008 to incorporate revised BLS measures of sectoral output in manufacturing industries published May 16, 2018 in Multifactor Productivity Trends In Manufacturing - 2016. The period most affected was from 2014 to 2016, with the average annual rate of productivity growth over this period revised down from -0.1 percent to -0.6 percent. The average annual rate of manufacturing productivity growth from 2007 to 2017 was unrevised at 0.7 percent, well below the long-term rate from 1987 to 2017 of 2.7 percent. (See tables 3, 4, and 5, and appendix tables 1, 2, and 3.) For more complete information see www.bls.gov/mfp/sectoraloutputrevisions.htm.

In the nonfinancial corporate sector, productivity rose 1.2 percent in the fourth quarter of 2017 rather than increasing 0.8 percent as previously reported, due solely to an upward revision to output. Annual average productivity in the nonfinancial corporate sector increased 1.0 percent in 2017, the same as the preliminary estimate. Unit profits rose 2.2 percent in the fourth quarter of 2017, rather than the 2.6 percent increase reported May 3.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: June 6, 2018 at 07:00 AM (Wednesday)

Mortgage applications increased 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 June 1, 2018. This week's results included an adjustment for the Memorial Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 4.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 7 percent compared with the previous week. The Refinance Index increased 4 percent from the previous week. The seasonally adjusted Purchase Index increased 4 percent from one week earlier. The unadjusted Purchase Index decreased 8 percent compared with the previous week and was 9 percent higher than the same week one year ago.

The refinance share of mortgage activity increased to 35.6 percent of total applications from 35.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.1 percent of total applications.

The FHA share of total applications decreased to 9.7 percent from 9.9 percent the week prior. The VA share of total applications increased to 10.1 percent from 9.9 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 ($453,100 or less) decreased to 4.75 percent from 4.84 percent, with points decreasing to 0.46 from 0.47 (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 $453,100) decreased to 4.70 percent from 4.73 percent, with points decreasing to 0.35 from 0.36 (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 4.77 percent from 4.85 percent, with points decreasing to 0.70 from 0.88 (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 4.21 percent from 4.24 percent, with points decreasing to 0.50 from 0.51 (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 4.08 percent from 4.11 percent, with points decreasing to 0.41 from 0.62 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


ISM Non-Manufacturing Index increased to 58.6% in May
Posted: June 5, 2018 at 10:00 AM (Tuesday)

Economic activity in the non-manufacturing sector grew in May for the 100th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The NMI® registered 58.6 percent, which is 1.8 percentage points higher than the April reading of 56.8 percent. This represents continued growth in the non-manufacturing sector at a faster rate. The Non-Manufacturing Business Activity Index increased to 61.3 percent, 2.2 percentage points higher than the April reading of 59.1 percent, reflecting growth for the 106th consecutive month, at a faster rate in May. The New Orders Index registered 60.5 percent, 0.5 percentage point higher than the reading of 60 percent in April. The Employment Index increased 0.5 percentage point in May to 54.1 percent from the April reading of 53.6 percent. The Prices Index increased by 2.5 percentage points from the April reading of 61.8 percent to 64.3 percent, indicating that prices increased in May for the 27th consecutive month. According to the NMI®, 14 non-manufacturing industries reported growth. The majority of respondents are optimistic about business conditions and the overall economy. There continue to be concerns about the uncertainty surrounding tariffs, trade agreements and the impact on cost of goods sold.

INDUSTRY PERFORMANCE
The 14 non-manufacturing industries reported growth in May — listed in order — are: Wholesale Trade; Mining; Real Estate, Rental & Leasing; Construction; Retail Trade; Management of Companies & Support Services; Professional, Scientific & Technical Services; Transportation & Warehousing; Public Administration; Agriculture, Forestry, Fishing & Hunting; Accommodation & Food Services; Finance & Insurance; Utilities; and Other Services. The only industry reporting a decrease is Information.


Job Openings increased to 6.7 million in April
Posted: June 5, 2018 at 10:00 AM (Tuesday)

The number of job openings was little changed at 6.7 million on the last business day of April, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were little changed at 5.6 million and 5.4 million, respectively. Within separations, the quits rate was unchanged at 2.3 percent and the layoffs and discharges rate increased to 1.2 percent. 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.

Job Openings
On the last business day of April, the job openings level was little changed but reached a new series high of 6.7 million. The series began in December 2000. The job openings rate was 4.3 percent in April 2018. The number of job openings was little changed for total private and for government. Job openings increased in durable goods manufacturing (+33,000) and information (+26,000) but decreased in finance and insurance (-84,000). The number of job openings was little changed in all four regions.

Hires
The number of hires was little changed at 5.6 million in April. The hires rate was 3.8 percent. Hires for total private and for government were little changed. The number of hires was little changed in all industries and in all four regions.

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

The number of total separations was little changed at 5.4 million in April. The total separations rate was 3.6 percent. The number of total separations was little changed for total private and for government. Total separations increased in state and local government education (+20,000). The number of total separations was little changed in all four regions.

The number of quits was little changed at 3.4 million in April. The quits rate was 2.3 percent. The number of quits was little changed for total private and increased for government (+17,000). Quits increased in state and local government education (+14,000) but decreased in arts, entertainment, and recreation (-25,000). The number of quits was little changed in all four regions.

The number of layoffs and discharges edged up to 1.7 million in April. The layoffs and discharges rate increased to 1.2 percent over the month. The number of layoffs and discharges edged up for total private and was little changed for government. Layoffs and discharges increased in arts, entertainment, and recreation (+51,000) and in finance and insurance (+27,000). The number of layoffs and discharges was little changed in all four regions.

The number of other separations was little changed in April at 347,000. The number of other separations was little changed for total private and unchanged for government. Other separations was little changed in all industries and in all four regions.

Net Change in Employment
Large numbers of hires and separations occur every month throughout the business cycle. Net employment change results from the relationship between hires and separations. When the number of hires exceeds the number of separations, employment rises, even if the hires level is steady or declining. Conversely, when the number of hires is less than the number of separations, employment declines, even if the hires level is steady or rising. Over the 12 months ending in April, hires totaled 66.1 million and separations totaled 63.7 million, yielding a net employment gain of 2.4 million. These totals include workers who may have been hired and separated more than once during the year.


New orders for manufactured goods decreased 0.8% in April
Posted: June 4, 2018 at 10:00 AM (Monday)

New orders for manufactured goods in April, down following two consecutive monthly increases, decreased $4.0 billion or 0.8 percent to $494.4 billion, the U.S. Census Bureau reported today. This followed a 1.7 percent March increase. Shipments, up eleven of the last twelve months, increased $0.1 billion or virtually unchanged to $492.8 billion. This followed a 0.7 percent March increase. Unfilled orders, up five of the last six months, increased $5.4 billion or 0.5 percent to $1,153.1 billion. This followed a 0.8 percent March increase. The unfilled orders-to-shipments ratio was 6.73, up from 6.66 in March. Inventories, up eighteen consecutive months, increased $2.2 billion or 0.3 percent to $666.9 billion. This followed a 0.2 percent March increase. The inventories-to-shipments ratio was 1.35, unchanged from March.

New Orders
New orders for manufactured durable goods in April, down following two consecutive monthly increases, decreased $4.1 billion or 1.6 percent to $248.6 billion, up from the previously published 1.7 percent decrease. This followed a 2.7 percent March increase. Transportation equipment, also down following two consecutive monthly increases, drove the decrease, $5.5 billion or 6.0 percent to $87.2 billion. New orders for manufactured nondurable goods increased $0.1 billion or 0.1 percent to $245.8 billion.

Shipments
Shipments of manufactured durable goods in April, down following eight consecutive monthly increases, decreased less than $0.1 billion or virtually unchanged to $247.0 billion, up from the previously published 0.1 percent decrease. This followed a 0.8 percent March increase. Transportation equipment, down following three consecutive monthly increases, drove the decrease, $1.7 billion or 2.0 percent to $83.0 billion. Shipments of manufactured nondurable goods, up ten of the last eleven months, increased $0.1 billion or 0.1 percent to $245.8 billion. This followed a 0.6 percent March increase. Food products, up five of the last six months, drove the increase, $0.3 billion or 0.5 percent to $68.1 billion.

