U.S. Leading Economic Index increased 0.6% in January
Posted: February 17, 2017 at 10:00 AM (Friday)
The Conference Board Leading Economic Index® (LEI)for the U.S. increased 0.6 percent in January to 125.5 (2010 = 100), following a 0.5 percent increase in December, and a 0.2 percent increase in November.
“The U.S. Leading Economic Index increased sharply again in January, pointing to a positive economic outlook in the first half of this year,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “The January gain was broad based among the leading indicators. If this trend continues, the U.S. economy may even accelerate in the near term.”
The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.1 percent in January to 114.4 (2010 = 100), following a 0.3 percent increase in December, and no change in November.
The Conference Board Lagging Economic Index® (LAG) for the U.S. increased 0.3 percent in January to 123.7 (2010 = 100), following a 0.5 percent increase in December, and a 0.2 percent increase in November.
January Housing Starts down 2.6%, Permits up 4.6%
Posted: February 16, 2017 at 08:30 AM (Thursday)
Privately-owned housing units authorized by building permits in January were at a seasonally adjusted annual rate of 1,285,000. This is 4.6 percent (±2.0 percent) above the revised December rate of 1,228,000 and is 8.2 percent (±1.6 percent) above the January 2016 rate of 1,188,000. Single-family authorizations in January were at a rate of 808,000; this is 2.7 percent (±1.9 percent) below the revised December figure of 830,000. Authorizations of units in buildings with five units or more were at a rate of 446,000 in January.
Privately-owned housing starts in January were at a seasonally adjusted annual rate of 1,246,000. This is 2.6 percent (±11.0 percent) below the revised December estimate of 1,279,000, but is 10.5 percent (±15.3 percent) above the January 2016 rate of 1,128,000. Single-family housing starts in January were at a rate of 823,000; this is 1.9 percent (±10.8 percent) above the revised December figure of 808,000. The January rate for units in buildings with five units or more was 421,000.
Privately-owned housing completions in January were at a seasonally adjusted annual rate of 1,047,000. This is 5.6 percent (±8.0 percent) below the revised December estimate of 1,109,000 and is 0.9 percent (±15.0 percent) below the January 2016 rate of 1,056,000. Single-family housing completions in January were at a rate of 800,000; this is 4.3 percent (±7.5 percent) above the revised December rate of 767,000. The January rate for units in buildings with five units or more was 244,000.
Philadelphia Fed Outlook Reported Activity Improvement Broadened in February
Posted: February 16, 2017 at 08:30 AM (Thursday)
Results from the February Manufacturing Business Outlook Survey suggest that growth in regional manufacturing is broadening. The diffusion indexes for general activity, new orders, and shipments were all positive this month and increased notably from their readings last month. The surveyed firms continued to report growth in employment and work hours. Although they moderated from last month, the future indexes for growth over the next six months continued to reflect a high degree of optimism.
Current Indicators Suggest Broadening Expansion
The index for current manufacturing activity in the region increased from a reading of 23.6 in January to 43.3 this month and has remained positive for seven consecutive months (see Chart). The share of firms reporting growth continues to increase: More than 48 percent of the firms reported increases in activity this month compared with 40 percent last month. The index for current new orders increased 12 points this month (with 44 percent of the firms reporting increases and just 6 percent reporting decreases). The shipments index increased 8 points. Other broad indicators also corroborate growth. Both the delivery times and unfilled orders indexes were positive for the fourth consecutive month, suggesting longer delivery times and an increase in unfilled orders.
Firms continued to report overall increases in manufacturing employment this month. The percentage of firms reporting an increase in employment (15 percent) exceeded the percentage reporting a decrease (4 percent). However, the largest share of firms reported no change in employment (74 percent). The current employment index fell 2 points but has now registered its third consecutive positive reading. Firms reported an increase in work hours this month: The average workweek index increased 7 points and has now been positive for four consecutive months.
Price Pressures Moderate
The survey’s diffusion indexes for prices remained positive but moderated from their readings in January. On the cost side, 33 percent of the firms reported increases in the prices paid for inputs; only 3 percent reported paying lower prices. The prices paid index edged 3 points lower to 29.9. With respect to prices received for firms’ own manufactured goods, 22 percent of the firms reported higher prices, down from 31 percent in January. The prices received index decreased 16 points but remains positive at 10.6.
Firms Expect Price Increases for Their Own Products to Match Inflation
In this month’s special questions, firms were asked to forecast the changes in the prices of their own products and for U.S. consumers over the next four quarters (see Special Questions). The median forecast was for an increase in their own prices of 2.0 percent, the same as when the question was asked in the fourth quarter of 2016. When asked about the rate of inflation for U.S. consumers over the next year, the firms’ median forecast was 2.2 percent, nearly the same as the 2.3 percent that was forecast last quarter. Firms expect their employee compensation costs (wages plus benefits on a per employee basis) to rise at a pace of 3.0 percent over the next four quarters.
Six-Month Indexes Moderate from High Readings
The diffusion index for future general activity decreased slightly from a reading of 56.6 in January to 53.5 this month (see Chart). Over 58 percent of the firms expect increases in activity over the next six months, down from 67 percent in January. The indexes for future new orders and shipments, which remain at high levels, also showed declines this month, decreasing 3 points and 7 points, respectively. With respect to employment, 34 percent of the firms expect increases in payrolls over the next six months, down from 43 percent in January. The future employment diffusion index fell 10 points.
Responses to the February Manufacturing Business Outlook Survey suggest broader growth for the region’s manufacturing sector. The indexes for general activity and new orders, in particular, showed notable improvement this month. The employment and average workweek indexes indicated continued expansion. Indicators reflecting firms’ expectations for the next six months remained at high levels, although they moderated from high readings in January.
Weekly Initial Unemployment Claims Increase 5,000 to 239,000
Posted: February 16, 2017 at 08:30 AM (Thursday)
In the week ending February 11, the advance figure for seasonally adjusted initial claims was 239,000, an increase of 5,000 from the previous week's unrevised level of 234,000. The 4-week moving average was 245,250, an increase of 500 from the previous week's revised average. The previous week's average was revised up by 500 from 244,250 to 244,750.
The advance seasonally adjusted insured unemployment rate was 1.5 percent for the week ending February 4, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending February 4 was 2,076,000, a decrease of 3,000 from the previous week's revised level. The previous week's level was revised up 1,000 from 2,078,000 to 2,079,000. The 4-week moving average was 2,080,250, an increase of 4,250 from the previous week's revised average. The previous week's average was revised up by 250 from 2,075,750 to 2,076,000.
Treasury International Capital Data for December 2016
Posted: February 15, 2017 at 04:00 PM (Wednesday)
The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for December 2016. The sum total in December of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC outflow of $42.8 billion. Of this, net foreign private outflows were $57.1 billion, and net foreign official inflows were $14.3 billion.
Foreign residents decreased their holdings of long-term U.S. securities in December; net sales were $13.9 billion. Net sales by private foreign investors were $32.0 billion, while net purchases by foreign official institutions were $18.1 billion. U.S. residents decreased their holdings of long-term foreign securities, with net sales of $1.1 billion.
Taking into account transactions in both foreign and U.S. securities, net foreign sales of long-term securities were $12.9 billion. After including adjustments, such as estimates of unrecorded principal payments to foreigners on U.S. asset-backed securities, overall net foreign sales of long-term securities are estimated to have been $29.4 billion in December.
Foreign residents increased their holdings of U.S. Treasury bills by $11.1 billion. Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities increased by $33.5 billion. Banks' own net dollar-denominated liabilities to foreign residents decreased by $46.8 billion.
Business Inventories up 0.4% in December
Posted: February 15, 2017 at 10:00 AM (Wednesday)
The combined value of distributive trade sales and manufacturers’ shipments for December, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,356.0 billion, up 2.0 percent (±0.2 percent) from November 2016 and was up 5.2 percent (±0.4 percent) from December 2015.
Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,835.7 billion, up 0.4 percent (±0.2 percent) from November 2016 and were up 2.0 percent (±0.5 percent) from December 2015.
The total business inventories/sales ratio based on seasonally adjusted data at the end of December was 1.35. The December 2015 ratio was 1.40.
Builder Confidence down 2 points to 65 in February
Posted: February 15, 2017 at 10:00 AM (Wednesday)
Builder confidence in the market for newly-built single-family homes declined two points in February to a level of 65 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).
“While builders remain optimistic, we are seeing the numbers settling back into a normal range,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas. “Regulatory burdens remain a major challenge to our industry, and NAHB looks forward to working with the new Congress and administration to help alleviate some of the pressures that are holding small businesses back and making homes less affordable.”
“With much of the decline this month resulting from a decrease in buyer traffic, builders continue to struggle to minimize costs while dealing with supply side challenges such as a lack of developed lots and labor shortages,” said NAHB Chief Economist Robert Dietz. “Despite these constraints, the overall housing market fundamentals remain strong and we expect to see continued growth this year as some of these concerns are addressed.”
All three HMI components fell in February. The component gauging current sales conditions dipped one point to 71, and the index charting sales expectations in the next six months registered a three-point decline to 73. The component measuring buyer traffic dropped five points to 46.
Looking at the three-month moving averages for regional HMI scores, the Northeast fell two points to 50 and the Midwest rose one point to 65. The South dipped one point to 67 and the West held steady at 79 for the third month in a row.
