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Category: Research - Topic: Economics



New Home Sales in July at annual rate of 654,000
Posted: August 23, 2016 at 10:00 AM (Tuesday)

Sales of new single-family houses in July 2016 were at a seasonally adjusted annual rate of 654,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 12.4 percent (±12.7%)* above the revised June rate of 582,000 and is 31.3 percent (±19.9%) above the July 2015 estimate of 498,000.

The median sales price of new houses sold in July 2016 was $294,600; the average sales price was $355,800. The seasonally adjusted estimate of new houses for sale at the end of July was 233,000. This represents a supply of 4.3 months at the current sales rate.


Richmond Fed's Current Activity Index declined 21 points to a reading of -11
Posted: August 23, 2016 at 10:00 AM (Tuesday)

Fifth District manufacturing activity declined in August, according to the most recent survey by the Federal Reserve Bank of Richmond. New orders and shipments decreased this month, while backlogs fell. Hiring increases in the sector expanded modestly across firms, and wage increases were more widespread. Raw materials prices rose at a somewhat faster pace in August, while prices of finished goods rose at a slightly slower pace.

Looking ahead six months, producers anticipated more robust business conditions. Manufacturers expected strong growth in shipments and in the volume of new orders. Survey participants looked for backlogs to rise, and expected longer vendor lead times. Expectations were for increased capacity utilization during the next six months.

Hiring expectations across firms were strong for the months ahead, and producers anticipated future wage increases. Firms expected little change in prices paid, however anticipated somewhat faster growth in prices received in the next six months.

Overall, manufacturing activity declined in August, with the composite index dropping to a reading of −11, following last month's reading of 10. The indicators for shipments and new orders decreased sharply this month. The index for shipments lost 21 points, ending at a reading of −14, while the index for new orders fell 35 points to −20. In addition, the index for order backlogs fell to a reading of −21, following last month's reading of 1. In contrast, the manufacturing employment index changed little from last month, maintaining a positive reading. That indicator gained one point to end at 7.

Capacity utilization weakened in August, the index lost 22 points to end at a reading of −19. Additionally, the vendor lead time indicator moved down five points to end at 5. Finished goods inventories rose across more firms compared to a month ago, that index moved up nine points, ending at a reading of 24. Growth in raw materials inventories continued in August, with that index adding four points to end the survey period at 27.


Philadelphia NonManufacturing Activity Suggest Steady Growth
Posted: August 23, 2016 at 08:30 AM (Tuesday)

The August Nonmanufacturing Business Outlook Survey suggests that business activity continued to expand at a steady pace. The survey’s broadest indicators of general activity and sales/revenues remained positive and near their readings in July. The employment indexes suggest continued expansion in employment for both full-time and part-time employees. Overall, expectations for growth over the next six months showed continued optimism.

Current Indicators Suggest Steady Growth in Overall Business
The diffusion index for general activity at the firm level decreased modestly, from 20.3 in July to 19.5 in August. The index remains below its historical average reading of 28.7. The sales/revenues index was virtually unchanged this month, at 22.5. New orders, however, fell notably: The index fell nearly 15 points to 14.7. Nearly 38 percent of the firms indicated an increase in new orders in August, compared with 39 percent last month. However, the percentage of firms reporting a decrease in new orders rose from 9 percent to 23 percent.

On balance, firms continued to perceive that regional economic activity is expanding. The regional activity index edged down 4 points, to 24.8, after increasing 18 points in July. The regional general activity index remains slightly higher than its historical average of 23.0.

Firms Expand Both Full-Time and Part-Time Employment
Although the largest percentage of firms (60 percent) reported no change in full-time employment, the percentage of firms reporting an increase in employment (24 percent) was larger than the percentage reporting a decrease (14 percent). The full-time employment index rebounded 8 points to a reading of 10.0 but remains slightly lower than its historical average of 14.1. Nearly the same percentage of firms reported increasing part-time, temporary, and contract workers as reported increasing full-time workers, 25 percent and 24 percent, respectively. The part-time employment index decreased 3 points, to 19.0.

Price Increases Moderate
Price increases for firms’ inputs and own products moderated somewhat from July. Nearly 17 percent of the firms reported higher prices for inputs in August, down from 29 percent in July. The prices paid index fell 13 points to 10.6, well below its historical average of 20.1. With respect to their own prices, 19 percent of the firms reported higher prices in August. The prices received index edged 2 points lower to 10.5, slightly below its historical average of 12.0.

Firms’ Own Prices Expected to Be the Same as the Rate of Inflation
In this month’s special questions, firms were asked about future changes in the prices of their own products, in employee compensation, and in prices their employees and U.S. consumers will pay. The median forecast over the next four quarters was for an increase of 2.5 percent in their own prices, an increase from the 2 percent forecasted in May, when the same questions were last asked. Firms forecast an increase in compensation per employee of 3 percent over the next year, an increase from the 2.5 percent reported in May. Firms expect overall price increases for their employees and for U.S. consumers to be 2 percent and 2.5 percent, respectively, over the next four quarters. For the average rate of inflation for U.S. consumers over the next 10 years, the median response was 2.5 percent, which is unchanged from May.

Forecasts for Future Growth Still Optimistic Overall
The respondents to this month’s survey remained optimistic about future activity over the next six months. Nearly 57 percent of the firms expect increases in activity at their firms over the next six months, and only 13 percent expect decreases. The diffusion index for future activity at the individual firm level fell 3 points, to 43.7 — near its average reading of the previous three months (see Chart 1). Forecasts for growth in the region also deteriorated slightly but remain optimistic overall. The future regional activity index decreased 9 points, to 34.4.

Summary
Results from the Nonmanufacturing Business Outlook Survey suggest continued business expansion in August. The survey’s indicators for firms’ general activity and sales/revenues remained near their positive readings in July. Overall employment grew among the reporting firms, for both full-time and part-time employees. Firms’ six-month forecasts remained optimistic this month, although readings fell modestly from last month.


Chicago Fed National Activity increased in July
Posted: August 22, 2016 at 08:30 AM (Monday)

The index’s three-month moving average, CFNAI-MA3, increased to –0.10 in July from –0.19 in June. July’s CFNAI-MA3 suggests that growth in national economic activity was slightly below its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.

The CFNAI Diffusion Index, which is also a three-month moving average, moved up to –0.02 in July from –0.16 in June. Fifty-three of the 85 individual indicators made positive contributions to the CFNAI in July, while 32 made negative contributions. Forty-nine indicators improved from June to July, while 36 indicators deteriorated. Of the indicators that improved, 11 made negative contributions.

The contribution from production-related indicators to the CFNAI rose to +0.23 in July from +0.07 in June. Manufacturing industrial production increased 0.5 percent in July after moving up 0.3 percent in June; and manufacturing capacity utilization increased to 75.4 percent in July from 75.0 percent in the previous month. The sales, orders, and inventories category made a contribution of +0.01 to the CFNAI in July, up slightly from –0.01 in June.

Employment-related indicators contributed +0.09 to the CFNAI in July, up from +0.05 in June. Civilian nonagricultural employment rose by 515,000 in July after increasing by 211,000 in the previous month. However, nonfarm payrolls increased by only 255,000 in July after rising by 292,000 in June.

The contribution of the personal consumption and housing category to the CFNAI was steady at –0.06 in July. Housing starts increased to 1,211,000 annualized units in July from 1,186,000 in June.

However, housing permits decreased to 1,152,000 annualized units in July from 1,153,000 in the previous month.

The CFNAI was constructed using data available as of August 18, 2016. At that time, July data for 51 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index. The June monthly index value was revised to +0.05 from an initial estimate of +0.16, and the May monthly index value was revised to –0.63 from last month’s estimate of –0.56. Revisions to the monthly index value can be attributed to two main factors: revisions in previously published data and differences between the estimates of previously unavailable data and subsequently published data. The revision to the June monthly index value was due primarily to the former, while the revision to the May monthly index value was due primarily to the latter.


U.S. Leading Economic Index increased 0.4% in July
Posted: August 18, 2016 at 10:00 AM (Thursday)

The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.4 percent in July to 124.3 (2010 = 100), following a 0.3 percent increase in June, and a 0.2 percent decline in May.

“The U.S. LEI picked up again in July, suggesting moderate economic growth should continue through the end of 2016,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “There may even be some moderate upside growth potential if recent improvements in manufacturing and construction are sustained, and average consumer expectations don’t deteriorate further.”

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.4 percent in July to 113.9 (2010 = 100), following a 0.2 percent increase in June, and a 0.1 percent decline in May.

The Conference Board Lagging Economic Index® (LAG) for the U.S. increased 0.1 percent in July to 121.8 (2010 = 100), following a 0.1 percent decline in June, and a 0.4 percent increase in May.