Unfilled Orders
Unfilled orders for manufactured durable goods in April, up five of the last six months, increased $5.4 billion or 0.5 percent to $1,153.1 billion, unchanged from the previously published increase. This followed a 0.8 percent March increase. Transportation equipment, also up five of the last six months, led the increase, $4.2 billion or 0.5 percent to $796.1 billion.

Inventories
Inventories of manufactured durable goods in April, up seventeen of the last eighteen months, increased $1.3 billion or 0.3 percent to $401.9 billion, unchanged from the previously published increase. This followed a 0.2 percent March increase. Fabricated metal products, up fifteen of the last sixteen months, led the increase, $0.4 billion or 0.8 percent to $52.0 billion. Inventories of manufactured nondurable goods, up ten consecutive months, increased $0.8 billion or 0.3 percent to $265.0 billion. This followed a 0.1 percent March increase. Chemical products, up six of the last seven months, led the increase, $0.4 billion or 0.5 percent to $87.8 billion. By stage of fabrication, April materials and supplies increased 0.5 percent in durable goods and increased 0.3 percent nondurable goods. Work in process increased 0.5 percent in both durable goods and nondurable goods. Finished goods decreased 0.1 percent in durable goods and increased 0.2 percent in nondurable goods.


Employment Trends Index Decreased in May to 107.69
Posted: June 4, 2018 at 10:00 AM (Monday)

The Conference Board Employment Trends Index™ (ETI) decreased in May, after five consecutive monthly gains. The index now stands at 107.69, down from 108.00 (a downward revision) in April. The change represents a 3.9 percent gain in the ETI compared to a year ago.

“The decline in the Employment Trends Index in May is probably a reversion to trend after the very rapid increases in recent months,” said Gad Levanon, Chief Economist, North America, at The Conference Board. “With the economy growing well above trend, we expect solid job growth to continue despite the difficulty in filling job openings.”

May’s decline in the ETI was fueled by negative contributions from six out of the eight components. From the largest negative contributor to the smallest, these were: The Percentage of Firms With Positions Not Able to Fill Right Now, Percentage of Respondents Who Say They Find “Jobs Hard to Get,” Job Openings, Number of Employees Hired by the Temporary-Help Industry, Initial Claims for Unemployment Insurance, and the Ratio of Involuntarily Part-time to All Part-time Workers. Real Manufacturing and Trade Sales and Industrial Production made a positive contribution.


New York Purchasing Managers Business Activity Dropped to 66.4 in May
Posted: June 4, 2018 at 08:30 AM (Monday)

In May, New York City purchasing managers reported the lowest level of Current Revenues on record, according to the survey taken by the Institute for Supply Management-New York.

New York Metro
Current Business Conditions were at 56.4 in May, down from 64.3 in April. The Six-Month Outlook rose to a four-month high of 66.9 in May, up from 58.4 in April. The six-month outlook has been a reliable short-run guide for current business conditions over time.

Company Specific
Employment, a seasonally adjusted index, stayed just above the breakeven point by coming in at 50.2 in May, down from 58.3 in April. Employment has moved below the breakeven point just once in 2018: when it fell to 46.7 in February. Quantity of Purchases remained at 50.0 for the second consecutive month. Quantity of purchases has been a relatively stable index, staying between 44.3 and 58.0 for 24 consecutive months. In May, top line and forward revenue guidance both moved downward. Current Revenues fell 11.8 to 43.8, the lowest level since the index was added to the survey in February of 2012. Current revenues has only fallen below the breakeven point 10 times. Expected Revenues fell from April’s 12-month high of 76.3, coming in at 71.7 in May. Prices Paid rose to 72.9 in May, reaching a seven year high.


May Manufacturing ISM increased to 58.7
Posted: June 1, 2018 at 10:00 AM (Friday)

Economic activity in the manufacturing sector expanded in May, and the overall economy grew for the 109th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The May PMI® registered 58.7 percent, an increase of 1.4 percentage points from the April reading of 57.3 percent. The New Orders Index registered 63.7 percent, an increase of 2.5 percentage points from the April reading of 61.2 percent. The Production Index registered 61.5 percent, a 4.3 percentage point increase compared to the April reading of 57.2 percent. The Employment Index registered 56.3 percent, an increase of 2.1 percentage points from the April reading of 54.2 percent. The Supplier Deliveries Index registered 62 percent, a 0.9 percentage point increase from the April reading of 61.1 percent. The Inventories Index registered 50.2 percent, a decrease of 2.7 percentage points from the April reading of 52.9 percent. The Prices Index registered 79.5 percent in May, a 0.2 percentage point increase from the April reading of 79.3 percent, indicating higher raw materials prices for the 27th consecutive month.

Comments from the panel reflect continued expanding business strength. Demand remains strong, with the New Orders Index at 60 or above for the 13th straight month, and the Customers’ Inventories Index remaining at very low levels. The Backlog of Orders Index continued expanding, with its highest reading since April 2004, when it registered 66.5 percent. Consumption, described as production and employment, continues to expand in spite of labor and skill shortages. Inputs, expressed as supplier deliveries, inventories and imports, had expansion declines, due primarily to inventory reductions likely caused by supplier performance issues. Lead-time extensions, steel and aluminum disruptions, supplier labor issues, and transportation difficulties continue. Export orders expanded at slower rates. The Prices Index is at its highest level since April 2011, when it registered 82.6 percent. Demand remains robust, but the nation’s employment resources and supply chains continue to struggle. Respondents say price pressure at their companies is causing price-increase discussions as we prepare to enter H2.

Of the 18 manufacturing industries, 16 reported growth in May, in the following order: Textile Mills; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Printing & Related Support Activities; Fabricated Metal Products; Furniture & Related Products; Machinery; Chemical Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Petroleum & Coal Products; Plastics & Rubber Products; Miscellaneous Manufacturing; Transportation Equipment; Paper Products; and Primary Metals. No industry reported a decrease in PMI® in May compared to April.


Construction Spending increased 1.8% in April
Posted: June 1, 2018 at 10:00 AM (Friday)

Total Construction
Construction spending during April 2018 was estimated at a seasonally adjusted annual rate of $1,310.4 billion, 1.8 percent (±1.0 percent) above the revised March estimate of $1,286.8 billion. The April figure is 7.6 percent (±1.5 percent) above the April 2017 estimate of $1,217.7 billion. During the first four months of this year, construction spending amounted to $387.0 billion, 6.6 percent (±1.2 percent) above the $363.1 billion for the same period in 2017.

Private Construction
Spending on private construction was at a seasonally adjusted annual rate of $1,014.3 billion, 2.8 percent (±0.8 percent) above the revised March estimate of $986.6 billion. Residential construction was at a seasonally adjusted annual rate of $556.3 billion in April, 4.5 percent (±1.3 percent) above the revised March estimate of $532.4 billion. Nonresidential construction was at a seasonally adjusted annual rate of $458.0 billion in April, 0.8 percent (±0.8 percent)* above the revised March estimate of $454.2 billion.

Public Construction
In April, the estimated seasonally adjusted annual rate of public construction spending was $296.1 billion, 1.3 percent (±2.0 percent)* below the revised March estimate of $300.1 billion. Educational construction was at a seasonally adjusted annual rate of $74.2 billion, nearly the same as (±2.3 percent)* the revised March estimate of $74.2 billion. Highway construction was at a seasonally adjusted annual rate of $88.0 billion, 1.0 percent (±6.3 percent)* below the revised March estimate of $88.8 billion.


May Employment rose by 223,000
Unemployment Rate dipped to 3.8%

Posted: June 1, 2018 at 08:30 AM (Friday)

Total nonfarm payroll employment increased by 223,000 in May, and the unemployment rate edged down to 3.8 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in several industries, including retail trade, health care, and construction.