Industrial Production decreased 0.3%
Capacity Utilization fell to 75.3%
Posted: February 15, 2017 at 09:15 AM (Wednesday)
Industrial production decreased 0.3 percent in January following a 0.6 percent increase in December. In January, manufacturing output moved up 0.2 percent, and mining output jumped 2.8 percent. The index for utilities fell 5.7 percent, largely because unseasonably warm weather reduced the demand for heating. At 104.6 percent of its 2012 average, total industrial production in January was at about the same level as it was a year earlier. Capacity utilization for the industrial sector fell 0.3 percentage point in January to 75.3 percent, a rate that is 4.6 percentage points below its long-run (1972–2016) average.
Consumer Price Index increased 0.6% in January, Ex Fd & Engy up 0.3%
Posted: February 15, 2017 at 08:30 AM (Wednesday)
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.6 percent in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.5 percent before seasonal adjustment.
The January increase was the largest seasonally adjusted all items increase since February 2013. A sharp rise in the gasoline index accounted for nearly half the increase, and advances in the indexes for shelter, apparel, and new vehicles also were major contributors.
The energy index increased 4.0 percent in January as the gasoline index advanced 7.8 percent and the index for natural gas also increased. The food index, which had been unchanged for 6 consecutive months, increased 0.1 percent. The food at home index was unchanged, while the index for food away from home rose 0.4 percent.
The index for all items less food and energy rose 0.3 percent in January. Most of the major component indexes increased in January, with the indexes for apparel, new vehicles, motor vehicle insurance, and airline fares all rising 0.8 percent or more. The shelter index rose 0.2 percent, a smaller increase than in recent months.
The all items index rose 2.5 percent for the 12 months ending January, the largest 12-month increase since March 2012. The index for all items less food and energy rose 2.3 percent over the last 12 months, and the energy index increased 10.8 percent, its largest 12-month increase since November 2011. In contrast, the food index declined 0.2 percent over the last 12 months.
Real Average Hourly Earnings decreased 0.5% in January
Posted: February 15, 2017 at 08:30 AM (Wednesday)
Real average hourly earnings for all employees decreased 0.5 percent from December to January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from a 0.1-percent increase in average hourly earnings combined with a 0.6-percent increase in the Consumer Price Index for All Urban Consumers (CPI-U).
Real average weekly earnings decreased 0.4 percent over the month due to the decrease in real average hourly earnings combined with no change in the average workweek.
Real average hourly earnings were unchanged, seasonally adjusted, from January 2016 to January 2017. No change in real average hourly earnings combined with a 0.6-percent decrease in the average workweek resulted in a 0.6-percent decrease in real average weekly earnings over this period.
U.S. Retail Sales for December Increase 0.6%, Ex-Auto up 0.2%
Posted: February 15, 2017 at 08:30 AM (Wednesday)
Advance estimates of U.S. retail and food services sales for January 2017, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $472.1 billion, an increase of 0.4 percent (±0.5 percent)* from the previous month, and 5.6 percent (±0.9 percent) above January 2016. Total sales for the November 2016 through January 2017 period were up 4.6 percent (±0.7 percent) from the same period a year ago. The November 2016 to December 2016 percent change was revised from up 0.6 percent (±0.5 percent) to up 1.0 percent (±0.2 percent).
Retail trade sales were up 0.2 percent (±0.5 percent)* from December 2016, and up 5.6 percent (±0.7 percent) from last year. Gasoline Stations sales were up 14.2 percent (±1.4 percent) from January 2016, while Nonstore Retailers were up 12.0 percent (±1.8 percent) from last year.
Empire State Manufacturing Survey Conditions continues growth in February
Posted: February 15, 2017 at 08:30 AM (Wednesday)
Business activity expanded at a solid clip in New York State, according to firms responding to the February 2017 Empire State Manufacturing Survey. The headline general business conditions index rose twelve points to 18.7, its highest level in more than two years. The new orders index climbed to 13.5, and the shipments index advanced to 18.2, pointing to substantial increases in both orders and shipments. The unfilled orders index rose above zero for the first time in more than five years. Delivery times were reported as longer, and inventories increased. Labor market conditions improved, with both employment and hours worked moving higher. After reaching multiyear highs last month, the prices paid and prices received indexes were little changed. Indexes assessing the six-month outlook continued to convey a high degree of optimism about future conditions.
Business Growth Gains Momentum
Manufacturing firms in New York State reported that business activity expanded at the fastest pace since 2014. The general business conditions index climbed twelve points to 18.7, its fourth consecutive positive reading. Thirty-three percent of respondents reported that conditions had improved over the month, while fourteen percent reported that conditions had worsened. The new orders index rose ten points to 13.5, and the shipments index climbed eleven points to 18.2, pointing to a solid increase in both orders and shipments. The unfilled orders index turned positive for the first time since 2011. The delivery time index rose to 7.1, a sign of longer delivery times, and the inventories index, at 3.1, suggested that inventory levels were slightly higher.
Employment Edges Higher as Price Increases Continue
Employment indexes turned positive in February, pointing to some improvement in labor market conditions. The index for number of employees rose to 2.0, and the average workweek index rose to 4.1. Prices continued to increase at a fairly strong pace. After reaching a multiyear high last month, the prices paid index was little changed at 37.8, and the prices received index held steady at 19.4, also a multiyear high.
Firms Remain Optimistic
Indexes for the six-month outlook suggested that respondents remained highly optimistic about future conditions. The index for future business conditions dropped eight points, but at 41.7, remained high by historical standards. The indexes for future employment and the future average workweek indicated that firms expected strong growth in employment and hours worked in the months ahead. The capital expenditures index edged down to 22.4, and the technology spending index moved up modestly to 16.3.
Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: February 15, 2017 at 07:00 AM (Wednesday)
Mortgage applications decreased 3.7 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending February 10, 2017.
The Market Composite Index, a measure of mortgage loan application volume, decreased 3.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The Refinance Index decreased 3 percent from the previous week. The seasonally adjusted Purchase Index decreased 5 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 decreased to 46.9 percent of total applications, its lowest level since June 2009, from 47.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.5 percent of total applications, its highest level since October 2015.
The FHA share of total applications remained unchanged at 11.9 percent from the week prior. The VA share of total applications decreased to 11.8 percent from 12.7 percent the week prior. The USDA share of total applications increased to 1.0 percent from 0.9 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to 4.32 percent from 4.35 percent, with points remaining unchanged at 0.34 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) increased to 4.28 percent from 4.27 percent, with points decreasing to 0.27 from 0.31 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.12 percent from 4.16 percent, with points decreasing to 0.31 from 0.37 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 3.55 percent, with points increasing to 0.37 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.
The average contract interest rate for 5/1 ARMs decreased to 3.34 percent from 3.39 percent, with points increasing to 0.19 from 0.18 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
Producer Price Index increased 0.6% in January, ex Fd & Engy up 0.2%
Posted: February 14, 2017 at 08:30 AM (Tuesday)
The Producer Price Index for final demand increased 0.6 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.2 percent in December and 0.5 percent in November. On an unadjusted basis, the final demand index climbed 1.6 percent for the 12 months ended January 2017.
In January, over 60 percent of the advance in the final demand index is attributable to a 1.0 percent increase 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 rose 0.2 percent in January after inching up 0.1 percent in December. For the 12 months ended in January, the index for final demand less foods, energy, and trade services climbed 1.6 percent.
NFIB Small Business Optimism Index rose 0.1 in January to 105.9
Posted: February 14, 2017 at 07:00 AM (Tuesday)
The Index of Small Business Optimism rose 0.1 points to 105.9, the highest reading since December 2004, sustaining the remarkable surge in optimism that started post-election. Five of the 10 Index components posted a gain and 5 declined, but all by just a few points. After the stunning increases seen after the election, all of the Index components held near their record high levels. Job openings and job creation plans both posted small gains, confirmed by a huge increase in the net number of jobs added by the average firm, a gain subsequently confirmed by the BLS in its February jobs report. As “good feelings” are translated into actual hiring and spending, GDP growth should see an uptick. The inflation outlook remained stable, there was no surge in reports of higher selling prices.
Although many economists claim that President Trump is inheriting a “strong economy”, government statistics beg to differ. GDP grew only 1.9 percent in the fourth quarter of 2016 and an average of 1.6 percent for the entire year. This is the result of eight years of poor economic policies and gridlock in Congress. Congress now has the opportunity to undo harmful, anti-growth policies. For small-business owners, the success or failure to produce positive results will be reflected in future reports measuring small business optimism and their hiring and spending activity.
The January jobs report surprised pundits (and disappointed critics), coming in strong and well ahead of “consensus”. NFIB survey results anticipated the strong showing as their optimism gets translated into hiring action. Gains in expected sales require more workers to produce output and handle sales. The increase in labor force participation was a welcome sign, suggesting that labor markets are not as tight as the unemployment rate indicates (which went up) and that, as opportunities materialize and compensation rises, more workers will re-enter the labor force.
The Federal Reserve left interest rates unchanged in February’s meeting but sketched a more positive view of future economic developments. Most observers expect three rate hikes this year, which would still leave interest rates historically low. The percent of owners reporting paying higher interest rates on their last loan jumped 7 points to 11 percent, well above most readings since 2009 which were historically very flat. The interest rate is one of the most important prices in the economy, allocating capital to its highest valued uses. Since 2009, there has been very little movement as Federal Reserve policy has paralyzed the functioning of interest rates. The sooner the Federal Reserve restores the role of interest rates, the healthier the economy will become.
Forecasters Predict real GDP will grow at a faster pace
Posted: February 10, 2017 at 10:00 AM (Friday)
The U.S. economy looks stronger now than it did three months ago, according to 42 forecasters surveyed by the Federal Reserve Bank of Philadelphia. The forecasters predict real GDP will grow at an annual rate of 2.2 percent this quarter and 2.3 percent next quarter. On an annual-average over annual-average basis, the forecasters predict real GDP growing 2.3 percent in 2017, 2.4 percent in 2018, and 2.6 percent in 2019. The forecasts for 2017, 2018, and 2019 are higher than the estimates of three months ago. For 2020, real GDP is estimated to grow 2.1 percent.
