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U.S. Leading Economic Index increased 0.3% in June
Posted: July 21, 2016 at 10:00 AM (Thursday)

The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.3 percent in June to 123.7 (2010 = 100), following a 0.2 percent decline in May, and a 0.5 percent increase in April.

“The U.S. LEI picked up in June, reversing its May decline,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “Improvements in initial claims for unemployment insurance, building permits, and financial indicators were the primary drivers. While the LEI continues to point to moderating economic growth in the U.S. through the end of 2016, the expansion still appears resilient enough to weather volatility in financial markets and a moderating outlook in labor markets.”

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.3 percent in June to 113.8 (2010 = 100), following no change in May, and a 0.2 percent increase in April.

The Conference Board Lagging Economic Index® (LAG) for the U.S. declined 0.1 percent in June to 121.9 (2010 = 100), following a 0.4 percent increase in May, and a 0.2 percent increase in April.


Existing-Home Sales climbed 1.1% in June
Posted: July 21, 2016 at 10:00 AM (Thursday)

Boosted by a greater share of sales to first-time buyers not seen in nearly four years, existing-home sales maintained their upward trajectory in June and increased for the fourth consecutive month, according to the National Association of Realtors®. Only the Northeast saw a decline in closings in June, and sales to investors fell to their lowest overall share since July 2009.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, climbed 1.1 percent to a seasonally adjusted annual rate of 5.57 million in June from a downwardly revised 5.51 million in May. After last month's gain, sales are now up 3.0 percent from June 2015 (5.41 million) and remain at their highest annual pace since February 2007 (5.79 million).

Lawrence Yun, NAR chief economist, says the impressive four month streak of sales gains through June caps off a solid first half of 2016 for the housing market. "Existing sales rose again last month as more traditional buyers and fewer investors were able to close on a home despite many competitive areas with unrelenting supply and demand imbalances," he said. "Sustained job growth as well as this year's descent in mortgage rates is undoubtedly driving the appetite for home purchases."

Cautions Yun, "Looking ahead, it's unclear if this current sales pace can further accelerate as record high stock prices, near-record low mortgage rates and solid job gains face off against a dearth of homes available for sale and lofty home prices that keep advancing."

The median existing-home price for all housing types in June was $247,700, up 4.8 percent from June 2015 ($236,300). June's price increase marks the 52nd consecutive month of year-over-year gains and surpasses May's peak median sales price of $238,900.

Total housing inventory at the end of June dipped 0.9 percent to 2.12 million existing homes available for sale, and is now 5.8 percent lower than a year ago (2.25 million). Unsold inventory is at a 4.6-month supply at the current sales pace, which is down from 4.7 months in May.

The share of first-time buyers was 33 percent in June, which is up from 30 percent in May and a year ago and is the highest since July 2012 (34 percent). Through the first six months of the year, first-time buyers have represented an average of 31 percent of buyers; they were 30 percent in all of 2015.

"The modest bump in June sales to first-time buyers can be attributed to mortgage rates near all-time lows and perhaps a hopeful indication that more affordable, lower-priced homes are beginning to make their way onto the market," adds Yun. "The odds of closing on a home are definitely higher right now for first-time buyers living in metro areas with tamer price growth and greater entry-level supply — particularly areas in the Midwest and parts of the South."

All-cash sales were 22 percent of transactions in June, unchanged from both May and a year ago. Individual investors, who account for many cash sales, purchased 11 percent of homes in June (lowest since July 2009 at 9 percent), down from 13 percent in May and 12 percent a year ago. Sixty-four percent of investors paid cash in June.

According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage decreased from 3.60 percent in May to 3.57 percent in June. Mortgage rates have now fallen four straight months and in June were the lowest since May 2013 (3.54 percent). The average commitment rate for all of 2015 was 3.85 percent.

NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Florida, says Realtors® are thrilled that the U.S. Senate last week unanimously voted to pass H.R. 3700, the Housing Opportunity Through Modernization Act. "At a time of historically low mortgage rates, this is a huge win for prospective first-time and low- to moderate-income buyers interested in purchasing a condo," he said. "Eliminating overly burdensome restrictions on condos will help more of these prospective buyers access financing and take advantage of this affordable entry point into homeownership."

Properties typically stayed on the market for 34 days in June, an increase from 32 days in May but unchanged from a year ago. Short sales were on the market the longest at a median of 156 days in June, while foreclosures sold in 49 days and non-distressed homes took 30 days. Forty-eight percent of homes sold in June were on the market for less than a month.

Inventory data from Realtor.com® (link is external) reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in June were Wilson, N.C., and Jacksonville, N.C., both at a median of 22 days; San Jose-Sunnyvale-Santa Clara, Calif., 28 days; and San Francisco-Oakland-Hayward, Calif., Seattle-Tacoma-Bellevue, and Denver-Aurora-Lakewood, Colo., at 29 days.

Distressed sales — foreclosures and short sales — were 6 percent of sales in June, unchanged from May and down from 8 percent a year ago. Four percent of June sales were foreclosures (lowest since NAR began tracking in October 2008) and 2 percent were short sales. Foreclosures sold for an average discount of 11 percent below market value in June (12 percent in May), while short sales were discounted 18 percent (11 percent in May).

Single-family and Condo/Co-op Sales
Single-family home sales increased 0.8 percent to a seasonally adjusted annual rate of 4.92 million in June from 4.88 million in May, and are now 3.1 percent higher than the 4.77 million pace a year ago. The median existing single-family home price was $249,800 in June, up 5.0 percent from June 2015.

Existing condominium and co-op sales grew 3.2 percent to a seasonally adjusted annual rate of 650,000 units in June from 630,000 in May, and are now 1.6 percent above June 2015 (640,000 units). The median existing condo price was $231,600 in June, which is 3.2 percent above a year ago.

Regional Breakdown
June existing-home sales in the Northeast declined 1.3 percent to an annual rate of 760,000, but are still 5.6 percent above a year ago. The median price in the Northeast was $284,800, which is 1.4 percent above June 2015.

In the Midwest, existing-home sales jumped 3.8 percent to an annual rate of 1.35 million in June, and are now 4.7 percent above June 2015. The median price in the Midwest was $199,900, up 5.7 percent from a year ago.

Existing-home sales in the South in June remained unchanged from May at an annual rate of 2.26 million, and are 3.2 percent above June 2015. The median price in the South was $217,400, up 5.5 percent from a year ago.

Existing-home sales in the West rose 1.7 percent to an annual rate of 1.20 million in June, but are still 0.8 percent below a year ago. The median price in the West was $350,800, which is 7.2 percent above June 2015.


Weekly Initial Unemployment Claims Decrease 1,000 to 254,000
Posted: July 21, 2016 at 08:30 AM (Thursday)

In the week ending July 16, the advance figure for seasonally adjusted initial claims was 253,000, a decrease of 1,000 from the previous week's unrevised level of 254,000. The 4-week moving average was 257,750, a decrease of 1,250 from the previous week's unrevised average of 259,000. There were no special factors impacting this week's initial claims. This marks 72 consecutive weeks of initial claims below 300,000, the longest streak since 1973.

The advance seasonally adjusted insured unemployment rate was 1.5 percent for the week ending July 9, a decrease of 0.1 percentage point from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending July 9 was 2,128,000, a decrease of 25,000 from the previous week's revised level. The previous week's level was revised up 4,000 from 2,149,000 to 2,153,000. The 4-week moving average was 2,141,250, a decrease of 2,750 from the previous week's revised average. The previous week's average was revised up by 1,000 from 2,143,000 to 2,144,000.