Philadelphia Fed Outlook Reported Indicators Remain Weak in August
Posted: August 18, 2016 at 08:30 AM (Thursday)

Firms responding to the Manufacturing Business Outlook Survey suggest that growth was positive but tenuous this month. The diffusion index for current general activity moved from a negative reading to a marginally positive reading, while the indicators for new orders and employment suggested continued general weakness in business conditions. Of the current broad indicators, the diffusion index for shipments recorded the strongest reading. The respondents were confident about future growth, as their forecasts of future activity showed notable improvement.

Current Indicators Remain Weak
The index for current manufacturing activity in the region rose 5 points to only 2.0 in August, as the share of firms reporting an increase in activity (35 percent) barely exceeded the share reporting a decrease (33 percent). This is only the third positive reading of the index in the current year.

The current new orders index dropped significantly from a reading of 11.8 in July to -7.2 in August. The percentage of firms reporting an increase in new orders (27 percent) was less than 1 point lower than last month; however, the percentage of firms reporting a decrease (34 percent) was 18 points higher than last month. The current shipments index rose slightly, from 6.3 to 8.4. The percentage of firms reporting an increase in shipments (35 percent) was 6 points higher than last month. The indexes for unfilled orders and delivery times fell into negative territory, recording values of -15.0 and -3.8, respectively. The index for inventories dropped from -4.3 to -9.2. The indicators for unfilled orders, delivery times, and inventories have been negative for most of this year.

The survey’s indicators of employment weakened considerably. The employment index fell 18 points to -20.0, which is its largest negative reading for the current year. Although 67 percent of the firms reported no change in employment this month, the percentage reporting decreases (25 percent) significantly exceeded the percentage reporting increases (5 percent). The workweek index also fell, from -3.6 to -11.5. Twenty-five percent of the firms reported a decrease in average work hours, and only 13 percent reported an increase.

Price Inflation Rises
Firms indicated that there was a broadening of price increases both for inputs and for their own goods. The prices paid index rose 10 points, to 19.7, in August. Twenty percent of the respondents reported increases in prices paid, and none reported decreases. The prices received index rose 7 points, to 7.1. Eighteen percent of the respondents indicated increases in prices received, while 11 percent reported decreases.

Respondents See Growth Ahead
The survey’s index of future manufacturing activity rose 12 points to 45.8 in August, strongly indicating that the current weakness is expected to be temporary. This index is at its highest reading since January 2015 (see Chart). Fifty-four percent of the firms expect an increase in activity over the next six months, up from 46 percent last month. Only 8 percent expect a decline, down from 12 percent last month. The future indexes for new orders and shipments also increased, rising 16 points and 24 points, respectively. The future employment index held relatively steady at 12.9.

Firms Expect Own Price Increases to Lag General Inflation
In this month’s special questions, firms were asked to forecast the changes in the prices of their own products and general inflation over the next four quarters. The median forecast was for an increase in their own prices of 1 percent. Firms expect their employee compensation costs (wages plus benefits on a per employee basis) to rise at a much higher pace of 3 percent over the next four quarters. When asked about the average rate of inflation for consumers over the next 10 years, the firms’ median forecast was 2.5 percent. These median responses were identical to those from May when the same questions were last asked, with one exception: In May, the median price forecast for firms’ own prices was higher, at 2 percent.

Summary
The August Manufacturing Business Outlook Survey indicated, on balance, that growth in the region’s manufacturing sector is currently weak. The survey’s indicators for current general activity and shipments were positive, while the indicators for new orders and employment were negative. The indicators for future conditions rose sharply from last month’s readings, however.


Weekly Initial Unemployment Claims Decrease 4,000 to 262,000
Posted: August 18, 2016 at 08:30 AM (Thursday)

In the week ending August 13, the advance figure for seasonally adjusted initial claims was 262,000, a decrease of 4,000 from the previous week's unrevised level of 266,000. The 4-week moving average was 265,250, an increase of 2,500 from the previous week's unrevised average of 262,750. There were no special factors impacting this week's initial claims. This marks 76 consecutive weeks of initial claims below 300,000, the longest streak since 1970.

The advance seasonally adjusted insured unemployment rate was 1.6 percent for the week ending August 6, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending August 6 was 2,175,000, an increase of 15,000 from the previous week's revised level. The previous week's level was revised up 5,000 from 2,155,000 to 2,160,000. The 4-week moving average was 2,155,000, an increase of 10,750 from the previous week's revised average. The previous week's average was revised up by 1,250 from 2,143,000 to 2,144,250.


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: August 17, 2016 at 07:00 AM (Wednesday)

Mortgage applications decreased 4.0 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending August 12, 2016.

The Market Composite Index, a measure of mortgage loan application volume, decreased 4.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 5 percent compared with the previous week. The Refinance Index decreased 4 percent from the previous week. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier to the lowest level since February 2016, but remained 10 percent higher than the same week last year. The unadjusted Purchase Index decreased 5 percent compared with the previous week.

The refinance share of mortgage activity increased to 62.6 percent of total applications from 62.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 4.6 percent of total applications.

The FHA share of total applications decreased to 9.6 percent from 10.0 percent the week prior. The VA share of total applications increased to 13.2 percent from 13.0 percent the week prior. The USDA share of total applications remained unchanged at 0.6 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.64 percent from 3.65 percent, with points decreasing to 0.31 from 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 $417,000) decreased to 3.60 percent from 3.64 percent, with points decreasing to 0.28 from 0.31 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.49 percent from 3.52 percent, with points decreasing to 0.28 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 15-year fixed-rate mortgages decreased to 2.90 percent from 2.93 percent, with points decreasing to 0.32 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 5/1 ARMs increased to 2.85 percent from 2.81 percent, with points decreasing to 0.17 from 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


Industrial Production increased 0.7%
Capacity Utilization increased to 75.9%

Posted: August 16, 2016 at 09:15 AM (Tuesday)

Industrial production rose 0.7 percent in July after moving up 0.4 percent in June. The advance in July was the largest for the index since November 2014. Manufacturing output increased 0.5 percent in July for its largest gain since July 2015. The index for utilities rose 2.1 percent as a result of warmer-than-usual weather in July boosting demand for air conditioning. The output of mining moved up 0.7 percent; the index has increased modestly, on net, over the past three months after having fallen about 17 percent between December 2014 and April 2016. At 104.9 percent of its 2012 average, total industrial production in July was 0.5 percent lower than its year-earlier level. Capacity utilization for the industrial sector increased 0.5 percentage point in July to 75.9 percent, a rate that is 4.1 percentage points below its long-run (1972–2015) average.


July Housing Starts up 2.1%, Permits down 0.1%
Posted: August 16, 2016 at 08:30 AM (Tuesday)

BUILDING PERMITS
Privately-owned housing units authorized by building permits in July were at a seasonally adjusted annual rate of 1,152,000. This is 0.1 percent (±1.2%) below the revised June rate of 1,153,000, but is 0.9 percent (±1.5%) above the July 2015 estimate of 1,142,000. Single-family authorizations in July were at a rate of 711,000; this is 3.7 percent (±1.4%) below the revised June figure of 738,000. Authorizations of units in buildings with five units or more were at a rate of 411,000 in July.

HOUSING STARTS
Privately-owned housing starts in July were at a seasonally adjusted annual rate of 1,211,000. This is 2.1 percent (±8.8%) above the revised June estimate of 1,186,000 and is 5.6 percent (±14.7%) above the July 2015 rate of 1,147,000.
Single-family housing starts in July were at a rate of 770,000; this is 0.5 percent (±8.6%) above the revised June figure of 766,000. The July rate for units in buildings with five units or more was 433,000.

HOUSING COMPLETIONS
Privately-owned housing completions in July were at a seasonally adjusted annual rate of 1,026,000. This is 8.3 percent (±8.9%) below the revised June estimate of 1,119,000, but is 3.2 percent (±11.2%) above the July 2015 rate of 994,000. Single-family housing completions in July were at a rate of 743,000; this is 0.4 percent (±8.8%) below the revised June rate of 746,000. The July rate for units in buildings with five units or more was 275,000.


Consumer Price Index unch% in July, Ex Fd & Engy up 0.1%
Posted: August 16, 2016 at 08:30 AM (Tuesday)

The Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in July on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 0.8 percent before seasonal adjustment.

The energy index declined in July and the food index was unchanged. The index for all items less food and energy rose, but posted its smallest increase since March. As a result, the all items index was unchanged after rising in each of the 4 previous months.

The energy index fell 1.6 percent after rising in each of the last four months. The decline was due to a sharp decrease in the gasoline index; other energy indexes were mixed. The food at home index declined 0.2 percent as four of the six major grocery store food group indexes decreased, while the index for food away from home rose 0.2 percent.

The index for all items less food and energy increased 0.1 percent in July after rising 0.2 percent in June. The shelter index rose 0.2 percent, its smallest increase since March, and the indexes for medical care, new vehicles, and motor vehicle insurance also rose. In contrast, the indexes for airline fares, used cars and trucks, communication, and recreation were among those that declined in July.

The all items index rose 0.8 percent for the 12 months ending July, a smaller increase than the 1.0 percent rise for the 12 months ending June. Similarly, the index for all items less food and energy rose 2.2 percent for the 12 months ending July, a smaller increase than the 2.3 percent rise for the 12 months ending June.


