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U.S. Leading Economic Index increased 0.3% in March
Posted: April 19, 2018 at 10:00 AM (Thursday)

The Conference Board Leading Economic Index® (LEI)for theU.S. increased 0.3 percent in March to 109.0 (2016 = 100), following a 0.7 percent increase in February, and a 0.8 percent increase in January.

“The U.S. LEI increased in March, and while the monthly gain is slower than in previous months, its six-month growth rate increased further and points to continued solid growth in the U.S. economy for the rest of the year,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “The strengths among the components of the leading index have been very widespread over the last six months. However, labor market components made negative contributions in March and bear watching in the near future.”

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.2 percent in March to 103.4 (2016 = 100), following a 0.4 percent increase in February, and a 0.1 percent decline in January.

The Conference Board Lagging Economic Index® (LAG) for the U.S. increased 0.1 percent in March to 104.5 (2016 = 100), following a 0.3 percent increase in February and a 0.3 percent increase in January.


Weekly Initial Unemployment Claims Decrease 1,000 to 232,000
Posted: April 19, 2018 at 08:30 AM (Thursday)

In the week ending April 14, the advance figure for seasonally adjusted initial claims was 232,000, a decrease of 1,000 from the previous week's unrevised level of 233,000. The 4-week moving average was 231,250, an increase of 1,250 from the previous week's unrevised average of 230,000. Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.

The advance seasonally adjusted insured unemployment rate was 1.3 percent for the week ending April 7, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending April 7 was 1,863,000, a decrease of 15,000 from the previous week's revised level. The previous week's level was revised up 7,000 from 1,871,000 to 1,878,000. The 4-week moving average was 1,858,750, an increase of 6,750 from the previous week's revised average. The previous week's average was revised up by 1,750 from 1,850,250 to 1,852,000.


Philadelphia Fed Outlook Reported Activity Suggest Continued Growth in April
Posted: April 19, 2018 at 08:30 AM (Thursday)

Results from the April Manufacturing Business Outlook Survey suggest continued growth for the region’s manufacturing sector. Although the survey’s indexes for general activity and employment improved slightly, the indexes for new orders and shipments moderated. The firms also reported higher prices for both inputs and their own manufactured goods this month. The survey’s future indexes, measuring expectations for the next six months, reflected continued optimism.

Current Indicators Suggest Continued Growth
The diffusion index for current general activity edged 1 point higher, from 22.3 in March to 23.2 this month (see Chart 1). Nearly 37 percent of the manufacturers reported increases in overall activity this month, while 14 percent reported decreases. The indexes for current new orders and shipments remained positive but fell 17 points and 9 points, respectively.

The firms continued to report overall increases in employment. Over 31 percent of the responding firms reported increases in employment, while 4 percent reported decreases this month. The current employment index edged 2 points higher to 27.1, its highest reading in six months. The firms also reported a longer average workweek this month: The current average workweek index increased 9 points.

Price Indexes Suggest Increasing Prices
Price increases for purchased inputs were reported by 59 percent of the manufacturers this month, up notably from 44 percent in March. The prices paid diffusion index increased 14 points to its highest reading since March 2011 (see Chart 2). The current prices received index, reflecting the manufacturers’ own prices, increased 9 points to a reading of 29.8, its highest reading since May 2008.

Firms Remain Optimistic
The diffusion index for future general activity decreased from 47.9 in March to 40.7 this month (see Chart 1). Nearly 50 percent of the firms expect increases in activity over the next six months, while 9 percent expect declines. The future new orders index fell 12 points, while the future shipments index rose 5 points. Slightly more than 68 percent of the firms expect price increases for purchased inputs over the next six months, and 50 percent expect higher prices for their own manufactured goods. Nearly 42 percent of the firms expect to add workers over the next six months. Although the future employment index declined 3 points, it remains at a high reading of 34.6.

Firms Expect Higher Capital Spending in 2018
In special questions this month, firms were surveyed about their capital spending plans for 2018 compared with actual spending levels in 2017 (see Special Questions). Most of the special questions were also asked last April. Nearly 53 percent of the firms indicated that total capital spending would increase this year compared with 2017, while 19 percent indicated that spending would decrease. Over 27 percent of the firms indicated that the recent tax changes had positively affected their planned capital spending for 2018. Nearly 19 percent of the firms were not yet sure of the impacts on spending plans. The need to replace capital goods and expected high sales growth were the most cited reasons for the increase in capital spending plans. Among the firms that indicated that capital spending would increase, 71 percent indicated that the majority of the spending would occur in the second half of the year. Among the firms that do not plan to increase capital spending, the most cited reasons were limited need to replace capital goods and information technology equipment.

Summary
Responses to the April Manufacturing Business Outlook Survey suggest continued growth for the region’s manufacturing sector. The indexes for general activity, new orders, shipments, and employment all indicated continued expansion this month. The indexes for prices paid and received also increased notably this month. In responses to special questions, over half of the firms indicated plans to increase capital spending this year. Looking ahead six months, the firms continued to be optimistic about the outlook for manufacturing activity.


Beige Book: Economic Activity continued to expand at a modest to moderate pace
Posted: April 18, 2018 at 02:00 PM (Wednesday)

Economic activity continued to expand at a modest to moderate pace across the 12 Federal Reserve Districts in March and early April. Outlooks remained positive, but contacts in various sectors including manufacturing, agriculture, and transportation expressed concern about the newly imposed and/or proposed tariffs. Consumer spending rose in most regions, with gains noted for nonauto retail sales and tourism, but mixed results for vehicle sales. Manufacturing activity grew moderately, and demand for nonfinancial services was mostly solid. Residential construction and real estate activity expanded further, although low home inventories continued to constrain sales in several Districts. Loan demand increased, and commercial real estate activity and construction improved since the last report. Transportation services activity expanded in over half of the reporting Districts, buoyed by increases in port traffic and/or air, rail and/or trucking shipments. Agricultural conditions were little changed or worsened on net, in part due to persistent drought conditions. Contacts in the energy sector cited a pickup in activity, except in the Richmond District, where coal production was flat and natural gas production dipped slightly.

Employment and Wages
Widespread employment growth continued, with most Districts characterizing growth as modest to moderate. Labor markets across the country remained tight, restraining job gains in some regions. Contacts continued to note difficulty finding qualified candidates across a broad array of industries and skill levels. Reports of labor shortages over the reporting period were most often cited in high-skill positions, including engineering, information technology, and health care, as well as in construction and transportation. Businesses were responding to labor shortages in a variety of ways, from raising pay to enhancing training to increasing their use of overtime and/or automation, among other strategies. Upward wage pressures persisted but generally did not escalate; most Districts reported wage growth as only modest.

Prices
Prices increased across all Districts, generally at a moderate pace. There were widespread reports that steel prices rose, sometimes dramatically, due to the new tariff. Prices for building materials continued to rise briskly, especially for lumber, drywall, and concrete. Transportation costs also generally rose, with contacts citing higher fuel prices and shortages of truck drivers as the primary causes. There were scattered reports of companies successfully passing through price increases to customers in manufacturing, information technology, transportation, and construction. Businesses generally anticipate further price increases in the months ahead, particularly for steel and building materials.
Highlights by Federal Reserve District

Boston
Revenues and sales were moderately higher than a year earlier at almost all contacted retailers, manufacturers, and software and IT services firms. Most commercial real estate markets recorded positive results; residential markets continued to see inventory shortages and rising median prices. Business sector respondents' outlooks remained positive.

New York
Economic activity grew at a modest pace, while labor markets have remained tight. Input price pressures have persisted, and selling price increases have picked up somewhat. Housing markets and commercial real estate markets have been steady to slightly softer.

Philadelphia
Economic activity continued to grow at a modest pace, in particular for nonauto retail sales, tourism, nonfinancial services, and nonresidential leasing. Manufacturing accelerated to a moderate pace, while existing home sales declined. Auto sales continued to decline, while construction activity was flat. On balance, employment, wages, and prices continued to grow modestly.

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

Richmond
The regional economy expanded at a moderate rate. Ports and trucking firms continued to report robust activity but faced capacity constraints. As a result, manufacturers faced longer delivery times and, in some cases, began stockpiling raw materials. Prices grew moderately, overall, but steel and aluminum prices rose sharply and were expected to rise further as a result of the tariffs.

Atlanta
Economic activity increased modestly. Contacts continued to report difficulties filling positions in high-demand/high-growth sectors. Many contacts noted steady but modest wage pressures. Overall, nonlabor input costs were subdued. Retail sales were stable. Manufacturers noted an increase in new orders and production. District bankers reported solid commercial and consumer loan growth.

Chicago
Growth in economic activity remained at a moderate pace. Employment, consumer spending, and manufacturing production increased moderately, and business spending and construction and real estate activity grew slightly. Wages and prices increased modestly and financial conditions improved slightly on balance. Income prospects for the agricultural sector improved a bit.

St. Louis
Economic conditions continued to improve at a modest pace. District bankers reported an increase in lending activity driven by robust commercial and industrial loan growth. Some steel and aluminum manufacturers announced plans to reopen facilities and call back workers. District acreage for the four major crops for the year is expected to be the same as in 2017.

Minneapolis
Ninth District economic activity grew moderately. Employment grew modestly even as hiring demand was robust, due to tight labor supply. Wages grew moderately, as did prices overall, but price pressures at the wholesale level appeared to accelerate. While growth was noted across sectors, activity in professional services, energy, and mining was particularly strong.

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

Dallas
Economic activity grew moderately, with a rebound in retail sales and an acceleration in financial and nonfinancial services activity. Robust expansion in the energy industry continued, while growth in manufacturing eased somewhat. Hiring was solid despite a tight labor market, and wage and price growth remained elevated. Numerous contacts expressed concern about new tariffs and trade policy uncertainty, although outlooks overall were still positive.

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


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: April 18, 2018 at 07:00 AM (Wednesday)

Mortgage applications increased 4.9 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending April 13, 2018.

The Market Composite Index, a measure of mortgage loan application volume, increased 4.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 6 percent compared with the previous week. The Refinance Index increased 4 percent from the previous week. The seasonally adjusted Purchase Index increased 6 percent from one week earlier. The unadjusted Purchase Index increased 7 percent compared with the previous week and was 10 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 37.6 percent of total applications, the lowest share since September 2008, from 38.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.6 percent of total applications.

The FHA share of total applications decreased to 10.6 percent from 11.0 percent the week prior. The VA share of total applications decreased to 10.4 percent from 10.9 percent the week prior. The USDA share of total applications remained unchanged at 0.8 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) remained unchanged at 4.66 percent, with points unchanged at 0.46 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) remained unchanged at 4.53 percent, with points increasing to 0.38 from 0.31 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.70 percent from 4.66 percent, with points decreasing to 0.53 from 0.76 (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 4.08 percent, with points decreasing to 0.47 from 0.50 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs increased to 3.94 percent from 3.93 percent, with points decreasing to 0.43 from 0.60 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


Industrial Production rose 0.5%
Capacity Utilization up to 78.0%

Posted: April 17, 2018 at 09:15 AM (Tuesday)

Industrial production rose 0.5 percent in March after increasing 1.0 percent in February; the index advanced 4.5 percent at an annual rate for the first quarter as a whole. After having climbed 1.5 percent in February, manufacturing production edged up 0.1 percent in March. Mining output rose 1.0 percent, mostly as a result of gains in oil and gas extraction and in support activities for mining. The index for utilities jumped 3.0 percent after being suppressed in February by warmer-than-normal temperatures. At 107.2 percent of its 2012 average, total industrial production was 4.3 percent higher in March than it was a year earlier. Capacity utilization for the industrial sector moved up 0.3 percentage point in March to 78.0 percent, a rate that is 1.8 percentage points below its long-run (1972–2017) average.


March Housing Starts increased 1.9%, Permits up 2.5%
Posted: April 17, 2018 at 08:30 AM (Tuesday)

Building Permits
Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,354,000. This is 2.5 percent (±1.4 percent) above the revised February rate of 1,321,000 and is 7.5 percent (±1.4 percent) above the March 2017 rate of 1,260,000. Single-family authorizations in March were at a rate of 840,000; this is 5.5 percent (±1.5 percent) below the revised February figure of 889,000. Authorizations of units in buildings with five units or more were at a rate of 473,000 in March.

Housing Starts
Privately-owned housing starts in March were at a seasonally adjusted annual rate of 1,319,000. This is 1.9 percent (±12.4 percent)* above the revised February estimate of 1,295,000 and is 10.9 percent (±10.0 percent) above the March 2017 rate of 1,189,000. Single-family housing starts in March were at a rate of 867,000; this is 3.7 percent (±11.8 percent)* below the revised February figure of 900,000. The March rate for units in buildings with five units or more was 439,000.

Housing Completions
Privately-owned housing completions in March were at a seasonally adjusted annual rate of 1,217,000. This is 5.1 percent (±16.0 percent)* below the revised February estimate of 1,282,000, but is 1.9 percent (±13.4 percent)* above the March 2017 rate of 1,194,000. Single-family housing completions in March were at a rate of 840,000; this is 4.7 percent (±12.3 percent)* below the revised February rate of 881,000. The March rate for units in buildings with five units or more was 371,000.


Treasury International Capital Data for February 2018
Posted: April 16, 2018 at 04:00 PM (Monday)

The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for February 2018. The sum total in February of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC inflow of $44.7 billion. Of this, net foreign private inflows were $26.9 billion, and net foreign official inflows were $17.8 billion.

Foreign residents increased their holdings of long-term U.S. securities in February; net purchases were $57.9 billion. Net purchases by private foreign investors were $31.6 billion, while net purchases by foreign official institutions were $26.3 billion. U.S. residents increased their holdings of long-term foreign securities, with net purchases of $8.9 billion.

Taking into account transactions in both foreign and U.S. securities, net foreign purchases of long-term securities were $49.0 billion. After including adjustments, such as estimates of unrecorded principal payments to foreigners on U.S. asset-backed securities, overall net foreign purchases of long-term securities are estimated to have been $35.8 billion in February.

Foreign residents increased their holdings of U.S. Treasury bills by $16.3 billion. Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities increased by $45.3 billion. Banks’ own net dollar-denominated liabilities to foreign residents decreased by $36.3 billion.