Philadelphia Fed Outlook Reported Indicators fell slightly in July
Posted: July 21, 2016 at 08:30 AM (Thursday)

Manufacturing activity in the region fell slightly in July, according to firms responding to this month’s Manufacturing Business Outlook Survey. Although the indicator for current general activity turned negative, indicators for new orders and shipments were positive. Employment was flat at the reporting firms this month. Firms reported higher prices paid for materials and other inputs in July, but prices received for manufactured goods were relatively steady. The survey’s index of future activity improved slightly, and firms expect growth in new orders and shipments over the next six months.

Indicators for Current Growth Were Mixed
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, fell from 4.7 in June to -2.9 this month. For nine of the past 11 months, this diffusion index has been negative (see Chart 1). Twenty-two percent of the firms reported an increase in activity, 3 points lower than last month, and the percent of firms that reported decreases rose from 20 to 25. Fifty-one percent of the firms reported steady activity this month, similar to the share that reported steady activity last month.

Demand for manufactured goods, as measured by the survey’s current new orders index, expanded in July. The new orders index rose from -3.0 in June to 11.8 this month, and the current shipments index increased as well, from -2.1 to 6.3. The share of firms reporting an increase in new orders was 28 percent, up 7 points from last month, and 53 percent reported no change in new orders. The share of firms reporting an increase in shipments was 29 percent, up 3 points from last month, and 48 percent reported no change in shipments. Both unfilled orders and the delivery times were relatively flat this month.

Firms’ responses suggest steady employment in July. The share of firms reporting no change in employees in July was 77 percent, up from 72 percent in June, and the current employment index rose from a reading of -10.9 last month to -1.6 this month. While firms reported a slight decline in the workweek in July, the -3.6 reading for this indicator is an improvement over June’s reading of -13.1.

Firms Reported Steady Prices for Their Own Goods
Seventy-two percent of the firms reported no change in input prices this month, up from the 68 percent that reported no change last month. The prices paid index fell 13 points and is now at 9.9. With respect to prices received for their own manufactured goods, 76 percent of the firms reported no change, almost unchanged from June, and the prices received index fell from 3.9 to 0.3.

Future Indexes Signal Optimism
The survey’s broad indicator of future growth moved slightly higher this month: The diffusion index for future general activity increased 4 points to 33.7, which is close to its average of 35.9 during the past five years (see Chart 1). Forty-six percent of the firms expect an increase in activity over the next six months, almost unchanged from last month, but the percentage of firms that expect a decrease in activity fell from 16 percent to 12 percent.

The future index for new orders held steady at 29.2, and the future shipments index fell 5 points, to 27.2. While both of these specific company-level diffusion indexes are below their five-year averages of 38.5 and 37.1, respectively, they show that firms are optimistic about prospects for growth. The future employment index rose slightly, to 12.8, in July. Twenty-four percent of the firms expect to expand their workforce over the next six months.

Special Questions About Seasonal Factors
In this month’s special questions, firms were asked to assess the importance of seasonal factors in production, seasonal changes in their production by month, and whether these seasonal factors have changed in importance over time. Most firms (62 percent) reported that seasonal factors were not significant. Of the firms that reported significant seasonal patterns, the most common pattern was increased production during the spring and fall and decreased activity in midsummer and during the winter months. This year, 57 percent of the firms with seasonal patterns reported that seasonal effects have not changed; 30 percent saw seasonal patterns as less important.

Summary
This month’s Manufacturing Business Outlook Survey gave mixed signals for current activity in the region’s manufacturing sector. The indicator for general activity was negative, but the indicators for new orders and shipments were positive. Employment and output prices were reported as steady. Firms' expectations for the next six months showed an improvement in the outlook for general activity.


Chicago Fed National Activity picked up in June
Posted: July 21, 2016 at 08:30 AM (Thursday)

The index’s three-month moving average, CFNAI-MA3, increased to –0.12 in June from –0.39 in May. June’s CFNAI-MA3 suggests that growth in national economic activity was slightly below its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.

The CFNAI Diffusion Index, which is also a three-month moving average, moved up to –0.16 in June from –0.38 in May. Forty of the 85 individual indicators made positive contributions to the CFNAI in June, while 45 made negative contributions. Fifty-eight indicators improved from May to June, while 27 indicators deteriorated. Of the indicators that improved, 19 made negative contributions.

The contribution from production-related indicators to the CFNAI rose to +0.18 in June from –0.29 in May. Total industrial production rose by 0.6 percent in June after falling by 0.3 percent in May, and manufacturing production increased by 0.4 percent in June after a 0.3 percent reduction in the previous month. The sales, orders, and inventories category made a neutral contribution to the CFNAI in June, up slightly from –0.04 in May.

Employment-related indicators contributed +0.06 to the CFNAI in June, up from –0.14 in May. Nonfarm payrolls rose by 287,000 in June after increasing by only 11,000 in the previous month. However, the civilian unemployment rate rose to 4.9 percent in June from 4.7 percent in May.

The contribution of the personal consumption and housing category to the CFNAI was steady at –0.08 in June. Housing permits increased slightly to 1,153,000 annualized units in June from 1,136,000 in May; and housing starts moved up a little to 1,189,000 annualized units in June from 1,135,000 in the previous month.

The CFNAI was constructed using data available as of July 19, 2016. At that time, June data for 50 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index. The May monthly index value was revised to –0.56 from an initial estimate of –0.51, and the April monthly index value was revised to +0.04 from last month’s estimate of +0.05. Revisions to the monthly index value can be attributed to two main factors: revisions in previously published data and differences between the estimates of previously unavailable data and subsequently published data. The revision to the May monthly index value was due primarily to the latter, while the revision to the April monthly index value was due primarily to the former.


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: July 20, 2016 at 07:00 AM (Wednesday)

Mortgage applications decreased 1.3 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending July 15, 2016. The prior week's results included an adjustment for the July 4th holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 24 percent compared with the previous week. The Refinance Index decreased 1 percent from the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index increased 23 percent compared with the previous week and was 16 percent higher than the same week one year ago.

The refinance share of mortgage activity increased to 64.2 percent of total applications from 64.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.1 percent of total applications.

The FHA share of total applications decreased to 9.9 percent from 10.0 percent the week prior. The VA share of total applications decreased to 11.2 percent from 12.1 percent the week prior. The USDA share of total applications decreased to 0.5 percent from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 3.65 percent from 3.60 percent, with points unchanged at 0.36 (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 $417,000) increased to 3.66 percent from 3.61 percent, with points unchanged at 0.32 (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 remained unchanged at 3.53 percent, with points decreasing to 0.30 from 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 2.90 percent from 2.88 percent, with points decreasing to 0.31 from 0.34 (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 2.86 percent from 2.78 percent, with points increasing to 0.29 from 0.25 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


June Housing Starts up 4.8%, Permits up 1.5%
Posted: July 19, 2016 at 08:30 AM (Tuesday)

BUILDING PERMITS
Privately-owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 1,153,000. This is 1.5 percent (±1.3%) above the revised May rate of 1,136,000, but is 13.6 percent (±0.6%) below the June 2015 estimate of 1,334,000. Single-family authorizations in June were at a rate of 738,000; this is 1.0 percent (±1.5%) above the revised May figure of 731,000. Authorizations of units in buildings with five units or more were at a rate of 384,000 in June.

HOUSING STARTS
Privately-owned housing starts in June were at a seasonally adjusted annual rate of 1,189,000. This is 4.8 percent (±13.5%) above the revised May estimate of 1,135,000, but is 2.0 percent (±12.9%) below the June 2015 rate of 1,213,000. Single-family housing starts in June were at a rate of 778,000; this is 4.4 percent (±15.8%) above the revised May figure of 745,000. The June rate for units in buildings with five units or more was 392,000.