Real Average Hourly Earnings increased 0.4% in July
Posted: August 16, 2016 at 08:30 AM (Tuesday)

Real average hourly earnings for all employees increased 0.4 percent from June to July, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from a 0.3-percent increase in average hourly earnings combined with essentially no change in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings increased 0.6 percent over the month due to the increase in real average hourly earnings combined with a 0.3-percent increase in the average workweek.

Real average hourly earnings increased 1.7 percent, seasonally adjusted, from July 2015 to July 2016. This increase in real average hourly earnings combined with a 0.3-percent decrease in the average workweek resulted in a 1.4-percent increase in real average weekly earnings over this period.


Treasury International Capital Data for June 2016
Posted: August 15, 2016 at 04:00 PM (Monday)

The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for June 2016. The sum total in June of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC outflow of $202.8 billion. Of this, net foreign private outflows were $162.4 billion, and net foreign official outflows were $40.4 billion.

Foreign residents increased their holdings of long-term U.S. securities in June; net purchases were $7.6 billion. Net purchases by private foreign investors were $36.0 billion, while net sales by foreign official institutions were $28.4 billion. U.S. residents increased their holdings of long-term foreign securities, with net purchases of $11.2 billion.

Taking into account transactions in both foreign and U.S. securities, net foreign sales of long-term securities were $3.6 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 $38.9 billion in June.

Foreign residents decreased their holdings of U.S. Treasury bills by $7.4 billion. Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities increased by $10.5 billion. Banks’ own net dollar-denominated liabilities to foreign residents decreased by $174.4 billion.


Builder Confidence rose two points to 60 in August
Posted: August 15, 2016 at 10:00 AM (Monday)

Builder confidence in the market for newly constructed single-family homes in August rose two points to 60 from a downwardly revised reading of 58 in July on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

“New construction and new home sales are on the rise in most areas of the country, and this is helping to boost builder sentiment,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill.

“Builder confidence remains solid in the aftermath of weak GDP reports that were offset by positive job growth in July,” said NAHB Chief Economist Robert Dietz. “Historically low mortgage rates, increased household formations and a firming labor market will help keep housing on an upward path during the rest of the year.”

Two of the three HMI components posted gains in August. The component gauging current sales conditions rose two points to 65, while the index charting sales expectations in the next six months increased one point to 67. The component measuring buyer traffic fell one point to 44.

Looking at the three-month moving averages for regional HMI scores, the South registered a two-point uptick to 63, the Northeast rose two points to 41 while the West was unchanged at 69. The Midwest dropped two points to 55.


Empire State Manufacturing Survey Conditions declined slightly in August
Posted: August 15, 2016 at 08:30 AM (Monday)

Business activity in New York State declined slightly this month, according to firms responding to the August 2016 Empire State Manufacturing Survey. The headline general business conditions index fell five points to -4.2. The new orders index remained near zero, a sign that orders were little changed, while the shipments index climbed eight points to 9.0, indicating that shipments rose. Labor market indicators pointed to little change in employment levels and hours worked. The prices paid index edged down to 15.5, suggesting that input price increases remained moderate, and at 2.1, the prices received index reflected a minute increase in selling prices. Forward-looking indicators suggested that firms expected conditions to improve over the next six months, although the level of optimism diminished for a second consecutive month.

Business Activity Wanes
Manufacturing firms in New York State reported a slight weakening of business activity in August. The general business conditions index moved lower for a second consecutive month, falling five points to -4.2. Twenty-six percent of respondents reported that conditions had improved over the month, while 30 percent reported that conditions had worsened. The new orders index rose three points to 1.0, suggesting that orders were little changed. The shipments index advanced eight points to 9.0, pointing to an increase in shipments. The unfilled orders index inched up to -9.3. The delivery time index fell to -4.1, signaling shorter delivery times, and the inventories index remained negative at -4.1, evidence that inventory levels were somewhat lower.

Labor Market Steadies
The employment index climbed three points to -1.0, indicating that employment levels were little changed, and the average workweek index rose to 2.1, pointing to a slight increase in hours worked. The prices paid index slipped three points but, at 15.5, indicated that input prices continued to rise at a moderate pace. The prices received index, at 2.1, suggested that selling prices moved slightly higher.

Conditions Expected to Improve, though Firms Are Less Optimistic
Indexes for the six-month outlook revealed that respondents remained optimistic about future conditions, though to a lesser extent than in July. The index for future business conditions fell for a second consecutive month, dropping six points to 23.7. Indexes for future new orders and shipments also edged lower. Indexes for future employment and the average workweek were below zero, suggesting that firms expected employment and hours worked to decline in the months ahead. The capital expenditures index fell to 4.1, and the technology spending index retreated to 5.2.


Business Inventories up 0.2% in June
Posted: August 12, 2016 at 10:00 AM (Friday)

The U.S. Census Bureau announced today that the combined value of distributive trade sales and manufacturers’ shipments for June, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,307.8 billion, up 1.2 percent (±0.2%) from May 2016, but was down 0.6 percent (±0.4%) from June 2015.

Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,813.7 billion, up 0.2 percent (±0.1%) from May 2016 and were up 0.5 percent (±0.6%)* from June 2015.

The total business inventories/sales ratio based on seasonally adjusted data at the end of June was 1.39. The June 2015 ratio was 1.37.


Forecasters See Weaker Outlook for Growth and Employment
Posted: August 12, 2016 at 10:00 AM (Friday)

The outlook for growth in the U.S. economy over the next three years looks slightly weaker than that of three months ago, according to 40 forecasters surveyed by the Federal Reserve Bank of Philadelphia. The panel expects real GDP to grow at an annual rate of 2.6 percent this quarter and 2.3 percent next quarter. On an annual-average over annual-average basis, the forecasters see real GDP growing 1.5 percent in 2016, down from the previous estimate of 1.7 percent. The forecasters predict real GDP will grow 2.3 percent in 2017, 2.2 percent in 2018, and 2.2 percent in 2019. The forecasts for 2016, 2017, and 2018 are slightly weaker than the previous estimates.

The projections for unemployment remain nearly unchanged from those of the previous survey. The forecasters predict the unemployment rate will be an annual average of 4.8 percent in 2016, before falling to 4.6 percent in 2017, 4.6 percent in 2018, and 4.7 percent in 2019.

On the employment front, the forecasters have revised downward their estimates for job gains in 2016 and 2017. The forecasters’ projections for the annual-average level of nonfarm payroll employment suggest job gains at a monthly rate of 204,600 in 2016, down from the previous estimate of 212,400, and 161,100 in 2017, down from the previous estimate of 178,400. (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.)

For 2016, the panelists are more certain now than they were in the previous survey that growth will fall below 2.0 percent. For 2017, 2018, and 2019, the probabilities are about the same now as they were in the survey of three months ago.

Short-Term CPI Inflation Revises Upward, While the Outlook for PCE Inflation Holds Steady
The forecasters see slightly higher headline CPI inflation in 2016 and 2017 compared with their predictions of three months ago. Measured on a fourth-quarter over fourth-quarter basis, headline CPI inflation is expected to average 1.6 percent in 2016, 2.3 percent in 2017, and 2.3 percent in 2018. The projections for headline PCE inflation over the next three years remained unchanged from the survey of three months ago. Measured on a fourth-quarter over fourth-quarter basis, headline PCE inflation is expected to average 1.4 percent in 2016, 1.9 percent in 2017, and 2.0 percent in 2018.

Over the next 10 years, 2016 to 2025, the forecasters expect headline CPI inflation to average 2.15 percent at an annual rate, down slightly from their previous estimate of 2.20 percent. The corresponding estimate for 10-year annual-average PCE inflation is 2.00 percent, which is unchanged from the previous estimate.

Natural Rate of Unemployment Estimated at 4.8 Percent
In third-quarter surveys, we ask the forecasters to provide their estimates of the natural rate of unemployment — the rate of unemployment that occurs when the economy reaches equilibrium. The forecasters peg this rate at 4.80 percent. The table below shows, for each third-quarter survey since 1996, the percentage of respondents who use the natural rate in their forecasts and, for those who use it, the median estimate and the lowest and highest estimates. Fifty-six percent of the 32 forecasters who answered the question report that they use the natural rate in their forecasts. The lowest estimate is 4.50 percent, and the highest estimate is 5.50 percent.


Producer Price Index decreased 0.4% in July, ex Fd & Engy unch%
Posted: August 12, 2016 at 08:30 AM (Friday)

The Producer Price Index for final demand decreased 0.4 percent in July, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.5 percent in June and 0.4 percent in May. On an unadjusted basis, the final demand index moved down 0.2 percent for the 12 months ended in July.

In July, the decline in the final demand index was led by prices for final demand services, which fell 0.3 percent. The index for final demand goods decreased 0.4 percent.