Business Inventories up 0.6% in February
Posted: April 16, 2018 at 10:00 AM (Monday)

The combined value of distributive trade sales and manufacturers’ shipments for February, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,430.4 billion, up 0.4 percent (±0.2 percent) from January 2018 and was up 5.8 percent (±0.3 percent) from February 2017.

Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,928.8 billion, up 0.6 percent (±0.1 percent) from January 2018 and were up 4.0 percent (±0.3 percent) from February 2017.

The total business Inventories/Sales Ratio based on seasonally adjusted data at the end of February was 1.35. The February 2017 ratio was 1.37.


Builder Confidence slips 1 point to 69 in April
Posted: April 16, 2018 at 10:00 AM (Monday)

Builder confidence in the market for newly-built single-family homes edged down one point to a level of 69 in April on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) but remains on firm ground.

“Strong demand for housing is keeping builders optimistic about future market conditions,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “However, builders are facing supply-side constraints, such as a lack of buildable lots and increasing construction material costs. Tariffs placed on Canadian lumber and other imported products are pushing up prices and hurting housing affordability.”

“Ongoing employment gains, rising wages and favorable demographics should spur demand for single-family homes in the months ahead,” said NAHB Chief Economist Robert Dietz. “The minor dip in builder confidence this month is likely due to winter weather effects, which may be slowing housing activity in some pockets of the country. As we head into the spring home buying season, we can expect the market to continue to make gains at a gradual pace.”

The HMI index gauging buyer traffic held steady at 51, the chart measuring sales expectations in the next six months fell a single point to 77, and the component gauging current sales conditions dropped two points to 75.

Looking at the three-month moving averages for regional HMI scores, the South remained unchanged at 73, the Northeast fell one point to 55, the Midwest declined two points to 66, and the West dropped three points to 76.


U.S. Retail Sales for March Increase 0.6%, Ex-Auto up 0.2%
Posted: April 16, 2018 at 08:30 AM (Monday)

Advance estimates of U.S. retail and food services sales for March 2018, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $494.6 billion, an increase of 0.6 percent (±0.5 percent) from the previous month, and 4.5 percent (±0.5 percent) above March 2017. Total sales for the January 2018 through March 2018 period were up 4.1 percent (±0.5 percent) from the same period a year ago. The January 2018 to February 2018 percent change was unrevised from down 0.1 percent (±0.2 percent) *.

Retail trade sales were up 0.6 percent (±0.5 percent) from February 2018, and 4.7 percent (±0.5 percent) above last year. Gasoline Stations were up 9.7 percent (±1.6 percent) from March 2017, while Nonstore Retailers were up 9.7 percent (±1.4 percent) from last year.


Empire State Manufacturing Survey Conditions Grow at a Somewhat Slower Pace in April
Posted: April 16, 2018 at 08:30 AM (Monday)

Business activity grew at a solid clip in New York State, according to firms responding to the April 2018 Empire State Manufacturing Survey. The headline general business conditions index, at 15.8, remained firmly in positive territory, although its seven-point decline from its March level pointed to a somewhat slower pace of growth. Similarly, the new orders index and the shipments index suggested ongoing, albeit more measured, growth, with the first index falling eight points to 9.0 and the second declining ten points to 17.5. Delivery times continued to lengthen, and inventories moved higher. Labor market indicators pointed to a small increase in employment and significantly longer workweeks. The indexes for both prices paid and prices received remained elevated. Firms’ optimism about the six-month outlook waned sharply, with the index for future business conditions plunging twenty-six points to its lowest level in more than two years.

Business Activity Grows at a Somewhat Slower Pace
Manufacturing firms in New York State reported that business activity continued to expand, though at a somewhat slower pace than in March. The general business conditions index fell seven points to 15.8. Thirty-eight percent of respondents reported that conditions had improved over the month, while 22 percent reported that conditions had worsened. The new orders index fell eight points to 9.0, and the shipments index declined ten points to 17.5, indicating that orders and shipments expanded, but less so than last month. Unfilled orders edged higher, and inventories increased. The delivery time index was little changed at 15.6, a sign that delivery times continued to lengthen.

Price Indexes Remain Elevated
The index for number of employees declined three points to 6.0, a level pointing to a modest increase in employment. Moving in the opposite direction, the average workweek index climbed eleven points to 16.9, indicating a significant increase in hours worked. Price increases remained elevated. The prices paid index edged down three points to 47.4, just slightly below last month’s multiyear high. The prices received index was little changed at 20.7, a level suggesting ongoing moderate selling price increases.

Optimism Tumbles
Optimism about the six-month outlook plunged among manufacturing firms. The index for future business conditions slipped twenty-six points to 18.3, its lowest level in more than two years. After reaching its highest level in several years last month, the index for future prices paid was little changed, indicating a widespread expectation that input prices would increase in the months ahead. The index for future prices received edged higher. The capital expenditures index posted its third consecutive monthly decline, though at 25.2, it suggested that firms plan to increase capital spending in the months ahead.


Job Openings decreased to 6.1 million in February
Posted: April 13, 2018 at 10:00 AM (Friday)

The number of job openings was little changed at 6.1 million on the last business day of February, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were little changed at 5.5 million and 5.2 million, respectively. Within separations, the quits rate was unchanged at 2.2 percent and the layoffs and discharges rate was little changed at 1.1 percent. This release includes estimates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and by four geographic regions.

Job Openings
On the last business day of February, there were 6.1 million job openings, little changed from January. The job openings rate was 3.9 percent in February. The number of job openings edged down for total private and was little changed for government. Job openings increased in finance and insurance (+69,000) and state and local government education (+31,000). Job openings decreased in a number of industries with the largest decreases being in accommodation and food services (-91,000), construction (-56,000), and wholesale trade (-38,000). The number of job openings decreased in the West region.

Hires
The number of hires was little changed at 5.5 million in February. The hires rate was 3.7 percent. The number of hires was little changed for total private and for government. Hires decreased in educational services (-48,000). The number of hires was little changed in all four regions.

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

The number of total separations was little changed at 5.2 million in February. The total separations rate was 3.5 percent. The number of total separations was little changed for total private and for government. Total separations increased in federal government (+9,000) but decreased in state and local government education (-17,000). The number of total separations was little changed in all four regions. The number of quits was little changed at 3.2 million in February. The quits rate was 2.2 percent. The number of quits was little changed for total private and for government. Quits decreased in other services (-41,000). The number of quits was little changed in all four regions.

There were 1.6 million layoffs and discharges in February, little changed from January. The layoffs and discharges rate was 1.1 percent in February. The number of layoffs and discharges was little changed for total private and unchanged for government. Layoffs and discharges decreased in state and local government education (-13,000). The number of layoffs and discharges decreased in the Northeast region.

The number of other separations was little changed in February at 334,000. The number of other separations was little changed for total private and for government. Other separations increased in federal government (+7,000) but decreased in nondurable goods manufacturing (-6,000). The number of other separations was little changed in all four regions.

Net Change in Employment
Large numbers of hires and separations occur every month throughout the business cycle. Net employment change results from the relationship between hires and separations. When the number of hires exceeds the number of separations, employment rises, even if the hires level is steady or declining. Conversely, when the number of hires is less than the number of separations, employment declines, even if the hires level is steady or rising. Over the 12 months ending in February, hires totaled 65.6 million and separations totaled 63.3 million, yielding a net employment gain of 2.3 million. These totals include workers who may have been hired and separated more than once during the year.


University of Michigan Consumer Confidence Preliminary April Results at 97.8
Posted: April 13, 2018 at 10:00 AM (Friday)

Consumer sentiment slipped in early April, largely reversing the gains recorded in the prior two months. The small decline was widely shared by all age and income subgroups and across all regions of the country. Importantly, confidence still remains relatively high, despite the recent losses that were mainly due to concerns about the potential impact of Trump's trade policies on the domestic economy. Uncertainty surrounding the evolving trade policy has caused many small (and at times inconsistent) changes in expectations. Spontaneous references to trade policies were made by 29% of all consumers in early April, with nearly all the mentions negative (27% out of 29%). The Expectations Index was just 64.2 among those who made negative comments about trade policies, while among those who made no mention of trade policies, the Expectations Index was 93.9, a substantial difference. Consumers who negatively mentioned trade policies also anticipated that the year-ahead inflation rate would be 0.4 percentage points higher than among those who did not spontaneously mention Trump's trade policies; there was a differential of 0.2 percentage points for long term inflation expectations. There were other factors responsible for the small overall April decline, the most important was the expectation of rising interest rates, which slightly slowed the anticipated pace of growth in the economy. Overall, the data are consistent with a growth rate of 2.7% in consumption from mid-2018 to mid-2019.


Weekly Initial Unemployment Claims Decrease 9,000 to 233,000
Posted: April 12, 2018 at 08:30 AM (Thursday)

In the week ending April 7, the advance figure for seasonally adjusted initial claims was 233,000, a decrease of 9,000 from the previous week's unrevised level of 242,000. The 4-week moving average was 230,000, an increase of 1,750 from the previous week's unrevised average of 228,250. Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.

The advance seasonally adjusted insured unemployment rate was 1.3 percent for the week ending March 31, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending March 31 was 1,871,000, an increase of 53,000 from the previous week's revised level. The previous week's level was revised up 10,000 from 1,808,000 to 1,818,000. The 4-week moving average was 1,850,250, a decrease of 1,500 from the previous week's revised average. This is the lowest level for this average since January 5, 1974 when it was 1,838,500. The previous week's average was revised up by 3,500 from 1,848,250 to 1,851,750.


U.S. Import Price Index unch% in March
Posted: April 12, 2018 at 08:30 AM (Thursday)

U.S. import prices recorded no change in March, the U.S. Bureau of Labor Statistics reported today, following a 0.3 percent rise in February. Higher nonfuel prices offset declining prices for imported fuel in March. Prices for U.S. exports advanced 0.3 percent in March, after rising 0.2 percent the previous month.

Imports
All Imports: Import prices recorded no change in March following rises of 0.3 percent in February and 0.8 percent in January. The index has not declined on a monthly basis since decreasing 0.2 percent in July 2017. Prices for U.S. imports rose 3.6 percent between March 2017 and March 2018. The last 12-month decline in import prices was a 0.2-percent drop for the period ended October 2016.

Fuel Imports: Fuel prices fell for the second consecutive month, declining 1.6 percent in March following a 1.0-percent drop in February. The March decrease was the largest monthly decline since the index dropped 3.6 percent in June 2017. Lower prices for both petroleum and natural gas drove the decline in fuel prices. Prices for imported petroleum declined 1.3 percent and natural gas fell 9.5 percent. Despite the decrease in March, fuel import prices advanced 18.7 percent between March 2017 and March 2018. The price index for petroleum imports rose 19.4 percent over the past 12 months. Prices for imported natural gas increased 20.0 percent over the same period.

All Imports Excluding Fuel: Prices for nonfuel imports rose 0.2 percent in March, following increases of 0.5 percent in February and January. Contributing to the March advance were higher import prices for nonfuel industrial supplies and materials; capital goods; and foods, feeds, and beverages, which more than offset declining prices for automotive vehicles and consumer goods. Nonfuel import prices advanced 2.1 percent on a 12-month basis for the second consecutive month, the largest over-the-year increases since a 2.4 percent advance in February 2012. An 8.0-percent rise in nonfuel industrial supplies and materials prices drove the 12-month advance in March.

Exports
All Exports: Prices for U.S. exports rose for the ninth consecutive month in March, advancing 0.3 percent. Increasing prices for agricultural exports drove the monthly advance, more than offsetting lower non-agricultural export prices. U.S. export prices increased 3.4 percent over the 12-month period ended in March and have not recorded an over-the-year drop since a 0.2-percent decline in November 2016.

Agricultural Exports: The price index for agricultural exports advanced 3.4 percent in March following a 0.6-percent rise in February. The March increase is the largest monthly advance since agricultural export prices rose 4.8 percent in August 2012. Higher prices for soybeans and wheat contributed to the monthly advance, increasing 7.8 percent and 8.0 percent, respectively. The price index for agricultural exports rose 3.0 percent over the past 12 months, driven by a 6.5-percent increase in meat prices.

All Exports Excluding Agriculture: Nonagricultural export prices ticked down 0.1 percent in March, after rising 0.2 percent in February and 0.9 percent in January. Declining prices for nonagricultural industrial supplies and materials more than offset increases in capital goods and automotive vehicles export prices. Prices for nonagricultural exports advanced 3.4 percent between March 2017 and March 2018, as the price indexes for nonagricultural industrial supplies and materials, capital goods, consumer goods, and automotive vehicles all increased.


Consumer Price Index decreased 0.1% in March, Ex Fd & Engy rose 0.2%
Posted: April 11, 2018 at 08:30 AM (Wednesday)

The Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.1 percent in March on a seasonally adjusted basis after rising 0.2 percent in February, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.4 percent before seasonal adjustment.

A decline in the gasoline index more than outweighed increases in the indexes for shelter, medical care, and food to result in the slight seasonally adjusted decline in the all items index. The energy index fell sharply due mainly to the 4.9-percent decrease in the gasoline index. The index for food rose 0.1 percent over the month, with the indexes for food at home and food away from home both increasing.

The index for all items less food and energy increased 0.2 percent in March, the same increase as in February. Along with shelter and medical care, the indexes for personal care, motor vehicle insurance, and airline fares all rose. The indexes for apparel, for communication, and for used cars and trucks all declined over the month.

The all items index rose 2.4 percent for the 12 months ending March, the largest 12-month increase since the period ending March 2017 and higher than the 1.6 percent average annual rate over the past 10 years. The index for all items less food and energy rose 2.1 percent, its largest 12-month increase since the period ending February 2017. The energy index increased 7.0 percent over the past 12 months, and the food index advanced 1.3 percent.

Food
The food index rose 0.1 percent in March after being unchanged in February. The index for food away from home increased 0.1 percent in March. The index for food at home also increased 0.1 percent as four of the six major grocery store food group indexes rose. The index for meats, poultry, fish, and eggs increased 0.8 percent in March after declining in January and February. The index for cereals and bakery products rose 0.4 percent, as did the index for nonalcoholic beverages. The index for dairy and related products also rose in March, advancing 0.3 percent after declining 0.3 percent in February.

The fruits and vegetables index declined 0.7 percent in March after falling 0.5 percent the prior month. The index for other food at home also fell for the second month in a row, declining 0.2 percent.