HOUSING COMPLETIONS
Privately-owned housing completions in June were at a seasonally adjusted annual rate of 1,147,000. This is 12.3 percent (±10.7%) above the revised May estimate of 1,021,000 and is 18.7 percent (±14.9%) above the June 2015 rate of 966,000. Single-family housing completions in June were at a rate of 752,000; this is 3.7 percent (±10.2%) above the revised May rate of 725,000. The June rate for units in buildings with five units or more was 386,000.


Treasury International Capital Data for May 2016
Posted: July 18, 2016 at 04:00 PM (Monday)

The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for May 2016. The sum total in May of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC outflow of $11.0 billion. Of this, net foreign private inflows were $14.9 billion, and net foreign official outflows were $26.0 billion.

Foreign residents increased their holdings of long-term U.S. securities in May; net purchases were $11.5 billion. Net purchases by private foreign investors were $32.4 billion, while net sales by foreign official institutions were $20.9 billion. U.S. residents decreased their holdings of long-term foreign securities, with net sales of $29.6 billion.

Taking into account transactions in both foreign and U.S. securities, net foreign purchases of long-term securities were $41.1 billion. After including adjustments, such as estimates of unrecorded principal payments to foreigners on U.S. asset-backed securities, overall net foreign sales of long-term securities are estimated to have been $25.8 billion in May.

Foreign residents decreased their holdings of U.S. Treasury bills by $9.1 billion. Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities decreased by $11.5 billion. Banks' own net dollar-denominated liabilities to foreign residents decreased by $25.4 billion.


Builder Confidence fell one point to 59 in July
Posted: July 18, 2016 at 10:00 AM (Monday)

Builder confidence in the market for newly built, single-family homes in July fell one point to 59 from a June reading of 60 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today.

“For the past six months, builder confidence has remained in a relatively narrow positive range that is consistent with the ongoing gradual housing recovery that is underway,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill. “However, we are still hearing reports from our members of scattered softness in some markets, due largely to regulatory constraints and shortages of lots and labor.”

“The economic fundamentals are in place for continued slow, steady growth in the housing market,” said NAHB Chief Economist Robert Dietz. “Job creation is solid, mortgage rates are at historic lows and household formations are rising. These factors should help to bring more buyers into the market as the year progresses.”

All three HMI components edged lower in July. The components measuring current sales expectations and buyer traffic each fell one point to 63 and 45, respectively. The index measuring sales expectations in the next six months posted a three-point decline to 66.

The three-month moving averages for regional HMI scores held remarkably steady. The Northeast, Midwest and South were unchanged at 39, 57 and 61, respectively. The West edged one point higher to 69.


Business Inventories up 0.2% in May
Posted: July 15, 2016 at 10:00 AM (Friday)

The U.S. Census Bureau announced today that the combined value of distributive trade sales and manufacturers’ shipments for May, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,291.8 billion, up 0.2 percent (±0.2%)* from April 2016, but was down 1.4 percent (±0.4%) from May 2015.

Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,810.0 billion, up 0.2 percent (±0.1%) from April 2016 and were up 1.0 percent (±0.5%) from May 2015.

The total business inventories/sales ratio based on seasonally adjusted data at the end of May was 1.40. The May 2015 ratio was 1.37.


Industrial Production increased 0.6%
Capacity Utilization increased to 75.4%

Posted: July 15, 2016 at 09:15 AM (Friday)

Industrial production increased 0.6 percent in June after declining 0.3 percent in May. For the second quarter as a whole, industrial production fell at an annual rate of 1.0 percent, its third consecutive quarterly decline. Manufacturing output moved up 0.4 percent in June, a gain largely due to an increase in motor vehicle assemblies. The output of manufactured goods other than motor vehicles and parts was unchanged. The index for utilities rose 2.4 percent as a result of warmer weather than is typical for June boosting demand for air conditioning. The output of mining moved up 0.2 percent for its second consecutive small monthly increase following eight straight months of decline. At 104.1 percent of its 2012 average, total industrial production in June was 0.7 percent lower than its year-earlier level. Capacity utilization for the industrial sector increased 0.5 percentage point in June to 75.4 percent, a rate that is 4.6 percentage points below its long-run (1972–2015) average.


Consumer Price Index increased 0.2% in June, Ex Fd & Engy up 0.2%
Posted: July 15, 2016 at 08:30 AM (Friday)

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in June on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 1.0 percent before seasonal adjustment.

For the second consecutive month, increases in the indexes for energy and all items less food and energy more than offset a decline in the food index to result in the seasonally adjusted all items increase. The food index fell 0.1 percent, with the food at home index declining 0.3 percent. The energy index rose 1.3 percent, due mainly to a 3.3-percent increase in the gasoline index; the indexes for natural gas and electricity declined.

The index for all items less food and energy increased 0.2 percent in June. The shelter index rose 0.3 percent, and a broad array of indexes also increased, including medical care, education, airline fares, motor vehicle insurance, and recreation. In contrast, the indexes for used cars and trucks, apparel, communication, and household furnishings and operations all declined in June.

The all items index rose 1.0 percent for the 12 months ending June. This is the same increase as for the 12 months ending May, but smaller than the 1.7 percent average annual increase over the past 10 years. The index for all items less food and energy rose 2.3 percent for the 12 months ending June, a larger increase than the 2.2 percent rise for the 12 months ending May, and above the average annual rate of 1.9 percent over the past 10 years.


Real Average Hourly Earnings decreased 0.2% in June
Posted: July 15, 2016 at 08:30 AM (Friday)

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

Real average weekly earnings decreased 0.1 percent over the month due to the decrease in real average hourly earnings and no change in the average workweek.

Real average hourly earnings increased 1.5 percent, seasonally adjusted, from June 2015 to June 2016. This increase in real average hourly earnings combined with a 0.3-percent decrease in the average workweek resulted in a 1.2-percent increase in real average weekly earnings over this period.


U.S. Retail Sales for June Increase 0.6%, Ex-Auto up 0.7%
Posted: July 15, 2016 at 08:30 AM (Friday)

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for June, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $457.0 billion, an increase of 0.6 percent (±0.5%) from the previous month, and 2.7 percent (±0.7%) above June 2015. Total sales for the April 2016 through June 2016 period were up 2.6 percent (±0.5%) from the same period a year ago. The April 2016 to May 2016 percent change was revised from up 0.5 percent (±0.5%)* to up 0.2 percent (±0.1%).

Retail trade sales were up 0.7 percent (±0.5%) from May 2016, and up 2.4 percent (±0.5%) from last year. Nonstore retailers were up 14.2 percent (±1.2%) from June 2015, while Health and Personal Care Stores were up 8.4 percent (±2.1%) from last year.


Empire State Manufacturing Survey Conditions Flattened in July
Posted: July 15, 2016 at 08:30 AM (Friday)

The July 2016 Empire State Manufacturing Survey indicates that business activity flattened out for New York manufacturers. The headline general business conditions index fell five points to 0.6. The new orders index and the shipments index both fell to levels not far from zero—a sign that orders and shipments were little changed. Labor market indicators pointed to a small decline in employment levels and hours worked. The prices paid index held steady at 18.7, suggesting that moderate input price increases were continuing, and the prices received index held near zero, indicating that selling prices remained steady. Firms were less optimistic about future conditions compared to last month.

Business Activity Levels Off
Business activity was flat for New York manufacturing firms over the last month. The general business conditions index has been in a seesaw pattern around zero for the past several months. After rising above zero last month, the index fell back five points to 0.6. Thirty-one percent of respondents reported that conditions had improved over the month, while 30 percent reported that conditions had worsened. The new orders index fell thirteen points to -1.8, suggesting that orders were little changed. Similarly, the shipments index fell nine points to 0.7, indicating that shipments were relatively unchanged. The unfilled orders index edged down to -12.1, and the delivery time index moved up to 3.3. The inventories index remained negative at -8.8, indicating that firms continued to draw down inventories in July.