A brighter outlook for the labor market accompanies the outlook for stronger output growth. The forecasters predict that the unemployment rate will average 4.6 percent in 2017, 4.5 percent in 2018 and 2019, and 4.6 percent in 2020. The projections for 2017, 2018, and 2019 are below those of the last survey, indicating a brighter outlook for unemployment.
The panelists also predict an improvement in the employment outlook for 2017. The forecasters’ projections for the annual-average level of nonfarm payroll employment suggest job gains at a monthly rate of 180,300 in 2017, up from the previous estimate of 173,600. (These annual-average estimates are computed as the year-to-year change in the annual-average level of nonfarm payroll employment, converted to a monthly rate.)
The charts below provide some insight into the degree of uncertainty the forecasters have about their projections for the rate of growth in the annual-average level of real GDP. Each chart (except the one for 2020) presents the forecasters’ previous and current estimates of the probability that growth will fall into each of 11 ranges. The charts show the forecasters have revised upward their estimates of the probability that real GDP growth will be above 3.0 percent in 2017, 2018, and 2019.
The forecasters’ density projections for unemployment, shown below, shed light on uncertainty about the labor market over the next four years. Each chart presents the forecasters’ current estimates of the probability that unemployment will fall into each of 10 ranges. The charts show the panelists are raising their density estimates over the next three years at the range of 4.0 percent to 4.9 percent of unemployment outcomes.
Forecasters See Higher Inflation
The forecasters expect higher headline CPI inflation in 2017 and 2018 than they predicted three months ago. Measured on a fourth-quarter over fourth-quarter basis, headline CPI inflation is expected to average 2.4 percent in 2017 and 2.3 percent in 2018, up from 2.2 percent in both 2017 and 2018 in the last survey. The forecasters have also revised upward slightly their projections for headline PCE inflation in 2017 to 2.0 percent, up from 1.9 percent in the survey of three months ago.
Over the next 10 years, 2017 to 2026, the forecasters expect headline CPI inflation to average 2.30 percent at an annual rate. The corresponding estimate for 10-year annual-average PCE inflation is 2.10 percent.
The charts below show the median projections (the red line) and the associated interquartile ranges (gray areas around the red line) for the projections for 10-year annual-average CPI and PCE inflation. The top panel shows a higher level of the long-term projection for CPI inflation, at 2.3 percent. The bottom panel depicts the higher 10-year forecast for PCE inflation, at 2.1 percent.
The figures below show the probabilities that the forecasters are assigning to the possibility that fourth-quarter over fourth-quarter core PCE inflation in 2017 and 2018 will fall into each of 10 ranges. For 2017, the forecasters have increased the probability that core PCE inflation will be above 2.0 percent, compared with their estimates in the survey of three months ago.
Lower Risk of a Negative Quarter
The forecasters have revised downward the chance of a contraction in real GDP in any of the next four quarters. For the current quarter, the forecasters predict a 7.7 percent chance of negative growth, down from 14.0 percent in the survey of three months ago. The panelists have also made downward revisions to their forecasts for the next three quarters in 2017.
Forecasters State Their Views on Home Price Growth over the Next Two Years
In this survey, a special question asked panelists to provide their forecasts for fourth-quarter over fourth-quarter growth in house prices, as measured by a number of alternative indices. The panelists were allowed to choose their measure from a list of indices or to write in their own index. For each index of their choosing, the panelists provided forecasts for growth in 2017 and 2018.
Eighteen panelists answered the special question. Some panelists provided projections for more than one index. The table below provides a summary of the forecasters’ responses. The number of responses (N) is low for each index. The median estimates for the seven house-price indices listed in the table below range from 3.9 percent to 5.4 percent in 2017 and from 3.8 percent to 4.7 percent in 2018.
Forecasters See Higher Long-Run Growth in Output and Productivity and in Returns to Financial Assets
In our first-quarter surveys, the forecasters provide their long-run projections for an expanded set of variables, including growth in output and productivity, as well as returns on financial assets.
As the table below shows, the forecasters have increased their estimates for the annual-average rate of growth in real GDP over the next 10 years. Currently, the forecasters expect real GDP to grow at an annual-average rate of 2.45 percent over the next 10 years, up from their projection of 2.28 percent in the first-quarter survey of 2016. Ten-year annual average productivity growth is now expected to average 1.60 percent, up from 1.40 percent.
Upward revisions to the return on the financial assets accompany the current outlook. The forecasters see the S&P 500 returning an annual-average 6.00 percent per year over the next 10 years, up from 5.37 percent in last year’s first-quarter survey. The forecasters expect the rate on 10-year Treasuries to average 3.86 percent over the next 10 years, up from 3.39 percent in last year’s first-quarter survey. Three-month Treasury bills will return an annual-average 2.50 percent per year over the next 10 years, unchanged from last year’s survey.
University of Michigan Consumer Confidence Preliminary February Results retreated at 95.7
Posted: February 10, 2017 at 10:00 AM (Friday)
Consumer confidence retreated from the decade-peak recorded in January, with the decline centered in the Expectations Index. To be sure, confidence remains quite favorable, with only five higher readings in the past decade. Importantly, the data do not reflect any closing of the partisan divide. The Michigan survey includes several free-response questions which ask respondents to answer in their own words, without any prompting or proposed answer categories. When asked to describe any recent news that they had heard about the economy, 30% spontaneously mentioned some favorable aspect of Trump’s policies, and 29% unfavorably referred to Trump’s economic policies. Thus a total of nearly six-in-ten consumers made a positive or negative mention of government policies. In the long history of the surveys, this total had never reached even half that amount, except for five surveys in 2013 and 2014 that were solely dominated by negative references to the debt and fiscal cliff crises. Moreover, never before have these spontaneous references to economic policies had such a large impact on the Sentiment Index: a difference of 37 Index points between those that referred to favorable and unfavorable policies. These differences are troublesome: the Democrat’s Expectations Index is close to its historic low (indicating recession) and the Republican’s Expectations Index is near its historic high (indicating expansion). While currently distorted by partisanship, the best bet is that the gap will narrow to match a more moderate pace of growth. Nonetheless, it has been long known that negative rather than positive expectations are more influential in determining spending, so forecasts of consumer expenditures must take into account a higher likelihood of asymmetric downside risks.
U.S. Import Price Index increased 0.4% in January
Posted: February 10, 2017 at 08:30 AM (Friday)
U.S. import prices advanced 0.4 percent in January, the U.S. Bureau of Labor Statistics reported today, following a 0.5-percent increase in December. For both months, a rise in fuel prices more than offset declining nonfuel prices. Prices for U.S. exports advanced 0.1 percent in January, after rising 0.4 percent the previous month.
Wholesale Inventories up 1.0% in December
Posted: February 9, 2017 at 10:00 AM (Thursday)
December 2016 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $464.9 billion, up 2.6 percent (±0.7 percent) from the revised November level and were up 6.8 percent (±0.9 percent) from the December 2015 level. The October 2016 to November 2016 percent change was revised from the preliminary estimate of up 0.4 percent (±0.5 percent)* to up 0.5 percent (±0.5 percent)*.
Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $601.1 billion at the end of December, up 1.0 percent (±0.4 percent) from the revised November level. Total inventories are up 2.6 percent (±1.4 percent) from the revised December 2015 level. The November 2016 to December 2016 percent change was unrevised from the advance estimate of up 1.0 percent (± 0.4 percent).
The December inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.29. The December 2015 ratio was 1.35.
Weekly Initial Unemployment Claims Decrease 12,000 to 234,000
Posted: February 9, 2017 at 08:30 AM (Thursday)
In the week ending February 4, the advance figure for seasonally adjusted initial claims was 234,000, a decrease of 12,000 from the previous week's unrevised level of 246,000. The 4-week moving average was 244,250, a decrease of 3,750 from the previous week's unrevised average of 248,000. This is the lowest level for this average since November 3, 1973 when it was 244,000.
The advance seasonally adjusted insured unemployment rate was 1.5 percent for the week ending January 28, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 28 was 2,078,000, an increase of 15,000 from the previous week's revised level. The previous week's level was revised down by 1,000 from 2,064,000 to 2,063,000. The 4-week moving average was 2,075,750, a decrease of 3,750 from the previous week's revised average. The previous week's average was revised down by 250 from 2,079,750 to 2,079,500.
Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: February 8, 2017 at 07:00 AM (Wednesday)
Mortgage applications increased 2.3 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending February 3, 2017.
The Market Composite Index, a measure of mortgage loan application volume, increased 2.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 6 percent compared with the previous week. The Refinance Index increased 2 percent from the previous week. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index increased 9 percent compared with the previous week and was 4 percent higher than the same week one year ago.
The refinance share of mortgage activity decreased to 47.9 percent of total applications, its lowest level since June 2009, from 49.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.9 percent of total applications.
The FHA share of total applications decreased to 11.9 percent from 12.1 percent the week prior. The VA share of total applications increased to 12.7 percent from 12.4 percent the week prior. The USDA share of total applications remained unchanged at 0.9 percent.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,000 or less) decreased to 4.35 percent from 4.39 percent, with points remaining unchanged at 0.34 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,000) decreased to 4.27 percent from 4.32 percent, with points decreasing to 0.31 from 0.34 (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 4.16 percent from 4.17 percent, with points increasing to 0.37 from 0.35 (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 decreased to 3.55 percent from 3.61 percent, with points increasing to 0.34 from 0.33 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 5/1 ARMs increased to 3.39 percent from 3.33 percent, with points decreasing to 0.18 from 0.22 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
Consumer Credit Increased at an annual rate of 4.50%
Posted: February 7, 2017 at 03:00 PM (Tuesday)
Consumer credit increased at a seasonally adjusted annual rate of 6 percent during the fourth quarter. Revolving credit increased at an annual rate of 6-3/4 percent, while nonrevolving credit increased at an annual rate of 5-3/4 percent. In December, consumer credit increased at an annual rate of 4-1/2 percent.