The index for food at home rose 0.4 percent over the last 12 months. The index for meats, poultry, fish, and eggs increased 2.1 percent over the span. Other food at home price indexes were relatively flat; all five of the remaining grocery store food groups moved less than 1 percent over the last year. The index for food away from home increased 2.5 percent over the last 12 months.

Energy
The energy index fell 2.8 percent in March after rising in 3 of the last 4 months. The gasoline index fell 4.9 percent in March after a 0.9-percent decrease in February. (Before seasonal adjustment, gasoline prices decreased 0.2 percent in March.) The index for natural gas also declined in March, falling 1.2 percent after rising 4.7 percent in February. The index for electricity was unchanged in March.

The energy index increased 7.0 percent over the past year, with all the major component indexes rising. The gasoline index increased 11.1 percent and the fuel oil index rose 20.0 percent. The electricity index increased 2.2 percent, and the index for natural gas advanced 3.4 percent.

All items less food and energy
The index for all items less food and energy increased 0.2 percent in March. The shelter index increased 0.4 percent, with the indexes for rent and owners' equivalent rent both rising 0.3 percent. The index for lodging away from home increased 2.3 percent in March after falling in January and being unchanged in February. The medical care index rose 0.4 percent, with the hospital services index rising 0.6 percent, the physicians' services index increasing 0.2 percent, but the index for prescription drugs declining 0.2 percent.

The personal care index increased 0.3 percent in March. The index for motor vehicle insurance continued to rise, increasing 0.3 percent. The airline fares index increased 0.6 percent, the same increase as in February. The indexes for alcoholic beverages and household furnishings and operations both increased 0.1 percent in March, while the indexes for new vehicles and for recreation were unchanged.

The apparel index fell 0.6 percent in March after rising in each of the two prior months. The index for communication declined 0.3 percent. The used cars and trucks index fell 0.3 percent in March, the same decline as in February. The indexes for education and for tobacco also declined in March.

The index for all items less food and energy rose 2.1 percent over the past 12 months, a higher figure than the 1.8-percent annual average increase over the past 10 years. The shelter index rose 3.3 percent over the last 12 months, a higher figure than the 2.2-percent average annual increase over the past decade. The index for medical care advanced 2.0 percent, a lower rate than the 2.9-percent average annual rate over the past 10 years.

Not seasonally adjusted CPI measures
The Consumer Price Index for All Urban Consumers (CPI-U) increased 2.4 percent over the last 12 months to an index level of 249.554 (1982-84=100). For the month, the index increased 0.2 percent prior to seasonal adjustment.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 2.4 percent over the last 12 months to an index level of 243.463 (1982-84=100). For the month, the index increased 0.2 percent prior to seasonal adjustment.

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) increased 2.2 percent over the last 12 months. For the month, the index increased 0.2 percent on a not seasonally adjusted basis. Please note that the indexes for the past 10 to 12 months are subject to revision.


Real Average Hourly Earnings increased 0.4% in March
Posted: April 11, 2018 at 08:30 AM (Wednesday)

Real average hourly earnings for all employees increased 0.4 percent from February to March, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from a 0.3-percent increase in average hourly earnings combined with a 0.1-percent decrease in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings increased 0.4 percent over the month due to the increase in real average hourly earnings combined with no change in the average workweek.

Real average hourly earnings increased 0.4 percent, seasonally adjusted, from March 2017 to March 2018. The increase in real average hourly earnings combined with a 0.6-percent increase in the average workweek resulted in a 0.9-percent increase in real average weekly earnings over this period.

Production and nonsupervisory employees
Real average hourly earnings for production and nonsupervisory employees increased 0.3 percent from February to March, seasonally adjusted. This result stems from a 0.2-percent increase in average hourly earnings combined with a 0.2-percent decrease in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Real average weekly earnings were unchanged over the month due to the increase in real average hourly earnings being offset by a 0.3-percent decrease in average weekly hours.

From March 2017 to March 2018, real average hourly earnings were unchanged, seasonally adjusted. No change in real average hourly earnings combined with a 0.3-percent increase in the average workweek resulted in a 0.3-percent increase in real average weekly earnings over this period.


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: April 11, 2018 at 07:00 AM (Wednesday)

Mortgage applications decreased 1.9 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending April 6, 2018.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The Refinance Index decreased 2 percent from the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 0.5 percent lower than the same week one year ago.

The refinance share of mortgage activity decreased to its lowest level since September 2008, 38.4 percent of total applications, from 38.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.3 percent of total applications.

The FHA share of total applications increased to 11.0 percent from 10.1 percent the week prior. The VA share of total applications increased to 10.9 percent from 10.3 percent the week prior. The USDA share of total applications remained unchanged at 0.8 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.66 percent from 4.69 percent, with points increasing to 0.46 from 0.43 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) decreased to 4.53 percent from 4.56 percent, with points increasing to 0.31 from 0.27 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.66 percent from 4.74 percent, with points increasing to 0.76 from 0.54 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.08 percent from 4.09 percent, with points increasing to 0.50 from 0.42 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to its highest level since February 2011, 3.93 percent, from 3.87 percent, with points increasing to 0.60 from 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


Wholesale Inventories up 1.0% in February
Posted: April 10, 2018 at 10:00 AM (Tuesday)

February 2018 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 $495.9 billion, up 1.0 percent (±0.5 percent) from the revised January level and were up 6.8 percent (±0.7 percent) from the February 2017 level. The December 2017 to January 2018 percent change was revised from the preliminary estimate of down 1.1 percent (±0.7 percent) to down 1.5 percent (±0.7 percent).

Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $625.6 billion at the end of February, up 1.0 percent (±0.2 percent) from the revised January level. Total inventories were up 5.5 percent (±0.9 percent) from the revised February 2017 level. The January 2018 to February 2018 percent change was revised from the advance estimate of up 1.1 percent (±0.2 percent) to up 1.0 percent (±0.2 percent).

The February Inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.26. The February 2017 ratio was 1.28.


Producer Price Index increased 0.3% in March, ex Fd & Engy up 0.4%
Posted: April 10, 2018 at 08:30 AM (Tuesday)

The Producer Price Index for final demand advanced 0.3 percent in March, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.2 percent in February and 0.4 percent in January. On an unadjusted basis, the final demand index increased 3.0 percent for the 12 months ended in March.

In March, 70 percent of the rise in the final demand index is attributable to a 0.3-percent advance in prices for final demand services. The index for final demand goods also climbed 0.3 percent.

The index for final demand less foods, energy, and trade services rose 0.4 percent in March, the same as in both February and January. For the 12 months ended in March, prices for final demand less foods, energy, and trade services increased 2.9 percent, the largest advance since 12-month percent change data were available in August 2014.

Final Demand
Final demand services: Prices for final demand services moved up 0.3 percent in March, the same as in both February and January. Over 70 percent of the broad-based advance in March can be traced to the index for final demand services less trade, transportation, and warehousing, which climbed 0.3 percent. Prices for final demand transportation and warehousing services rose 0.6 percent, and the index for final demand trade services increased 0.2 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: A major factor in the March advance in prices for final demand services was the index for outpatient care (partial), which climbed 0.4 percent. The indexes for machinery, equipment, parts, and supplies wholesaling; cable and satellite subscriber services; airline passenger services; food and alcohol wholesaling; and hospital inpatient care also moved higher. In contrast, margins for automotive fuels and lubricants retailing fell 10.4 percent. The indexes for apparel, footwear, and accessories retailing and wireless telecommunications services also decreased.

Final demand goods: Prices for final demand goods moved up 0.3 percent in March after edging down 0.1 percent in February. Most of the increase can be traced to prices for final demand foods, which advanced 2.2 percent. The index for final demand goods less foods and energy climbed 0.3 percent. Conversely, prices for final demand energy declined 2.1 percent.

Product detail: Over half of the March increase in the index for final demand goods is attributable to a 31.5-percent jump in prices for fresh and dry vegetables. The indexes for chicken eggs, meats, unprocessed finfish, motor vehicles, and iron and steel scrap also advanced. In contrast, prices for gasoline fell 3.7 percent. The indexes for primary basic organic chemicals and for fresh fruits and melons also moved lower.


NFIB Small Business Optimism Index decreased 2.9 points to 104.7 in March
Posted: April 10, 2018 at 07:00 AM (Tuesday)

The small business optimism index reached its 16th consecutive month in the top five percent of 45 years of survey readings, according to the NFIB Small Business Economic Trends survey, released today. The 104.7 March reading, down from 107.6 in February, remains among the highest in survey history and for the first time since 1982, taxes received the fewest number of votes as the number one problem. Taxes as the number one problem has declined since November 2017, the month before the tax bill passed, from 22 percent to 13 percent in March.

“It has been a remarkable 16 months for small business optimism,” said NFIB President and CEO Juanita Duggan. “This is the first time in 35 years where the fewest number of small business owners have told us that taxes are their number one business problem. They’ve been so optimistic that they feel confident enough to raise wages and invest in their business, which grows the economy.”

Survey components include a net 20 percent of owners are planning to create jobs, up two points from last month. Reports of improved earnings trends were the second best since 1987. Twenty-eight percent believe now is a good time to expand, down four points from February but continues a solid reading.

Small business owners expecting better business conditions fell 11 points to a net 32 percent and expected sales fell to a net 20 percent, though both remain at historically high levels.

“Although expected sales and expected business conditions posted large declines, it was from historically high levels and this still left the overall Index reading among the 20 best in survey history,” said NFIB Chief Economist Bill Dunkelberg. “Hiring and spending on new buildings and land acquisition remained at strong levels, a good sign of confidence in economic prospects.”

Twenty-six percent plan capital outlays in the next few months, down three points from February. Plans were the most frequent in manufacturing, where there is a demand for productivity-enhancing investments. A seasonally-adjusted net eight percent of owners reported higher nominal sales in the past three months.

As reported in NFIB’s Jobs Report on Thursday, labor quality remains as the top issue facing small business owners, with 89 percent of those hiring or trying to hire reporting few or no qualified applicants. Down one point from February, 21 percent selected Finding Qualified Labor as their top business problem, above taxes, weak sales, or the cost of regulations as their top challenge. A net 19 percent reported plans to raise compensation in response to the tight labor market.

“Small businesses have led the economy to what appears to become 12 months of three percent GDP growth,” said NFIB Chief Economist Bill Dunkelberg. “It is evident that the small business sector has responded positively to the current management in Washington and its economic policies.”

Profit trends declined one point to a net negative four percent reporting quarter on quarter profit improvements, one of the best readings in survey history. Reports of earnings gains surged 11 points in January and hasn’t gone down since.

LABOR MARKETS
Job creation remained solid in the small business sector as owners reported a seasonally-adjusted average employment change per firm of 0.36 workers, one of the best readings in survey history. Fifty-three percent reported hiring or trying to hire (up 1 point), but 47 percent (89 percent of those hiring or trying to hire) reported few or no qualified applicants for the positions they were trying to fill. Twenty-one percent of owners cited the difficulty of finding qualified workers as their Single Most Important Business Problem, exceeding the percentage citing taxes or regulations. Thirty-five percent of all owners reported job openings they could not fill in the current period. A seasonally-adjusted net 20 percent plan to create new jobs, up 2 points from February and at historically high levels. The availability of qualified workers will undoubtedly moderate actual job growth, even if the labor force participation rate picks up again.

SALES AND INVENTORIES
A net 8 percent of all owners (seasonally adjusted) reported higher nominal sales in the past three months compared to the prior three months, unchanged and the fourth consecutive strong month. The net percent of owners expecting higher real sales volumes fell 8 points, to a net 20 percent of owners. The decline is surprising in light of the continuing good news for jobs and the economy, as well as continued reports of better sales from small business owners.

The net percent of owners reporting inventory increases fell 4 percentage points to a net 3 percent (seasonally adjusted), still positive and extending a three month run of substantial inventory building. The net percent of owners viewing current inventory stocks as “too low” was a net negative 6 percent, down 3 points, suggesting that current stocks are looking more excessive in light of diminished sales expectations. Consistent with weaker sales expectations and dissatisfaction with current stocks, the net percent of owners planning to build inventories fell 3 points to 1 percent.

CAPITAL SPENDING
Fifty-eight percent reported capital outlays, down 8 points from February’s impressive reading (highest since 2004). Of those making expenditures, 39 percent reported spending on new equipment (down 6 points), 24 percent acquired vehicles (down 6 points), and 16 percent improved or expanded facilities (up 1 point). Eight percent acquired new buildings or land for expansion (up 2 points) and 12 percent spent money for new fixtures and furniture (down 3 points). Twenty-six percent plan capital outlays in the next few months, down 3 points.

COMPENSATION AND EARNINGS
Reports of higher worker compensation rose 2 points to a net 33 percent, the highest reading since 2000. Owners complain at record rates of labor quality issues, with 89 percent of those hiring or trying to hire reporting few or no qualified applicants for their open positions. Perhaps the recent gain in labor force participation has reduced the pressure to raise compensation a bit as hiring became somewhat easier. The decline in temporary employment as new jobs were added at a record high rate seems to support this view. The frequency of reports of positive profit trends declined 1 percentage point to a net negative 4 percent reporting quarter on quarter profit improvements, still one of the best readings in survey history. Reports of earnings gains surged 11 points in January and has remained elevated over the last two months.

INFLATION
The net percent of owners raising average selling prices rose 3 points to a net 16 percent seasonally adjusted, after a 3-point increase in both February and January. Seasonally adjusted, a net 25 percent plan price hikes (up 1 point), the highest reading since 2008. With reports of increased compensation running high, there is more pressure to pass these costs on in higher selling prices, although tax cuts and growing operating profits alleviate some of this pressure.

CREDIT MARKETS
Four percent of owners reported that all their borrowing needs were not satisfied, up 2 points and historically low. Thirty-one percent reported all credit needs met (down 1 point) and 47 percent said they were not interested in a loan, down 4 points. Only 2 percent reported that financing was their top business problem compared to 21 percent citing the availability of qualified labor. Four percent reported loans “harder to get”, historically low. In short, credit availability and cost are not issues and haven’t been for many years, even with the Federal Reserve raising interest rates. Thirty-two percent of all owners reported borrowing on a regular basis (up 1 point). The average rate paid on short maturity loans was up 40 basis points at 6.1 percent.