Employment Levels Recede
Labor market conditions worsened. The employment index dropped four points to -4.4, pointing to a small decline in employment levels, and at -5.5, the average workweek index showed that hours worked moved lower. The prices paid index was little changed at 18.7, an indication that input prices continued to increase at a moderate pace. The prices received index edged up to 1.1, suggesting that selling prices held steady.

Outlook Remains Positive, though Less So Than Last Month
Indexes for the six-month outlook suggested that respondents remained optimistic about future conditions, though to a lesser extent than in June. The index for future business conditions fell six points to 29.2, and indexes for future new orders and shipments were at similar levels. The index for future employment was near zero, suggesting that firms do not expect any change in employment levels in the months ahead—even so, the index for the expected average workweek fell into negative territory. The capital expenditures index was unchanged at 11.0, and the technology spending index jumped ten points to 14.3.


Producer Price Index rose 0.5% in June, ex Fd & Engy up 0.3%
Posted: July 14, 2016 at 08:30 AM (Thursday)

The Producer Price Index for final demand increased 0.5 percent in June, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.4 percent in May and 0.2 percent in April. On an unadjusted basis, the final demand index advanced 0.3 percent for the 12 months ended in June, the largest 12-month increase since moving up 0.9 percent in December 2014.

In June, the advance in the final demand index was led by prices for final demand services, which rose 0.4 percent. The index for final demand goods advanced 0.8 percent.

Prices for final demand less foods, energy, and trade services rose 0.3 percent in June after declining 0.1 percent in May. For the 12 months ended in June, the index for final demand less foods, energy, and trade services increased 0.9 percent.


Weekly Initial Unemployment Claims Unchanged at 254,000
Posted: July 14, 2016 at 08:30 AM (Thursday)

In the week ending July 9, the advance figure for seasonally adjusted initial claims was 254,000, unchanged from the previous week's unrevised level of 254,000. The 4-week moving average was 259,000, a decrease of 5,750 from the previous week's unrevised average of 264,750. There were no special factors impacting this week's initial claims. This marks 71 consecutive weeks of initial claims below 300,000, the longest streak since 1973.

The advance seasonally adjusted insured unemployment rate was 1.6 percent for the week ending July 2, an increase of 0.1 percentage point from the previous week's revised rate. The previous week's rate was revised down by 0.1 from 1.6 to 1.5 percent. The advance number for seasonally adjusted insured unemployment during the week ending July 2 was 2,149,000, an increase of 32,000 from the previous week's revised level. The previous week's level was revised down by 7,000 from 2,124,000 to 2,117,000. The 4-week moving average was 2,143,000, a decrease of 3,250 from the previous week's revised average. The previous week's average was revised down by 2,000 from 2,148,250 to 2,146,250.


Beige Book: Economic Activity shows continued modest economic growth
Posted: July 13, 2016 at 02:00 PM (Wednesday)

Reports from the twelve Federal Reserve Districts indicate that economic activity continued to expand at a modest pace across most regions from mid-May through the end of June. Business contacts in Cleveland reported a steady level of activity, while Minneapolis reported that activity increased at a moderate pace. Labor market conditions remained stable as employment continued to grow modestly since the previous report and wage pressures remained modest to moderate. Price pressures remained slight. Consumer spending was generally positive but with some signs of softening. Manufacturing activity was mixed but generally improved across Districts. Real estate activity continued to strengthen, and banks reported overall increases in loan demand. Agricultural activity was mixed but generally improving. The natural resources and energy sector has remained weak. The outlook was generally positive across broad segments of the economy including retail sales, manufacturing, and real estate. Districts reporting on overall growth expect it to remain modest.


U.S. Import Price Index rose 0.2% in June
Posted: July 13, 2016 at 08:30 AM (Wednesday)

U.S. import prices rose 0.2 percent in June, after rising 1.4 percent in May, the U.S. Bureau of Labor Statistics reported today. The June advance was driven by higher fuel prices which more than offset a decline in nonfuel prices. Prices for U.S. exports also increased in June, rising 0.8 percent following advances of 1.2 percent in May and 0.4 percent in April.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: July 13, 2016 at 07:00 AM (Wednesday)

Mortgage applications increased 7.2 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending July 8, 2016. This week's results included an adjustment for the Fourth of July holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 7.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 14 percent compared with the previous week. The Refinance Index increased 11 percent from the previous week. The seasonally adjusted Purchase Index was unchanged from one week earlier. The unadjusted Purchase Index decreased 20 percent compared with the previous week and was 5 percent lower than the same week one year ago. Last year, the Fourth of July fell on the prior week.

The refinance share of mortgage activity increased to 64.0 percent of total applications from 61.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.2 percent of total applications.

The FHA share of total applications increased to 10.0 percent from 9.5 percent the week prior. The VA share of total applications decreased to 12.1 percent from 12.8 percent the week prior. The USDA share of total applications remained unchanged at 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to its lowest level since May 2013, 3.60 percent, from 3.66 percent, with points increasing to 0.36 from 0.32 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 3.61 percent from 3.67 percent, with points increasing to 0.32 from 0.24 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.53 percent from 3.56 percent, with points increasing to 0.32 from 0.31 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.88 percent from 2.96 percent, with points increasing to 0.34 from 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 2.78 percent from 2.85 percent, with points decreasing to 0.25 from 0.26 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


Job Openings decreased to 5.5 million in May
Posted: July 12, 2016 at 10:00 AM (Tuesday)

The number of job openings decreased to 5.5 million on the last business day of May, the U.S. Bureau of Labor Statistics reported today. Hires and separations were both little changed at 5.0 million. Within separations, the quits rate was 2.0 percent and the layoffs and discharges rate was 1.2 percent. This release includes estimates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and by four geographic regions.

Job Openings decreased in May by 345,000 to 5.5 million. The prior 3-month average change in job openings was +80,000. The job openings rate in May 2016 was 3.7 percent. The number of job openings decreased for total private and was little changed for government. Job openings decreased in a number of industries, with the largest changes occurring in wholesale trade (-104,000), other services (-98,000), and real estate and rental and leasing (-53,000). In the regions, job openings decreased in the South and the Midwest.


Wholesale Inventories up 0.1% in May
Posted: July 12, 2016 at 10:00 AM (Tuesday)

The U.S. Census Bureau announced today that May 2016 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $435.5 billion, up 0.5 percent (+/-0.5%) from the revised April level, but were down 2.5 percent (+/-1.1%) from the May 2015 level. The April preliminary estimate was revised downward $1.0 billion or 0.2 percent. May sales of durable goods were up 0.6 percent (+/-0.7%) from last month, but were down 0.6 percent (+/-1.6%) from a year ago. Sales of computer and computer peripheral equipment and software were up 3.8 percent from last month and sales of electrical and electronic goods were up 2.4 percent. Sales of nondurable goods were up 0.5 percent (+/-0.5%) from April, but were down 4.1 percent (+/-1.8%) from last May. Sales of petroleum and petroleum products were up 5.6 percent from last month.

Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $589.2 billion at the end of May, up 0.1 percent (+/-0.2%) from the revised April level and were up 0.5 percent (+/-1.2%) from the May 2015 level. The April preliminary estimate was revised upward $0.5 billion or 0.1 percent. May inventories of durable goods were up 0.1 percent (+/-0.4%) from last month, but were down 2.3 percent (+/-1.2%) from a year ago. Inventories of computer and computer peripheral equipment and software were up 1.9 percent from last month, while inventories of motor vehicle and motor vehicle parts and supplies were down 1.9 percent. Inventories of nondurable goods were up 0.2 percent (+/-0.2%) from April and were up 5.1 percent (+/-1.6%) from last May. Inventories of farm product raw materials were up 5.9 percent from last month, while inventories of drugs and druggists' sundries were down 3.6 percent.