Job Openings was little changed at 5.5 million in December
Posted: February 7, 2017 at 10:00 AM (Tuesday)
The number of job openings was little changed at 5.5 million on the last business day of December, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were also little changed at 5.3 million and 5.0 million, respectively. Within separations, the quits rate was little changed at 2.0 percent and the layoffs and discharges rate was unchanged at 1.1 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.
Goods and Services Deficit decreased in December 2016
Posted: February 7, 2017 at 08:30 AM (Tuesday)
The Nation's international trade deficit in goods and services decreased to $44.3 billion in December from $45.7 billion in November (revised), as exports increased more than imports.
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $44.3 billion in December, down $1.5 billion from $45.7 billion in November, revised. December exports were $190.7 billion, $5.0 billion more than November exports. December imports were $235.0 billion, $3.6 billion more than November imports.
The December decrease in the goods and services deficit reflected a decrease in the goods deficit of $1.2 billion to $65.7 billion and an increase in the services surplus of $0.3 billion to $21.4 billion.
For 2016, the goods and services deficit increased $1.9 billion, or 0.4 percent, from 2015. Exports decreased $51.7 billion or 2.3 percent. Imports decreased $49.9 billion or 1.8 percent.
Employment Trends Index increased slightly in January to 130.04
Posted: February 6, 2017 at 10:00 AM (Monday)
The Conference Board Employment Trends Index™ (ETI) increased slightly in January, after declining in December. The index now stands at 130.04, up from 129.73(r) in December. The change represents a 2.4 percent gain in the ETI compared to a year ago.
“The continued growth in the Employment Trends Index suggests that job growth will remain solid and perhaps even accelerate in early 2017,” said Gad Levanon, Chief Economist, North America, at The Conference Board. “In both business confidence surveys and hard data, it appears that businesses are becoming more optimistic and are more willing to expand their workforce.”
January’s increase in the ETI was fueled by positive contributions from six of the eight components. In order from the largest positive contributor to the smallest, these were: Percentage of Respondents Who Say They Find “Jobs Hard to Get,” Initial Claims for Unemployment Insurance, Percentage of Firms With Positions Not Able to Fill Right Now, Industrial Production, Number of Employees Hired by the Temporary-Help Industry, and Real Manufacturing and Trade Sales.
New orders for manufactured goods increased 1.3% in December
Posted: February 3, 2017 at 10:00 AM (Friday)
New orders for manufactured goods in December, up five of the last six months, increased $6.1 billion or 1.3 percent to $464.9 billion, the U.S. Census Bureau reported today. This followed a 2.3 percent November decrease.
Shipments, up nine of the last ten months, increased $10.4 billion or 2.2 percent to $475.8 billion. This followed a 0.3 percent November increase. Unfilled orders, down six of the last seven months, decreased $7.1 billion or 0.6 percent to $1,119.5 billion. This followed a 0.2 percent November decrease. The unfilled orders-to-shipments ratio was 6.62, down from 6.75 in November.
Inventories, up five of the last six months, increased $0.6 billion or 0.1 percent to $625.6 billion. This followed a 0.5 percent November increase. The inventories-to-shipments ratio was 1.31, down from 1.34 in November.
ISM Non-Manufacturing Index dipped to 56.5% in January
Posted: February 3, 2017 at 10:00 AM (Friday)
Economic activity in the non-manufacturing sector grew in January for the 85th consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.
The NMI® registered 56.5 percent which is 0.1 percentage point lower than the seasonally adjusted December reading of 56.6. This represents continued growth in the non-manufacturing sector at a slightly slower rate. The Non-Manufacturing Business Activity Index decreased to 60.3 percent, 0.6 percentage point lower than the seasonally adjusted December reading of 60.9 percent, reflecting growth for the 90th consecutive month, at a slightly slower rate in January. The New Orders Index registered 58.6 percent, 2.1 percentage points lower than the seasonally adjusted reading of 60.7 percent in December. The Employment Index increased 2 percentage points in January to 54.7 percent from the seasonally adjusted December reading of 52.7 percent. The Prices Index increased 2.9 percentage points from the seasonally adjusted December reading of 56.1 percent to 59 percent; indicating prices increased for the 10th consecutive month, at a faster rate in January. According to the NMI®, 12 non-manufacturing industries reported growth in January. The non-manufacturing sector begins 2017 with a cooling-off in the rate of growth month-over-month. The sector still reflects strong growth. Respondents' comments are mixed indicating both optimism and a degree of uncertainty in the business outlook as a result of the change in government administration.
The 12 non-manufacturing industries reporting growth in January — listed in order — are: Mining; Other Services; Utilities; Health Care & Social Assistance; Finance & Insurance; Public Administration; Accommodation & Food Services; Retail Trade; Construction; Wholesale Trade; Professional, Scientific & Technical Services; and Management of Companies & Support Services. The five industries reporting contraction in January are: Real Estate, Rental & Leasing; Educational Services; Transportation & Warehousing; Information; and Arts, Entertainment & Recreation.
January Employment increased by 227,000
Unemployment Rate increased to 4.8%
Posted: February 3, 2017 at 08:30 AM (Friday)
Total nonfarm payroll employment increased by 227,000 in January, and the unemployment rate was little changed at 4.8 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in retail trade, construction, and financial activities.
Both the number of unemployed persons, at 7.6 million, and the unemployment rate, at 4.8 percent, were little changed in January. (See table A-1. For information about annual population adjustments to the household survey estimates, see the notes at the end of this news release and tables B and C.)
Among the major worker groups, the unemployment rate for Asians (3.7 percent) increased in January. The jobless rates for adult men (4.4 percent), adult women (4.4 percent), teenagers (15.0 percent), Whites (4.3 percent), Blacks (7.7 percent), and Hispanics (5.9 percent) showed little or no change over the month.
In January, the number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 1.9 million and accounted for 24.4 percent of the unemployed. Over the year, the number of long-term unemployed has declined by 244,000.
After accounting for the annual adjustments to the population controls, the civilian labor force increased by 584,000 in January, and the labor force participation rate rose by 0.2 percentage point to 62.9 percent. Total employment, as measured by the household survey, was up by 457,000 over the month, and the employment-population ratio edged up to 59.9 percent. (See table A-1. For additional information about the effects of the population adjustments, see table C.)
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed in January at 5.8 million. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find full-time jobs.
In January, 1.8 million persons were marginally attached to the labor force, down by 337,000 from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.
Among the marginally attached, there were 532,000 discouraged workers in January, 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 1.2 million persons marginally attached to the labor force in January had not searched for work for reasons such as school attendance or family responsibilities.
Establishment Survey Data
Total nonfarm payroll employment rose by 227,000 in January. Employment increased in retail trade, construction, and financial activities. (See table B-1. For information about the annual benchmark process, see the notes at the end of this news release and table A.)
Retail trade employment increased by 46,000 over the month and by 229,000 over the year. Three industries added jobs in January--clothing and clothing accessories stores (+18,000), electronics and appliance stores (+8,000), and furniture and home furnishings stores (+6,000).
Employment in construction rose by 36,000 in January, following little change in December. Residential building added 9,000 jobs over the month, and employment continued to trend up among residential specialty trade contractors (+11,000). Over the past 12 months, construction has added 170,000 jobs.
Financial activities added 32,000 jobs in January, with gains in real estate (+10,000), insurance carriers and related activities (+9,000), and credit intermediation and related activities (+9,000). Financial activities added an average of 15,000 jobs per month in 2016.
In January, employment in professional and technical services rose by 23,000, about in line with the average monthly gain in 2016. Over the month, job gains occurred in computer systems design and related services (+13,000).
Employment in food services and drinking places continued to trend up in January (+30,000). This industry added 286,000 jobs over the past 12 months.
Employment in health care also continued to trend up in January (+18,000), following a gain of 41,000 in December. The industry has added 374,000 jobs over the past 12 months.
Employment in other major industries, including mining and logging, manufacturing, wholesale trade, transportation and warehousing, information, and government, showed little change over the month.
The average workweek for all employees on private nonfarm payrolls was unchanged at 34.4 hours in January. In manufacturing, the workweek edged up by 0.1 hour to 40.8 hours, while overtime edged down by 0.1 hour to 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was 33.6 hours for the sixth consecutive month.
In January, average hourly earnings for all employees on private nonfarm payrolls rose by 3 cents to $26.00, following a 6-cent increase in December. Over the year, average hourly earnings have risen by 2.5 percent. In January, average hourly earnings of private-sector production and nonsupervisory employees increased by 4 cents to $21.84.
The change in total nonfarm payroll employment for November was revised down from +204,000 to +164,000, and the change for December was revised up from +156,000 to +157,000. With these revisions, employment gains in November and December combined were 39,000 lower than previously reported. Monthly revisions result from additional reports received from businesses since the last published estimates and from the recalculation of seasonal factors. The annual benchmark process also contributed to the November and December revisions. Over the past 3 months, job gains have averaged 183,000 per month.