Household Survey Data
The unemployment rate edged down to 3.8 percent in May, and the number of unemployed persons declined to 6.1 million. Over the year, the unemployment rate was down by 0.5 percentage point, and the number of unemployed persons declined by 772,000.

Among the major worker groups, the unemployment rates for adult men (3.5 percent), Blacks (5.9 percent), and Asians (2.1 percent) decreased in May. The jobless rates for adult women (3.3 percent), teenagers (12.8 percent), Whites (3.5 percent), and Hispanics (4.9 percent) changed little over the month.

The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.2 million in May and accounted for 19.4 percent of the unemployed. Over the past 12 months, the number of long-term unemployed has declined by 476,000.

Both the labor force participation rate, at 62.7 percent, and the employment-population ratio, at 60.4 percent, changed little in May.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 4.9 million in May. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.

The number of persons marginally attached to the labor force, at 1.5 million in May, was little different 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 378,000 discouraged workers in May, little changed 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 May had not searched for work for reasons such as school attendance or family responsibilities.

Establishment Survey Data
Total nonfarm payroll employment increased by 223,000 in May, compared with an average monthly gain of 191,000 over the prior 12 months. Over the month, employment continued to trend up in several industries, including retail trade, health care, and construction.

In May, retail trade added 31,000 jobs, with gains occurring in general merchandise stores (+13,000) and in building material and garden supply stores (+6,000). Over the year, retail trade has added 125,000 jobs.

Employment in health care rose by 29,000 in May, about in line with the average monthly gain over the prior 12 months. Ambulatory health care services added 18,000 jobs over the month, and employment in hospitals continued to trend up (+6,000).

Employment in construction continued on an upward trend in May (+25,000) and has risen by 286,000 over the past 12 months. Within the industry, nonresidential specialty trade contractors added 15,000 jobs over the month.

Employment in professional and technical services continued to trend up in May (+23,000) and has risen by 206,000 over the year.

Transportation and warehousing added 19,000 jobs over the month and 156,000 over the year. In May, job gains occurred in warehousing and storage (+7,000) and in couriers and messengers (+5,000).

Manufacturing employment continued to expand over the month (+18,000). Durable goods accounted for most of the change, including an increase of 6,000 jobs in machinery. Manufacturing employment has risen by 259,000 over the year, with about three-fourths of the growth in durable goods industries.

Mining added 6,000 jobs in May. Since a recent low point in October 2016, employment in mining has grown by 91,000, with support activities for mining accounting for nearly all of the increase.

In May, employment changed little in other major industries, including wholesale trade, information, financial activities, leisure and hospitality, and government.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in May. In manufacturing, the workweek decreased by 0.2 hour to 40.8 hours, and overtime edged down by 0.2 hour to 3.5 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls remained at 33.8 hours.

In May, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents to $26.92. Over the year, average hourly earnings have increased by 71 cents, or 2.7 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 7 cents to $22.59 in May.

The change in total nonfarm payroll employment for March was revised up from +135,000 to +155,000, and the change for April was revised down from +164,000 to +159,000. With these revisions, employment gains in March and April combined were 15,000 more than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 179,000 over the last 3 months.


Pending Home Sales Index inched up 0.4% in May
Posted: May 31, 2018 at 10:00 AM (Thursday)

After two straight months of modest increases, pending home sales dipped in April to their third-lowest level over the past year, according to the National Association of Realtors. All major regions saw no gain in contract activity last month.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, declined 1.3 percent to 106.4 in April from an upwardly revised 107.8 in March. With last month’s decrease, the index is down on an annualized basis (2.1 percent) for the fourth straight month.

Lawrence Yun, NAR chief economist, says the housing market this spring is hindered because of the severe housing shortages in much of the country. “Pending sales slipped in April and continued to stay within the same narrow range with little signs of breaking out,” he said. “Feedback from Realtors®, as well as the underlying sales data, reveal that the demand for buying a home is very robust. Listings are typically going under contract in under a month, and instances of multiple offers are increasingly common and pushing prices higher.”

Added Yun, “The unfortunate reality for many home shoppers is that reaching the market will remain challenging if supply stays at these dire levels.”

Heading into the summer months, if low supply and swift price growth were not enough of a headwind for the housing market, Yun believes that rising mortgage rates and gas prices could lead to hesitation among some would-be buyers.

“The combination of paying extra at the pump, while also needing to save more for a down payment because of higher rates and home prices, may weigh on the psyche of those looking to buy,” he said. “For now, the economy is very healthy, job growth is holding steady and wages are slowly rising. However, it all comes down to overall supply. If more new and existing homes are listed for sale, it would allow home prices to moderate enough to stave off inflationary pressures and higher rates.”

Yun still forecasts for existing-home sales in 2018 to increase 0.5 percent to 5.54 million – up from 5.51 million in 2017. The national median existing-home price is expected to increase around 5.1 percent. In 2017, existing sales increased 1.1 percent and prices rose 5.7 percent.

The PHSI in the Northeast remained at 90.6 in April, and is 2.1 percent below a year ago. In the Midwest the index decreased 3.2 percent to 98.5 in April, and is 5.1 percent lower than April 2017.

Pending home sales in the South declined 1.0 percent to an index of 127.3 in April, but is still 2.7 percent higher than last April. The index in the West inched backward 0.4 percent in April to 94.4, and is 4.6 percent below a year ago.


Chicago Purchasing Managers Index rose 5.1 points to 62.7 in May
Posted: May 31, 2018 at 09:45 AM (Thursday)

The MNI Chicago Business Barometer rose 5.1 points to 62.7 in May, up from 57.6 in April, hitting the highest level since January.

Business activity gained traction in May, with growth in firms’ operations up for only the second time this year. All five Barometer components rose on the month, helping take the Barometer’s year-over-year growth back into the black.

While broad based, the Barometer’s gain was largely driven by an acceleration in both output levels and orders. Having ended a run of three consecutive falls last month, the Production indicator notched another gain on its belt, rising to a three-month high. New Orders also increased in May, the first sign of order book growth this year, rising to a four-month high. The two indicators account for the lion’s share of the headline index, two thirds exactly, and stand 3.7% and 2.1% above their respective May 2017 levels.

Having trended lower since the end of 2017, companies’ unfulfilled orders surged in May. The Order Backlogs indicator ended a run of four straight declines, rebounding to a level last seen higher in October 2017.

A contributory factor to the rise in backlogs were elevated lead times on key supplies. The Supplier Deliveries indicator nudged higher in May, again the highest outturn since November, up 12.4% on the year. Growth in firms’ level of stock, meanwhile, found room to grow in May after softening in April.

Firms were more optimistic regarding their workforce in May with the Employment indicator bouncing back from last month’s six-month low. However, firms continued to stress that finding adequate workers remained challenging.

The price of key materials continued to prove a major source of angst amongst firms. Despite receding from April’s seven year high, the Prices Paid indicator remained fixed in a range last seen as high all the way back in 2011, the last time it remained above the 70-mark for two straight months.

This month, two special questions were posed to firms. The first asked firms whether supply-side issues were negatively affecting their business and a clear majority, 63.0%, said yes, consistent with the survey’s associated indicators sitting at elevated levels. The second asked firms to assess the impact of another interest rate hike in the next three months. Just under two thirds saw it having no impact on their operations, while 22.9% saw it having a negative impact. Only 2.1% who saw it assisting their business with the remainder unsure. “It had been a somewhat sluggish start to the year, perhaps unsurprising after the stellar end to 2017, but the MNI Chicago Business Barometer found a higher gear in May. Although broad based, the rise was largely thanks to a rebound in demand and back-to-back growth in output,” said Jamie Satchi, Economist at MNI Indicators.

“The result was, however, assisted by the intensification of supply side constraints, with order backlogs surging and lead times on key materials up sharply,” he added.


Personal Income increased 0.3%, Spending increased 0.6%
Posted: May 31, 2018 at 08:30 AM (Thursday)

Personal income increased $49.5 billion (0.3 percent) in April according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $60.9 billion (0.4 percent) and personal consumption expenditures (PCE) increased $79.8 billion (0.6 percent).