The May inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.35. The May 2015 ratio was 1.31.


NFIB Small Business Optimism Index increased 0.7 points in June to 94.5
Posted: July 12, 2016 at 07:00 AM (Tuesday)

The Index of Small Business Optimism increased 0.7 points to 94.5, still well below the 40 year average of 98, but the third monthly gain in a row, although the gains are very small. Four of the 10 Index components posted a gain, three declined and three were unchanged. The outlook for business conditions six months out continued to improve, although more owners still expect conditions to be worse than expect improvement. First quarter GDP growth was revised up again, to a sluggish 1.1 percent. Second quarter growth will likely be better, in the low 2 percent range. Small business owners appear to be on the same track they have followed for the past few years – maintenance mode, but not much growth. This will keep the economy moving forward, but not at an impressive pace.

Federal Reserve officials had the market all set for a June or July rate hike, then came the employment numbers, stunningly low, and then the BREXIT vote. Now, many observers expect no hike for the rest of this year, maybe even in 2017. One data point and a UK vote, and the entire projected policy path is changed. Not to mention that the data are subject to substantial revisions so who knows where they will land. For example, Q1 GDP growth estimates started at 0.4 percent and ended up at 1.1 percent, almost 3 times larger. Financial markets plunged for two days and then made it up the next two, no surprise with 50 percent on each side of the BREXIT bet. So the policy path remains “data dependent” as if these monthly data points are good guides to longer term growth prospects. For fiscal policy, the expectation remains the same – no new developments, $600 billion will be added to the deficit. State and local government spending will pick up modestly, not much to hang your hat on unfortunately.

Consumer sentiment went down (University of Michigan) or up (Conference Board) depending on the source but the most recent retail sales figures were promising. Consumer spending is critically important to small businesses. Ford doesn’t sell cars, small business owners do. The savings rate in Q2 was half a point lower than in Q1, if that went to spending, it will support GDP growth. The New York Fed’s advance estimates put Q2 growth at 2.1 percent and 2.2 percent for Q3. The Atlanta Fed is at 2.6 percent for Q2. That a big difference in terms of job growth.

The NFIB data indicate no surge in growth coming from the small business sector to support Q3 growth. Capital spending plans are very low in the West South Central states, 18 percent vs 26 percent nationally. Reports of capital spending in the past six months were also conspicuously low, 43 percent vs 57 percent nationally, and this will weigh on growth numbers. Hiring plans were weak as well, a net 11 percent planning to create jobs compared to 18 percent nationally. Faced with the Federal Reserve’s “back-peddling” and BREXIT to add to uncertainty, the prospects for economic growth beyond recent experience are cloudy at best.


Employment Trends Index increased in June to 128.13
Posted: July 11, 2016 at 10:00 AM (Monday)

The Conference Board Employment Trends Index™ (ETI) increased in June, after declining in May. The index now stands at 128.13, up from 126.42 (a downward revision) in May. The change represents a 1.8 percent gain in the ETI compared to a year ago.

“The Employment Trends Index has been moving sideways in the first half of 2016, suggesting only moderate job growth in the coming months,” said Gad Levanon, Chief Economist, North America, at The Conference Board. “In such an uncertain political and economic environment, U.S. businesses, which in total have been experiencing shrinking profits for over a year, are unlikely to rapidly expand their payrolls.”

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


Consumer Credit Increased at an annual rate of 6.25%
Posted: July 8, 2016 at 03:00 PM (Friday)

In May, consumer credit increased at a seasonally adjusted annual rate of 6-1/4 percent. Revolving credit increased at an annual rate of 3 percent, while nonrevolving credit increased at an annual rate of 7-1/4 percent.


June Employment increased by 287,000
Unemployment Rate rose to 4.9%

Posted: July 8, 2016 at 08:30 AM (Friday)

Total nonfarm payroll employment increased by 287,000 in June, and the unemployment rate rose to 4.9 percent, the U.S. Bureau of Labor Statistics reported today. Job growth occurred in leisure and hospitality, health care and social assistance, and financial activities. Employment also increased in information, mostly reflecting the return of workers from a strike.

The unemployment rate increased by 0.2 percentage point to 4.9 percent in June, and the number of unemployed persons increased by 347,000 to 7.8 million. These increases largely offset declines in May and brought both measures back in line with levels that had prevailed from August 2015 to April.

Among the major worker groups, the unemployment rates for adult women (4.5 percent) and Whites (4.4 percent) rose in June. The rates for adult men (4.5 percent), teenagers (16.0 percent), Blacks (8.6 percent), Asians (3.5 percent), and Hispanics (5.8 percent) showed little or no change.

The number of persons unemployed less than 5 weeks increased by 211,000 in June, following a decrease in the prior month. At 2.0 million, the number of long-term unemployed (those jobless for 27 weeks or more) changed little in June and accounted for 25.8 percent of the unemployed.

In June, the number of job losers and persons who completed temporary jobs rose by 203,000 to 3.8 million, after a decline in May.

Both the labor force participation rate, at 62.7 percent, and the employment-population ratio, at 59.6 percent, changed little in June.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) decreased by 587,000 to 5.8 million in June, offsetting an increase in May. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job.

In June, 1.8 million persons were marginally attached to the labor force, about unchanged from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 502,000 discouraged workers in June, down by 151,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.3 million persons marginally attached to the labor force in June had not searched for work for reasons such as school attendance or family responsibilities.

Total nonfarm payroll employment increased by 287,000 in June, after changing little in May (+11,000). In June, job growth occurred in leisure and hospitality, health care and social assistance, and financial activities. Employment also rose in information, largely reflecting the return of workers from a strike.

Leisure and hospitality added 59,000 jobs in June, following little employment change in the prior month. In June, employment increased in performing arts and spectator sports (+14,000), after edging down in May. Employment in food services and drinking places changed little over the month (+22,000). Job gains in leisure and hospitality have averaged 27,000 per month thus far this year, down from an average of 37,000 in 2015, reflecting slower job growth in food services and drinking places.

Health care and social assistance added 58,000 jobs in June. Health care employment increased by 39,000 over the month. Job gains occurred in ambulatory health care services (+19,000) and hospitals (+15,000), about in line with average monthly gains over the prior 12 months in each industry. Within social assistance, child day care services added 15,000 jobs in June.

Employment in financial activities rose by 16,000 in June and has risen by 163,000 over the year.

Employment in information increased by 44,000 in June. Employment rose in telecommunications (+28,000), largely reflecting the return of workers from a strike. Employment increased in motion picture and sound recording industries (+11,000), after a decrease of similar magnitude in May.

Employment in professional and business services continued to trend up in June (+38,000). Thus far this year, the industry has added an average of 30,000 jobs per month, compared with an average monthly gain of 52,000 in 2015.

Employment in retail trade edged up by 30,000 in June, after changing little over the prior 2 months. In June, job gains occurred in general merchandise stores (+9,000) and in health and personal care stores (+5,000). Retail trade has added 313,000 jobs over the year.

Employment in mining continued to trend down in June (-6,000). Since reaching a peak in September 2014, mining has lost 211,000 jobs.

Employment in other major industries, including construction, manufacturing, wholesale trade, transportation and warehousing, and government, showed little or no change in June.

In June, the average workweek for all employees on private nonfarm payrolls was 34.4 hours for the fifth consecutive month. The manufacturing workweek (40.7 hours) and manufacturing overtime (3.3 hours) were also unchanged over the month. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.6 hours.

In June, average hourly earnings for all employees on private nonfarm payrolls edged up (+2 cents) to $25.61, following a 6-cent increase in May. Over the year, average hourly earnings have risen by 2.6 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 4 cents to $21.51 in June.