COMMENTARY
Growth in the fourth quarter was revised up to 2.9 percent, leaving growth at 3 percent for the last nine months of 2017. If the first quarter this year comes in at or close to 3 percent, the economy will have logged a full 12 months of 3 percent GDP growth, 50 percent better than growth in the prior administration. Job growth continues to produce high numbers and the labor force participation rate has improved as jobs are more plentiful.

The Federal Reserve is expected to raise rates several more times this year and continue its plan to not reinvest proceeds from maturing bonds in its portfolio. By itself, this reduces the demand for bonds and thus raises interest rates. Putting more pressure on rates is the Treasury’s need to sell a lot of bonds to finance the deficit, which imposes additional pressure on rates (higher rates must be paid to get private investors to take them). Rising interest rates will, of course, not be a positive development for equity prices or asset prices in general. Interest rates on variable price loans will rise. Less clear is the impact on long term rates, but they are likely to continue to move higher.

The percent of owners reporting higher average selling prices has risen steadily since October 2016, from a net 2 percent to a net 16 percent. This should raise the overall average increase in average prices for the economy. The Federal Reserve has predicted that the inflation rate would rise to 2 percent and then stay there (without explaining how the inflation rate would stop rising). Using 45 years of NFIB and inflation data makes it clear that serious inflation for the economy is dependent on serious inflation on Main Street – lots of firms raising average selling prices. So far, the percent raising prices is not supportive of serious inflation, but a clear trend has been established. A look at past inflation makes clear that the price of “things” has been falling steadily while the price of labor intensive “services” has been increasing. The small business sector is “labor intensive” and labor services are rising in cost, whether in areas like health care or in construction. Reports of compensation gains are running well ahead of reports of price increases, but the gap is narrowing.

The big picture remains solid, with small firms as optimistic, and inclined to spend and hire as they have ever been. Tax cuts will start to impact firms directly and positively impact their customers. Economic growth will continue to be strong and that will spur more capital investment and hiring on Main Street.


Employment Trends Index Increased in March to 107.72
Posted: April 9, 2018 at 10:00 AM (Monday)

The Conference Board Employment Trends Index™ (ETI) increased in March, after increasing in February. The index now stands at 107.72, up from 107.31 (a downward revision) in February. The change represents a 5.5 percent gain in the ETI compared to a year ago.

“The ETI continued its upward trend in March, suggesting that job growth will remain robust in the coming months,” said Gad Levanon, Chief Economist, North America, at The Conference Board. “We interpret Friday’s disappointing job numbers as noise in an otherwise fast-growing labor market.”

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

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 3.25%
Posted: April 6, 2018 at 03:00 PM (Friday)

In February, consumer credit increased at a seasonally adjusted annual rate of 3-1/4 percent. Revolving credit increased at an annual rate of 1/4 percent, while nonrevolving credit increased at an annual rate of 4-1/2 percent.


March Employment rose by 103,000
Unemployment Rate unchanged at 4.1%

Posted: April 6, 2018 at 08:30 AM (Friday)

Total nonfarm payroll employment edged up by 103,000 in March, and the unemployment rate was unchanged at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in manufacturing, health care, and mining.

Household Survey Data
In March, the unemployment rate was 4.1 percent for the sixth consecutive month, and the number of unemployed persons, at 6.6 million, changed little.

Among the major worker groups, the unemployment rates for adult men (3.7 percent), adult women (3.7 percent), teenagers (13.5 percent), Whites (3.6 percent), Blacks (6.9 percent), Asians (3.1 percent), and Hispanics (5.1 percent) showed little or no change in March.

At 1.3 million, the number of long-term unemployed (those jobless for 27 weeks or more) was little changed in March and accounted for 20.3 percent of the unemployed. Over the year, the number of long-term unemployed was down by 338,000.

The labor force participation rate, at 62.9 percent, changed little in March, and the employment-population ratio held at 60.4 percent.
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed at 5.0 million in March. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or because they were unable to find full time jobs.

In March, 1.5 million persons were marginally attached to the labor force, little different from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 450,000 discouraged workers in March, essentially unchanged 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 1.0 million persons marginally attached to the labor force in March had not searched for work for reasons such as school attendance or family responsibilities.

Establishment Survey Data
Total nonfarm payroll employment edged up by 103,000 in March, following a large gain in February (+326,000). In March, employment grew in manufacturing, health care, and mining.

In March, employment in manufacturing rose by 22,000, with all of the gain in the durable goods component. Employment in fabricated metal products increased over the month (+9,000). Over the year, manufacturing has added 232,000 jobs; the durable goods component accounted for about three-fourths of the jobs added.

In March, health care added 22,000 jobs, about in line with its average monthly gain over the prior 12 months. Employment continued to trend up over the month in ambulatory health care services (+16,000) and hospitals (+10,000).

Employment in mining increased by 9,000 in March, with gains occurring in support activities for mining (+6,000) and in oil and gas extraction (+2,000). Mining employment has risen by 78,000 since a recent low in October 2016.

Employment in professional and business services continued to trend up in March (+33,000) and has risen by 502,000 over the year.

Retail trade employment changed little in March (-4,000), after increasing by 47,000 in February. In March, employment declined by 13,000 in general merchandise stores, offsetting a gain of the same size in February. Over the year, employment in retail trade has shown little net change.

In March, employment in construction also changed little (-15,000), following a large gain in February (+65,000).

Employment changed little over the month in other major industries, including wholesale trade, transportation and warehousing, information, financial activities, leisure and hospitality, and government.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in March. In manufacturing, the workweek edged down by 0.1 hour to 40.9 hours; overtime edged down by 0.1 hour to 3.6 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged down by 0.1 hour to 33.7 hours.

In March, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents to $26.82. Over the year, average hourly earnings have increased by 71 cents, or 2.7 percent. Average hourly earnings for private-sector production and nonsupervisory employees increased by 4 cents to $22.42 in March.

The change in total nonfarm payroll employment for January was revised down from +239,000 to +176,000, and the change for February was revised up from +313,000 to +326,000. With these revisions, employment gains in January and February combined were 50,000 less than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 202,000 over the last 3 months.


Goods and Services Deficit Increased in February 2018
Posted: April 5, 2018 at 08:30 AM (Thursday)

The nation's international trade deficit in goods and services increased to $57.6 billion in February from $56.7 billion in January (revised), as imports increased more than exports. The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $57.6 billion in February, up $0.9 billion from $56.7 billion in January, revised.

Exports, Imports, and Balance (Exhibit 1)
February exports were $204.4 billion, $3.5 billion more than January exports. February imports were $262.0 billion, $4.4 billion more than January imports. The February increase in the goods and services deficit reflected an increase in the goods deficit of $0.3 billion to $77.0 billion and a decrease in the services surplus of $0.6 billion to $19.4 billion. Year-to-date, the goods and services deficit increased $21.1 billion, or 22.7 percent, from the same period in 2017. Exports increased $22.4 billion or 5.9 percent. Imports increased $43.6 billion or 9.1 percent.

Three-Month Moving Averages (Exhibit 2)
The average goods and services deficit increased $2.2 billion to $56.1 billion for the three months ending in February.
- Average exports increased $1.4 billion to $203.0 billion in February.
- Average imports increased $3.6 billion to $259.1 billion in February.

Year-over-year, the average goods and services deficit increased $10.1 billion from the three months ending in February 2017.


Weekly Initial Unemployment Claims Increase 24,000 to 242,000
Posted: April 5, 2018 at 08:30 AM (Thursday)

In the week ending March 31, the advance figure for seasonally adjusted initial claims was 242,000, an increase of 24,000 from the previous week's revised level. The previous week's level was revised up by 3,000 from 215,000 to 218,000. The 4-week moving average was 228,250, an increase of 3,000 from the previous week's revised average. The previous week's average was revised up by 750 from 224,500 to 225,250. Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.

The advance seasonally adjusted insured unemployment rate was 1.3 percent for the week ending March 24, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending March 24 was 1,808,000, a decrease of 64,000 from the previous week's revised level. This is the lowest level for insured unemployment since December 29, 1973 when it was 1,805,000. The previous week's level was revised up 1,000 from 1,871,000 to 1,872,000. The 4-week moving average was 1,848,250, a decrease of 13,500 from the previous week's revised average. This is the lowest level for this average since January 5, 1974 when it was 1,838,500. The previous week's average was revised up by 250 from 1,861,500 to 1,861,750.


Challenger Layoffs Increased to 60,357 in March
Posted: April 5, 2018 at 07:30 AM (Thursday)

Job cuts announced by U.S.-based employers surged in March to 60,357, a 71 percent increase from the 35,369 cuts announced in February. Last month’s total is the highest monthly total since April 2016, when 64,141 job cuts were announced, according to a report released Thursday by global outplacement and executive coaching firm Challenger, Gray & Christmas, Inc.

“We’ve experienced 22 months of relatively low planned layoff activity. With the current economic conditions, companies are in a position to grow and invest. We’ve seen companies invest back into their workforces in the last couple of months,” said John Challenger, Chief Executive Officer of Challenger, Gray & Christmas, Inc.

“However, last month’s plans may indicate that growth could be slowing down, especially as the market continues to tighten,” he added.

March’s total is 39 percent higher than the 43,310 announced job cuts during the same month last year.

Through the first quarter of this year, employers have announced 140,379 cuts, 11 percent more than the 126,201 job cut announcements in the first quarter of 2017 and 44 percent higher than the 97,292 cuts announced in the final quarter of last year. First quarter job cut plans are the highest since Q1 2016, when 180,920 cuts were announced.

“In 2016, cuts in retail and oil drove announcements in the first quarter. This year, we are likewise seeing cuts in retail, as that industry continues to pivot to meet consumer demand,” said Challenger.

Retail leads all sectors in job cuts in 2018, with 56,526. So far this year, Challenger has tracked 1,730 announced retail store closures. That is in addition to the 9,241 store closures that were announced in 2017.

Health Care/Products companies announced the second highest number of job cuts in 2018, with 12,491, while the Consumer Products sector announced 11,778. The Services sector announced 10,564 job cuts this year.

“The growth and job creation we’ve seen over the last few months may be coming to an end. As wages grow and the labor market tightens, companies are going to switch to a no-risk strategy and potentially begin contracting,” said Challenger.

In fact, the number of hiring announcements fell in March; companies announced plans to hire 14,525 last month, bringing the year-to-date total to 196,340. This is 32 percent lower than the 289,272 announced hiring plans in the first quarter of 2017.


New orders for manufactured goods increased 1.2% in February
Posted: April 4, 2018 at 10:00 AM (Wednesday)

New orders for manufactured goods in February, up six of the last seven months, increased $6.0 billion or 1.2 percent to $498.0 billion, the U.S. Census Bureau reported today. This followed a 1.3 percent January decrease. Shipments, up fourteen of the last fifteen months, increased $1.0 billion or 0.2 percent to $500.5 billion. This followed a 0.7 percent January increase. Unfilled orders, up five of the last six months, increased $1.9 billion or 0.2 percent to $1,142.8 billion. This followed a 0.3 percent January decrease. The unfilled orders-to-shipments ratio was 6.49, down from 6.52 in January. Inventories, up fifteen of the last sixteen months, increased $2.3 billion or 0.3 percent to $675.2 billion. This followed a 0.4 percent January increase. The inventories-to-shipments ratio was 1.35, unchanged from January.

New Orders
New orders for manufactured durable goods in February, up three of the last four months, increased $7.2 billion or 3.0 percent to $247.3 billion, down from the previously published 3.1 percent increase. This followed a 3.6 percent January decrease. Transportation equipment, also up three of the last four months, led the increase, $5.5 billion or 7.0 percent to $83.5 billion. New orders for manufactured nondurable goods decreased $1.2 billion or 0.5 percent to $250.7 billion.

Shipments
Shipments of manufactured durable goods in February, up nine of the last ten months, increased $2.2 billion or 0.9 percent to $249.8 billion, unchanged from the previously published increase. This followed a 0.5 percent January increase. Machinery, up six of the last seven months, led the increase, $0.6 billion or 1.7 percent to $33.3 billion. Shipments of manufactured nondurable goods, down following eight consecutive monthly increases, decreased $1.2 billion or 0.5 percent to $250.7 billion. This followed a 1.0 percent January increase. Petroleum and coal products, down following seven consecutive monthly increases, drove the decrease, $2.0 billion or 3.7 percent to $50.5 billion.

Unfilled Orders
Unfilled orders for manufactured durable goods in February, up five of the last six months, increased $1.9 billion or 0.2 percent to $1,142.8 billion, unchanged from the previously published increase. This followed a 0.3 percent January decrease. Transportation equipment, up two of the last three months, led the increase, $1.4 billion or 0.2 percent to $773.3 billion.

Inventories
Inventories of manufactured durable goods in February, up nineteen of the last twenty months, increased $1.8 billion or 0.4 percent to $410.8 billion, unchanged from the previously published increase. This followed a 0.4 percent January increase. Transportation equipment, up three consecutive months, led the increase, $0.7 billion or 0.5 percent to $132.7 billion. Inventories of manufactured nondurable goods, up nine consecutive months, increased $0.4 billion or 0.2 percent to $264.4 billion. This followed a 0.4 percent January increase. Petroleum and coal products, up eight consecutive months, led the increase, $0.2 billion or 0.5 percent to $42.8 billion. By stage of fabrication, February materials and supplies increased 0.6 percent in both durable goods and nondurable goods. Work in process increased 0.4 percent in durable goods and decreased 0.6 percent in nondurable goods. Finished goods increased 0.4 percent in durable goods and increased 0.2 percent in nondurable goods.


Help Wanted OnLine Labor Demand increased 102,100 to 4,819,700 in March
Posted: April 4, 2018 at 10:00 AM (Wednesday)

Online advertised vacancies increased 102,100 to 4,819,700 in March, according to The Conference Board Help Wanted OnLine® (HWOL) Data Series,released today. The February Supply/Demand rate stands at 1.42 unemployed for each advertised vacancy, with a total of 2.0 million more unemployed workers than the number of advertised vacancies. The number of unemployed was approximately 6.7 million in February.

The Professional occupational category saw gains in Management (14.4) and Healthcare practitioners and technical (11.7). The Services/Production occupational category saw changes in Sales (21.2), Transportation (14.6), and Food prep (-11.7).