Real DPI increased 0.2 percent in April and Real PCE increased 0.4 percent. The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index increased 0.2 percent.

The increase in personal income in April primarily reflected increases in wages and salaries, in personal interest income, and in government social benefit payments to persons, specifically veteran’s benefits and Medicare.

The $42.8 billion increase in real PCE in April reflected an increase of $15.4 billion in spending for goods and a $27.5 billion increase in spending for services. Within goods, spending for gasoline and other energy goods was a leading contributor to the increase. Within services, the largest contributor to the increase was spending for household utilities. Detailed information on monthly real PCE spending can be found in Table 2.3.6U.

Personal outlays increased $86.9 billion in April. Personal saving was $419.6 billion in April and the personal saving rate, personal saving as a percentage of disposable personal income, was 2.8 percent.


Weekly Initial Unemployment Claims Decrease 13,000 to 221,000
Posted: May 31, 2018 at 08:30 AM (Thursday)

In the week ending May 26, the advance figure for seasonally adjusted initial claims was 221,000, a decrease of 13,000 from the previous week's unrevised level of 234,000. The 4-week moving average was 222,250, an increase of 2,500 from the previous week's unrevised average of 219,750. Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending May 19, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending May 19 was 1,726,000, a decrease of 16,000 from the previous week's revised level. The previous week's level was revised up 1,000 from 1,741,000 to 1,742,000. The 4-week moving average was 1,743,500, a decrease of 8,500 from the previous week's revised average. This is the lowest level for this average since December 15, 1973 when it was 1,735,750. The previous week's average was revised up by 250 from 1,751,750 to 1,752,000.


Challenger Layoffs Decreased to 31,517 in May
Posted: May 31, 2018 at 07:00 AM (Thursday)

Job cuts announced by U.S.-based employers fell 12.6 percent, from 36,081 in April to 31,517 in May, according to a report released Thursday by global outplacement and executive coaching firm Challenger, Gray & Christmas, Inc.

Last month’s job cuts were down 4.8 percent from the 33,092 announced in the same month last year. That is the lowest monthly total since October 2017, when 29,831 cuts were announced.

“On average, job cuts are at their lowest in May and June. Companies typically make their staffing moves at the beginning of the year or in the fourth quarter,” said John Challenger, Chief Executive Officer of Challenger, Gray & Christmas, Inc.

So far this year, employers have announced 207,977 job cuts, 6.2 percent more than the 195,895 announced through the first five months of 2017.

Retail leads all sectors in job cuts this year, with 69,316, 4,946 of which occurred in May. Retailers have announced 24 percent more cuts than through the same period last year, when 55,910 cuts were announced. So far this year, Challenger has tracked 2,565 store closures.

Health Care/Products companies announced the second highest number of job cuts in May, with 4,003, for a total of 21,453 this year. Companies in the Services sector announced 19,363 cuts, with 4,698 in May.


Beige Book: Economic Activity expanded moderately in late April and early May
Posted: May 30, 2018 at 02:00 PM (Wednesday)

Economic activity expanded moderately in late April and early May with few shifts in the pattern of growth. The Dallas District was an exception, where overall economic activity sped up to a solid pace. Manufacturing shifted into higher gear with more than half of the Districts reporting a pickup in industrial activity and a third of the Districts classifying activity as "strong." Fabricated metals, heavy industrial machinery, and electronics equipment were noted as areas of strength. Rising goods production led to higher freight volumes for transportation firms. By contrast, consumer spending was soft. Nonauto retail sales growth moderated somewhat and auto sales were flat, although there was considerable variation by District and vehicle type. In banking, demand for loans ticked higher and banks reported that increased competition had led to higher deposit rates. Delinquency rates were mostly stable at low levels. Homebuilding and home sales increased modestly, on net, and nonresidential construction continued at a moderate pace. Contacts noted some concern about the uncertainty of international trade policy. Still, outlooks for near term growth were generally upbeat.

Employment and Wages
Employment rose at a modest to moderate rate across most Districts. Again, the Dallas District was the exception, where solid and widespread employment growth was reported. Labor market conditions remained tight across the country, and contacts continued to report difficulty filling positions across skill levels. Shortages of qualified workers were reported in various specialized trades and occupations, including truck drivers, sales personnel, carpenters, electricians, painters, and information technology professionals. Many firms responded to talent shortages by increasing wages as well as the generosity of their compensation packages. In the aggregate, however, wage increases remained modest in most Districts. Contacts in some Districts expected similar employment and wage gains in the coming months.

Prices
Prices rose moderately in most Districts, while the remainder reported slight or modest increases. There were several reports of rising materials costs, notably for steel, aluminum, oil, oil derivatives, lumber, and cement. A few Districts noted that these reports of rising materials costs were becoming more common across contacts. Input cost increases, along with labor shortages in some sectors and strengthening demand, put upward pressure on prices in the transportation, construction, and manufacturing sectors. Some Districts also noted that their retail contacts were more able to pass along price increases to their customers than in the recent past.

Highlights by Federal Reserve District

Boston
Business activity continued to expand at a moderate pace, with contacted manufacturers, retailers, and most staffing firms reporting year-over-year increases in revenues. While some firms said prices were increasing more than last year, others indicated no unusual pressure. Most hiring firms noted tight labor markets; some--including staffing firms--said wages were rising.

New York
Economic growth continued at a modest pace, while labor markets have tightened further. Input price pressures have broadened, and selling price increases have picked up somewhat. Housing markets have firmed slightly, while commercial real estate markets have softened.

Philadelphia
Economic activity continued to expand at a modest pace. Wage pressures were emerging in some tighter labor markets, but wage and price increases remained modest overall, as did job growth. Notably, nonfinancial services accelerated to a moderate pace, and auto sales appeared to reverse several periods of decline, posting a slight increase.

Cleveland
The District economy expanded at a moderate pace. Labor markets tightened, with wage pressures noted broadly. Rising commodities prices and transportation costs are pressuring goods producers. Stronger confidence in the economy boosted demand in manufacturing, banking, and nonfinancial services. Consumer demand increased modestly. Construction activity remained robust.

Richmond
The regional economy expanded moderately. Robust demand and a shortage of drivers led some trucking firms to turn away business which, in turn, increased demand for rail services. Home sales were steady, while inventories remained limited. Labor demand continued to strengthen and supply remained tight across industries. Prices rose moderately, overall.

Atlanta
Economic activity grew at a modest pace. Tightness continued in the labor market with firms noting increased efforts to attract and retain workers. Reports of wage growth were mixed. Overall retail sales rose and light truck sales were robust. Real estate activity improved slightly. Manufacturers noted increases in new orders and production. Loan growth remained firm.

Chicago
Growth in economic activity continued at a moderate pace. Manufacturing increased strongly, employment grew moderately, consumer and business spending rose modestly, and construction and real estate increased slightly. Wages and prices increased modestly and financial conditions improved modestly. The outlook for farm income brightened.

St. Louis
Economic conditions improved slightly. Wage growth was moderate. Some firms have begun relaxing drug-testing standards and restrictions on hiring felons to alleviate labor shortages. District bankers reported weaker demand for new loans and a decline in creditworthiness of loan applicants. Firms surveyed in mid-May were slightly less optimistic about the rest of 2018 as those surveyed in mid-February.

Minneapolis
Ninth District economic activity increased moderately. While labor demand appeared robust, employment growth was restrained by a tight labor supply. Wage growth was moderate, while price pressures increased slightly, particularly at the wholesale level. District manufacturers were experiencing robust growth but also were experiencing supply-chain disruptions as a result of uncertainty over trade policy.

Kansas City
Overall economic activity in the Tenth District increased moderately, with further growth expected in coming months. Manufacturing activity expanded at a rapid pace, while consumer spending, energy, and business services grew moderately. Agricultural conditions weakened but at a slower pace, while District employment and wages rose modestly.