The change in total nonfarm payroll employment for April was revised from +123,000 to +144,000, and the change for May was revised from +38,000 to +11,000. With these revisions, employment gains in April and May combined were 6,000 less, on net, than previously reported. Over the past 3 months, job gains have averaged 147,000 per month.


Weekly Initial Unemployment Claims Decrease 16,000 to 254,000
Posted: July 7, 2016 at 08:30 AM (Thursday)

In the week ending July 2, the advance figure for seasonally adjusted initial claims was 254,000, a decrease of 16,000 from the previous week's revised level. The previous week's level was revised up by 2,000 from 268,000 to 270,000. The 4-week moving average was 264,750, a decrease of 2,500 from the previous week's revised average. The previous week's average was revised up by 500 from 266,750 to 267,250. There were no special factors impacting this week's initial claims. This marks 70 consecutive weeks of initial claims below 300,000, the longest streak since 1973.

The advance seasonally adjusted insured unemployment rate was 1.6 percent for the week ending June 25, unchanged from the previous week's revised rate. The previous week's rate was revised up by 0.1 from 1.5 to 1.6 percent. The advance number for seasonally adjusted insured unemployment during the week ending June 25 was 2,124,000, a decrease of 44,000 from the previous week's revised level. The previous week's level was revised up 48,000 from 2,120,000 to 2,168,000. The 4-week moving average was 2,148,250, an increase of 3,000 from the previous week's revised average. The previous week's average was revised up by 11,750 from 2,133,500 to 2,145,250.


ADP National Employment Report increased by 172,000 jobs in June
Posted: July 7, 2016 at 08:15 AM (Thursday)

Private sector employment increased by 172,000 jobs from May to June according to the June ADP National Employment Report®.

Payrolls for businesses with 49 or fewer employees increased by 95,000 jobs in June, up from 84,000 in May. Employment at companies with 50-499 employees increased by 52,000 jobs, down from last month’s 60,000. Employment at large companies – those with 500 or more employees – increased by 25,000, up from May’s 23,000. Companies with 500-999 employees added 21,000 and companies with more than 1,000 employees added 4,000 this month.

Goods-producing employment was down by 36,000 jobs in June after an additional loss of 5,000 jobs in May. The construction industry lost 5,000 jobs, offsetting May’s gain of 9,000 jobs. Meanwhile, manufacturing lost 21,000 jobs after losing 3,000 the previous month.

Service-providing employment rose by 208,000 jobs in June, a stronger increase when compared to May’s 173,000 jobs. The ADP National Employment Report indicates that professional/business services contributed 51,000 jobs, up from May’s 47,000. Trade/transportation/utilities grew by 55,000, nearly twice that of the 27,000 jobs added the previous month. Financial activities added 2,000, down from last month’s gain of 13,000 jobs.

“Since the start of 2016, average monthly job creation has slightly dropped,” said Ahu Yildirmaz, vice president and head of the ADP Research Institute. “Lackluster global growth, low commodity prices, and an unfavorable exchange rate continue to weigh on U.S. companies, especially larger companies.”
Mark Zandi, chief economist of Moody’s Analytics, said, “Job growth revived last month from its spring slump. Job growth remains healthy except in the energy and trade-sensitive manufacturing sectors. Large multinationals are struggling a bit, and Brexit won’t help, but small- and mid-sized companies continue to add strongly to payrolls.”


Challenger Layoffs rose to 38,536 in June
Posted: July 7, 2016 at 07:30 AM (Thursday)

Employers announced plans to cut payrolls by 38,536 jobs in June, an increase from May, but still well below the 12-month average and indicative of a positive employment environment, according to the report released Thursday by global outplacement consultancy Challenger, Gray & Christmas, Inc.
The June job-cut total is 28 percent higher than May, when planned layoffs fell to a five-month low of 30,157.

“Job cut announcements were up last month, but they increased from the lowest total of the year to the second lowest of the year. The June total is 26 percent lower than the 53,049 monthly job cuts averaged over the past year,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

June job cuts were down 14 percent from the 44,842 planned job cuts reported by employers in June 2015.

Through the first half of the year, employers announced 313,754 planned job cuts, which is up 9 percent from the 287,672 job cuts announced in the first six months of 2015.

However, pace of job cutting has slowed significantly since the beginning of the year. Job cuts in the second quarter totaled 132,834, down 27 percent from the 180,920 first-quarter cuts and 10 percent lower than the 147,458 job cuts announced in the second quarter of 2015.

“It is not unusual to see a slowdown in job cuts during the summer months. Other factors are definitely contributing to the decline, the biggest one being the precipitous drop off in job cuts attributed to low oil prices,” said Challenger.

In the first quarter, firms in the energy and industrial goods sectors blamed oil prices for 50,053 announced job cuts. In the second quarter, oil-related job cuts declined 48 percent to 26,022.

In the energy sector alone, job cuts declined 42 percent from 48,901 in the first quarter to 28,310 in the second quarter.

Sectors linked to oil were not the only ones to see a drop in job cuts. After announcing 31,832 job cuts in the first three months of 2016, retailers announced 48 percent fewer layoffs in the second quarter (10,263). Job cuts in the health care fell by 65 percent from 7,935 in Q1 to 2,798 in Q2.

“We may continue to see low job cut totals throughout the remainder of 2016, as employers take a wait-and-see stance on workforce levels. Several uncertainties, including national elections, the recent Brexit, and global security and economic issues are giving employers pause when it comes to workforce decisions. We are seeing it in layoff numbers, as well as the job creation numbers, which have been lackluster in recent months,” said Challenger.

“Last year, the second half of the year kicked off with more than 100,000 job cuts announced in July. The surge was due primarily to massive cuts in troop and civilian jobs in the US military. We are unlikely to see similar government cuts in an election year. Even with the 105,000 July job cuts, monthly job cuts averaged just under 52,000 in the last half of 2015, well below a level that would indicate widespread contraction in employment,” said Challenger.

Not every sector is holding off on job cuts. Layoffs in the computer industry increased in the second quarter and total 39,589 through the first half of 2016, which is more than triple the 11,618 announced by these firms in the first six months of 2015.

“We have seen large scale job cuts from Intel and Dell this year, as well as, numerous smaller cuts from tech firms, including Seagate Technology, which announced 1,600 job cuts in June. The very nature of the technology sector means that these firms must remain agile and able to shift directions on a dime to meet constantly changing advances and changing consumer demands,” said Challenger.


ISM Non-Manufacturing Index higher growth at 56.5% in June
Posted: July 6, 2016 at 10:00 AM (Wednesday)

Economic activity in the non-manufacturing sector grew in June for the 77th consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The NMI® registered 56.5 percent in June, 3.6 percentage points higher than the May reading of 52.9 percent. This represents continued growth in the non-manufacturing sector at a faster rate. The Non-Manufacturing Business Activity Index increased to 59.5 percent, 4.4 percentage points higher than the May reading of 55.1 percent, reflecting growth for the 83rd consecutive month, at a faster rate in June. The New Orders Index registered 59.9 percent, 5.7 percentage points higher than the reading of 54.2 percent in May. The Employment Index grew 3 percentage points in June after one month of contraction to 52.7 percent from the May reading of 49.7 percent. The Prices Index decreased 0.1 percentage point from the May reading of 55.6 percent to 55.5 percent, indicating prices increased in June for the third consecutive month. According to the NMI®, 15 non-manufacturing industries reported growth in June. Respondents’ comments are mostly positive about business conditions and the economy. Overall, the report reflects a strong rebound from the 'cooling-off' of the previous month for the non-manufacturing sector.