ISM Non-Manufacturing Index slowed to 58.8% in March
Posted: April 4, 2018 at 10:00 AM (Wednesday)

Economic activity in the non-manufacturing sector grew in March for the 98th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The NMI® registered 58.8 percent, which is 0.7 percentage point lower than the February reading of 59.5 percent. This represents continued growth in the non-manufacturing sector at a slightly slower rate. The Non-Manufacturing Business Activity Index decreased to 60.6 percent, 2.2 percentage points lower than the February reading of 62.8 percent, reflecting growth for the 104th consecutive month, at a slower rate in March. The New Orders Index registered 59.5 percent, 5.3 percentage points lower than the reading of 64.8 percent in February. The Employment Index increased 1.6 percentage points in March to 56.6 percent from the February reading of 55 percent. The Prices Index increased by 0.5 percentage point from the February reading of 61 percent to 61.5 percent, indicating that prices increased in March for the 25th consecutive month. According to the NMI®, 15 non-manufacturing industries reported growth. Despite the slight dip in the NMI® composite index, the non-manufacturing sector enjoyed another month of strong growth in March. The cooling off of the New Orders Index possibly prevented an even stronger reading for the NMI® composite index. The majority of respondents remain positive about business conditions.

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


ADP National Employment Report increased by 241,000 jobs in March
Posted: April 4, 2018 at 08:15 AM (Wednesday)

Private sector employment increased by 241,000 jobs from February to March according to the March ADP National Employment Report®.

“We saw impressive momentum in the first quarter of 2018 with more jobs added per month on average than in 2017,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Midsized businesses added nearly half of all jobs this month, the best growth this segment has seen since the fall of 2014. The manufacturing industry also performed well, with its strongest increase in more than three years.”

Mark Zandi, chief economist of Moody’s Analytics, said, “The job market is rip-roaring. Monthly job growth remains firmly over 200,000, double the pace of labor force growth. The tight labor market continues to tighten.”


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: April 4, 2018 at 07:00 AM (Wednesday)

Mortgage applications decreased 3.3 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending March 30, 2018.

The Market Composite Index, a measure of mortgage loan application volume, decreased 3.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3 percent compared with the previous week. The Refinance Index decreased 5 percent from the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 5 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to its lowest level since September 2008, 38.5 percent of total applications, from 39.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.5 percent of total applications.

The FHA share of total applications increased to 10.1 percent from 9.9 percent the week prior. The VA share of total applications remained unchanged at 10.3 percent. The USDA share of total applications remained unchanged at 0.8 percent.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) remained unchanged at 4.69 percent, with points remaining unchanged at 0.43 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate remained unchanged from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) decreased to 4.56 percent from 4.60 percent, with points decreasing to 0.27 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.74 percent from 4.75 percent, with points decreasing to 0.54 from 0.56 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 4.09 percent, with points decreasing to 0.42 from 0.46 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.87 percent from 3.92 percent, with points decreasing to 0.28 from 0.46 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


Paychex-IHS Small Business Jobs Index declined slightly to 99.65 in March
Posted: April 3, 2018 at 08:30 AM (Tuesday)

Small business employment growth declined slightly in March, while wage growth remained largely consistent, according to the latest Paychex | IHS Markit Small Business Employment Watch. Falling 0.12 percent to 99.65 in March, the Small Business Jobs Index has been below 100 for the past nine months and has slowed 1.07 percent since March 2017. Hourly earnings grew $0.69 in the past year to $26.48 for a 12-month wage growth of 2.66 percent, virtually unchanged from 2.67 percent YOY growth in February. Due to continued increases in hours worked, weekly earnings growth is higher than hourly earnings growth at 2.90 percent.

“Small business job growth slowed slightly yet again, to its lowest point in more than seven years,” said James Diffley, chief regional economist at IHS Markit.

“Larger employers are adding more workers than smaller businesses at this time, though the tightening labor market is impacting businesses of all sizes,” said Martin Mucci, Paychex president and CEO. “Interestingly, as job applicants are scarce, this month, we saw one-month annualized hourly earnings increase by nearly three percent among small businesses, compared to the annual growth rate of 2.66 percent. This could be the beginning of accelerating wage growth to attract more employees.”



The Small Business Jobs Index decreased 0.12 percent to 99.65 in March

At $26.48, hourly earnings growth increased 2.66 percent YOY ($0.69); one-month annualized hourly earnings growth increased 2.94 percent; weekly earnings growth outpaced hourly earnings, up 2.90 percent YOY

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

Tennessee rose to the top in state job growth; Arizona remains first in annual hourly earnings growth

Denver regained first place among metros in small business job growth; Phoenix continues to lead in small business wage growth

Construction industry maintains steady job growth at 100.42; Leisure and Hospitality leads industry sectors in hourly earnings growth


New York Purchasing Managers Business Activity down slightly to 54.0 in March
Posted: April 3, 2018 at 08:30 AM (Tuesday)

In March, New York City purchasing managers reported small adjustments to the large changes seen in February, according to the survey taken by the Institute for Supply Management-New York.

New York Metro
Current Business Conditions were at 54.0 in March, down just slightly from 54.5 in February, when they dropped 18 points off of January’s 11 year high of 72.5. This index made the smallest month over month change in the March report. The Six-Month Outlook ended two consecutive months of decline, increasing 0.9 to 65.6 in March, up from 64.7 in February. The six-month outlook has been a reliable short-run guide for current business conditions over time.

Company Specific
Employment, a seasonally adjusted index, was 53.5 in March, moving back above the breakeven point after coming in at 46.7 in February. Quantity of Purchases decreased to 54.2 in March, down from 55.6 in February. In March, top line and forward revenue guidance moved downward together. Current Revenues decreased to 50.0 (the breakeven point) in March, down from 61.8 in February. This was the biggest move, up or down, in this month’s report. Expected Revenues fell after two months of increases, coming in at 68.2 in March, down from 72.2 in February. Prices Paid increased to 66.7, up from 61.1 in February.


March Manufacturing ISM slipped to 59.3
Posted: April 2, 2018 at 10:00 AM (Monday)

Economic activity in the manufacturing sector expanded in March, and the overall economy grew for the 107th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The March PMI® registered 59.3 percent, a decrease of 1.5 percentage points from the February reading of 60.8 percent. The New Orders Index registered 61.9 percent, a decrease of 2.3 percentage points from the February reading of 64.2 percent. The Production Index registered 61 percent, a 1 percentage point decrease compared to the February reading of 62 percent. The Employment Index registered 57.3 percent, a decrease of 2.4 percentage points from the February reading of 59.7 percent. The Supplier Deliveries Index registered 60.6 percent, a 0.5 percentage point decrease from the February reading of 61.1 percent. The Inventories Index registered 55.5 percent, a decrease of 1.2 percentage points from the February reading of 56.7 percent. The Prices Index registered 78.1 percent in March, a 3.9 percentage point increase from the February reading of 74.2 percent, indicating higher raw materials prices for the 25th consecutive month. Comments from the panel reflect continued expanding business strength. Demand remains robust, with the New Orders Index at 60 or above for the 11th straight month, and the Customers’ Inventories Index at its lowest level since July 2011. The Backlog of Orders Index continued a 14-month expansion with its highest reading since May 2004, when it registered 63 percent. Consumption, described as production and employment, continues to expand, with indications that labor and skill shortages are affecting production output. Inputs, expressed as supplier deliveries, inventories and imports, were negatively impacted by weather conditions; Asian holidays; lead time extensions; steel and aluminum disruptions across many industries; supplier labor issues; and transportation difficulties due to driver and equipment shortages. Export orders remained strong, supported by a weaker U.S. currency. The Prices Index is at its highest level since April 2011, when it registered 82.6 percent. In March, price increases occurred across 17 of 18 industry sectors. Demand remains robust, but the nation’s employment resources and supply chains are still struggling to keep up.

Of the 18 manufacturing industries, 17 reported growth in March, in the following order: Fabricated Metal Products; Plastics & Rubber Products; Computer & Electronic Products; Paper Products; Printing & Related Support Activities; Nonmetallic Mineral Products; Transportation Equipment; Petroleum & Coal Products; Wood Products; Machinery; Chemical Products; Textile Mills; Electrical Equipment, Appliances & Components; Furniture & Related Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Primary Metals. The only industry reporting a decrease during the period is Apparel, Leather & Allied Products.


Construction Spending up 0.1% in February
Posted: April 2, 2018 at 10:00 AM (Monday)

Total Construction
Construction spending during February 2018 was estimated at a seasonally adjusted annual rate of $1,273.1 billion, 0.1 percent (±1.2 percent)* above the revised January estimate of $1,272.2 billion. The February figure is 3.0 percent (±1.5 percent) above the February 2017 estimate of $1,235.7 billion. During the first two months of this year, construction spending amounted to $176.3 billion, 4.4 percent (±1.3 percent) above the $168.9 billion for the same period in 2017.

Private Construction
Spending on private construction was at a seasonally adjusted annual rate of $982.0 billion, 0.7 percent (±1.6 percent)* above the revised January estimate of $974.8 billion. Residential construction was at a seasonally adjusted annual rate of $533.4 billion in February, 0.1 percent (±1.3 percent)* above the revised January estimate of $532.9 billion. Nonresidential construction was at a seasonally adjusted annual rate of $448.6 billion in February, 1.5 percent (±1.6 percent)* above the revised January estimate of $441.9 billion.

Public Construction
In February, the estimated seasonally adjusted annual rate of public construction spending was $291.1 billion, 2.1 percent (±1.6 percent) below the revised January estimate of $297.4 billion. Educational construction was at a seasonally adjusted annual rate of $74.6 billion, 0.5 percent (±2.6 percent)* below the revised January estimate of $75.0 billion. Highway construction was at a seasonally adjusted annual rate of $88.5 billion, 0.2 percent (±5.4 percent)* below the revised January estimate of $88.7 billion.


University of Michigan Consumer Confidence gained in March to 101.4
Posted: March 29, 2018 at 10:00 AM (Thursday)

The Consumer Sentiment Index reached the highest level since 2004, and the Current Conditions Index set a new peak, dating back to the mid-1940s, according to the University of Michigan Surveys of Consumers.

Importantly, all of the March gain was among households with incomes in the bottom third; those in the middle third were unchanged, while the Index fell among households with incomes in the top third, said U-M economist Richard Curtin, director of the surveys.

Upper income households cited significantly greater concerns about government economic policies, especially trade policies, offsetting their positive reactions to tax policies, he said.

Currently, the main factor driving discretionary spending is that consumers remain confident in their future job and income prospects, which is anchored more in the stability of these economic prospects rather than the size of the expected gains, Curtin said. Overall, the data are consistent with growth rate in personal consumption expenditures of 2.6 percent from mid-2018 to mid-2019.

"The consensus expectation among consumers is that interest rates will increase in the foreseeable future," Curtin said. "While consumers view the current level of interest rates as still relatively low, they understand that interest rate hikes are intended to dampen the future pace of economic growth.Their reaction will both emphasize borrowing in advance of those expected increases as well as heighten their precautionary savings motives.

"The trade-off between spending and saving will crucially depend on the pace of future interest rate hikes compared with the pace of income growth. It is likely that income growth will initially dominate, tilting consumers' motives more toward spending than saving."

Record Financial Progress
Recent financial progress was reported by 57 percent of consumers in March, which tied the 1998 all-time peak. Half of all households cited higher incomes and nearly two-thirds cited rising home values. While these gains were widespread, future financial prospects improved among the lowest income households and declined among the highest-income households. Expected increases in nominal incomes during the year ahead fell to 1.7 percent in March, down from 2.3 percent last year, with most of the decline among households with incomes in the top third.

Economic News Weakens Outlook
Consumers reported more negative news about trade policies, with unfavorable references rising to 31 percent from last month's 18 percent. While six-in-10 consumers reported that the overall economy had recently improved, half as many anticipated additional gains in the pace of economic growth during the year ahead. The remaining strength was among those with incomes in the bottom third, while losses were recorded among those with incomes in the top third. The same pattern held for expectations about future changes in the unemployment rate.

Consumer Sentiment Index
The Consumer Sentiment Index was 101.4 in the March 2018 survey, up from 99.7 in February and 96.9 in last March's survey. The Current Conditions Index was 121.2 in March, up from 114.9 in February and last year's 113.2, reaching the highest level ever recorded. The Expectations Index was 88.8 in March, between last month's 90.0 and last year's 86.5.

Consumer sentiment at month's end was marginally below the mid-month reading due to uncertainty about the impact of the proposed trade tariffs. The Sentiment Index, however, still reached the highest level since 2004, and the Current Conditions Index set a new all-time peak. Importantly, all of the March gain in the Sentiment Index was among households with incomes in the bottom third (+14.1); those in the middle third were unchanged, while the Index fell among households in the top third (-5.6). Households with incomes in the top third cited significantly greater concerns with government economic policies than last month, especially trade policies, with net references falling from +31 to just +1, offsetting their positive reactions to tax policies. The consensus expectation among consumers is that interest rates will increase in the foreseeable future. While consumers view the current level of interest rates as still relatively low, they understand that interest rate hikes are intended to dampen the future pace of economic growth. Their reaction will both emphasize borrowing-in-advance of those expected increases as well as heighten their precautionary savings motives. The trade-off between spending and saving will crucially depend on the pace of future interest rate hikes compared with the pace of income growth. It is likely that income growth will initially dominate, tilting consumers' motives more toward spending than saving. Overall, the data are consistent with a growth rate of 2.6% in consumption from mid-2018 to mid-2019.


Chicago Purchasing Managers Index fell 4.5 points to 57.4 in March
Posted: March 29, 2018 at 09:45 AM (Thursday)

The MNI Chicago Business Barometer fell 4.5 points to 57.4 in March, down from 61.9 in February, hitting the lowest level in exactly one year.

Firms’ operations continued to expand in March, but the pace of expansion moderated for a third straight month. Three of the five Barometer components receded on the month, with only Employment and Supplier Deliveries expanding.

Compared to March last year, the Barometer was up 0.5%. On the quarter, the Barometer was down on Q4 2017 but Q1’s outturn was still the second-best calendar quarter result since Q2 2014 and the best first quarter outturn since 2011.

Extending a trend set since the turn of the year, firms’ count of output and incoming orders fell in March. The Production indicator sunk to the lowest level since October 2016, while the New Orders indicator decreased to a level last seen lower just over a year ago. The two indicators, accounting for two thirds of the headline Barometer, have fallen 28% and 19% since their respective December highs.