Dallas
Economic activity grew at a solid pace, with an acceleration in manufacturing activity. Expansion in the services, energy, and real estate sectors continued at about the same pace. Retail spending was mixed and drought conditions persisted in parts of the District. Hiring remained solid despite a tight labor market, and wage and price pressures stayed elevated. Contacts expressed concern about trade uncertainty and rising interest rates, although outlooks overall remained positive.

San Francisco
Economic activity in the Twelfth District continued to expand at a moderate pace. Sales of retail goods edged up, and activity in the consumer and business services sectors expanded slightly. Activity in the manufacturing sector was solid. Activity in residential real estate markets remained solid, and conditions in the commercial real estate sector picked up notably. Lending activity ticked up modestly.


Help Wanted OnLine Labor Demand decreased 51,000 to 4,699,500 in May
Posted: May 30, 2018 at 10:00 AM (Wednesday)

Online advertised vacancies decreased 51,000 to 4,699,500 in May, according to The Conference Board Help Wanted OnLine® (HWOL) Data Series,released today. The April Supply/Demand rate stands at 1.34 unemployed for each advertised vacancy, with a total of 1.6 million more unemployed workers than the number of advertised vacancies. The number of unemployed was approximately 6.35 million in April.

The Professional occupational category saw changes in Education (-8.4), Computer and math (+5.0) and Management (-5.9). The Services/Production occupational category saw changes in Transportation (-27.2), Protective service (+5.1), and Construction (-4.8).


1Q2018 GDP preliminary estimate increased 2.2%
Posted: May 30, 2018 at 08:30 AM (Wednesday)

Real gross domestic product (GDP) increased at an annual rate of 2.2 percent in the first quarter of 2018, according to the "second" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2017, real GDP increased 2.9 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 2.3 percent. With this second estimate for the first quarter, the general picture of economic growth remains the same; downward revisions to private inventory investment, residential fixed investment, and exports were partly offset by an upward revision to nonresidential fixed investment.

Real gross domestic income (GDI) increased 2.8 percent in the first quarter, compared with an increase of 1.0 percent (revised) in the fourth quarter. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 2.5 percent in the first quarter, compared with an increase of 2.0 percent in the fourth quarter.

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

The deceleration in real GDP growth in the first quarter reflected decelerations in PCE, exports, state and local government spending, and federal government spending and a downturn in residential fixed investment. These movements were partly offset by an upturn in private inventory investment and a larger increase in nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, decelerated.

Current-dollar GDP increased 4.2 percent, or $202.7 billion, in the first quarter to a level of $19.96 trillion. In the fourth quarter, current-dollar GDP increased 5.3 percent, or $253.5 billion.

The price index for gross domestic purchases increased 2.7 percent in the first quarter, compared with an increase of 2.5 percent in the fourth quarter. The PCE price index increased 2.6 percent, compared with an increase of 2.7 percent. Excluding food and energy prices, the PCE price index increased 2.3 percent, compared with an increase of 1.9 percent.

Updates to GDP
The percent change in real GDP was revised down 0.1 percentage point from the advance estimate, primarily reflecting downward revisions to private inventory investment, residential fixed investment, and exports that were partly offset by an upward revision to nonresidential fixed investment.

For the fourth quarter of 2017, the percent change in real GDI was revised from 0.9 percent to 1.0 percent based on newly available fourth-quarter wages and salaries data from the BLS Quarterly Census of Employment and Wages program.

Corporate Profits
Profits from current production (corporate profits with inventory valuation adjustment and capital consumption adjustment) decreased $12.4 billion in the first quarter, compared with a decrease of $1.1 billion in the fourth quarter.

Profits of domestic financial corporations increased $2.2 billion in the first quarter, in contrast to a decrease of $14.6 billion in the fourth quarter. Profits of domestic nonfinancial corporations decreased $19.0 billion, in contrast to an increase of $19.4 billion. Rest-of-the-world profits increased $4.4 billion, in contrast to a decrease of $5.9 billion. In the first quarter, receipts increased $20.0 billion, and payments increased $15.7 billion.


ADP National Employment Report increased by 178,000 jobs in May
Posted: May 30, 2018 at 08:15 AM (Wednesday)

Private sector employment increased by 178,000 jobs from April to May according to the May ADP National Employment Report®.

“The hot job market has cooled slightly as the labor market continues to tighten,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Healthcare and professional services remain a model of consistency and continue to serve as the main drivers of growth in the services sector and the broader labor market as well.”

Mark Zandi, chief economist of Moody’s Analytics, said, “Job growth is strong, but slowing, as businesses are unable to fill a record number of open positions. Wage growth is accelerating in response, most notably for young, new entrants and those changing jobs. Finding workers is increasingly becoming businesses number one problem.”


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: May 30, 2018 at 07:00 AM (Wednesday)

Mortgage applications decreased 2.9 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending May 25, 2018.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.9 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 5 percent from the previous week to its lowest level since December 2000. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 2 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to its lowest level since August 2008, 35.3 percent of total applications, from 35.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.7 percent of total applications.

The FHA share of total applications decreased to 9.9 percent from 10.3 percent the week prior. The VA share of total applications increased to 9.9 percent from 9.8 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 ($453,100 or less) decreased to 4.84 percent from 4.86 percent, with points decreasing to 0.47 from 0.52 (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 $453,100) decreased to 4.73 percent from 4.81 percent, with points decreasing to 0.36 from 0.42 (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 4.85 percent from 4.90 percent, with points increasing to 0.88 from 0.85 (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 4.24 percent from 4.31 percent, with points decreasing to 0.51 from 0.56 (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 4.11 percent from 4.12 percent, with points increasing to 0.62 from 0.46 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


Texas Fed Manufacturing Activity Expansion Accelerates Notably in May
Posted: May 29, 2018 at 10:30 AM (Tuesday)

Texas factory activity rose markedly in May, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, increased 10 points to a 12-year high of 35.2, signaling further acceleration in output growth.

Most other indexes of manufacturing activity also indicated a sharp acceleration in May. The capacity utilization index rose notably from 18.7 to 32.2, and the shipments index jumped 20 points to 39.5. Demand growth picked up as the growth rate of orders index increased eight points to 26.5. All three measures reached their highest readings since 2006. Meanwhile, the new orders index held steady at 27.7.

Perceptions of broader business conditions were even more positive in May than in April. The general business activity index rose five points to 26.8, and the company outlook index rose four points to 28.0. These readings are far above their respective averages.

Labor market measures suggested stronger growth in employment and notably longer work hours in May. The employment index pushed up six points to 23.4, its highest reading in six years. Twenty-nine percent of firms noted net hiring, compared with 5 percent that noted net layoffs. The hours worked index shot up nine points to 23.2.

Price and wage pressures remained highly elevated in May. The raw materials prices index and wages and benefits index edged down to 44.0 and 24.3, respectively—still well above their average readings. The finished goods prices index moved up to 20.5, with a quarter of firms noting that prices rose this month.

Expectations regarding future business conditions remained largely optimistic in May. The indexes of future general business activity and future company outlook were largely unchanged at 30.0 and 35.2, respectively, with both readings significantly above average. Most other indexes for future manufacturing activity pushed further into positive territory.


Consumer Confidence Increased in May to 128.0
Posted: May 29, 2018 at 10:00 AM (Tuesday)

The Conference Board Consumer Confidence Index® increased in May, following a modest decline in April (after a downward revision). The Index now stands at 128.0 (1985=100), up from 125.6 in April. The Present Situation Index increased from 157.5 to 161.7, while the Expectations Index improved from 104.3 last month to 105.6 this month.

“Consumer confidence increased in May after a modest decline in April,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current conditions increased to a 17-year high (March 2001, 167.5), suggesting that the level of economic growth in Q2 is likely to have improved from Q1. Consumers’ short-term expectations improved modestly, suggesting that the pace of growth over the coming months is not likely to gain any significant momentum. Overall, confidence levels remain at historically strong levels and should continue to support solid consumer spending in the near-term.”