4Q2016 Productivity Growth Increased 1.3%
Posted: February 2, 2017 at 08:30 AM (Thursday)
Nonfarm business sector labor productivity increased at a 1.3-percent annual rate during the fourth quarter of 2016, the U.S. Bureau of Labor Statistics reported today, as output increased 2.2 percent and hours worked increased 0.9 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the fourth quarter of 2015 to the fourth quarter of 2016, productivity increased 1.0 percent, reflecting increases in output and hours worked of 2.2 percent and 1.1 percent, respectively. Annual average productivity increased 0.2 percent from 2015 to 2016.
Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked of all persons, including employees, proprietors, and unpaid family workers.
Unit labor costs in the nonfarm business sector increased 1.7 percent in the fourth quarter of 2016, reflecting a 3.0-percent increase in hourly compensation and a 1.3-percent increase in productivity. Unit labor costs increased 1.9 percent over the last four quarters.
BLS calculates unit labor costs as the ratio of hourly compensation to labor productivity. Increases in hourly compensation tend to increase unit labor costs, and increases in output per hour tend to reduce them.
Manufacturing sector labor productivity increased 0.7 percent in the fourth quarter of 2016, as output increased 0.8 percent and hours worked were unchanged. Output per hour increased 0.1 percent in the durable goods manufacturing sector and 1.8 percent in the nondurable goods sector. Over the last four quarters, manufacturing sector productivity increased 0.4 percent, output increased 0.2 percent, and hours worked decreased 0.2 percent. Unit labor costs in manufacturing increased 3.3 percent in the fourth quarter of 2016 and rose 2.2 percent from the same quarter a year ago. Hourly compensation increased 4.1 percent in the fourth quarter of 2016.
Table C1 presents annual average changes for the most recent 5 years for the nonfarm business sector and the total manufacturing sector. Nonfarm business sector productivity grew 0.2 percent in 2016, as output and hours increased 1.7 percent and 1.5 percent, respectively. The increase in hours was the smallest since a 0.1-percent decrease in 2010. Productivity has increased at an annual rate of less than 1.0 percent in each of the last 6 years. The average annual rate of nonfarm business sector productivity growth from 2007 to 2016--corresponding to the current business cycle--is 1.1 percent, well below the long-term rate from 1947 to 2016 of 2.1 percent.
Unit labor costs in the nonfarm business sector rose 2.6 percent in 2016, reflecting increases of 2.8 percent in hourly compensation and 0.2 percent in productivity. The increase in unit labor costs is the largest since 2007, when unit labor costs rose 2.7 percent. Real hourly compensation, which takes into account changes in consumer prices, increased 1.5 percent in 2016.
In the manufacturing sector, productivity increased 0.6 percent in 2016, as output increased 0.2 percent and hours worked decreased 0.4 percent. The decrease in the annual hours series was the first since a 12.9-percent annual decrease in 2009. Manufacturing sector productivity has increased at an annual rate of less than 1.0 percent in each of the last 4 years. The average annual rate of manufacturing productivity growth from 2007 to 2016 is 1.7 percent, which is below the long-term rate from 1987 to 2016 of 3.2 percent. Unit labor costs increased 2.6 percent in 2016.
Revised and previously published measures for the third quarter of 2016 are shown in tables A2 and B1 and cover the following major sectors: nonfarm business, business, manufacturing, and nonfinancial corporations.
In the third quarter of 2016, nonfarm business productivity was revised up 0.4 percentage point, to an increase of 3.5 percent. Unit labor costs in the nonfarm business sector increased 0.2 percent in the third quarter--rather than 0.7 percent as previously reported.
In the manufacturing sector, productivity was revised down 0.4 percentage point to show no change in the third quarter of 2016. Manufacturing unit labor costs increased 3.3 percent, the same rate as previously reported.
In the nonfinancial corporate sector, productivity was revised down 0.6 percentage point in the third quarter of 2016, to an increase of 6.5 percent. This downward revision to productivity is due primarily to a 0.5-percentage point downward revision to output.
Weekly Initial Unemployment Claims Decrease 14,000 to 246,000
Posted: February 2, 2017 at 08:30 AM (Thursday)
In the week ending January 28, the advance figure for seasonally adjusted initial claims was 246,000, a decrease of 14,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 259,000 to 260,000. The 4-week moving average was 248,000, an increase of 2,250 from the previous week's revised average. The previous week's average was revised up by 250 from 245,500 to 245,750.
The advance seasonally adjusted insured unemployment rate was 1.5 percent for the week ending January 21, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 21 was 2,064,000, a decrease of 39,000 from the previous week's revised level. The previous week's level was revised up 3,000 from 2,100,000 to 2,103,000. The 4-week moving average was 2,079,750, a decrease of 13,000 from the previous week's revised average. The previous week's average was revised up by 750 from 2,092,000 to 2,092,750.
New York Purchasing Managers Business Activity dropped in January to 57.7
Posted: February 2, 2017 at 08:30 AM (Thursday)
New York City purchasing managers maintained their optimism while adjusting to 'new' normal business conditions in January, according to the survey taken by the Institute for Supply Management-New York. With the exception of Quantity of Purchases, which was just below the breakeven point, all report indices stayed in growth territory in January, even as future optimism eased off the level seen in December.
New York Metro
Current Business Conditions came in at 57.7 in January, dropping from a fourteen-month high in December. The Six-Month Outlook decreased to 66.2 in January after the eighteen month high seen in Decmber. The six-month outlook has been a reliable short-run guide for current business conditions over time.
Employment, a seasonally adjusted index, increased to 54.8 in January after falling to 42.0 in December. Quantity of Purchases came in at 46.9 in December, reversing the largely upward trajectory seen in the second half of 2016. News for the top line and forward guidance continued to be positive, albeit without seeing significant changes over last month. Current Revenues were 55.0 in January, indicating no change from the previous month. Expected Revenues reached 69.0 in January, climbing to the highest level seen since November of 2015. Prices Paid decreased for the second month in a row, falling to 54.7 in January.
Challenger Layoffs increase to 45,934 in January
Posted: February 2, 2017 at 07:00 AM (Thursday)
In all, retailers announced 22,491 planned layoffs in January, accounting for 49 percent of all job cuts recorded during the month. The January total is virtually unchanged from the previous January, when retailers announced 22,246 job cuts to start 2016.
“A January surge in retail hiring has become the standard. Most retailers ramp up hiring in the final three months of the year to handle the holiday rush. However, as consumers increasingly go online to shop, retailers are not only dismissing temporary seasonal workers, but also increasingly closing stores and laying off permanent staff,” said Challenger.
Meanwhile, the energy sector, which announced 20,103 job cuts in January 2016, reported just 1,853 planned layoffs to kick off 2017.
“Oil prices were already starting to rebound in the last half of 2016. Now, with an administration that is expected to be very friendly to the oil, gas, and mining industries, many are forecasting a swift and sustained turnaround for these firms in 2017. The fact that January job cuts in the sector were 91 percent lower than a year ago, certainly appears to support that outlook,” said Challenger.
January 2016 also experienced heavy layoffs in the computer industry, where employers announced plans to shed 11,003 job cuts. This year, however, job-cut plans announced by these firms totaled 2,211 in the first month of 2017. That represents an 80 percent decline.
“Job cuts will not be the leading story in the tech industry this year. It is more likely to be labor shortages, particularly if the new administration continues to tighten the boarders to immigrants, many of whom come to America to work at leading tech companies,” noted Challenger.
FOMC target funds rate reaffirmed at 1/2 to 3/4%
Posted: February 1, 2017 at 02:00 PM (Wednesday)
Information received since the Federal Open Market Committee met in December indicates that the labor market has continued to strengthen and that economic activity has continued to expand at a moderate pace. Job gains remained solid and the unemployment rate stayed near its recent low. Household spending has continued to rise moderately while business fixed investment has remained soft. Measures of consumer and business sentiment have improved of late. Inflation increased in recent quarters but is still below the Committee's 2 percent longer-run objective. Market-based measures of inflation compensation remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labor market conditions will strengthen somewhat further, and inflation will rise to 2 percent over the medium term. Near-term risks to the economic outlook appear roughly balanced. The Committee continues to closely monitor inflation indicators and global economic and financial developments.
In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1/2 to 3/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a return to 2 percent inflation.
In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.
The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.
Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Patrick Harker; Robert S. Kaplan; Neel Kashkari; Jerome H. Powell; and Daniel K. Tarullo.
January Manufacturing ISM registered 56.0
Posted: February 1, 2017 at 10:00 AM (Wednesday)
Economic activity in the manufacturing sector expanded in January, and the overall economy grew for the 92nd consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.
The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee; “The January PMI® registered 56 percent, an increase of 1.5 percentage points from the seasonally adjusted December reading of 54.5 percent. The New Orders Index registered 60.4 percent, an increase of 0.1 percentage point from the seasonally adjusted December reading of 60.3 percent. The Production Index registered 61.4 percent, 2 percentage points higher than the seasonally adjusted December reading of 59.4 percent. The Employment Index registered 56.1 percent, an increase of 3.3 percentage points from the seasonally adjusted December reading of 52.8 percent. Inventories of raw materials registered 48.5 percent, an increase of 1.5 percentage points from the December reading of 47 percent. The Prices Index registered 69 percent in January, an increase of 3.5 percentage points from the December reading of 65.5 percent, indicating higher raw materials prices for the 11th consecutive month. The PMI®, New Orders, and Production Indexes all registered their highest levels since November of 2014, and comments from the panel are generally positive regarding demand levels and business conditions.”
Of the 18 manufacturing industries, 12 reported growth in January in the following order: Plastics & Rubber Products; Miscellaneous Manufacturing; Apparel, Leather & Allied Products; Paper Products; Chemical Products; Transportation Equipment; Food, Beverage & Tobacco Products; Machinery; Petroleum & Coal Products; Primary Metals; Fabricated Metal Products; and Computer & Electronic Products. The five industries reporting contraction in January are: Nonmetallic Mineral Products; Wood Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; and Printing & Related Support Activities.