Joining Production and New Orders, firms’ level of unfulfilled orders also continued to level-off in March. The Order Backlogs indicator slowed for a third consecutive month, to an eleven-month low, to hover just above the neutral-level.

Supplier delivery times, however, inched higher and remain long by recent standards. There were multiple reports of suppliers struggling to keep up with orders of key inputs, ranging from steel to electronic components. The rate at which firms added to their stock levels also increased in March, just before the kick-off of the new fiscal year.

Meanwhile, firms’ appetite to add to their workforce grew in March. The Employment indicator ticked up, rising to the second highest level in the past 12 months.

This month’s special question asked firms to forecast the level of incoming orders over the forthcoming quarter. At 50.1%, most firms said they expect orders to grow in Q2. Only 9.4% thought orders would recede with the remainder predicting orders would be more or less unchanged.

Input price inflation pressures, meanwhile, refuse to abate. The Prices Paid indicator picked up in March, enough to take the quarterly average up to the highest level since Q3 2011. Multiple firms reported the increased price of steel, among other materials, as impacting their business while others noted that persistently high prices were forcing them to find new suppliers.

“The Chicago Business Barometer calendar quarter average had increased for six straight quarters until Q1 2018, with the halt largely due to the recent downward trajectory of orders and output,” said Jamie Satchi, Economist at MNI Indicators.

“Troubles higher up in firms’ supply chains are restraining their productive capacity and higher prices are being passed on to consumers. On a more positive note, firms remain keen to expand their workforce,” he added.


Personal Income increased 0.4%, Spending increased 0.2%
Posted: March 29, 2018 at 08:30 AM (Thursday)

Personal income increased $67.3 billion (0.4 percent) in February according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $53.9 billion (0.4 percent) and personal consumption expenditures (PCE) increased $27.7 billion (0.2 percent).

Real DPI increased 0.2 percent in February and Real PCE increased less than 0.1 percent. The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index increased 0.2 percent.

The increase in personal income in February primarily reflected increases in wages and salaries and nonfarm proprietors’ income.

The $1.4 billion increase in real PCE in February reflected an increase of $1.0 billion in spending for goods and a $0.5 billion increase in spending for services (table 7). Within goods, recreational goods and vehicles was the leading contributor to the increase. Within services, financial services and insurance was the leading contributor to the increase. Detailed information on monthly real PCE spending can be found in Table 2.3.6U.

Personal outlays increased $27.8 billion in February (table 3). Personal saving was $497.4 billion in February and the personal saving rate, personal saving as a percentage of disposable personal income, was 3.4 percent.

2017 Personal Income and Outlays
Personal income (table 6) increased 3.1 percent in 2017 (that is, from the 2016 annual level to the 2017 annual level), compared with an increase of 2.4 percent in 2016. DPI increased 2.9 percent in 2017 compared with an increase of 2.6 percent in 2016. In 2017, PCE increased 4.5 percent, compared with an increase of 4.0 percent in 2016.

Real DPI increased 1.2 percent in 2017, compared with an increase of 1.4 percent in 2016. Real PCE increased 2.8 percent, compared with an increase of 2.7 percent in 2016.


Weekly Initial Unemployment Claims Decrease 12,000 to 215,000
Posted: March 29, 2018 at 08:30 AM (Thursday)

In the week ending March 24, the advance figure for seasonally adjusted initial claims was 215,000, a decrease of 12,000 from the previous week's revised level. This is the lowest level for initial claims since January 27, 1973 when it was 214,000. The previous week's level was revised down by 2,000 from 229,000 to 227,000. The 4-week moving average was 224,500, a decrease of 500 from the previous week's revised average. The previous week's average was revised up by 1,250 from 223,750 to 225,000. Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.

The advance seasonally adjusted insured unemployment rate was 1.3 percent for the week ending March 17, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending March 17 was 1,871,000, an increase of 35,000 from the previous week's revised level. The previous week's level was revised up 8,000 from 1,828,000 to 1,836,000. The 4-week moving average was 1,861,500, a decrease of 12,750 from the previous week's revised average. This is the lowest level for this average since January 5, 1974 when it was 1,838,500. The previous week's average was revised down by 6,250 from 1,880,500 to 1,874,250.


Pending Home Sales Index grew 3.1% in February
Posted: March 28, 2018 at 10:00 AM (Wednesday)

Pending home sales snapped back in much of the country in February, but weakening affordability and not enough inventory on the market restricted overall activity compared to a year ago, according to the National Association of Realtors®.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, grew 3.1 percent to 107.5 in February from a downwardly revised 104.3 in January. Even with last month’s increase in activity, the index is 4.1 percent below a year ago.

Lawrence Yun, NAR chief economist, says the housing market has gotten off to an uneven start so far in 2018. “Contract signings rebounded in most areas in February, but the gains were not large enough to keep up with last February’s level, which was the second highest in over a decade (112.1),” he said. “The expanding economy and healthy job market are generating sizeable homebuyer demand, but the miniscule number of listings on the market and its adverse effect on affordability are squeezing buyers and suppressing overall activity.”

Added Yun, “Expect ongoing volatility in the Northeast region at least through March. Although pending sales there bounced back in February following January’s cold weather-related decline, the multiple winter storms over these last few weeks likely put a chill on contract signings once again this month.”

With the start of the spring buying season in full swing, Yun believes that one of the top wild cards for the housing market in coming months will be how both buyers and potential sellers adjust to the steady climb in mortgage rates since late last year. Prospective buyers continue to feel the strain of swift price growth – up 5.9 percent so far in 2018 – and the higher borrowing costs will only add to the pressures placed on their budget. Meanwhile, more would-be sellers deciding to balk at listing their home for sale out of uneasiness of losing their low mortgage rate – especially if they refinanced in recent years – would not be good news for any alleviation of the ongoing supply shortages in much of the country.

“Homeowners are already staying in their homes at an all-time high before selling, and any situation where they remain put even longer only exacerbates the nation’s inventory crunch,” said Yun. “Even if new home construction starts picking up at a faster pace this year, as expected, existing sales will fail to break out if these record low supply levels do not recover enough to meet demand.”

For the year, Yun now forecasts for existing-home sales to be around 5.51 million – flat from 2017. The national median existing-home price is expected to increase around 4.2 percent. In 2017, existing sales increased 1.1 percent and prices rose 5.8 percent.

The PHSI in the Northeast surged 10.3 percent to 96.0 in February, but is still 5.1 percent below a year ago. In the Midwest the index inched forward 0.7 percent to 98.9 in February, but is 9.5 percent lower than February 2017.

Pending home sales in the South rose 3.0 percent to an index of 125.7 in February, but are 1.5 percent lower than last February. The index in the West climbed 0.4 percent in February to 96.9, but is 2.2 percent below a year ago.


4Q2017 GDP final estimate increased 2.9%, 2017 GDP 2.3%
Posted: March 28, 2018 at 08:30 AM (Wednesday)

Real gross domestic product (GDP) increased at an annual rate of 2.9 percent in the fourth quarter of 2017, according to the "third" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.2 percent.

The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 2.5 percent. With this third estimate for the fourth quarter, the general picture of economic growth remains the same; personal consumption expenditures (PCE) and private inventory investment were revised up.

Real gross domestic income (GDI) increased 0.9 percent in the fourth quarter, compared with an increase of 2.4 percent in the third. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 1.9 percent in the fourth quarter, compared with an increase of 2.8 percent in the third quarter.

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

The deceleration in real GDP growth in the fourth quarter reflected a downturn in private inventory investment that was partly offset by accelerations in PCE, exports, state and local government spending, nonresidential fixed investment, and federal government spending, and an upturn in residential fixed investment. Imports, which are a subtraction in the calculation of GDP, turned up.

Current-dollar GDP increased 5.3 percent, or $253.5 billion, in the fourth quarter to a level of $19,754.1 billion. In the third quarter, current-dollar GDP increased 5.3 percent, or $250.6 billion.

The price index for gross domestic purchases increased 2.5 percent in the fourth quarter, compared with an increase of 1.7 percent in the third quarter. The PCE price index increased 2.7 percent, compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index increased 1.9 percent, compared with an increase of 1.3 percent.

2017 GDP
Real GDP increased 2.3 percent in 2017 (that is, from the 2016 annual level to the 2017 annual level),compared with an increase of 1.5 percent in 2016.

The increase in real GDP in 2017 primarily reflected positive contributions from PCE, nonresidential fixed investment, and exports. These contributions were partly offset by a decline in private inventory investment. Imports, which are a subtraction in the calculation of GDP, increased.

The acceleration in real GDP from 2016 to 2017 reflected upturns in nonresidential fixed investment and in exports and a smaller decrease in private inventory investment. These movements were partly offset by decelerations in residential fixed investment and in state and local government spending. Imports, which are a subtraction in the calculation of GDP, accelerated.

Current-dollar GDP increased 4.1 percent, or $766.1 billion, in 2017 to a level of $19,390.6 billion, compared with an increase of 2.8 percent, or $503.8 billion, in 2016.

The price index for gross domestic purchases increased 1.8 percent in 2017, compared with an increase of 1.0 percent in 2016 (table 4). The PCE price index increased 1.7 percent, compared with an increase of 1.2 percent. Excluding food and energy prices, the PCE price index increased 1.5 percent, compared with an increase of 1.8 percent.

During 2017 (measured from the fourth quarter of 2016 to the fourth quarter of 2017), real GDP increased 2.6 percent, compared with an increase of 1.8 percent during 2016. The price index for gross domestic purchases increased 1.9 percent during 2017, compared with an increase of 1.4 percent during 2016.

Corporate Profits
Profits from current production (corporate profits with inventory valuation adjustment and capital consumption adjustment) decreased $1.1 billion in the fourth quarter, in contrast to an increase of $90.2 billion in the third quarter.

Profits of domestic financial corporations decreased $14.6 billion in the fourth quarter, in contrast to an increase of $47.8 billion in the third. Profits of domestic nonfinancial corporations increased $19.4 billion, compared with an increase of $10.4 billion. Rest-of-the-world profits decreased $5.9 billion, in contrast to an increase of $32.0 billion. In the fourth quarter, receipts increased $14.9 billion, and payments increased $20.8 billion.

In 2017, profits from current production increased $91.2 billion, in contrast to a decrease of $44.0 billion in 2016. Profits of domestic financial corporations increased $15.7 billion, in contrast to a decrease of $2.0 billion. Profits of domestic nonfinancial corporations increased $37.4 billion, in contrast to a decrease of $51.7 billion. The rest-of-the-world component of profits increased $38.0 billion, compared with an increase of $9.8 billion.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: March 28, 2018 at 07:00 AM (Wednesday)

Mortgage applications increased 4.8 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending March 23, 2018.

The Market Composite Index, a measure of mortgage loan application volume, increased 4.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 5 percent compared with the previous week. The Refinance Index increased 7 percent from the previous week. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index increased 4 percent compared with the previous week and was 8 percent higher than the same week one year ago.

The refinance share of mortgage activity increased to 39.4 percent of total applications from 38.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 7.0 percent of total applications.

The FHA share of total applications decreased to 9.9 percent from 10.3 percent the week prior. The VA share of total applications decreased to 10.3 percent from 10.7 percent the week prior. The USDA share of total applications remained unchanged at 0.8 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to 4.69 percent from 4.68 percent, with points decreasing to 0.43 from 0.46 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) increased to 4.60 percent from 4.55 percent, with points decreasing to 0.36 from 0.37 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.75 percent from 4.69 percent, with points decreasing to 0.56 from 0.81 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.09 percent from 4.12 percent, with points decreasing to 0.46 from 0.51 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs increased to 3.92 percent from 3.83 percent, with points decreasing to 0.46 from 0.68 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


Consumer Confidence decreased in March to 127.7
Posted: March 27, 2018 at 10:00 AM (Tuesday)

The Conference Board Consumer Confidence Index® decreased in March, following an increase in February. The Index now stands at 127.7 (1985=100), down from 130.0 in February. The Present Situation Index decreased from 161.2 to 159.9, while the Expectations Index declined from 109.2 last month to 106.2 this month.

“Consumer confidence declined moderately in March after reaching an 18-year high in February,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current conditions declined slightly, with business conditions the primary reason for the moderation. Consumers’ short-term expectations also declined, including their outlook for the stock market, but overall expectations remain quite favorable. Despite the modest retreat in confidence, index levels remain historically high and suggest further strong growth in the months ahead.”

Consumers’ assessment of current conditions eased in March. The percentage saying business conditions are “good” increased from 36.5 percent to 37.9 percent, however those claiming business conditions are “bad” also increased, from 11.3 percent to 13.4 percent. Consumers’ assessment of the labor market was marginally more favorable. Those claiming jobs are “plentiful” increased from 39.1 percent to 39.9 percent, while those claiming jobs are “hard to get” decreased from 15.1 percent to 14.9 percent.

Consumers were moderately less optimistic about the short-term outlook in March. The percentage of consumers anticipating business conditions will improve over the next six months decreased from 25.0 percent to 23.0 percent, while those expecting business conditions will worsen increased from 9.4 percent to 9.8 percent.

Consumers’ outlook for the job market was also less positive. The proportion expecting more jobs in the months ahead decreased from 22.4 percent to 19.1 percent, while those anticipating fewer jobs increased from 12.4 percent to 12.6 percent. Regarding their short-term income prospects, the percentage of consumers expecting an improvement decreased from 23.5 percent to 22.0 percent, however, the proportion expecting a decrease also declined, from 8.6 percent to 7.2 percent.


Richmond Fed's Current Activity Index dropped from 28 to 15 in March
Posted: March 27, 2018 at 10:00 AM (Tuesday)

Fifth District manufacturing expanded at a slower pace in March, according to the most recent survey results from the Federal Reserve Bank of Richmond. The composite index dropped from a particularly strong reading of 28 in February to 15 in March as each of the three components (shipments, new orders, and employment) fell. However, for each of these variables, a larger share of firms predicted growth in six months than had in February. Firms reported weaker growth in capital expenditures in March but saw an uptick in growth of business services expenditures.

The survey's employment measures suggested slower growth in March. While the availability of skills index increased in March, it remained in negative territory indicating that skills shortages persisted. Firms anticipate stronger growth in all employment measures in the coming months.

District manufacturers saw higher growth in prices paid in March, but growth in prices received slowed slightly. However, firms expected to see accelerating price increases for both prices paid and received in the next six months.