Consumers’ assessment of current conditions improved in May. Those claiming business conditions are “good” increased from 34.8 percent to 38.4 percent, while those claiming business conditions are “bad” decreased from 12.3 percent to 12.0 percent. Consumers’ assessment of the labor market was somewhat mixed. The percentage of consumers stating jobs are “plentiful” improved from 38.2 percent to 42.4 percent, while those claiming jobs are “hard to get” also increased, from 15.5 percent to 15.8 percent.

Consumers were modestly more positive about the short-term outlook in May. The percentage of consumers anticipating business conditions will improve over the next six months decreased from 23.6 percent to 23.1 percent, while those expecting business conditions will worsen also decreased, from 9.8 percent to 8.3 percent.

Consumers’ outlook for the labor market was mixed. The proportion expecting more jobs in the months ahead increased from 18.6 percent to 19.7 percent, while those anticipating fewer jobs also increased, from 13.2 percent to 13.9 percent. Regarding their short-term income prospects, the percentage of consumers expecting an improvement declined, from 21.8 percent to 21.3 percent, while the proportion expecting a decrease rose from 7.9 percent to 8.2 percent.


S&P CoreLogic Case-Shiller Home Price Indices gained 0.8% in March
Posted: May 29, 2018 at 09:00 AM (Tuesday)

S&P Dow Jones Indices today released the latest results for the S&P CoreLogic Case-Shiller Indices, the leading measure of U.S. home prices. Data released today for March 2018 shows that home prices continued their rise across the country over the last 12 months.

YEAR-OVER-YEAR
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 6.5% annual gain in March, the same as the previous month. The 10-City Composite annual increase came in at 6.5%, up from 6.4% in the previous month. The 20-City Composite posted a 6.8% year-over-year gain, no change from the previous month.

Seattle, Las Vegas, and San Francisco continue to report the highest year-over-year gains among the 20 cities. In March, Seattle led the way with a 13.0% year-over-year price increase, followed by Las Vegas with a 12.4% increase and San Francisco with an 11.3% increase. Twelve of the 20 cities reported greater price increases in the year ending March 2018 versus the year ending February 2018.

MONTH-OVER-MONTH
Before seasonal adjustment, the National Index posted a month-over-month gain of 0.8% in March. The 10-City and 20-City Composites reported increases of 0.9% and 1.0%, respectively. After seasonal adjustment, the National Index recorded a 0.4% month-over-month increase in March. The 10-City and 20-City Composites posted 0.4% and 0.5% month-over-month increases, respectively. All 20 cities reported increases in March before seasonal adjustment, while 19 of 20 cities reported increases after seasonal adjustment.

ANALYSIS
“The home price increases continue with the National Index rising at 6.5% per year,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Seattle continues to report the fastest rising prices at 13% per year, double the National Index pace. While Seattle has been the city with the largest gains for 19 months, the ranking among other cities varies. Las Vegas and San Francisco saw the second and third largest annual gains of 12.4% and 11.3%. A year ago, they ranked 10th and 16th. Any doubts that real, or inflation-adjusted, home prices are climbing rapidly are eliminated by considering Chicago; the city reported the lowest 12-month gain among all cities in the index of 2.8%, almost a percentage point ahead of the inflation rate.

“Looking across various national statistics on sales of new or existing homes, permits for new construction, and financing terms, two figures that stand out are rapidly rising home prices and low inventories of existing homes for sale. Months-supply, which combines inventory levels and sales, is currently at 3.8 months, lower than the levels of the 1990s, before the housing boom and bust. Until inventories increase faster than sales, or the economy slows significantly, home prices are likely to continue rising. Compared to the price gains of the last boom in the early 2000s, things are calmer today. Gains in the National Index peaked at 14.5% in September 2005, more quickly than Seattle is rising now.”

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, which covers all nine U.S. census divisions, recorded a 6.5% annual gain in March 2018. The 10-City and 20-City Composites reported year-over-year increases of 6.5% and 6.8%, respectively.

As of March 2018, average home prices for the MSAs within the 10-City and 20-City Composites are back to their winter 2007 levels.


Paychex-IHS Small Business Jobs Index increased to 99.60 in May
Posted: May 29, 2018 at 08:30 AM (Tuesday)

The Paychex | IHS Markit Small Business Employment Watch for May shows a small increase in the rate of hiring and a slight decrease in the pace of wage growth. The Small Business Jobs Index grew for the first time since January, up 0.07 percent to 99.60. Job growth among small businesses is down 0.73 percent year-over year, reflecting tightening labor markets. Hourly earnings grew $0.67 to $26.61, up 2.59 percent from last year. The pace of annual wage growth is down from its peak of 2.96 percent in June 2017, but one-month (2.80 percent) and three-month (2.86 percent) annualized hourly earnings growth continue to trend higher than the annual rate.

"The national index saw a slight improvement in May, its first since January, but remains below 100," said James Diffley, chief regional economist at IHS Markit.

“It’s encouraging to see the jobs index increase for the first time since January. The modest rate of growth in small business employment reflects the continuing pressure of the tightening labor market,” said Martin Mucci, Paychex president and CEO.


The Small Business Jobs Index increased 0.07 percent to 99.60 in May

At $26.61, hourly earnings growth increased 2.59 percent YOY ($0.67); one-month and three-month annualized hourly earnings growth continue to trend higher than the annual rate

South leads regions in employment growth; West ranks highest for wage growth

Texas ranks first in state job growth; Arizona remains first in annual hourly earnings growth

Denver continues to lead metros in job growth; Phoenix remains first among metros in wage growth.

At 100.30, Construction has been above 100 for the past six years; Trade, Transportation, and Utilities leads weekly earnings growth among industries (4.07 percent)


University of Michigan Consumer Confidence slipped in May to 98.0
Posted: May 25, 2018 at 10:00 AM (Friday)

Consumer sentiment slipped by less than an index-point from last month, remaining at the same favorable levels for the past 18 months, according to the University of Michigan Surveys of Consumers.

Since President Trump’s election, the Sentiment Index has meandered in a tight eight-point range from 93.4 to 101.4, with the small month-to-month variations indicating no emerging trend, said U-M economist Richard Curtin, director of the surveys.

Consumers, he said, have remained focused on expected gains in jobs and incomes as well as anticipated increases in interest rates and inflation during the year ahead.

References to low prices for household durables, vehicles and homes fell to decade lows. Coupled with higher interest rates, it is likely that the pace of growth in personal consumption will average about 2.6 percent during the year ahead, he said.

“As past expansions have shown, rising interest rates do not suppress spending gains as long as they are accompanied by more substantial increases in consumer incomes,” Curtin said. “The May survey, however, found that consumers anticipated smaller income gains than a month or year ago, even though they anticipate a continued tight labor market.

“Although consumers anticipated a slightly higher year-ahead inflation rate, they expected the uptick to be temporary and for the inflation rate to fall back in the years ahead. While the vast majority of consumers anticipate repeated rate hikes in the year ahead, those increases must be accompanied by stronger income growth to ensure a robust expansion.”

Income Gains Remain Subdued
The long-awaited rise in wages was still absent in the May survey, as consumers anticipated gains in household incomes of just 1.6 percent, down from last month’s 2.2 percent and last year’s 2 percent. Those under age 45 anticipated income gains of 3.5 percent and those with incomes in the top third expected income gains of 3.2 percent; all other subgroups were under 2 percent.

The majority of consumers (51 percent) expected the unemployment rate to stabilize at about its current 18-year low, with equal proportions of consumers expecting some minor increases or minor declines in the year ahead (24 percent).

Low Prices Disappear
Favorable views of buying conditions fell slightly for household durables, vehicles and homes. Although the falloff still left buying plans at generally favorable levels, the widespread declines were due to how consumers assessed current market prices.

Net price references were the least favorable for household durables since just prior to the Great Recession, for vehicles since 1997, and for homes since 2006—although higher home prices brightened prospects for selling homes. Rather than prices or interest rates, consumers have increasingly cited greater certainty about their future jobs and income as the underlying reason for advancing their purchases.