Prices for final demand less foods, energy, and trade services were unchanged in July after rising 0.3 percent in June. For the 12 months ended in July, the index for final demand less foods, energy, and trade services increased 0.8 percent.


U.S. Retail Sales for July unch%, Ex-Auto down 0.3%
Posted: August 12, 2016 at 08:30 AM (Friday)

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for July, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $457.7 billion, virtually unchanged (±0.5%)* from the previous month, and 2.3 percent (±0.7%) above July 2015. Total sales for the May 2016 through July 2016 period were up 2.5 percent (±0.5%) from the same period a year ago.

The May 2016 to June 2016 percent change was revised from up 0.6 percent (±0.5%) to up 0.8 percent (±0.2%). Retail trade sales were virtually unchanged (±0.5%)* from June 2016, and up 1.9 percent (±0.5%) from last year. Nonstore retailers were up 14.1 percent (±1.2%) from July 2015, while Health and Personal Care Stores were up 7.8 percent (±2.3%) from last year.


U.S. Import Price Index rose 0.1% in July
Posted: August 11, 2016 at 08:30 AM (Thursday)

Prices for U.S. imports advanced 0.1 percent in July, the U.S. Bureau of Labor Statistics reported today, following a 0.6-percent rise the previous month. In July, increasing nonfuel prices more than offset a downturn in fuel prices. The price index for U.S. exports rose 0.2 percent in July, after advancing 0.8 percent in June.


Weekly Initial Unemployment Claims Decrease 1,000 to 266,000
Posted: August 11, 2016 at 08:30 AM (Thursday)

In the week ending August 6, the advance figure for seasonally adjusted initial claims was 266,000, a decrease of 1,000 from the previous week's revised level. The previous week's level was revised down by 2,000 from 269,000 to 267,000. The 4-week moving average was 262,750, an increase of 3,000 from the previous week's revised average. The previous week's average was revised down by 500 from 260,250 to 259,750. There were no special factors impacting this week's initial claims. This marks 75 consecutive weeks of initial claims below 300,000, the longest streak since 1970.

The advance seasonally adjusted insured unemployment rate was 1.6 percent for the week ending July 30, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending July 30 was 2,155,000, an increase of 14,000 from the previous week's revised level. The previous week's level was revised up 3,000 from 2,138,000 to 2,141,000. The 4-week moving average was 2,143,000, an increase of 500 from the previous week's revised average. The previous week's average was revised up by 750 from 2,141,750 to 2,142,500.


Job Openings little changed at 5.6 million in June
Posted: August 10, 2016 at 10:00 AM (Wednesday)

The number of job openings was little changed at 5.6 million on the last business day of June, the U.S. Bureau of Labor Statistics reported today. Hires and separations were little changed at 5.1 million and 4.9 million, respectively. Within separations, the quits rate was 2.0 percent and the layoffs and discharges rate was 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.

In June, there were 5.6 million job openings, little changed from May. The job openings rate in June was 3.8 percent. The number of job openings was essentially unchanged for total nonfarm, total private, and government. Job openings increased in durable goods manufacturing (+37,000) and decreased in federal government (-15,000). In the regions, job openings increased in the South.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: August 10, 2016 at 07:00 AM (Wednesday)

Mortgage applications increased 7.1 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending August 5, 2016.

The Market Composite Index, a measure of mortgage loan application volume, increased 7.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 7 percent compared with the previous week. The Refinance Index increased 10 percent from the previous week. The Government Refinance index was up 27 percent and the Conventional Refinance Index was up 6 percent from one week earlier. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 13 percent higher than the same week one year ago.

The refinance share of mortgage activity increased to 62.4 percent of total applications from 60.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 4.7 percent of total applications.

The FHA share of total applications increased to 10.0 percent from 9.4 percent the week prior. The VA share of total applications increased to 13.0 percent from 12.1 percent the week prior. The USDA share of total applications decreased to 0.6 percent from 0.7 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.65 percent from 3.67 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 decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 3.64 percent from 3.65 percent, with points increasing to 0.31 from 0.24 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.52 percent from 3.54 percent, with points increasing to 0.33 from 0.32 (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 2.93 percent, with points decreasing to 0.34 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 2.81 percent from 2.90 percent, with points increasing to 0.32 from 0.24 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


Wholesale Inventories up 0.3% in June
Posted: August 9, 2016 at 10:00 AM (Tuesday)

The U.S. Census Bureau announced today that June 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 $444.6 billion, up 1.9 percent (+/-0.5%) from the revised May level, but were down 0.4 percent (+/-1.1%) from the June 2015 level. The April 2016 to May 2016 percent change was revised from the preliminary estimate of up 0.5 percent (0.5%) to up 0.7 percent (0.5%). June sales of durable goods were up 1.2 percent (+/-0.9%) from last month and were up 1.8 percent (+/-1.8%) from a year ago. Sales of hardware, and plumbing and heating equipment and supplies were up 7.7 percent from last month and sales of electrical and electronic goods were up 2.5 percent. Sales of nondurable goods were up 2.5 percent (+/-0.7%) from May, but were down 2.5 percent (+/-1.6%) from last June. Sales of farm product raw materials were up 5.1 percent from last month and petroleum and petroleum products were up 5.1 percent.

Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $590.9 billion at the end of June, up 0.3 percent (+/-0.2%) from the revised May level. Total inventories are up 0.2 percent (+/-1.6%) from the revised June 2015 level. The May 2016 to June 2016 percent change was revised from the advance estimate of virtually unchanged (+/-0.4%) to up 0.3 percent (+/-0.2%). June inventories of durable goods were down 0.3 percent (+/-0.4%) from last month and were down 2.4 percent (+/-1.4%) from a year ago. Inventories of electrical and electronic goods were down 0.9 percent from last month, while inventories of lumber and other construction materials were up 1.8 percent. Inventories of nondurable goods were up 1.1 percent (+/-0.5%) from May and were up 4.5 percent (+/-2.5%) from last June. Inventories of drugs and druggists' sundries were up 4.9 percent from last month and inventories of farm product raw materials were up 4.0 percent.

The June inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.33. The June 2015 ratio was 1.32.


2Q2016 Productivity Growth Decreased 0.5%
Posted: August 9, 2016 at 08:30 AM (Tuesday)

Nonfarm business sector labor productivity decreased at a 0.5-percent annual rate during the second quarter of 2016, the U.S. Bureau of Labor Statistics reported today, as output increased 1.2 percent and hours worked increased 1.8 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the second quarter of 2015 to the second quarter of 2016, productivity decreased 0.4 percent, the first four-quarter decline in the series since a 0.6-percent decrease in the second quarter of 2013.

Unit labor costs in the nonfarm business sector increased 2.0 percent in the second quarter of 2016, reflecting a 1.5-percent increase in hourly compensation and a 0.5-percent decline in productivity. Unit labor costs increased 2.1 percent over the last four quarters.

Manufacturing sector labor productivity decreased 0.2 percent in the second quarter of 2016, as output and hours worked decreased 0.8 percent and 0.7 percent, respectively. Output per hour increased 2.6 percent in the durable goods manufacturing sector reflecting a 2.0-percent decline in hours worked and a 0.5-percent increase in output. Productivity decreased 4.1 percent in the nondurable goods sector in the second quarter of 2016, following a 4.0 percent first-quarter increase. Over the last four quarters, manufacturing productivity increased 0.9 percent, as output increased 0.3 percent and hours declined 0.6 percent. Unit labor costs in manufacturing increased 3.1 percent in the second quarter of 2016 and rose 1.7 percent from the same quarter a year ago. Hourly compensation increased 2.9 percent in the second quarter of 2016.


NFIB Small Business Optimism Index increased 0.1 points in July to 94.6
Posted: August 9, 2016 at 07:00 AM (Tuesday)

The Index of Small Business Optimism increased 0.1 points to 94.6, still well below the 40 year average of 98. Four of the 10 Index components posted a gain, four declined and two were unchanged. GDP growth in the last three quarters has averaged 1 percent, not a recession but only matching the growth in the population. The outlook for business conditions six months from the current period continued to improve, gaining 16 percentage points since January but still in negative territory – more owners expecting deterioration than improvement. Only 8 percent (seasonally adjusted) view the current period as favorable for business expansion, the average for this recovery but well below the 17 percent average for 2000-2007.

After seven years of “recovery” which hasn’t turned out to be much of one, real GDP posted three quarters of growth averaging 1 percent, dragging down the average of 2.1 percent growth for the recovery period. Compare this to 4.5 percent for the 1983 recovery. At the tail end of this recovery, there are 5 million more food stamp recipients than at the start of the Obama administration. There are 10 million more people on Medicaid. The “work” requirement in the 1996 welfare reform legislation that worked well has been eliminated, perhaps explaining why so many owners with job openings for low skilled workers can’t find qualified applicants, welfare competes with actually taking a job. If this is where the “recovery” ends, it will certainly be a sad performance.