Construction Spending decreased 0.2% in December
Posted: February 1, 2017 at 10:00 AM (Wednesday)
The U.S. Census Bureau of the Department of Commerce announced today that construction spending during December 2016 was estimated at a seasonally adjusted annual rate of $1,181.5 billion, 0.2 percent (±1.0%) below the revised November estimate of $1,184.4 billion. The December figure is 4.2 percent (±1.3%) above the December 2015 estimate of $1,133.7 billion. The value of construction in 2016 was $1,162.4 billion, 4.5 percent (±1.0%) above the $1,112.4 billion spent in 2015.
Spending on private construction was at a seasonally adjusted annual rate of $897.0 billion, 0.2 percent (±0.8%) above the revised November estimate of $894.8 billion. Residential construction was at a seasonally adjusted annual rate of $466.9 billion in December, 0.5 percent (±1.3%) above the revised November estimate of $464.8 billion. Nonresidential construction was at a seasonally adjusted annual rate of $430.1 billion in December, nearly the same as (±0.8%) the revised November estimate of $430.1 billion. The value of private construction in 2016 was $876.3 billion, 6.4 percent (±1.2%) above the $823.5 billion spent in 2015. Residential construction in 2016 was $456.2 billion, 5.2 percent (±2.1%) above the 2015 figure of $433.7 billion and nonresidential construction was $420.1 billion, 7.8 percent (±1.2%) above the $389.9 billion in 2015.
In December, the estimated seasonally adjusted annual rate of public construction spending was $284.5 billion, 1.7 percent (±1.8%) below the revised November estimate of $289.6 billion. Educational construction was at a seasonally adjusted annual rate of $70.1 billion, 2.2 percent (±2.3%) below the revised November estimate of $71.6 billion. Highway construction was at a seasonally adjusted annual rate of $94.3 billion, 0.6 percent (±4.1%) below the revised November estimate of $94.9 billion. The value of public construction in 2016 was $286.0 billion, 1.0 percent (±1.5%) below the $288.9 billion spent in 2015. Educational construction in 2016 was $69.7 billion, 4.7 percent (±3.5%) above the 2015 figure of $66.6 billion and highway construction was $91.2 billion, 2.0 percent (±3.5%) above the $89.4 billion in 2015.
Help Wanted OnLine Labor Demand increased 49,000 to 4,850,500 in January
Posted: February 1, 2017 at 10:00 AM (Wednesday)
Online advertised vacancies increased 49,000 to 4,850,500 in January, according to The Conference Board Help Wanted OnLine® (HWOL) Data Series,released today. The December Supply/Demand rate stands at 1.57 unemployed for each advertised vacancy with a total of 2.7 million more unemployed workers than the number of advertised vacancies. The number of unemployed was approximately 7.5 million in December.
“In recent months, the trend in the number of online job ads has been flat to slightly rising,” said Gad Levanon, Chief Economist, North America, at The Conference Board.
The Professional occupational category saw small losses in Management (-1.2), Healthcare Practitioners (-1.4), and gains in Computer/Math (23.0) and Architecture/Engineering (6.1). The Services/Production occupational category saw losses in Sales (-7.6) and gains in Office/Admin (18.8) and Transportation (10.1).
ADP National Employment Report increased by 246,000 jobs in January
Posted: February 1, 2017 at 08:15 AM (Wednesday)
Private sector employment increased by 246,000 jobs from December 2016 to January 2017 according to the January ADP National Employment Report®.
“The U.S. labor market is hitting on all cylinders and we saw small and midsized businesses perform exceptionally well,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Further analysis shows that services gains have rebounded from their tepid December pace, adding 201,000 jobs. The goods producers added 46,000 jobs, which is the strongest job growth that sector has seen in the last two years.”
Mark Zandi, chief economist of Moody’s Analytics said, “2017 got off to a strong start in the job market. Job growth is solid across most industries and company sizes. Even the energy sector is adding to payrolls again.”
Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: February 1, 2017 at 07:00 AM (Wednesday)
Mortgage applications decreased 3.2 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending January 27, 2017. The previous week's results included an adjustment for the MLK Day holiday.
The Market Composite Index, a measure of mortgage loan application volume, decreased 3.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 11 percent compared with the previous week. The Refinance Index decreased 1 percent from the previous week. The seasonally adjusted Purchase Index decreased 6 percent from one week earlier. The unadjusted Purchase Index increased 12 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 49.4 percent of total applications from 50.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.4 percent of total applications.
The FHA share of total applications decreased to 12.1 percent from 13.6 percent the week prior. The VA share of total applications increased to 12.4 percent from 12.2 percent the week prior. The USDA share of total applications remained unchanged at 0.9 percent from the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,000 or less) increased to its highest level since December 2016, 4.39 percent, from 4.35 percent, with points increasing to 0.34 from 0.30 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,000) increased to 4.32 percent from 4.28 percent, with points increasing to 0.34 from 0.31 (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 4.17 percent from 4.19 percent, with points remaining unchanged at 0.35 (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 increased to 3.61 percent from 3.57 percent, with points increasing to 0.33 from 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The average contract interest rate for 5/1 ARMs decreased to 3.33 percent from 3.41 percent, with points decreasing to 0.22 from 0.30 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
Consumer Confidence retreated in January to 111.8
Posted: January 31, 2017 at 10:00 AM (Tuesday)
The Conference Board Consumer Confidence Index®, which had increased in December, retreated in January. The Index now stands at 111.8 (1985=100), down from 113.3 in December. The Present Situation Index increased from 123.5 to 129.7, but the Expectations Index decreased from 106.4 last month to 99.8.
The monthly Consumer Confidence Survey®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was January 19.
“Consumer confidence decreased in January, after reaching a 15-year high in December (Aug. 2001, 114.0),” said Lynn Franco, Director of Economic Indicators at The Conference Board. “The decline in confidence was driven solely by a less optimistic outlook for business conditions, jobs, and especially consumers’ income prospects. Consumers’ assessment of current conditions, on the other hand, improved in January. Despite the retreat in confidence, consumers remain confident that the economy will continue to expand in the coming months.”
Consumers’ appraisal of current conditions improved in January. Those saying business conditions are “good” increased slightly from 28.6 percent to 29.3 percent, while those saying business conditions are “bad” decreased from 17.8 percent to 16.1 percent. Consumers’ assessment of the labor market was also more positive than last month. The percentage of consumers stating jobs are “plentiful” rose from 26.0 percent to 27.4 percent, while those claiming jobs are “hard to get” decreased from 22.7 percent to 21.5 percent.
Consumers’ short-term outlook, which had increased considerably last month, declined in January. The percentage of consumers expecting business conditions to improve over the next six months decreased from 24.7 percent to 23.1 percent, while those expecting business conditions to worsen increased from 8.9 percent to 10.7 percent.
Consumers’ outlook for the labor market was somewhat mixed. The proportion expecting more jobs in the months ahead decreased from 21.7 percent to 19.8 percent, while those anticipating fewer jobs was virtually unchanged at 14.0 percent. The percentage of consumers expecting their incomes to increase declined from 21.5 percent to 18.0 percent, while the proportion expecting a decrease rose from 8.6 percent to 9.6 percent.
Chicago Purchasing Managers Index fell 3.6 points to 50.3 in January
Posted: January 31, 2017 at 09:45 AM (Tuesday)
The MNI Chicago Business Barometer fell 3.6 points to 50.3 in January from a previously revised 53.9 in December 2016, the lowest since May 2016.
Following a strong Q4, with the three-month average of the barometer at 54.3, the January reading made for a sluggish start to the first quarter of 2017. It was down 8.4% compared with January 2016’s reading.
Three of the five components of the Barometer decreased, with only Order Backlogs and Supplier Deliveries recording gains in January.
The slide in demand contributed the most to the Barometer’s fall. New orders fell by 7.8 points, slipping into contraction territory, to the lowest level since December 2015. Growth in Production also eased, down 2.3 points to 56.0 in January. Order Backlogs rose but remained in contractionary territory. With lower orders and output, demand for labor fell. Employment remained below the break-even level for the third straight month. Supplier Deliveries lengthened, to the highest level since May last year.
This month’s special question asked firms how they expected their purchasing policies to be impacted with the Federal Reserve looking to increase rates in 2017. Almost 9 in every 10 respondents did not expect any impact on their purchasing decisions, while 8.5% of businesses expected to be negatively impacted. Fewer respondents expected to benefit from rate increases.
Elsewhere, companies reduced their stock levels at the fastest pace since May 2016, with the Inventories Indicator falling by 2.7 points in January.
January also saw inflationary pressures at the factory gate increase for the second consecutive month. Prices Paid rose to 61.4 in January, the highest since September 2014.
“Business activity in the New Year got off to a slow start with contracting orders and easing production weighing heavily on hiring intentions. Activity in Q1 is usually weaker due to seasonal factors, so the following surveys will provide a better picture of business performance.”
“‘Respondents to our survey did not expect to be affected by rate increases by the Fed in 2017. Although cost of capital is expected to increase, firms seemed to have already factored this into their purchase decisions.” said Shaily Mittal, senior economist at MNI Indicators.
S&P CoreLogic Case-Shiller Home Price Indices gained 0.2% in November
Posted: January 31, 2017 at 09:00 AM (Tuesday)
S&P Dow Jones Indices today released the latest results for the S&P CoreLogic Case-Shiller Indices, the leading measure of U.S. home prices. Data released today for November 2016 shows that home prices continued their rise across the country over the last 12 months.