Consumer Sentiment Index
The Consumer Sentiment Index was 98.0 in the May 2018 survey, barely below the 98.8 in April and just above the 97.1 in last May’s survey. The Current Conditions Index fell to 111.8 in May, down from 114.9 in April, and nearly identical to last May’s 111.7. The Expectations Index was 89.1 in May, up from 88.4 in April and last year’s 87.7.

Consumer sentiment slipped by less than an Index-point from last month. Since Trump's election, the Sentiment Index has meandered in a tight eight-point range from 93.4 to 101.4, with the small month-to-month variations indicating no emerging trend. Consumers have remained focused on expected gains in jobs and incomes as well as anticipated increases in interest rates and inflation during the year ahead. As past expansions have shown, rising interest rates do not suppress spending gains as long as they are accompanied by more substantial increases in incomes. The May survey, however, found that consumers anticipated smaller income gains than a month or year ago, even though they anticipate the unemployment rate to stabilize at its current eighteen year low. Importantly, references to discounted prices for durables, vehicles, and homes fell to decade lows. Coupled with higher interest rates, it is likely that the pace of growth in personal consumption will remain at about 2.6% during the year ahead.

When asked to explain how their personal finances had changed, the proportion that spontaneously cited higher prices worsening their financial situation has shown a close correspondence with actual trends in the year-over-year change in the CPI-see the chart. That close relationship ended about a decade ago, and in the past year or so, as the CPI has risen, complaints about inflation have fallen. While the reasons underlying the current divergence are unclear, it nonetheless signals a change in how consumers judge the impact of inflation on their personal finances. It may also suggest a change in their behavioral reaction to inflation.


April New Orders for Durable Goods decreased 1.7%, Ex-Trans up 0.9%
Posted: May 25, 2018 at 08:30 AM (Friday)

New Orders
New orders for manufactured durable goods in April decreased $4.2 billion or 1.7 percent to $248.5 billion, the U.S. Census Bureau announced today. This decrease, down following two consecutive monthly increases, followed a 2.7 percent March increase. Excluding transportation, new orders increased 0.9 percent. Excluding defense, new orders decreased 1.9 percent. Transportation equipment, also down following two consecutive monthly increases, drove the decrease, $5.6 billion or 6.1 percent to $87.1 billion.

Shipments
Shipments of manufactured durable goods in April, down following eight consecutive monthly increases, decreased $0.1 billion or 0.1 percent to $246.7 billion. This followed a 0.7 percent March increase. Transportation equipment, down following three consecutive monthly increases, drove the decrease, $1.8 billion or 2.1 percent to $82.8 billion.

Unfilled Orders
Unfilled orders for manufactured durable goods in April, up five of the last six months, increased $5.5 billion or 0.5 percent to $1,153.4 billion. This followed a 0.8 percent March increase. Transportation equipment, also up five of the last six months, led the increase, $4.2 billion or 0.5 percent to $796.2 billion.

Inventories
Inventories of manufactured durable goods in April, up seventeen of the last eighteen months, increased $1.2 billion or 0.3 percent to $401.7 billion. This followed a 0.2 percent March increase. Fabricated metal products, up fifteen of the last sixteen months, led the increase $0.4 billion or 0.8 percent to $52.0 billion.

Capital Goods
Nondefense new orders for capital goods in April decreased $5.7 billion or 6.8 percent to $78.6 billion. Shipments decreased $3.6 billion or 4.6 percent to $74.1 billion. Unfilled orders increased $4.5 billion or 0.6 percent to $713.9 billion. Inventories increased $0.8 billion or 0.5 percent to $176.1 billion. Defense new orders for capital goods in April increased $0.3 billion or 3.1 percent to $11.0 billion. Shipments increased $1.4 billion or 12.9 percent to $12.0 billion. Unfilled orders decreased $1.1 billion or 0.7 percent to $144.7 billion. Inventories decreased $0.3 billion or 1.4 percent to $22.2 billion.

Revised and Recently Benchmarked March Data
Revised seasonally adjusted March figures for all manufacturing industries were: new orders, $498.4 billion (revised from $498.3 billion); shipments, $492.6 billion (revised from $492.2 billion); unfilled orders, $1,147.8 billion (revised from $1,148.2 billion) and total inventories, $664.8 billion (revised from $664.3 billion).


Existing-Home Sales Decreased 2.5% in April
Posted: May 24, 2018 at 10:00 AM (Thursday)

After moving upward for two straight months, existing-home sales retreated in April on both a monthly and annualized basis, according to the National Association of Realtors®. All four major regions saw no gain in sales activity last month.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 2.5 percent to a seasonally adjusted annual rate of 5.46 million in April from 5.60 million in March. With last month’s decline, sales are now 1.4 percent below a year ago and have fallen year-over-year for two straight months.

Lawrence Yun, NAR chief economist, says this spring’s staggeringly low inventory levels caused existing sales to slump in April. “The root cause of the underperforming sales activity in much of the country so far this year continues to be the utter lack of available listings on the market to meet the strong demand for buying a home,” he said. “Realtors® say the healthy economy and job market are keeping buyers in the market for now even as they face rising mortgage rates. However, inventory shortages are even worse than in recent years, and home prices keep climbing above what many home shoppers are able to afford.”

The median existing-home price for all housing types in April was $257,900, up 5.3 percent from April 2017 ($245,000). March’s price increase marks the 74th straight month of year-over-year gains.

Total housing inventory3 at the end of April increased 9.8 percent to 1.80 million existing homes available for sale, but is still 6.3 percent lower than a year ago (1.92 million) and has fallen year-over-year for 35 consecutive months. Unsold inventory is at a 4.0-month supply at the current sales pace (4.2 months a year ago).

Properties typically stayed on the market for 26 days in April, which is down from 30 days in February and 29 days a year ago. Fifty-seven percent of homes sold in April were on the market for less than a month.

“What is available for sale is going under contract at a rapid pace,” said Yun. “Since NAR began tracking this data in May 2011, the median days a listing was on the market was at an all-time low in April, and the share of homes sold in less than a month was at an all-time high.”

Realtor.com®’s Market Hotness Index, measuring time-on-the-market data and listings views per property, revealed that the hottest metro areas in April were Midland, Texas; Boston-Cambridge-Newton, Mass.; San Francisco-Oakland-Hayward, Calif.; Columbus, Ohio; and Vallejo-Fairfield, Calif.

According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage increased for the seventh straight month to 4.47 percent in April (highest since 4.49 percent in September 2013) from 4.44 percent in March. The average commitment rate for all of 2017 was 3.99 percent.

“With mortgage rates and home prices continuing to climb, an increase in housing supply is absolutely crucial to keeping affordability conditions from further deterioration,” said Yun. “The current pace of price appreciation far above incomes is not sustainable in the long run.”

First-time buyers were 33 percent of sales in April (highest since last July), which is up from 30 percent last month but down from 34 percent a year ago. NAR’s 2017 Profile of Home Buyers and Sellers – released in late 2017 – revealed that the annual share of first-time buyers was 34 percent.

“Especially with mortgage rates going up in recent weeks, prospective buyers should visit with more than one lender to ensure they are getting the lowest rate possible,” NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty. “Receiving a rate quote from multiple lenders could lead to considerable savings over the life of the loan. Ask a Realtor® for a few recommendations of lenders to contact to get a quote.”

All-cash sales were 21 percent of transactions in April, which is up from 20 percent in March and unchanged from a year ago. Individual investors, who account for many cash sales, purchased 15 percent of homes in April (unchanged from last month and a year ago).

Distressed sales – foreclosures and short sales – were 3.5 percent of sales in April (lowest since NAR began tracking in October 2008), down from 4 percent last month and 5 percent a year ago. Three percent of April sales were foreclosures and 0.5 percent were short sales.
Single-family and Condo/Co-op Sales

Single-family home sales declined 3.0 percent to a seasonally adjusted annual rate of 4.84 million in April from 4.99 million in March, and are 1.6 percent below the 4.92 million sales pace a year ago. The median existing single-family home price was $259,900 in April, up 5.5 percent from April 2017.