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


Help Wanted OnLine Labor Demand decreased 226,700 to 4,657,500 in June
Posted: July 6, 2016 at 10:00 AM (Wednesday)

Online advertised vacancies decreased 226,700 to 4,657,500 in June, according to The Conference Board Help Wanted OnLine® (HWOL) Data Series,released today. The May Supply/Demand rate stands at 1.52 unemployed for each advertised vacancy with a total of 2.6 million more unemployed workers than the number of advertised vacancies. The number of unemployed was around 7.4 million in May.

“The losses in the first quarter of 2016 have been followed with even larger losses in the second quarter,” said Gad Levanon, Chief Economist, North America, at The Conference Board. “The 2016 slowdown in demand has been widespread, affecting virtually all States and MSAs.”

In June, the Professional category saw losses in all major occupational categories with the largest losses in Management (−24.1), Business/Finance (−21.3), and Computer/Math (−34.8). The Services/Production category saw large losses in Sales (−26.3), Office/Admin (−33.1), and Installation/Repair (−13.4); other categories showed only small gains and losses.


Goods and Services Deficit Increased in May 2016
Posted: July 6, 2016 at 08:30 AM (Wednesday)

The Nation's international trade deficit in goods and services increased to $41.1 billion in May from $37.4 billion in April (revised), as imports increased and exports decreased.

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $41.1 billion in May, up $3.8 billion from $37.4 billion in April, revised. May exports were $182.4 billion, $0.3 billion less than April exports. May imports were $223.5 billion, $3.4 billion more than April imports.

The May increase in the goods and services deficit reflected an increase in the goods deficit of $3.7 billion to $62.2 billion and a decrease in the services surplus of $0.1 billion to $21.1 billion.

Year-to-date, the goods and services deficit decreased $7.2 billion, or 3.5 percent, from the same period in 2015. Exports decreased $47.2 billion or 4.9 percent. Imports decreased $54.3 billion or 4.7 percent.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: July 6, 2016 at 07:00 AM (Wednesday)

Mortgage applications increased 14.2 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending July 1, 2016.

The Market Composite Index, a measure of mortgage loan application volume, increased 14.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 14 percent compared with the previous week. The Refinance Index increased 21 percent from the previous week to the highest level since January 2015. The seasonally adjusted Purchase Index increased 4 percent from one week earlier. The unadjusted Purchase Index increased 4 percent compared with the previous week and was 23 percent higher than the same week one year ago.

"Interest rates continued to drop last week as markets assessed the impact of Brexit, downgrading the likelihood of additional rate hikes by the Fed, and mortgage rates for 30-year conforming loans dropped to their lowest level in over 3 years," said Mike Fratantoni, MBA's Chief Economist. "In response, refinance application volume jumped almost 21 percent last week to its highest level since January 2015."

The refinance share of mortgage activity increased to 61.6 percent of total applications, the highest level since February 2016, from 58.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.6 percent of total applications.

The FHA share of total applications decreased to 9.5 percent from 10.6 percent the week prior. The VA share of total applications increased to 12.8 percent from 12.2 percent the week prior. The USDA share of total applications decreased to 0.6 percent from 0.7 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to its lowest level since May 2013, 3.66 percent, from 3.75 percent, with points decreasing to 0.32 from 0.36 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to its lowest level since January 2011, 3.67 percent, from 3.74 percent, with points decreasing to 0.24 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to its lowest level since May 2013, 3.56 percent, from 3.61 percent, with points decreasing to 0.31 from 0.37 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to its lowest level since May 2013, 2.96 percent, from 3.02 percent, with points decreasing to 0.32 from 0.38 (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 its lowest level since April 2015, 2.85 percent, from 2.88 percent, with points decreasing to 0.26 from 0.30 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


New orders for manufactured goods decreased 1.0% in May
Posted: July 5, 2016 at 10:00 AM (Tuesday)

New orders for manufactured goods in May, down following two consecutive monthly increases, decreased $4.6 billion or 1.0 percent to $455.2 billion, the U.S. Census Bureau reported today. This followed a 1.8 percent April increase.

Shipments, up three consecutive months, increased $0.2 billion or virtually unchanged to $456.5 billion. This followed a 0.4 percent April increase. Unfilled orders, up four of the last five months, increased $1.7 billion or 0.2 percent to $1,138.9 billion. This followed a 0.6 percent April increase. The unfilled orders-to-shipments ratio was 6.90, down from 6.94 in April.

Inventories, down twelve of the last thirteen months, decreased $0.8 billion or 0.1 percent to $619.7 billion. This followed a 0.1 percent April decrease. The inventories-to-shipments ratio was 1.36, unchanged from April.


New York Purchasing Managers Business Activity still lower at 45.4 in June
Posted: July 5, 2016 at 08:45 AM (Tuesday)

New York City business activity contracted in back-to-back months for the first time since the Great Recession, according to the survey taken by the Institute for Supply Management-New York. The June survey period ran from the 3rd to the 30th, and 97% of responses occurred before Brexit.

New York Metro
Current Business Conditions came in at 45.4 in June, remaining below the breakeven 50 level for a second straight month. The Six-Month Outlook showed another sign of stabilization, rising to a three-month high of 59.5 in June. This resilience will be tested in July.

Company Specific
Companies continued to reveal persistent caution. Labor contracted for the ninth time in the last ten months and by the most in seven years. Employment fell to 35.9 in June. Purchase volume contracted for the third straight month. Quantity of Purchases came in at 46.7 in June.

News for the top line and forward guidance moderated compared to last month. Current Revenues eased to 55.6 in June. Expected Revenues pulled back to 57.1 in June. Cost pressures rose for the first time in four months. Prices Paid increased to 55.0 in June.


Paychex-IHS Small Business Jobs Index rebounded to 100.81 in June
Posted: July 5, 2016 at 08:30 AM (Tuesday)

The Paychex | IHS Small Business Jobs Index rebounded 0.21 percent in June, increasing to 100.81, reversing the May decline of 0.18 percent. The second quarter of 2016 saw an overall gain of 0.07 percent, despite significant movement in the index month-to-month. The change in the pace of small business employment growth from May to June was the largest the national index has seen since June 2013. With a strong one-month growth rate, the South Atlantic hit a record level in June at 101.96 to claim the top spot among regions. Washington increased its lead among states, gaining 0.13 percent from May to June to bring its index level to 104.50. At 104.96, Seattle was essentially unchanged and remains the top-ranked metro index. Up 0.52 percent this month, Construction had its strongest gain in more than three years, the largest increase among all industries in June.

“The Paychex | IHS Small Business Jobs Index rebounded 0.21 percent in June, reversing May’s decline of 0.18 percent. At 100.81, the index improved to its strongest level of 2016 and close to one percent higher than the 2004 base year,” said James Diffley, chief regional economist at IHS.

“While we’ve seen a lot of movement in the index over the past couple of months, I think it’s important to focus on the long-term trend: sustained, moderate growth. The index is now up 0.44 percent through the first half of 2016, which is certainly a positive,” said Martin Mucci, president and CEO of Paychex.


Construction Spending decreased 0.8% in May
Posted: July 1, 2016 at 10:00 AM (Friday)

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during May 2016 was estimated at a seasonally adjusted annual rate of $1,143.3 billion, 0.8 percent (±1.3%) below the revised April estimate of $1,152.4 billion. The May figure is 2.8 percent (±1.6%) above the May 2015 estimate of $1,112.2 billion. During the first 5 months of this year, construction spending amounted to $438.5 billion, 8.2 percent (±1.3%) above the $405.4 billion for the same period in 2015.

PRIVATE CONSTRUCTION
Spending on private construction was at a seasonally adjusted annual rate of $859.3 billion, 0.3 percent (±1.0%) below the revised April estimate of $861.9 billion. Residential construction was at a seasonally adjusted annual rate of $451.9 billion in May, nearly the same as (±1.3%) the revised April estimate of $451.7 billion. Nonresidential construction was at a seasonally adjusted annual rate of $407.4 billion in May, 0.7 percent (±1.0%) below the revised April estimate of $410.1 billion.