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.6% annual gain in November, up from 5.5% last month. The 10-City Composite posted a 4.5% annual increase, up from 4.3% the previous month. The 20-City Composite reported a year-over-year gain of 5.3%, up from 5.1% in October.
Seattle, Portland, and Denver reported the highest year-over-year gains among the 20 cities over each of the last 10 months. In November, Seattle led the way with a 10.4% year-over-year price increase, followed by Portland with 10.1%, and Denver with an 8.7% increase. Eight cities reported greater price increases in the year ending November 2016 versus the year ending October 2016.
Before seasonal adjustment, the National Index posted a month-over-month gain of 0.2% in November. Both the 10-City Composite and the 20-City Composite posted 0.2% increases in November. After seasonal adjustment, the National Index recorded a 0.8% month-over-month increase, while both the 10-City and 20-City Composites each reported 0.9% month-over-month increases. Ten of 20 cities reported increases in November before seasonal adjustment; after seasonal adjustment, all 20 cities saw prices rise.
“With the S&P CoreLogic Case-Shiller National Home Price Index rising at about 5.5% annual rate over the last two-and-a-half years and having reached a new all-time high recently, one can argue that housing has recovered from the boom-bust cycle that began a dozen years ago,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “The recovery has been supported by a few economic factors: low interest rates, falling unemployment, and consistent gains in per-capita disposable personal income. Thirty-year fixed rate mortgages dropped under 4.5% in 2011 and have only recently shown hints of rising above that level. The unemployment rate at 4.7% is close to the Fed’s full employment target. Inflation adjusted per capita personal disposable income has risen at about a 2.5% annual rate for 30 months.
Employment Cost Index up 0.5% in 4Q2016
Posted: January 31, 2017 at 08:30 AM (Tuesday)
Compensation costs for civilian workers increased 0.5 percent, seasonally adjusted, for the 3-month period ending in December 2016, the U.S. Bureau of Labor Statistics reported today. Wages and salaries (which make up about 70 percent of compensation costs) increased 0.5 percent, and benefits (which make up the remaining 30 percent of compensation) increased 0.4 percent.
Compensation costs for civilian workers increased 2.2 percent for the 12-month period ending in December 2016. In December 2015, compensation costs increased 2.0 percent. Wages and salaries increased 2.3 percent for the current 12-month period, and increased 2.1 percent for the 12-month period ending in December 2015. Benefit costs increased 2.1 percent for the 12-month period ending in December 2016. In December 2015, the increase was 1.7 percent.
Private Industry Workers
Compensation costs for private industry workers increased 2.2 percent over the year. In December 2015, the increase was 1.9 percent. Wages and salaries increased 2.3 percent for the current 12-month period. In December 2015, the increase was 2.1 percent. The cost of benefits rose 1.8 percent for the 12-month period ending in December 2016, higher than the 1.3 percent increase in December 2015.
Employer costs for health benefits increased 2.7 percent for the 12-month period ending in December 2016. (For further information, see www.bls.gov/web/eci/echealth.pdf.)
Among occupational groups, compensation cost increases for private industry workers for the 12-month period ending in December 2016 ranged from 1.7 percent for management, professional, and related occupations to 3.2 percent for service occupations.
Among industry supersectors, compensation cost increases for private industry workers for the current 12-month period ranged from 1.2 percent for professional and business services to 3.3 percent for leisure and hospitality.
State and Local Government Workers
Compensation costs for state and local government workers increased 2.4 percent for the 12-month period ending in December 2016. In December 2015, the increase was 2.5 percent. Wages and salaries increased 2.1 percent for the 12-month period ending in December 2016, higher than the December 2015 increase of 1.8 percent. Benefit costs increased 3.1 percent for the 12-month period ending in December 2016. The prior year’s increase was 3.5 percent.
Paychex-IHS Small Business Jobs Index increased to 100.62 in January
Posted: January 31, 2017 at 08:30 AM (Tuesday)
The Paychex | IHS Small Business Jobs Index continued to increase in January to 100.62, beginning 2017 at the same pace of employment growth it averaged throughout 2016. Up 0.13 percent in January and 0.10 percent in December, the national index increased two months in a row for the first time since last February as employment improved 0.21 percent during the past quarter. All regions increased in January, except for the South Atlantic, which had a slight decrease of 0.09 percent. Four of the top five states decreased in January, while nine of the bottom 10 states improved. At 104.17, Tennessee has the strongest index and growth rates among states. With moderate gains in January and indexes exceeding 102, Atlanta, Seattle, and Dallas top the metro rankings. At 104.73, Other Services remains far ahead among industry sectors, while the high-paying Professional and Business Services, Financial Activities, and Manufacturing industries are below 100 to start the year.
“The Paychex | IHS Small Business Jobs Index indicates small business employment conditions are beginning 2017 on firm footing, recovering from a slowdown of gains during the fall months,” said James Diffley, chief regional economist at IHS Markit.
“The increase in this month’s index tracks with the positive performance of other economic indicators as well as overall business optimism since the presidential election,” said Martin Mucci, Paychex president and CEO.
Texas Fed Manufacturing Activity Increased in January
Posted: January 30, 2017 at 10:30 AM (Monday)
Texas factory activity increased for the seventh consecutive month in January, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, edged down but remained positive at 11.9, suggesting output growth continued but at a slightly slower pace this month.
Other measures of current manufacturing activity also indicated expansion. The new orders index climbed to a multiyear high of 15.7, while the growth rate of orders index returned to positive territory, rising 8 points to 6.7. The capacity utilization index posted a seventh positive reading in a row, although it moved down to 9.1 this month. The shipments index rose 10 points to 15.8, with more than a third of manufacturers noting a rise in shipment volumes from December.
Perceptions of broader business conditions improved further this month. The general business activity index posted a fourth consecutive positive reading and moved up to 22.1, its highest reading since April 2010. The company outlook index pushed up to 25.0, also a level not seen since 2010.
Labor market measures indicated employment gains and longer workweeks. The employment index bounced back to 6.1 after dipping into negative territory last month. Twenty-three percent of firms noted net hiring, compared with 17 percent noting net layoffs. The hours worked index moved up to 9.1, its strongest reading since the end of 2015.
Upward price pressures remained relatively strong, and wages continued to rise in January. The raw materials and finished goods prices indexes were nearly unchanged at 30.8 and 17.7, respectively. The wages and benefits index also held fairly steady at 20.8.
Expectations regarding future business conditions generally improved this month. The index of future general business activity edged up to 43.7. The index of future company outlook also inched up, coming in at 48.8. Most other indexes of future manufacturing activity pushed higher into positive territory.
Pending Home Sales Index increased 1.6% in December
Posted: January 30, 2017 at 10:00 AM (Monday)
The Pending Home Sales Index,* a forward-looking indicator based on contract signings, increased 1.6 percent to 109.0 in December from 107.3 in November. With last month's uptick in activity, the index is now 0.3 percent above last December (108.7).
Lawrence Yun, NAR chief economist, says contract activity was mixed throughout the country in December but ultimately ended on a high note to close out 2016. "Pending sales rebounded last month as enough buyers fended off rising mortgage rates and alarmingly low inventory levels1 to sign a contract," he said. "The main storyline in the early months of 2017 will be if supply can meaningfully increase to keep price growth at a moderate enough level for households to absorb higher borrowing costs. Sales will struggle to build on last year's strong pace if inventory conditions don't improve."
According to Yun, a large portion of overall supply right now is at the upper end of the market. This is evident by looking at December data on the year-over-year change in single-family sales by price range. Last month, sales were up around 10 percent compared to December 2015 for homes sold at or above $250,000, while homes sold between $100,000 and $250,000 only increased 2.3 percent. Meanwhile, sales of homes under $100,000 were down 11.6 percent compared to a year ago.
"The dismal number of listings in the affordable price range is squeezing prospective first-time buyers the most," said Yun. "As a result, young households are missing out on the wealth gains most homeowners have accrued from the 41 percent cumulative rise in existing home prices since 2011."
Existing-home sales are forecast to be around 5.54 million this year, an increase of 1.7 percent from 2016, which was the best year of sales since 2006. The national median existing-home price in 2017 is expected to increase around 4 percent. In 2016, existing sales increased 3.8 percent and prices rose 5.2 percent.
Yun expects housing starts – which for another year undershot overall demand – to jump to around 1.26 million units, an increase of 7.9 percent from 2016 (1.16 million).
"Especially if construction-related regulations are relaxed, all eyes will be on the homebuilding industry this year to see if they can finally start making up lost ground on the severe housing shortages impacting much of the country," added Yun.
The PHSI in the Northeast declined 1.6 percent to 96.4 in December, and is now 1.2 percent below a year ago. In the Midwest the index decreased 0.8 percent to 102.7 in December, and is now 3.4 percent lower than December 2015.
Pending home sales in the South rose 2.4 percent to an index of 121.3 in December and are now 0.5 percent above last December. The index in the West jumped 5.0 percent in December to 106.1, and is now 5.0 percent higher than a year ago.
Personal Income increased 0.3%, Spending increased 0.5%
Posted: January 30, 2017 at 08:30 AM (Monday)
Personal income increased $50.2 billion (0.3 percent) in December according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $43.6 billion (0.3 percent) and personal consumption expenditures (PCE) increased $63.1 billion (0.5 percent).
Real DPI increased 0.1 percent in December and Real PCE increased 0.3 percent. The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index increased 0.1 percent.