Consumer sentiment went down (University of Michigan) but the most recent retail sales figures were promising, with better than 4 percent growth. Consumer spending is critically important to small businesses. Ford doesn’t sell cars, small business owners do and sales have recently been at a very high pace. It appears that the consumer is totally responsible for second quarter growth and appears poised to keep spending in Q3. However there is little hope of a good growth year at this point, as the business sector does not seem anxious to do a lot of investment spending or hiring. Small business owners remain in “maintenance mode”. A record high percentage of owners cited “the political climate” as the major reason for viewing the current period as a bad time to expand. The surge in consumer spending was met by drawing down inventories, taking a point off of GDP growth. A rebuild of inventories was not apparent in the NFIB numbers but if it happens, Q3 growth will get a boost. Overall, growth will likely resume its 2 percent pace.


Employment Trends Index increased in July to 128.28
Posted: August 8, 2016 at 10:00 AM (Monday)

The Conference Board Employment Trends Index™ (ETI) increased in July, after increasing in June. The index now stands at 128.28, up from 127.89 (a downward revision) in June. The change represents a 1.6 percent gain in the ETI compared to a year ago.

“The Employment Trends Index is still suggesting that job growth will slow in the coming months, despite strong employment numbers for June and July,” said Gad Levanon, Chief Economist, North America, at The Conference Board. “It is surprising that hiring has been so robust, given the current slow economic growth environment. Perhaps, economic growth is actually stronger than the anemic 1.2 percent GDP growth reported for the past four quarters.”

July’s increase in the ETI was fueled by positive contributions from five 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,” Number of Employees Hired by the Temporary-Help Industry, Job Openings, Industrial Production, and Initial Claims for Unemployment Insurance.

The Employment Trends Index aggregates eight labor-market indicators, each of which has proven accurate in its own area. Aggregating individual indicators into a composite index filters out “noise” to show underlying trends more clearly.


Consumer Credit Increased at an annual rate of 5.25%
Posted: August 5, 2016 at 03:00 PM (Friday)

Consumer credit increased at a seasonally adjusted annual rate of 5-1/4 percent during the second quarter. Revolving credit increased at an annual rate of 4-1/2 percent, while nonrevolving credit increased at an annual rate of 5-1/2 percent. In June, consumer credit increased at an annual rate of 4 percent.


June Employment increased by 255,000
Unemployment Rate unchanged at 4.9%

Posted: August 5, 2016 at 08:30 AM (Friday)

Total nonfarm payroll employment rose by 255,000 in July, and the unemployment rate was unchanged at 4.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, health care, and financial activities. Employment in mining continued to trend down.

The unemployment rate held at 4.9 percent in July, and the number of unemployed persons was essentially unchanged at 7.8 million. Both measures have shown little movement, on net, since August of last year.

Among the major worker groups, unemployment rates in July were little changed for adult men (4.6 percent), adult women (4.3 percent), teenagers (15.6 percent), Whites, (4.3 percent), Blacks (8.4 percent), Asians (3.8 percent), and Hispanics (5.4 percent).

In July, the number of persons unemployed less than 5 weeks decreased by 258,000. At 2.0 million, the number of long-term unemployed (those jobless for 27 weeks or more) was about unchanged over the month and accounted for 26.6 percent of the unemployed.

Both the labor force participation rate, at 62.8 percent, and the employment-population ratio, at 59.7 percent, changed little in July. The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed at 5.9 million in July. 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 a full-time job.

In July, 2.0 million persons were marginally attached to the labor force, about unchanged 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 591,000 discouraged workers in July, little different 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 1.4 million persons marginally attached to the labor force in July had not searched for work for reasons such as school attendance or family responsibilities.

Total nonfarm payroll employment rose by 255,000 in July. Job gains occurred in professional and business services, health care, and financial activities. Mining employment continued to trend down.

Professional and business services added 70,000 jobs in July and has added 550,000 jobs over the past 12 months. Within the industry, employment rose by 37,000 in professional and technical services in July, led by computer systems design and related services (+8,000) and architectural and engineering services (+7,000). Employment in management and technical consulting services continued to trend up (+6,000).

In July, health care employment increased by 43,000, with gains in ambulatory health care services (+19,000), hospitals (+17,000), and nursing and residential care facilities (+7,000). Over the past 12 months, health care has added 477,000 jobs.

Employment in financial activities rose by 18,000 in July and has risen by 162,000 over the year.

Employment in leisure and hospitality continued to trend up in July (+45,000). Employment in food services and drinking places changed little in July (+21,000); this industry has added an average of 18,000 jobs per month thus far this year, compared with an average monthly gain of 30,000 in 2015.

Government employment edged up in July (+38,000).

Employment in mining continued to trend down over the month (-6,000). Since reaching a peak in September 2014, employment in this industry has fallen by 220,000, or 26 percent.

Employment in other major industries, including construction, manufacturing, wholesale trade, retail trade, and information, showed little or no change over the month.

The average workweek for all employees on private nonfarm payrolls increased by 0.1 hour to 34.5 hours in July. In manufacturing, the workweek was unchanged at 40.7 hours, while overtime increased by 0.1 hour to 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls also increased by 0.1 hour to 33.7 hours.

In July, average hourly earnings for all employees on private nonfarm payrolls increased by 8 cents to $25.69. Over the year, average hourly earnings have risen by 2.6 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 7 cents to $21.59 in July. (See tables B-3 and B-8.)

The change in total nonfarm payroll employment for May was revised from +11,000 to +24,000, and the change for June was revised from +287,000 to +292,000. With these revisions, employment gains in May and June combined were 18,000 more than previously reported. Over the past 3 months, job gains have averaged 190,000 per month.


Goods and Services Deficit Increased in june 2016
Posted: August 5, 2016 at 08:30 AM (Friday)

The Nation's international trade deficit in goods and services increased to $44.5 billion in June from $41.0 billion in May (revised), as imports increased more than exports.

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $44.5 billion in June, up $3.6 billion from $41.0 billion in May, revised. June exports were $183.2 billion, $0.6 billion more than May exports. June imports were $227.7 billion, $4.2 billion more than May imports.

The June increase in the goods and services deficit reflected an increase in the goods deficit of $3.8 billion to $66.0 billion and an increase in the services surplus of $0.3 billion to $21.5 billion.

Year-to-date, the goods and services deficit decreased $5.8 billion, or 2.3 percent, from the same period in 2015. Exports decreased $54.2 billion or 4.7 percent. Imports decreased $60.0 billion or 4.3 percent.


New orders for manufactured goods decreased 1.5% in June
Posted: August 4, 2016 at 10:00 AM (Thursday)

New orders for manufactured goods in June, down two consecutive months, decreased $6.9 billion or 1.5 percent to $447.4 billion, the U.S. Census Bureau reported today. This followed a 1.2 percent May decrease.

Shipments, up four consecutive months, increased $3.1 billion or 0.7 percent to $460.0 billion. This followed a 0.1 percent May increase.

Unfilled orders, down following three consecutive monthly increases, decreased $9.6 billion or 0.8 percent to $1,128.0 billion. This followed a virtually unchanged May increase. The unfilled orders-to-shipments ratio was 6.81, down from 6.89 in May.

Inventories, down thirteen of the last fourteen months, decreased $0.5 billion or 0.1 percent to $619.1 billion. This followed a 0.1 percent May decrease. The inventories-to-shipments ratio was 1.35, down from 1.36 in May.


Weekly Initial Unemployment Claims Increase 3,000 to 269,000
Posted: August 4, 2016 at 08:30 AM (Thursday)

In the week ending July 30, the advance figure for seasonally adjusted initial claims was 269,000, an increase of 3,000 from the previous week's unrevised level of 266,000. The 4-week moving average was 260,250, an increase of 3,750 from the previous week's unrevised average of 256,500. There were no special factors impacting this week's initial claims. This marks 74 consecutive weeks of initial claims below 300,000, the longest streak since 1973.

The advance seasonally adjusted insured unemployment rate was 1.6 percent for the week ending July 23, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending July 23 was 2,138,000, a decrease of 6,000 from the previous week's revised level. The previous week's level was revised up 5,000 from 2,139,000 to 2,144,000. The 4-week moving average was 2,141,750, an increase of 5,250 from the previous week's revised average. The previous week's average was revised up by 1,250 from 2,135,250 to 2,136,500.


Challenger Layoffs increase to 45,346 in July
Posted: August 4, 2016 at 07:00 AM (Thursday)

The pace of layoffs ticked up in July, as employers announced plans to shed 45,346 workers from their payrolls. That represents a 19 percent increase from 38,536 job cuts in June, according to the report released Thursday by global outplacement consultancy Challenger, Gray & Christmas, Inc.

It was the second consecutive increase in monthly job cuts, as the June total was up 28 percent from May, when planned layoffs fell to a five-month low of 30,157.

While the July total was up from the previous month, it was 57 percent lower than same period a year ago, when job cuts surged to a 4-year high of 105,696. The increase was due to heavy cuts in the military, where 57,000 troops and civilian personnel were discharged in budget-cutting initiatives.