S&P CoreLogic Case-Shiller Home Price Indices gained 0.05% in January
Posted: March 27, 2018 at 09:00 AM (Tuesday)

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

YEAR-OVER-YEAR
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 6.2% annual gain in January, down from 6.3% in the previous month. The 10-City Composite annual increase came in at 6.0%, no change from the previous month. The 20-City Composite posted a 6.4% year-over-year gain, up from 6.3% in the previous month.

Seattle, Las Vegas, and San Francisco reported the highest year-over-year gains among the 20 cities. In January, Seattle led the way with a 12.9% year-over-year price increase, followed by Las Vegas with an 11.1% increase and San Francisco with a 10.2% increase. Twelve of the 20 cities reported greater price increases in the year ending January 2018 versus the year ending December 2017.

MONTH-OVER-MONTH
Before seasonal adjustment, the National Index posted a month-over-month gain of 0.05% in January. The 10-City and 20-City Composites both reported increases of 0.3%. After seasonal adjustment, the National Index recorded a 0.5% month-over-month increase in January. The 10-City and 20-City Composites posted 0.7% and 0.8% month-over-month increases, respectively. Sixteen of the 20 cities reported increases in January before seasonal adjustment, while all 20 cities reported increases after seasonal adjustment.

ANALYSIS
“The home price surge continues,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Since the market bottom in December 2012, the S&P Corelogic Case-Shiller National Home Price index has climbed at a 4.7% real – inflation adjusted – annual rate. That is twice the rate of economic growth as measured by the GDP. While price gains vary from city to city, there are few, if any, really weak spots. Seattle, up 12.9% in the last year, continues to see the largest gains, followed by Las Vegas up 11.1% over the same period. Even Chicago and Washington, the cities with the smallest price gains, saw a 2.4% annual increase in home prices.

“Two factors supporting price increases are the low inventory of homes for sale and the low vacancy rate among owner-occupied housing. The current months-supply -- how many months at the current sales rate would be needed to absorb homes currently for sale -- is 3.4; the average since 2000 is 6.0 months, and the high in July 2010 was 11.9. Currently, the homeowner vacancy rate is 1.6% compared to an average of 2.1% since 2000; it peaked in 2010 at 2.7%. Despite limited supplies, rising prices, and higher mortgage rates, affordability is not a concern. Affordability measures published by the National Association of Realtors show that a family with a median income could comfortably afford a mortgage for a median priced home.”

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, which covers all nine U.S. census divisions, recorded a 6.2% annual gain in January 2018. The 10-City and 20-City Composites reported year-over-year increases of 6.0% and 6.4%, respectively. As of January 2018, average home prices for the MSAs within the 10-City and 20-City Composites are back to their winter 2007 levels.


Texas Fed Manufacturing Activity Expanded Slower in March
Posted: March 26, 2018 at 10:30 AM (Monday)

Texas factory activity continued to expand in March, albeit at a markedly slower pace than last month, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell 15 points to 12.7, signaling a deceleration in output growth.

Other indexes of manufacturing activity also remained positive but posted double-digit declines in March. The new orders and growth rate of orders indexes fell to 8.3 and 3.8, respectively. The capacity utilization index dropped to 9.6, and the shipments index plunged 23 points to 9.3. Although these indexes are down notably from their February readings, they remain well above their postrecession averages.

Perceptions of broader business conditions remained positive on net, but the share of firms reporting an improvement declined from last month. The general business activity index fell 16 points to 21.4, and the company outlook index declined 12 points to 19.6. While both of these March readings represent the lowest this year, they are on par with last year’s average indexes and far above their postrecession average levels.

Labor market measures suggested growth was weaker for employment and workweek length. The employment index came in at 10.8, down eight points from February. Twenty percent of firms noted net hiring, compared with 9 percent noting net layoffs. The hours worked index moved down to 9.4.

Price and wage pressures remained elevated in March. The raw materials prices index ticked up to 41.4, its highest reading since mid-2011. The finished goods prices index edged down to 18.5. The wages and benefits index retreated nearly 10 points to 22.9, reversing the 10-point increase seen last month. Even so, the index remained above its 2017 average and well above its postrecession average.

Expectations regarding future business conditions remained optimistic in March. The indexes of future general business activity and future company outlook slipped to 32.0 and 30.9, respectively, but both remained significantly above their average readings. Other indexes for future manufacturing activity showed mixed movements but remained highly positive.


Chicago Fed National Activity Points to a Pickup in Economic Growth in February
Posted: March 26, 2018 at 08:30 AM (Monday)

The CFNAI Diffusion Index, which is also a three-month moving average, moved up to +0.28 in February from +0.16 in January. Sixty-three of the 85 individual indicators made positive contributions to the CFNAI in February, while 22 made negative contributions. Sixty-one indicators improved from January to February, while 23 indicators deteriorated and one was unchanged. Of the indicators that improved, nine made negative contributions.

Production-related indicators contributed +0.50 to the CFNAI in February, up from –0.15 in January. Total industrial production increased 1.1 percent in February after decreasing 0.3 percent in January. The sales, orders, and inventories category made a contribution of +0.09 to the CFNAI in February, up from +0.03 in January. The Institute for Supply Management’s Manufacturing Inventories Index increased to 56.7 in February from 52.3 in the previous month.

Employment-related indicators contributed +0.31 to the CFNAI in February, up from +0.24 in January. Nonfarm payrolls increased by 313,000 in February after increasing by 239,000 in January. The contribution of the personal consumption and housing category to the CFNAI moved up to –0.02 in February from –0.10 in January. Consumption indicators improved, on balance, pushing up the category’s overall contribution. However, housing starts decreased to 1,236,000 annualized units in February from 1,329,000 in January.

The CFNAI was constructed using data available as of March 22, 2018. At that time, February data for 51 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index. The January monthly index value was revised to +0.02 from an initial estimate of +0.12, and the December monthly index value was revised to +0.22 from last month’s estimate of +0.14. Revisions to the monthly index can be attributed to two main factors: revisions in previously published data and differences between the estimates of previously unavailable data and subsequently published data. The revisions to both the January and December monthly index values were primarily due to the former.

Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) rose to +0.88 in February from +0.02 in January. All four broad categories of indicators that make up the index increased from January, and three of the four categories made positive contributions to the index in February. The index’s three-month moving average, CFNAI-MA3, increased to +0.37 in February from +0.16 in January.


New Home Sales in February at annual rate of 618,000
Posted: March 23, 2018 at 10:00 AM (Friday)

New Home Sales
Sales of new single-family houses in February 2018 were at a seasonally adjusted annual rate of 618,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 0.6 percent (±13.3 percent)* below the revised January rate of 622,000, but is 0.5 percent (±16.6 percent)* above the February 2017 estimate of 615,000.

Sales Price
The median sales price of new houses sold in February 2018 was $326,800. The average sales price was $376,700.

For Sale Inventory and Months’ Supply
The seasonally-adjusted estimate of new houses for sale at the end of February was 305,000. This represents a supply of 5.9 months at the current sales rate.


February New Orders for Durable Goods increased 3.1%, Ex-Trans up 1.2%
Posted: March 23, 2018 at 08:30 AM (Friday)

New Orders
New orders for manufactured durable goods in February increased $7.4 billion or 3.1 percent to $247.7 billion, the U.S. Census Bureau announced today. This increase, up three of the last four months, followed a 3.5 percent January decrease. Excluding transportation, new orders increased 1.2 percent. Excluding defense, new orders increased 2.5 percent. Transportation equipment, also up three of the last four months, led the increase, $5.5 billion or 7.1 percent to $83.5 billion.

Shipments
Shipments of manufactured durable goods in February, up nine of the last ten months, increased $2.2 billion or 0.9 percent to $249.7 billion. This followed a 0.5 percent January increase. Machinery, up six of the last seven months, led the increase, $0.6 billion or 1.8 percent to $33.4 billion.

Unfilled Orders
Unfilled orders for manufactured durable goods in February, up five of the last six months, increased $2.3 billion or 0.2 percent to $1,143.3 billion. This followed a 0.3 percent January decrease. Transportation equipment, up two of the last three months, led the increase, $1.4 billion or 0.2 percent to $773.2 billion.

Inventories
Inventories of manufactured durable goods in February, up nineteen of the last twenty months, increased $1.6 billion or 0.4 percent to $410.6 billion. This followed a 0.4 percent January increase. Transportation equipment, up three consecutive months, led the increase, $0.7 billion or 0.6 percent to $132.7 billion.

Capital Goods
Nondefense new orders for capital goods in February increased $3.3 billion or 4.5 percent to $77.4 billion. Shipments increased $0.9 billion or 1.2 percent to $75.3 billion. Unfilled orders increased $2.1 billion or 0.3 percent to $708.6 billion. Inventories increased $1.0 billion or 0.6 percent to $183.1 billion. Defense new orders for capital goods in February increased $1.5 billion or 16.5 percent to $10.7 billion. Shipments decreased $0.4 billion or 3.6 percent to $11.1 billion. Unfilled orders decreased $0.4 billion or 0.3 percent to $140.6 billion. Inventories increased less than $0.1 billion or 0.2 percent to $23.2 billion.

Revised January Data
Revised seasonally adjusted January figures for all manufacturing industries were: new orders, $491.9 billion (revised from $491.7 billion); shipments, $499.2 billion (revised from $498.8); unfilled orders, $1,141.0 billion (revised from $1,141.2 billion) and total inventories, $672.6 billion (revised from $672.4 billion).


Kansas City Fed Manufacturing Activity continued solid pace in March
Posted: March 22, 2018 at 11:00 AM (Thursday)

Tenth District manufacturing activity continued at a solid pace in March, and optimism remained high for future activity. In a special question on the effect of potential steel and aluminum tariffs, most contacts indicated some impact, with varying anticipated degrees of severity. Price indexes were little changed in March after considerable increases the past few months.

The month-over-month composite index was 17 in March, equal to 17 in February and higher than 16 in January. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Factory activity grew modestly at durable goods plants, particularly for machinery and aircraft, while production of nondurable goods moderated slightly. Month-over-month indexes were mixed. The shipments and new orders indexes decreased moderately, while the production, order backlog, and new orders for exports indexes where basically unchanged. In contrast, the employment index edged up from 23 to 26 and the supplier delivery time index jumped from 16 to 30, both at their highest levels in survey history. The raw materials inventory index increased from 8 to 11, and the finished goods inventory index also rose modestly.

Most year-over-year factory indexes were slightly lower in March. The composite index was basically unchanged at 37, while the production, shipments, new orders, and order backlog indexes decreased moderately. The employment index inched lower from 39 to 37, and the capital expenditures index also fell. The raw materials inventory index increased from 23 to 30, while the finished goods inventory index was generally stable.

Future factory activity expectations moderated slightly but were still solid overall. The future composite index slipped from 38 to 33, and the future production, shipments, new orders, and order backlog indexes also moderated slightly. The future employment index decreased from 41 to 36, while the future capital expenditures index was basically unchanged. The future raw materials inventory index edged down from 23 to 21, while the future finished goods inventory index increased modestly.

Most price indexes were little changed in March but remained at high levels. The month-over-month finished goods price index slipped from 26 to 24, while the raw materials price index increased slightly. The year-over-year finished goods price index inched lower from 51 to 49, while the year-over-year raw materials price index moved modestly higher. The future finished goods price index eased from 53 to 48, while the future raw materials price index was basically unchanged.


U.S. Leading Economic Index increased 0.6% in February
Posted: March 22, 2018 at 10:00 AM (Thursday)

The Conference Board Leading Economic Index® (LEI)for the U.S. increased 0.6 percent in February to 108.7 (2016 = 100), following a 0.8 percent increase in January, and a 0.7 percent increase in December.

“The U.S. LEI rose again, despite a sharp downturn in stock markets and weakness in housing construction in February,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “The LEI points to robust economic growth throughout 2018. Its six-month growth rate has not been this high since the first quarter of 2011. While the Federal Reserve is on track to continue raising its benchmark rate for the rest of the year, the recent weakness in residential construction and stock prices – important leading indicators - should be monitored closely.”

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.3 percent in February to 103.3 (2016 = 100), following a 0.1 percent increase in January, and a 0.2 percent increase in December.

The Conference Board Lagging Economic Index® (LAG) for the U.S. increased 0.4 percent in February to 104.3 (2016 = 100), following a 0.1 percent increase in January and a 0.6 percent increase in December.


Weekly Initial Unemployment Claims Increase 3,000 to 229,000
Posted: March 22, 2018 at 08:30 AM (Thursday)

In the week ending March 17, the advance figure for seasonally adjusted initial claims was 229,000, an increase of 3,000 from the previous week's unrevised level of 226,000. The 4-week moving average was 223,750, an increase of 2,250 from the previous week's unrevised average of 221,500. Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.

The advance seasonally adjusted insured unemployment rate was 1.3 percent for the week ending March 10, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending March 10 was 1,828,000, a decrease of 57,000 from the previous week's revised level. This is the lowest level for insured unemployment since December 29, 1973 when it was 1,805,000. The previous week's level was revised up 6,000 from 1,879,000 to 1,885,000. The 4-week moving average was 1,880,500, a decrease of 11,750 from the previous week's revised average. This is the lowest level for this average since January 5, 1974 when it was 1,838,500. The previous week's average was revised up by 1,500 from 1,890,750 to 1,892,250.


FOMC target funds rate increased to 1.50% - 1.75%
Posted: March 21, 2018 at 02:00 PM (Wednesday)

Information received since the Federal Open Market Committee met in January indicates that the labor market has continued to strengthen and that economic activity has been rising at a moderate rate. Job gains have been strong in recent months, and the unemployment rate has stayed low. Recent data suggest that growth rates of household spending and business fixed investment have moderated from their strong fourth-quarter readings. On a 12-month basis, both overall inflation and inflation for items other than food and energy have continued to run below 2 percent. Market-based measures of inflation compensation have increased in recent months but remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The economic outlook has strengthened in recent months. The Committee expects that, with further gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace in the medium term and labor market conditions will remain strong. Inflation on a 12-month basis is expected to move up in coming months and to stabilize around the Committee's 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.

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

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant further 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.