University of Michigan Consumer Confidence up in January to 98.5
Posted: January 27, 2017 at 10:00 AM (Friday)
Consumers expressed a higher level of confidence in January than any other time in the last dozen years. The post-election surge in confidence was driven by a more optimistic outlook for the economy and job growth during the year ahead as well as more favorable economic prospects over the next five years. Consumers also reported much more positive assessments of their current financial situation due to gains in both incomes and household wealth, and anticipated the most positive outlook for their personal finances in more than a decade. Consumers have become more convinced that the stronger economy will finally prompt the Fed to increase interest rates at a quicker pace, which caused one-in-five consumers to favor borrowing-in-advance of anticipated increases in mortgage rates, the highest level in more than twenty years.
Favorable Outlook for Personal Finances
Rising incomes as well as home and stock values meant that consumers held quite favorable views of their finances. When asked about their financial prospects for the year ahead, the highest proportion in a decade anticipated improved finances. The size of anticipated income gains was the largest since 2008. In addition to gains in stock values, the majority of homeowners anticipated the largest annual gains in home values since 2007.
Outlook for Economy and Jobs Improve
An improving economy in the year ahead was anticipated by 44% of all consumers, the highest figure since 2004. A favorable long-term economic outlook was reported by 51%, tied with the recent cyclical peak; the last time a higher figure was recorded was in 2004. Perhaps the most remarkable result was that 33% of all consumers expected unemployment to fall below its already low level, the most optimistic view recorded since 1984.
The Consumer Sentiment Index was 98.5 in the January 2017 survey, just above December’s 98.2 and up from last January’s 92.0, and the highest reading since 103.8 was recorded in January 2004. The Expectations Index rose to 90.3 in January, up from last month’s 89.5 and last year’s 82.7. The Current Conditions Index was 111.3 in January 2017, barely below December’s 111.9 and up from 106.4 in January 2016.
The post-election surge in consumer confidence was based on political promises, and not, as yet, on economic outcomes. Moreover, over the past half century the surveys have never recorded as dominant an impact of partisanship on economic expectations. When the same consumers were re-interviewed from six months ago, the survey recorded extreme swings based on political party, with Democrats becoming much more pessimistic and Republicans much more optimistic. Such divergences will ultimately converge since consumers form economic expectations to be useful decision guides, which will require both to temper their extreme views.
4Q2016 GDP advance estimate increased 1.9%, 2016 GDP up 1.6%
Posted: January 27, 2017 at 08:30 AM (Friday)
Real gross domestic product (GDP) increased at an annual rate of 1.9 percent in the fourth quarter of 2016 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.5 percent.
The Bureau emphasized that the fourth-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see “Source Data for the Advance Estimate” on page 3). The "second" estimate for the fourth quarter, based on more complete data, will be released on February 28, 2017.
The increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, residential fixed investment, nonresidential fixed investment, and state and local government spending that were partly offset by negative contributions from exports and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.
The deceleration in real GDP in the fourth quarter reflected a downturn in exports, an acceleration in imports, a deceleration in PCE, and a downturn in federal government spending that were partly offset by an upturn in residential fixed investment, an acceleration in private inventory investment, an upturn in state and local government spending, and an acceleration in nonresidential fixed investment.
Current-dollar GDP increased 4.0 percent, or $185.5 billion, in the fourth quarter to a level of $18,860.8 billion. In the third quarter, current dollar GDP increased 5.0 percent, or $225.2 billion.
The price index for gross domestic purchases increased 2.0 percent in the fourth quarter, compared with an increase of 1.5 percent in the third quarter (table 4). The PCE price index increased 2.2 percent, compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index increased 1.3 percent, compared with an increase of 1.7 percent.
Current-dollar personal income increased $152.0 billion in the fourth quarter, compared with an increase of $172.3 billion in the third. The deceleration in personal income primarily reflected a deceleration in wages and salaries.
Disposable personal income increased $130.2 billion, or 3.7 percent, in the fourth quarter, compared with an increase of $141.5 billion, or 4.1 percent, in the third. Real disposable personal income increased 1.5 percent, compared with an increase of 2.6 percent.
Personal saving was $791.2 billion in the fourth quarter, compared with $818.1 billion in the third. The personal saving rate -- personal saving as a percentage of disposable personal income -- was 5.6 percent in the fourth quarter, compared with 5.8 percent in the third.
Real 2016 GDP increased 1.6 percent in 2016 (that is, from the 2015 annual level to the 2016 annual level), compared with an increase of 2.6 percent in 2015.
The increase in real GDP in 2016 reflected positive contributions from PCE, residential fixed investment, state and local government spending, exports, and federal government spending that were partly offset by negative contributions from private inventory investment and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.
The deceleration in real GDP from 2015 to 2016 reflected a downturn in private inventory investment, a deceleration in PCE, a downturn in nonresidential fixed investment, and decelerations in residential fixed investment and in state and local government spending that were offset by a deceleration in imports and accelerations in federal government spending and in exports.
Current-dollar GDP increased 2.9 percent, or $530.3 billion, in 2016 to a level of $18,566.9 billion, compared with an increase of 3.7 percent, or $643.5 billion, in 2015.
The price index for gross domestic purchases increased 1.0 percent in 2016, compared with an increase of 0.4 percent in 2015.
During 2016 (that is, measured from the fourth quarter of 2015 to the fourth quarter of 2016), real GDP increased 1.9 percent, the same rate as during 2015. The price index for gross domestic purchases increased 1.5 percent during 2016, compared with an increase of 0.4 percent during 2015.
December New Orders for Durable Goods decreased 0.4%, Ex-Trans up 0.5%
Posted: January 27, 2017 at 08:30 AM (Friday)
New orders for manufactured durable goods in December decreased $1.0 billion or 0.4 percent to $227.0 billion, the U.S. Census Bureau announced today. This decrease, down two consecutive months, followed a 4.8 percent November decrease. Excluding transportation, new orders increased 0.5 percent. Excluding defense, new orders increased 1.7 percent. Transportation equipment, also down two consecutive months, drove the decrease, $1.7 billion or 2.2 percent to $73.7 billion.
Shipments of manufactured durable goods in December, up three of the last four months, increased $3.3 billion or 1.4 percent to $238.0 billion. This followed a 0.3 percent November increase. Transportation equipment, up following two consecutive monthly decreases, led the increase, $2.0 billion or 2.5 percent to $82.3 billion.
Unfilled orders for manufactured durable goods in December, down six of the last seven months, decreased $7.2 billion or 0.6 percent to $1,119.4 billion. This followed a 0.3 percent November decrease. Transportation equipment, also down six of the last seven months, drove the decrease, $8.6 billion or 1.1 percent to $759.8 billion.
Inventories of manufactured durable goods in December, up five of the last six months, increased less than $0.1 billion or virtually unchanged to $384.4 billion. This followed a 0.2 percent November increase. Machinery, up four of the last five months, drove the increase, $0.4 billion or 0.5 percent to $66.4 billion.
Nondefense new orders for capital goods in December increased $2.4 billion or 3.8 percent to $66.6 billion. Shipments increased $1.2 billion or 1.8 percent to $71.7 billion. Unfilled orders decreased $5.1 billion or 0.7 percent to $691.8 billion. Inventories increased $0.6 billion or 0.3 percent to $171.1 billion. Defense new orders for capital goods in December decreased $4.8 billion or 33.4 percent to $9.5 billion. Shipments decreased $0.1 billion or 1.2 percent to $10.9 billion. Unfilled orders decreased $1.3 billion or 0.9 percent to $140.9 billion. Inventories decreased $0.2 billion or 0.7 percent to $20.7 billion.
Revised November Data
Revised seasonally adjusted November figures for all manufacturing industries were: new orders, $457.5 billion (revised from $458.3 billion); shipments, $464.3 billion (revised from $463.8 billion); unfilled orders, $1,126.5 billion (revised from $1,127.8 billion) and total inventories, $623.3 billion (revised from $623.1 billion).
Kansas City Fed Manufacturing Activity continued to expand moderately in January
Posted: January 26, 2017 at 11:00 AM (Thursday)
Tenth District manufacturing activity continued to expand moderately, and producers’ expectations for future activity increased considerably. Most price indexes recorded little change, with the exception of current selling prices which fell modestly.
The month-over-month composite index was 9 in January, unchanged from 9 in December but up from 0 in November (Tables 1 & 2, Chart). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Activity in durable goods plants increased moderately, particularly for metals, electronics, and machinery, while nondurable goods plants expanded at a slower pace with food production falling considerably. Most month-over-month indexes improved slightly in January. The production index moved slightly higher from 18 to 20, and the shipments, new orders, and order backlog indexes also increased. The employment index moderated somewhat from 8 to 6, and the new orders for exports index remained negative. The finished goods inventory index decreased from 0 to -4, and the raw materials inventory index also fell into negative territory.
Most year-over-year factory indexes increased considerably. The composite year-over-year index rose from 0 to 7, and the production, shipments, and new orders indexes recorded their highest levels in over two years. The order backlog index jumped from -5 to 5, and the employment index also moved into positive territory. In contrast, the capital expenditures index inched lower from 2 to -2, and the new orders for exports index continued to decline. The raw materials inventory index increased from -9 to -3, and the finished goods inventory index also rose.
Expectations for future factory activity continued to increase sharply. The future composite index jumped from 17 to 27, and the future production, shipments, and new orders indexes reached their highest levels in over twelve years. The future employment index increased markedly from 11 to 31, and the future capital expenditures index rose moderately. The future raw materials inventory index increased slightly, and the future finished goods index also moved higher.
Price indexes were mostly unchanged in January. The month-over-month finished goods price index fell from 10 to 0, and the raw materials price index also eased slightly. The year-over-year finished goods price index moderated from 17 to 13, while the raw materials price edged higher. Both the future finished goods price index and the future raw materials price index were basically unchanged from the previous month.