To date, employers have announced 359,100 job cuts in 2016. That is down 8.7 percent from the 393,368 job cuts announced from January through July 2015.

“While job cuts were up last month, compared to June, the total was still lower the July average recorded since the end of the recession. We did see a resurgence in energy-sector job cuts. This was somewhat unexpected in light of recent projections of increased oil prices and possible labor shortages in the industry,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

Job cuts in the energy sector totaled 17,725 in July, a 796 percent increase from the previous month (1,979) and the largest job-cut tally for the industry since April, when these firms announced 18,759 job cuts.

So far in 2016, energy firms have announced 94,936 job cuts. That is 37 percent more than at this point a year ago, when energy cuts totaled 69,550.

Of the 94,936 job cuts in the energy sector announced this year, 83,412 have been blamed on oil prices. In all, low oil prices have claimed 195,415 jobs since mid-2014, mostly in the energy and industrial goods sectors.

“Even as some oil-industry firms continued to reduce their headcounts in July, a report appearing in industry publication OilPrice.com noted that the number of oil rigs rebounded in May and predicted that firms will have a difficult time ramping up operations if and when oil and gas prices go up,” said Challenger.

“Not only have laid off workers relocated to other areas for new jobs but, just as in many other industries, a large portion of the workforce is reaching retirement age.”

Indeed, a report released earlier this year by the American Petroleum Institute indicated that petrochemical companies will need to hire about 30,000 new workers each year over the next two decades to replace retiring employees.

After the energy sector, the computer industry has seen the next highest number of job cut announcements this year. To date, these firms have reported 49,464 job cuts, including 9,875 in July. The year-to-date total is 94 percent higher than the seven-month total from 2015 (25,542).


ISM Non-Manufacturing Index lower growth at 55.5% in July
Posted: August 3, 2016 at 10:00 AM (Wednesday)

Economic activity in the non-manufacturing sector grew in July for the 78th consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The NMI® registered 55.5 percent in July, 1 percentage point lower than the June reading of 56.5 percent. This represents continued growth in the non-manufacturing sector at a slower rate. The Non-Manufacturing Business Activity Index decreased to 59.3 percent, 0.2 percentage point lower than the June reading of 59.5 percent, reflecting growth for the 84th consecutive month, at a slightly slower rate in July. The New Orders Index registered 60.3 percent, 0.4 percentage point higher than the reading of 59.9 percent in June. The Employment Index decreased 1.3 percentage points in July to 51.4 percent from the June reading of 52.7 percent. The Prices Index decreased 3.6 percentage points from the June reading of 55.5 percent to 51.9 percent, indicating prices increased in July for the fourth consecutive month. According to the NMI®, 15 non-manufacturing industries reported growth in July. The majority of the respondents’ comments reflect stability and continued growth for their respective companies and a positive outlook on the economy.

INDUSTRY PERFORMANCE
The 15 non-manufacturing industries reporting growth in July — listed in order — are: Arts, Entertainment & Recreation; Educational Services; Accommodation & Food Services; Real Estate, Rental & Leasing; Retail Trade; Utilities; Health Care & Social Assistance; Public Administration; Finance & Insurance; Management of Companies & Support Services; Transportation & Warehousing; Wholesale Trade; Construction; Information; and Professional, Scientific & Technical Services. The three industries reporting contraction in July are: Other Services; Agriculture, Forestry, Fishing & Hunting; and Mining.


Help Wanted OnLine Labor Demand increased 156,800 to 4,814,300 in July
Posted: August 3, 2016 at 10:00 AM (Wednesday)

Online advertised vacancies increased 156,800 to 4,814,300 in July, according to The Conference Board Help Wanted OnLine®(HWOL) Data Series,released today. The June Supply/Demand rate stands at 1.67 unemployed for each advertised vacancy with a total of 3.1 million more unemployed workers than the number of advertised vacancies. The number of unemployed was approximately 7.9 million in June.

“The first half of 2016 has shown a substantial drop in the level of online advertised vacancies,” said Gad Levanon, Chief Economist, North America, at The Conference Board. “July’s gain is a positive sign. However, recovery from earlier losses will require continued improvements throughout the rest of 2016.”

In July, virtually all major occupational categories saw increases. The Professional category saw strong gains in Healthcare (+37.3), Computer (+15.8), Business/Finance (+7.8), and Management (+6.1). The Services/Production category saw strong gains in Installation/Repair (+15.2), Sales (+13.9), Transportation (+12.9), and Office/Admin (+11.3).


ADP National Employment Report increased by 179,000 jobs in July
Posted: August 3, 2016 at 08:15 AM (Wednesday)

Private sector employment increased by 179,000 jobs from June to July according to the July ADP National Employment Report®.

Payrolls for businesses with 49 or fewer employees increased by 61,000 jobs in July, down from 86,000 in June. Employment at companies with 50-499 employees increased by 68,000 jobs, up from last month’s 56,000. Employment at large companies – those with 500 or more employees – increased by 50,000, up from June’s 34,000. Companies with 500-999 employees added 16,000 and companies with more than 1,000 employees added 33,000 in July.

Goods-producing employment was down by 6,000 jobs in July, following June losses of 28,000. The construction industry lost 6,000 jobs, following June losses of 4,000 jobs. Meanwhile, manufacturing gained 4,000 jobs after losing 15,000 the previous month.

Service-providing employment rose by 185,000 jobs in July, fewer than June’s 203,000 jobs. The ADP National Employment Report indicates that professional/business services contributed 59,000 jobs, down from June’s 78,000. Trade/transportation/utilities increased by 27,000 jobs in July, down from 41,000 jobs added the previous month. Financial activities added 11,000 jobs, following last month’s gain of 9,000 jobs.

“This month’s employment number falls short of the 12-month average primarily because of slowing in small business hiring,” said Ahu Yildirmaz, vice president and head of the ADP Research Institute. “As the labor market continues to tighten, small businesses may increasingly face challenges when it comes to offering wages that can compete with larger businesses.”
Mark Zandi, chief economist of Moody’s Analytics, said, “Job growth remains strong, but is moderating as the economy approaches full employment. Businesses are having a more difficult time filling open job positions, which are near record highs. The nation’s biggest economic problem will soon be the lack of available workers.”


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: August 3, 2016 at 07:00 AM (Wednesday)

Mortgage applications decreased 3.5 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending July 29, 2016.

The Market Composite Index, a measure of mortgage loan application volume, decreased 3.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4 percent compared with the previous week. The Refinance Index decreased 4 percent from the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier to the lowest level since February 2016 while the seasonally adjusted Government Purchase Index fell to the lowest level since November 2015. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 6 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 60.7 percent of total applications from 61.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 4.7 percent of total applications.

The FHA share of total applications decreased to 9.4 percent from 10.1 percent the week prior. The VA share of total applications increased to 12.1 percent from 11.9 percent the week prior. The USDA share of total applications increased to 0.7 percent from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.67 percent from 3.69 percent, with points decreasing to 0.30 from 0.36 (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 $417,000) decreased to 3.65 percent from 3.67 percent, with points decreasing to 0.24 from 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.54 percent from 3.56 percent, with points decreasing to 0.32 from 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 decreased to 2.93 percent from 2.94 percent, with points increasing to 0.36 from 0.32 (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 2.90 percent from 2.96 percent, with points decreasing to 0.24 from 0.30 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


Personal Income increased 0.2%, Spending increased 0.4%
Posted: August 2, 2016 at 08:30 AM (Tuesday)

Personal income increased $29.3 billion (0.2 percent) in June according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $24.6 billion (0.2 percent) and personal consumption expenditures (PCE) increased $53.0 billion (0.4 percent).

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


Paychex-IHS Small Business Jobs Index down to 100.68 in July
Posted: August 2, 2016 at 08:30 AM (Tuesday)

Following a 2016 high point in June, the Paychex | IHS Small Business Jobs Index moderated in July, down 0.12 percent from the previous month. At 100.68, the growth rate of the national index is consistent with the 2016 average and 0.04 percent higher than it was in July 2015. During the past 12 months, small business employment in the regions on the East Coast strengthened. Up 0.52 percent for the past three months, South Atlantic remained in the top spot among regions and is up 0.80 percent year-over-year. Washington remained the top-ranked state index at 103.63, but was unable to maintain the pace set in June, slipping 0.83 percent. At the top of the metro ranking, Seattle and Atlanta mirror their state indexes, with Seattle slowing and Atlanta gaining significantly. Employment growth slowed in eight of the nine industries in July, with Trade, Transportation and Utilities being the only industry sector to increase.

“At 100.68, the Paychex | IHS Small Business Jobs Index decreased to a level consistent with the 2016 average rate of small business job growth,” said James Diffley, chief regional economist at IHS.

“Following significant swings in the previous two months, the July index reflects a year-to-date trend of steady employment growth,” said Martin Mucci, president and CEO of Paychex. “That may sound contrary to the general belief that the uncertainty of a general election negatively impacts hiring. However, our research indicates that’s largely dependent on the size of the business, with larger companies citing the election as a key factor impacting decisions to add staff.”