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


Existing-Home Sales Increased 3.0% in February
Posted: March 21, 2018 at 10:00 AM (Wednesday)

Despite consistently low inventory levels and faster price growth, existing-home sales bounced back in February after two straight months of declines, according to the National Association of Realtors®. Sizeable sales increases in the South and West offset declines in the Northeast and Midwest.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, grew 3.0 percent to a seasonally adjusted annual rate of 5.54 million in February from 5.38 million in January. After last month’s increase, sales are now 1.1 percent above a year ago.

Lawrence Yun, NAR chief economist, says sales were uneven across the country in February but did increase nicely overall. “A big jump in existing sales in the South and West last month helped the housing market recover from a two-month sales slump,” he said. “The very healthy U.S. economy and labor market are creating a sizeable interest in buying a home in early 2018. However, even as seasonal inventory gains helped boost sales last month, home prices – especially in the West – shot up considerably. Affordability continues to be a pressing issue because new and existing housing supply is still severely subpar.”

Added Yun, “The unseasonably cold weather to start the year muted pending sales in the Northeast and Midwest in January and ultimately led to their sales retreat last month. Looking ahead, several markets in the Northeast will likely see even more temporary disruptions from the large winter storms that have occurred in March.”

The median existing-home price for all housing types in February was $241,700, up 5.9 percent from February 2017 ($228,200). February’s price increase marks the 72nd straight month of year-over-year gains.

Total housing inventory at the end of February rose 4.6 percent to 1.59 million existing homes available for sale, but is still 8.1 percent lower than a year ago (1.73 million) and has fallen year-over-year for 33 consecutive months. Unsold inventory is at a 3.4-month supply at the current sales pace (3.8 months a year ago).

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage moved higher for the fifth straight month to 4.33 percent in February (highest since 4.34 percent in April 2014) from 4.03 percent in January. The average commitment rate for all of 2017 was 3.99 percent.

Properties typically stayed on the market for 37 days in February, which is down from 41 days in January and 45 days a year ago. Forty-six percent of homes sold in February were on the market for less than a month.

“Mortgage rates are at their highest level in nearly four years, at a time when home prices are still climbing at double the pace of wage growth,” said Yun. “Homes for sale are going under contract a week faster than a year ago, which is quite remarkable given weakening affordability conditions and extremely tight supply. To fully satisfy demand, most markets right now need a substantial increase in new listings.”

Realtor.com®’s Market Hotness Index , measuring time-on-the-market data and listings views per property, revealed that the hottest metro areas in February were San Francisco-Oakland-Hayward, Calif.; Midland, Texas; Vallejo-Fairfield, Calif.; San Jose-Sunnyvale-Santa Clara, Calif.; and Sacramento-Roseville-Arden-Arcade, Calif.

First-time buyers were 29 percent of sales in February, which is unchanged from last month and down from 31 percent a year ago. NAR’s 2017 Profile of Home Buyers and Sellers – released in late 20175 – revealed that the annual share of first-time buyers was 34 percent.

NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty, says first-time buyers are seeing stiff competition for the available listings in their price range. “Realtors® in several markets note that entry-level homes for first-timers are hard to come by, which is contributing to their underperforming share of overall sales to start the year.” she said. “Prospective buyers should start conversations with a Realtor® now on what they want in a new home. Even with the expected uptick in new listings in coming months, buyers in most markets will likely have to act fast on any available listing that checks all their boxes.”

All-cash sales were 24 percent of transactions in February, which is up from 22 percent in January and the highest since last February (27 percent). Individual investors, who account for many cash sales, purchased 15 percent of homes in February, which is down from 17 percent in January and unchanged from a year ago.

Distressed sales – foreclosures and short sales – were 4 percent of sales in February, down from 5 percent in January and 7 percent a year ago. Three percent of February sales were foreclosures and 1 percent were short sales.

Single-family and Condo/Co-op Sales
Single-family home sales rose 4.2 percent to a seasonally adjusted annual rate of 4.96 million in February from 4.76 million in January, and are now 1.8 percent above the 4.87 million pace a year ago. The median existing single-family home price was $243,400 in February, up 5.9 percent from February 2017.

Existing condominium and co-op sales declined 6.5 percent to a seasonally adjusted annual rate of 580,000 units in February, and are now 4.9 percent below a year ago. The median existing condo price was $227,300 in February, which is 5.7 percent above a year ago.

Regional Breakdown
February existing-home sales in the Northeast fell 12.3 percent to an annual rate of 640,000, and are now 7.2 percent below a year ago. The median price in the Northeast was $258,900, which is 3.6 percent above February 2017.

In the Midwest, existing-home sales dipped 2.4 percent to an annual rate of 1.22 million in February (unchanged from a year ago). The median price in the Midwest was $179,400, up 4.5 percent from a year ago.

Existing-home sales in the South jumped 6.6 percent to an annual rate of 2.41 million in February, and are now 3.4 percent above a year ago. The median price in the South was $215,700, up 5.4 percent from a year ago.

Existing-home sales in the West surged 11.4 percent to an annual rate of 1.27 million in February, and are now 2.4 percent above a year ago. The median price in the West was $370,600, up 9.6 percent from February 2017.


4Q2017 and 2017 Current Account Deficit Increased
Posted: March 21, 2018 at 08:30 AM (Wednesday)

The U.S. current-account deficit increased to $128.2 billion (preliminary) in the fourth quarter of 2017 from $101.5 billion (revised) in the third quarter, according to statistics released by the Bureau of Economic Analysis (BEA). The deficit was 2.6 percent of current-dollar gross domestic product (GDP) in the fourth quarter, up from 2.1 percent in the third quarter.

The $26.7 billion increase in the current-account deficit mostly reflected increases in the deficits on goods and secondary income and a decrease in the surplus on primary income.

Current-Account Balance, Year 2017
The current-account deficit increased to $466.2 billion (preliminary) in 2017 from $451.7 billion in 2016. The deficit was 2.4 percent of current-dollar GDP in 2017, the same percentage as in 2016.

The $14.6 billion increase in the deficit reflected a $58.7 billion increase in the deficit on goods and a $4.9 billion decrease in the surplus on services that were partly offset by a $43.8 billion increase in the surplus on primary income and a $5.3 billion decrease in the deficit on secondary income.


Purchase Apps up, Refi's down in Latest MBA Weekly Survey
Posted: March 21, 2018 at 07:00 AM (Wednesday)

Mortgage applications decreased 1.1 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending March 16, 2018.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The Refinance Index decreased 5 percent from the previous week. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 6 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to its lowest level since September 2008, 38.5 percent of total applications, from 40.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.0 percent of total applications.

The FHA share of total applications decreased to 10.3 percent from 10.4 percent the week prior. The VA share of total applications increased to 10.7 percent from 10.3 percent the week prior. The USDA share of total applications decreased to 0.8 percent from 0.9 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.68 percent from 4.69 percent, with points increasing to 0.46 from 0.45 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate remained unchanged from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) remained unchanged at 4.55 percent, with points increasing to 0.37 from 0.33 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.69 percent from 4.73 percent, with points increasing to 0.81 from 0.76 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to its highest level since April 2011, 4.12 percent, from 4.07 percent, with points increasing to 0.51 from 0.46 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.83 percent from 3.93 percent, with points increasing to 0.68 from 0.45 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


Philadelphia NonManufacturing Activity Suggest Continued Growth in March
Posted: March 20, 2018 at 08:30 AM (Tuesday)

Responses to the March Nonmanufacturing Business Outlook Survey suggested that business activity in the region continued to grow. The indicators for firm-level general activity and sales/revenues remained positive but fell slightly from last month’s readings, while the indicator for new orders rose to a high level. In addition, the indicator for full-time employment improved for the second consecutive month, and the indexes for both prices paid and prices received increased. The survey’s indexes for future activity suggest that firms expect growth to continue over the next six months.

Current Activity Continued to Grow
The survey’s current indicators suggested continued growth in regional nonmanufacturing activity. While the diffusion index for general activity at the firm level fell 4 points to 27.6, it remains close to its historical average of 28.1 (see Chart 1). In March, 41 percent of the firms reported higher activity, compared with 14 percent that reported lower activity. The sales/revenues index fell 5 points to 24.0. Nearly 42 percent of the firms reported higher sales in March, compared with 18 percent that reported lower sales. In contrast to the downward movement in the sales/revenues index, the index for new orders jumped 15 points to 31.9, which is its highest reading since February 2015. More than 35 percent of the firms reported an increase in new orders, while only 3 percent reported a decline. The index for general activity in the region was also positive but edged down 1 point to 30.1.

Improvement in Employment Indicators
The survey’s labor market indicators improved in March. The full-time employment index rose 5 points to 22.6 this month, building on an 18 point rise in February. The share of firms reporting increases in full-time employment (28 percent) exceeded the share reporting decreases (6 percent). The part-time employment index rose 8 points to 19.5, while the workweek index rose 17 points to 29.9. The wage and benefit cost index also increased, from 34.1 in February to 40.9 in March.

Firms Report Price Increases
The respondents continued to report overall increases in prices for inputs and for their own goods and services. The prices paid index increased from 23.7 in February to 36.7 in March, its highest reading since September 2013 (see Chart 2). Nearly 37 percent of the firms reported paying higher prices, while none reported paying lower prices. The index for prices received also rose, from 12.5 in February to 18.9 in March. This index has been above its historical average of 11.7 for three consecutive months. More than 21 percent of the firms reported higher prices for their own goods and services, compared with only 2 percent that reported lower prices.

Capital Expenditures Increase
The indexes for capital spending showed further improvement in March. The index for equipment and software spending rose 10 points to 35.1, exceeding its historical average of 22.7 for the third consecutive month. More than 38 percent of the firms reported an increase in equipment and software spending, while only 3 percent reported a decline. The index for plant spending edged up, rising from 19.8 in February to 21.6 in March.

Expectations Are Positive
The respondents to this month’s survey remained optimistic about activity over the next six months. Nonetheless, the diffusion index for future activity at the firm level fell 4 points to 54.1 (see Chart 1). More than 58 percent of the firms anticipated higher activity over the next six months, compared with only 4 percent that anticipated a decline. The future regional activity index edged down 1 point to 49.7. Both future indexes are above their historical averages (49.5 for the firm-level index and 43.7 for the regional index).

Summary
The results from this month’s Nonmanufacturing Business Outlook Survey suggest continued improvement in regional nonmanufacturing activity. The indicators for firm-level general activity and sales fell but remained positive. The indicator for new orders rose sharply, and the firms reported increases in full-time employment. The survey’s respondents remain optimistic about growth over the next six months.


Job Openings increased to 6.3 million in January
Posted: March 16, 2018 at 10:00 AM (Friday)

The number of job openings increased to 6.3 million on the last business day of January, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were little changed at 5.6 million and 5.4 million, respectively. Within separations, the quits rate and the layoffs and discharges rate were little changed at 2.2 percent and 1.2 percent, respectively. This release includes estimates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and by four geographic regions. The release also includes 2017 annual estimates for hires and separations. The annual number of hires at 65.3 million and the annual number of quits at 38.2 million increased in 2017. The annual number of layoffs and discharges at 20.7 million edged up in 2017.

Job Openings
On the last business day of January, the job openings level increased to a series high of 6.3 million (+645,000). The job openings level increased for total private (+608,000) and edged up for government. The job openings rate increased to 4.1 percent in January. The number of job openings increased in professional and business services (+215,000), transportation, warehousing, and utilities (+113,000), construction (+101,000), and several other industries. The number of job openings increased in the South, Midwest, and West regions.

Hires
The number of hires was little changed at 5.6 million in January. The hires rate was little changed at 3.8 percent. The number of hires was little changed for total private and for government. Hires increased in federal government (+10,000). The number of hires was little changed in all four regions.

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

There were 5.4 million total separations in January, little changed from December. The total separations rate in January was little changed at 3.7 percent. The number of total separations was little changed for total private and edged down for government. Total separations increased in health care and social assistance (+52,000) but decreased in federal government (-6,000). The number of total separations was little changed in all four regions.

The number of quits was little changed at 3.3 million in January. The quits rate was little changed at 2.2 percent. Over the month, the number of quits was little changed for total private and for government. Quits increased in arts, entertainment, and recreation (+13,000) but decreased in professional and business services (-71,000). The number of quits decreased in the West region.

There were 1.8 million layoffs and discharges in January, little changed from December. The layoffs and discharges rate was little changed at 1.2 percent in January. The number of layoffs and discharges was little changed for total private and for government. The layoffs and discharges level increased in health care and social assistance (+52,000). Layoffs and discharges were little changed in all four regions.

In January, the number of other separations increased for total nonfarm (+57,000) and for total private (+56,000). The number of other separations was little changed for government. Other separations increased in retail trade (+26,000) but decreased in federal government (-4,000). Other separations increased in the West region.

Net Change in Employment
Large numbers of hires and separations occur every month throughout the business cycle. Net employment change results from the relationship between hires and separations. When the number of hires exceeds the number of separations, employment rises, even if the hires level is steady or declining. Conversely, when the number of hires is less than the number of separations, employment declines, even if the hires level is steady or rising. Over the 12 months ending in January, hires totaled 65.4 million and separations totaled 63.2 million, yielding a net employment gain of 2.1 million. These totals include workers who may have been hired and separated more than once during the year.

Annual Levels and Rates
Calculating annual levels and rates allows additional comparisons across years. Annual levels for hires, quits, layoffs and discharges, other separations, and total separations are the sum of the 12 published monthly levels. Annual rates are computed by dividing the annual level by the Current Employment Statistics (CES) annual average employment level, and multiplying that quotient by 100. Consistent with BLS practice, annual estimates are published only for not seasonally adjusted data and are released with the January news release each year. Note that annual estimates are not calculated for job openings because job openings are a stock, or point-in-time, measurement for the last business day of each month.

In 2017, there were 65.3 million hires, an increase from 2016. Total separations (the sum of quits, layoffs and discharges, and other separations) rose in 2017 to 63.0 million. Quits rose for the eighth consecutive year reaching 38.2 million in 2017 and comprised 61 percent of total separations. Layoffs and discharges edged up in 2017 to 20.7 million and comprised 33 percent of total separations. Other separations declined in 2017 to 4.2 million and comprised 7 percent of total separations.

The annual hires for 2017 was 44.5 percent of the annual average CES employment level. This rate has been trending upwards since 2009. The annual total separations rate for 2017 was 43.0 percent. The annual rates for the components of total separations were 26.0 percent for quits, 14.1 percent for layoffs and discharges, and 2.8 percent for other separations.


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