Existing condominium and co-op sales increased 1.6 percent to a seasonally adjusted annual rate of 620,000 units in April (unchanged from a year ago). The median existing condo price was $242,500 in April, which is 3.4 percent above a year ago.
Regional Breakdown

April existing-home sales in the Northeast fell 4.4 percent to an annual rate of 650,000, and are 11.0 percent below a year ago. The median price in the Northeast was $275,200, which is 2.8 percent above April 2017.

In the Midwest, existing-home sales were at an annual rate of 1.29 million in April (unchanged from March), and are 3.0 percent below a year ago. The median price in the Midwest was $202,100, up 4.6 percent from a year ago.

Existing-home sales in the South decreased 2.9 percent to an annual rate of 2.33 million in April, but are still 2.2 percent above a year ago. The median price in the South was $227,600, up 3.9 percent from a year ago.

Existing-home sales in the West declined 3.3 percent to an annual rate of 1.19 million in April, and are 0.8 percent below a year ago. The median price in the West was $382,100, up 6.2 percent from April 2017.


Weekly Initial Unemployment Claims Increase 11,000 to 234,000
Posted: May 24, 2018 at 08:30 AM (Thursday)

In the week ending May 19, the advance figure for seasonally adjusted initial claims was 234,000, an increase of 11,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 222,000 to 223,000. The 4-week moving average was 219,750, an increase of 6,250 from the previous week's revised average. The previous week's average was revised up by 250 from 213,250 to 213,500. Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending May 12, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending May 12 was 1,741,000, an increase of 29,000 from the previous week's revised level. The previous week's level was revised up 5,000 from 1,707,000 to 1,712,000. The 4-week moving average was 1,751,750, a decrease of 23,250 from the previous week's revised average. This is the lowest level for this average since December 15, 1973 when it was 1,735,750. The previous week's average was revised up by 1,250 from 1,773,750 to 1,775,000.


New Home Sales in April at annual rate of 662,000
Posted: May 23, 2018 at 10:00 AM (Wednesday)

New Home Sales
Sales of new single-family houses in April 2018 were at a seasonally adjusted annual rate of 662,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 1.5 percent (±11.8 percent)* below the revised March rate of 672,000, but is 11.6 percent (±23.7 percent)* above the April 2017 estimate of 593,000.

Sales Price
The median sales price of new houses sold in April 2018 was $312,400. The average sales price was $407,300.

For Sale Inventory and Months’ Supply
The seasonally-adjusted estimate of new houses for sale at the end of April was 300,000. This represents a supply of 5.4 months at the current sales rate.


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: May 23, 2018 at 07:00 AM (Wednesday)

Mortgage applications decreased 2.6 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending May 18, 2018.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3 percent compared with the previous week. The Refinance Index decreased 4 percent from the previous week to its lowest level since December 2000. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 3 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 35.7 percent of total applications from 35.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.8 percent of total applications.

The FHA share of total applications remained unchanged at 10.3 percent from the week prior. The VA share of total applications decreased to 9.8 percent from 10.3 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 ($453,100 or less) increased to its highest level since April 2011, 4.86 percent, from 4.77 percent, with points increasing to 0.52 from 0.50 (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 $453,100) increased to its highest level since September 2013, 4.81 percent from 4.73 percent, with points increasing to 0.42 from 0.35 (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 its highest level since May 2011, 4.90 percent from 4.78 percent, with points increasing to 0.85 from 0.76 (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 its highest level since February 2011, 4.31 percent from 4.20 percent, with points increasing to 0.56 from 0.53 (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 its highest level in the history of the survey, 4.12 percent from 4.09 percent, with points decreasing to 0.46 from 0.56 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.


Richmond Fed's Current Activity Index rebounded from -3 to 16 in May
Posted: May 22, 2018 at 10:00 AM (Tuesday)

Fifth District manufacturing firms saw robust growth in May, according to survey results from the Federal Reserve Bank of Richmond. The composite index swung from −3 in April to 16 in May, boosted by growth in the indexes for shipments, new orders, and employment. Local business conditions also moved back into expansionary territory, after weakening in April, and firms remained optimistic that growth would continue in coming months.

Survey results indicate that both employment and wages rose among manufacturing firms in May, however, firms still struggled to find the skills they needed. They expect this struggle to continue in the next six months and also expect employment and wages to increase further.

Many manufacturing firms continued to increase spending in May. The growth rate of prices paid continued to rise, on average, but firms seemed able to pass some of change through to customers, as prices received also grew at a faster rate.


Philadelphia NonManufacturing Activity Suggest Continued Improvement in Growth in May
Posted: May 22, 2018 at 08:30 AM (Tuesday)

Responses to the Nonmanufacturing Business Outlook Survey suggest that regional nonmanufacturing activity improved in May. The firm-level index of general activity, new orders, and sales/revenues rose notably after posting declines in April, and the full-time employment index remained positive. Both price indicators increased from last month. The firms continue to expect growth over the next six months.

Current Indicators Strengthen
The survey’s indicators for current activity suggest continued improvement in the nonmanufacturing sector of the regional economy. The diffusion index for current general activity at the firm level increased 13.5 points to 39.5, its highest reading since June 2015 (see Chart). Nearly 52 percent of the firms reported increases in activity, compared with 12 percent that reported decreases. The regional activity index also increased, rising 18 points to 45.3, its highest reading since June 2015. The indicators for new orders and sales/revenues rose sharply this month, as fewer firms reported decreases in each measure this month than did last month. The new orders index more than recovered from its decline from last month, rising 24 points to 36.2. The share of firms reporting increases in new orders (45 percent) exceeded the share reporting decreases (9 percent). The sales/revenues index increased after two consecutive months of declines, rising from 13.5 in April to 33.7 in May. Almost 49 percent of the firms reported increases in sales/revenues, while 15 percent reported declines.

Employment Conditions Remain Positive
The firms continued to report overall increases in full-time employment, although most firms noted steady employment levels. The full-time employment index decreased from 15.8 in April to 7.7 in May. The share of firms reporting increases in employment (15 percent) exceeded the share reporting decreases (8 percent); a majority (70 percent) reported no change. The part-time employment index increased 3 points to 11.4, and the average workweek index rose 14 points to 26.8. The wages and benefits indicator also increased, rising from 28.3 to 46.4.

Firms Continue to Report Overall Price Increases
The indexes for prices paid for inputs and prices received for firms’ own products and services increased in May after decreasing in April. The prices paid index rose 8 points to 33.8. Nearly 34 percent of the respondents reported increases in input prices, while none of the firms reported decreases. Most firms (58 percent) reported no change in input prices. The prices received index rose from 12.1 in April to 22.6 in May, its highest reading since February 2016. Nearly 24 percent of the firms reported increases in prices received, while only 1 percent reported decreases. Almost 66 percent of the firms reported no change in their own prices.

Firms' Forecasts for Own Prices and Inflation Edge Higher
In this month’s special questions, the 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). Regarding their own prices, the firms’ median forecast was for an increase of 2.5 percent, up from 2.0 percent when the question was last asked in February. When asked about the rate of inflation for U.S. consumers over the next year, the firms’ median forecast was 3.0 percent, an increase from the previous forecast of 2.0 percent in February. The firms expect their employee compensation costs (wages plus benefits on a per employee basis) to rise 3.0 percent over the next four quarters, the same as the previous forecast. The firms’ forecast for the long-run (10-year) inflation rate decreased from 3.0 percent to 2.5 percent.

Firms Remain Optimistic
The respondents continued to expect growth in nonmanufacturing activity over the next six months. The diffusion index for future activity at the firm level increased from 40.8 to 45.3 (see Chart). Almost 63 percent of the firms expect an increase in activity at their firms over the next six months, compared with 17 percent that expect a decline. The future regional activity index rebounded from its decline last month, rising 9 points to 50.1.

Summary
Results from this month’s Nonmanufacturing Business Outlook Survey suggest improvement in regional nonmanufacturing activity. The indicators for firm-level general activity, sales/revenues, and new orders rose, and the firms continued to report overall increases in full-time employment. The respondents remain optimistic about growth over the next six months.


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