New York Purchasing Managers Business Activity rose to 60.7 in July
Posted: August 2, 2016 at 08:30 AM (Tuesday)

New York City business activity returned to cautious optimism after the short term pre-Brexit negativity seen in May and June, according to the survey taken by the Institute for Supply Management-New York. While nearly all of the June responses came in before the Brexit vote, July results revealed no initial ill effects from the UK’s decision to leave the EU.

New York Metro
Current Business Conditions rose to a 7 month high of 60.7 in July after contracting for two consecutive months for the first time since the Great Recession. Despite the improvement in current business conditions, the Six-Month Outlook eased to 56.8 in July after rising to a three-month high of 59.5 in June. The six month outlook has been a reliable short-run guide for current business conditions over time.

Company Specific
Caution continued regarding labor and purchase volumes. Employment came in at 45.3 in July, contracting for the tenth time in the last 11 months. Quantity of Purchases came in at 48.3 in July, contracting for the fourth month running.

News for the top line and forward guidance remained positive. Current Revenues were 55.6 for the second month in a row. Expected Revenues increased to 62.1 in July. Cost pressures eased for the fourth time in five months. Prices Paid decreased to 48.3 in July.


Construction Spending decreased 0.6% in June
Posted: August 1, 2016 at 01:15 PM (Monday)

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during June 2016 was estimated at a seasonally adjusted annual rate of $1,133.5 billion, 0.6 percent (±1.3%)* below the revised May estimate of $1,140.9 billion. The June figure is 0.3 percent (±1.6%)* above the June 2015 estimate of $1,130.5 billion. During the first 6 months of this year, construction spending amounted to $539.8 billion, 6.2 percent (±1.3%) above the $508.1 billion for the same period in 2015.

PRIVATE CONSTRUCTION
Spending on private construction was at a seasonally adjusted annual rate of $851.0 billion, 0.6 percent (±1.0%)* below the revised May estimate of $856.6 billion. Residential construction was at a seasonally adjusted annual rate of $445.8 billion in June, nearly the same as (±1.3%)* the revised May estimate of $445.9 billion. Nonresidential construction was at a seasonally adjusted annual rate of $405.2 billion in June, 1.3 percent (±1.0%) below the revised May estimate of $410.7 billion.

PUBLIC CONSTRUCTION
In June, the estimated seasonally adjusted annual rate of public construction spending was $282.5 billion, 0.6 percent (±2.5%)* below the revised May estimate of $284.3 billion. Educational construction was at a seasonally adjusted annual rate of $67.5 billion, 0.5 percent (±5.8%)* below the revised May estimate of $67.8 billion. Highway construction was at a seasonally adjusted annual rate of $88.0 billion, 1.4 percent (±5.4%)* below the revised May estimate of $89.2 billion.


July Manufacturing ISM registered 52.6
Posted: August 1, 2016 at 10:00 AM (Monday)

Economic activity in the manufacturing sector expanded in July for the fifth consecutive month, while the overall economy grew for the 86th consecutive month, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®.

The July PMI® registered 52.6 percent, a decrease of 0.6 percentage point from the June reading of 53.2 percent. The New Orders Index registered 56.9 percent, a decrease of 0.1 percentage point from the June reading of 57 percent. The Production Index registered 55.4 percent, 0.7 percentage point higher than the June reading of 54.7 percent. The Employment Index registered 49.4 percent, a decrease of 1 percentage point from the June reading of 50.4 percent. Inventories of raw materials registered 49.5 percent, an increase of 1 percentage point from the June reading of 48.5 percent. The Prices Index registered 55 percent, a decrease of 5.5 percentage points from the June reading of 60.5 percent, indicating higher raw materials prices for the fifth consecutive month. Manufacturing registered growth in July for the fifth consecutive month, as 12 of our 18 industries reported an increase in new orders in July (same as in June), and nine of our 18 industries reported an increase in production in July (down from 12 in June).

Of the 18 manufacturing industries, 11 are reporting growth in July in the following order: Textile Mills; Printing & Related Support Activities; Miscellaneous Manufacturing; Wood Products; Furniture & Related Products; Chemical Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; Nonmetallic Mineral Products; Petroleum & Coal Products; and Computer & Electronic Products. The seven industries reporting contraction in July - listed in order - are: Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Machinery; Primary Metals; Transportation Equipment; and Paper Products.


University of Michigan Consumer Confidence dropped in July to 90.0
Posted: July 29, 2016 at 10:00 AM (Friday)

Consumers were a bit less optimistic in July than one month or one year ago, although consumer confidence remains at a reasonable high level. The recent decline was due to rising concerns about prospects for the economy, that were mainly expressed by upper income households. Uncertainties surrounding global economic prospects and the presidential election have made consumers more cautious in their expectations for future economic growth as well as employment growth. Strength in personal finances and low interest rates will maintain the growth in real consumption at 2.6% through mid 2017.

Personal Finances Regain Strength
Consumers remained upbeat about their current finances. The smallest proportion reported that their finances had worsened during the past year—24%—than anytime since the last peak in 2007. The fewest consumers in eight years complained about income losses in each survey during the past three months. Importantly, income expectations for the year ahead remained positive, especially among younger and middle income households.

Favorable Buying Attitudes
Ultra low mortgage rates have extended favorable buying plans for homes despite a falloff in perceptions of low and attractive home prices. Low mortgage rates were mentioned three times as frequently as low prices when consumers were asked to explain their views toward current home buying conditions. For vehicle purchases, low interest rates were mentioned twice as frequently as attractive pricing. Only for purchases of large household durables did attractive pricing dominate low interest rates.

The Consumer Sentiment Index was 90.0 in the July 2016 survey, down from 93.5 in June and last July’s 93.1. Most of the decline was due to the Expectations Index, which fell to 77.8 in July, down from 82.4 in June and last July’s 84.1. The Current Conditions Index fell slightly to 109.0 in July, just below last month’s cyclical peak of 110.8. The gap between the Expectations Index and the Current Conditions Index has grown, averaging its largest difference over the past three months since its last peak in 2006.

The enduring strength in consumer sentiment during the past eighteen months has been in personal finances and buying conditions, while the outlook for the economy and job creation has gradually weakened. Although this mirrors the pattern of aging expansions, it does not necessarily imply we are coming closer to a downturn. Indeed, it may reflect nothing more than lackluster growth during the past seven years and an unusual degree of economic uncertainty. Nonetheless, avoiding a downturn is now more dependent on gains in consumer spending than has been typical in the past, and maintaining that strength deserves special attention.”


Chicago Purchasing Managers Index fell 1 point to 55.8 in July
Posted: July 29, 2016 at 09:45 AM (Friday)

The MNI Chicago Business Barometer fell 1 point to 55.8 in July from the 1½-year high of 56.8 in June, led by a fall in New Orders. Smaller declines were seen in Production and Order Backlogs, which offset a strong increase in the Employment component.

The Barometer’s three-month average, though, which provides a better picture of the underlying trend in economic activity, rose to 54.0 from 52.2 in Q2, the highest since February 2015.

Following strong gains in the previous month, Production, New Orders and Order Backlogs declined somewhat in July, but remained above May’s levels, when they all fell into contraction territory. New Orders fell 3.9 points to 59.3, but held most of June’s gain that had left the indicator at the highest level since October 2014. Order Backlogs, which last month rose to the highest since March 2011, managed to remain above 50 following a 16-month run of sub-50 readings.

Demand for labour picked up noticeably in July, probably boosted by the increased level of orders and output at the end of Q2. Employment jumped solidly back above 50 to the highest since March 2016, a healthy recovery after three months in contraction that had left the indicator at the lowest since November 2009.

From November 2015 through to May 2016, firms ran down inventory levels. In July, though, companies increased their inventories at the fastest pace since October 2015, building on June’s double digit gain. Inflationary pressures were little changed on the month, with Prices Paid falling slightly for the third consecutive month.

In a special question posed to the Chicago panel, 66% said they would expect the net financial impact of Brexit on their company to be “negligible”. This was in line with the results from the national ISM which showed 61%.

“Demand and output softened somewhat in July following a solid showing in June but still outperformed the very weak results seen earlier in the year. On the upside, it was the first time since January 2015 that all five Barometer components were above 50. Looking at the three-month average, the Chicago Business Barometer so far suggests economic activity running at a healthier pace in Q3,” said Lorena Castellanos, senior economist at MNI Indicators.

“Another positive came from the Employment Indicator. Although it’s still relatively weak, should July’s increase hold then it could be read as a tentative sign of growing business confidence about economic growth ahead,” she added.


2Q2016 GDP advance estimate increased 1.1%
Posted: July 29, 2016 at 08:30 AM (Friday)

Real gross domestic product increased at an annual rate of 1.2 percent in the second quarter of 2016 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.8 percent (revised).

The Bureau emphasized that the second-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency . The "second" estimate for the second quarter, based on more complete data, will be released on August 26, 2016.

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

The acceleration in real GDP growth in the second quarter reflected an acceleration in PCE, an upturn in exports, and smaller decreases in nonresidential fixed investment and in federal government spending. These were partly offset by a larger decrease in private inventory investment, and downturns in residential fixed investment and in state and local government spending.

Current-dollar GDP increased 3.5 percent (table 1), or $155.9 billion, in the second quarter to a level of $18,437.6 billion (table 3A). In the first quarter, current dollar GDP increased 1.3 percent (revised), or $58.9 billion.

The price index for gross domestic purchases increased 2.0 percent in the second quarter, compared with an increase of 0.2 percent in the first (revised) (table 4). The PCE price index increased 1.9 percent, compared with an increase of 0.3 percent. Excluding food and energy prices, the PCE price index increased 1.7 percent, compared with an increase of 2.1 percent.

Current-dollar personal income increased $111.4 billion in the second quarter, compared with an increase of $52.8 billion in the first (revised). The acceleration in personal income primarily reflected upturns in wages and salaries, personal dividend income, and farm proprietors’ income that were offset by slowdowns in personal current transfer receipts.

Disposable personal income increased $106.3 billion, or 3.1 percent, in the second quarter, compared with an increase of $83.4 billion, or 2.5 percent, in the first (revised). Real disposable personal income increased 1.2 percent, compared with an increase of 2.2 percent.

Personal saving was $763.1 billion in the second quarter, compared with $847.8 billion in the first (revised). The personal saving rate -- personal saving as a percentage of disposable personal income -- was 5.5 percent in the second quarter, compared with 6.1 percent in the first.

For the first quarter of 2016, real GDP is now estimated to have increased 0.8 percent; in the previously published estimates, first-quarter GDP was estimated to have increased 1.1 percent. The 0.3-percentage point downward revision to the percent change in first-quarter real GDP primarily reflected downward revisions to residential fixed investment, to private inventory investment, and to exports that were partly offset by upward revisions to nonresidential fixed investment, to PCE, to state and local government spending, to imports, and to federal government spending.


Employment Cost Index up 0.6% in 2Q2016
Posted: July 29, 2016 at 08:30 AM (Friday)

Compensation costs for civilian workers increased 0.6 percent, seasonally adjusted, for the 3-month period ending in June 2016, the U.S. Bureau of Labor Statistics reported today. Wages and salaries (which make up about 70 percent of compensation costs) increased 0.6 percent, and benefits (which make up the remaining 30 percent of compensation) increased 0.5 percent.


Kansas City Fed Manufacturing Activity declined modestly in July
Posted: July 28, 2016 at 11:00 AM (Thursday)

Tenth District manufacturing activity declined modestly after last month’s rebound. Expectations for future activity continued to increase, and the price indexes were mixed.

The month-over-month composite index was -6 in July, down from 2 in June and -5 in May. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Non-durable goods producing plants reported a smaller decline in activity, but durable goods production dropped sharply, particularly for metals and electronic equipment. Most month-over-month indexes were lower than in June. The production index dropped from 12 to -15, and the shipments and news orders indexes also fell. The employment index inched down to -5, while the order backlog index remained unchanged. The raw materials inventory index eased further, while the finished goods inventory index increased from -5 to 5.

Year-over-year factory indexes were mixed but remained weak. The composite year-over-year index was flat at -15, while the production, shipments, and new orders indexes edged down slightly. The order backlog index was unchanged, and the employment index inched higher. The capital spending index fell from -3 to -14, reversing the increase reported in June. Both inventory indexes increased modestly but remained negative.

Most future factory indexes increased considerably in July. The future composite index increased from 7 to 14, its highest in over a year. The future production, shipments, new orders, and order backlog indexes also increased markedly. The future capital spending index edged down from 8 to 3, and the employment index also eased somewhat. Both future inventory indexes increased into positive territory for the first time in eighteen months.

Price indexes were mixed in July. The month-over-month finished goods price index fell from -4 to -11, and the raw materials price index inched lower. The year-over-year finished goods price index rose from 8 to 12, while the raw materials price index decreased modestly. The future finished goods price index moved higher from 5 to 13, and the future raw materials price index climbed from 9 to 17.


Weekly Initial Unemployment Claims Increase 14,000 to 266,000
Posted: July 28, 2016 at 08:30 AM (Thursday)

In the week ending July 23, the advance figure for seasonally adjusted initial claims was 266,000, an increase of 14,000 from the previous week's revised level. The previous week's level was revised down by 1,000 from 253,000 to 252,000. The 4-week moving average was 256,500, a decrease of 1,000 from the previous week's revised average. The previous week's average was revised down by 250 from 257,750 to 257,500. There were no special factors impacting this week's initial claims. This marks 73 consecutive weeks of initial claims below 300,000, the longest streak since 1973.

The advance seasonally adjusted insured unemployment rate was 1.6 percent for the week ending July 16, an increase of 0.1 percentage point from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending July 16 was 2,139,000, an increase of 7,000 from the previous week's revised level. The previous week's level was revised up 4,000 from 2,128,000 to 2,132,000. The 4-week moving average was 2,135,250, a decrease of 7,000 from the previous week's revised average. This is the lowest level for this average since November 11, 2000 when it was 2,119,750. The previous week's average was revised up by 1,000 from 2,141,250 to


FOMC target funds rate reaffirmed at 1/4 to 1/2%
Posted: July 27, 2016 at 02:00 PM (Wednesday)

Information received since the Federal Open Market Committee met in June indicates that the labor market strengthened and that economic activity has been expanding at a moderate rate. Job gains were strong in June following weak growth in May. On balance, payrolls and other labor market indicators point to some increase in labor utilization in recent months. Household spending has been growing strongly but business fixed investment has been soft. Inflation has continued to run below the Committee's 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will strengthen. Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further. Near-term risks to the economic outlook have diminished. The Committee continues to closely monitor inflation indicators and global economic and financial developments.

Against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The stance of monetary policy remains accommodative, thereby supporting further improvement 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; James Bullard; Stanley Fischer; Loretta J. Mester; Jerome H. Powell; Eric Rosengren; and Daniel K. Tarullo. Voting against the action was Esther L. George, who preferred at this meeting to raise the target range for the federal funds rate to 1/2 to 3/4 percent.


Pending Home Sales Index inched 0.2% in June
Posted: July 27, 2016 at 10:00 AM (Wednesday)

Pending home sales were mostly unmoved in June, but did creep slightly higher as supply and affordability constraints prevented a bigger boost in activity from mortgage rates that lingered near all-time lows through most of the month, according to the National Association of Realtors®. Increases in the Northeast and Midwest were offset by declines in the South and West.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, inched 0.2 percent to 111.0 in June from 110.8 in May and is now 1.0 percent higher than June 2015 (109.9). With last month's minor improvement, the index is now at its second highest reading over the past 12 months, but is noticeably down from this year's peak level in April (115.0).

Lawrence Yun, NAR chief economist, says a solid bump in activity in the Northeast pulled up pending sales modestly in June. "With only the Northeast region having an adequate supply of homes for sale, the reoccurring dilemma of strained supply causing a run-up in home prices continues to play out in several markets, leading to the last two months reflecting a slight, early summer cooldown after a very active spring," he said. "Unfortunately for prospective buyers trying to take advantage of exceptionally low mortgage rates, housing inventory at the end of last month was down almost 6 percent from a year ago, and home prices are showing little evidence of slowing to a healthier pace that more closely mirrors wage and income growth."

Adds Yun, "Until inventory conditions markedly improve, far too many prospective buyers are likely to run into situations of either being priced out of the market or outbid on the very few properties available for sale."

One noteworthy and positive development occurring in the housing market during the first half of the year, according to Yun, is that sales to investors have subsided from a high of 18 percent in February to a low of 11 percent in June, which is the smallest share since July 2009. Yun attributes this retreat to the diminished number of distressed properties coming onto the market at any given time and the ascent in home prices, which have now risen year-over-year for 52 consecutive months.

"Limited selection of homes at bargain prices is reducing the number of individual investors willing or able to buy," adds Yun. "This will hopefully open the door for first-time buyers, who made some progress last month but are still buying homes at a subpar level even as rents increase at rates not seen since before the downturn ."

In spite of the slight slowdown in contract signings from April's peak high, existing-home sales this year are still expected to be around 5.44 million, a 3.6 percent boost from 2015 and the highest annual pace since 2006 (6.48 million). After accelerating to 6.8 percent a year ago, national median existing-home price growth is forecast to slightly moderate to around 4 percent.

The PHSI in the Northeast advanced 3.2 percent to 96.0 in June, and is now 1.7 percent above a year ago. In the Midwest the index increased 0.8 percent to 108.9 in June, and is now 1.6 percent higher than June 2015.

Pending home sales in the South decreased modestly (0.6 percent) to an index of 125.9 in June but are still 1.8 percent higher than last June. The index in the West declined 1.3 percent in June to 101.3, and is now 1.8 percent below a year ago.


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