PUBLIC CONSTRUCTION
In May, the estimated seasonally adjusted annual rate of public construction spending was $284.0 billion, 2.3 percent (±2.6%) below the revised April estimate of $290.5 billion. Educational construction was at a seasonally adjusted annual rate of $66.8 billion, 5.4 percent (±3.5%) below the revised April estimate of $70.6 billion. Highway construction was at a seasonally adjusted annual rate of $88.9 billion, 0.2 percent (±8.1%) below the revised April estimate of $89.1 billion.


May Manufacturing ISM registered 53.2
Posted: July 1, 2016 at 10:00 AM (Friday)

Economic activity in the manufacturing sector expanded in June for the fourth consecutive month, while the overall economy grew for the 85th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The June PMI® registered 53.2 percent, an increase of 1.9 percentage points from the May reading of 51.3 percent. The New Orders Index registered 57 percent, an increase of 1.3 percentage points from the May reading of 55.7 percent. The Production Index registered 54.7 percent, 2.1 percentage points higher than the May reading of 52.6 percent. The Employment Index registered 50.4 percent, an increase of 1.2 percentage points from the May reading of 49.2 percent. Inventories of raw materials registered 48.5 percent, an increase of 3.5 percentage points from the May reading of 45 percent. The Prices Index registered 60.5 percent, a decrease of 3 percentage points from the May reading of 63.5 percent, indicating higher raw materials prices for the fourth consecutive month. Manufacturing registered growth in June for the fourth consecutive month, as 12 of our 18 industries reported an increase in new orders in June (down from 14 in May), and 12 of our 18 industries reported an increase in production in June (same as in May).

Of the 18 manufacturing industries, 13 are reporting growth in June in the following order: Printing & Related Support Activities; Textile Mills; Petroleum & Coal Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; Apparel, Leather & Allied Products; Paper Products; Miscellaneous Manufacturing; Computer & Electronic Products; Chemical Products; Primary Metals; Machinery; and Nonmetallic Mineral Products. The three industries reporting contraction in June are: Electrical Equipment, Appliances & Components; Transportation Equipment; and Plastics & Rubber Products.


Chicago Purchasing Managers Index rose 7.5 points to 56.8 in June
Posted: June 30, 2016 at 09:45 AM (Thursday)

The MNI Chicago Business Barometer rose 7.5 points to 56.8 in June from 49.3 in May, the highest since January 2015, led by strong gains in New Orders and Production.

June’s rebound was just enough to offset the previous two months of weakness, leaving the Barometer broadly unchanged over the quarter at an average of 52.2 in Q2 compared with 52.3 in Q1.

New Orders increased sharply on the month to the highest since October 2014, while Order Backlogs rose to the highest since March 2011, breaking a 16-month run of below 50 readings. Production also increased significantly to the highest since January 2016.

From November 2015 through to May 2016 firms ran down inventory levels. June, however, saw a double digit increase from May’s 6½ year low, ending a seven month run in contraction, with an equal number of firms increasing inventories as decreasing them.

Companies, though, were not as confident as last year about the future level of orders. In response to a special question, 46% of respondents anticipated higher orders in Q3. This was little changed from the March result which showed 44% expected higher orders in Q2, but was significantly down from 57% in June 2015.

Despite higher orders and output, demand for labour fell. Employment contracted at the fastest pace since November 2009 and was the only component of the Barometer below the neutral 50 level in June.

Following a significant lengthening in Supplier Delivery Times in April and May, data for June showed a shortening back to 50.0, suggesting bottlenecks in the supply chain have cleared. This was in line with all three buying policies which shortened in June.

Inflationary pressures were little changed on the month, with Prices Paid hovering just a shade below April’s 17-month high, following the recovery in the oil price and increases in other raw materials’ prices. Chief Economist of MNI Indicators Philip Uglow said,

“June’s sharp increase in the MNI Chicago Business Barometer needs to be viewed in the context of the weakness seen in April and May. Looking at the three-month average provides a better guide this month to the underlying trend in the economy with activity broadly unchanged between Q1 and Q2. Still, on a trend basis activity over the past four months is running above the very low levels seen around the turn of the year.”


Weekly Initial Unemployment Claims Increase 10,000 to 268,000
Posted: June 30, 2016 at 08:30 AM (Thursday)

In the week ending June 25, the advance figure for seasonally adjusted initial claims was 268,000, an increase of 10,000 from the previous week's revised level. The previous week's level was revised down by 1,000 from 259,000 to 258,000. The 4-week moving average was 266,750, unchanged from the previous week's revised average. The previous week's average was revised down by 250 from 267,000 to 266,750. There were no special factors impacting this week's initial claims. This marks 69 consecutive weeks of initial claims below 300,000, the longest streak since 1973.

The advance seasonally adjusted insured unemployment rate was 1.5 percent for the week ending June 18, a decrease of 0.1 percentage point from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending June 18 was 2,120,000, a decrease of 20,000 from the previous week's revised level. The previous week's level was revised down by 2,000 from 2,142,000 to 2,140,000. The 4-week moving average was 2,133,500, a decrease of 13,000 from the previous week's revised average. This is the lowest level for this average since November 11, 2000 when it was 2,119,750. The previous week's average was revised down by 500 from 2,147,000 to 2,146,500.


Pending Home Sales Index slid 3.7% in May
Posted: June 29, 2016 at 10:00 AM (Wednesday)

After steadily increasing for three straight months, pending home sales letup in May and declined year-over-year for the first time in almost two years, according to the National Association of Realtors®. All four major regions experienced a cutback in contract activity last month.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, slid 3.7 percent to 110.8 in May from a downwardly revised 115.0 in April and is now slightly lower (0.2 percent) than May 2015 (111.0). With last month’s decline, the index reading is still the third highest in the past year, but declined year-over-year for the first time since August 2014.

Lawrence Yun, NAR chief economist, says pending sales slumped in May across most of the country. “With demand holding firm this spring and homes selling even faster than a year ago1, the notable increase in closings in recent months took a dent out of what was available for sale in May and ultimately dragged down contract activity,” he said. “Realtors® are acknowledging with increasing frequency lately that buyers continue to be frustrated by the tense competition and lack of affordable homes for sale in their market.”

Despite mortgage rates hovering around three-year lows for most of the year, Yun says scant supply and swiftly rising home prices – which surpassed their all-time high last month2 – are creating an availability and affordability crunch that’s preventing what should be a more robust pace of sales.

“Total housing inventory at the end of each month has remarkably decreased year-over-year now for an entire year3,” adds Yun. “There are simply not enough homes coming onto the market to catch up with demand and to keep prices more in line with inflation and wage growth.”

Looking ahead to the second half of the year, Yun says the fallout from the U.K.’s decision to leave the European Union breeds both immediate opportunity as well as potential headwinds for the U.S. housing market.

“In the short term, volatility in the financial markets could very likely lead to even lower mortgage rates and increased demand from foreign buyers looking for a safer place to invest their cash,” he said. “On the other hand, any prolonged market angst and further economic uncertainty overseas could negatively impact our economy and end up tempering the overall appetite for homebuying.”

In spite of last month’s step back in contract signings, existing-home sales this year are still expected to be around 5.44 million, a 3.7 percent boost from 2015. After accelerating to 6.8 percent a year ago, national median existing-home price growth is forecast to slightly moderate to between 4 and 5 percent.
Regional Breakdown

The PHSI in the Northeast dropped 5.3 percent to 93.0 in May, and is now unchanged from a year ago. In the Midwest the index slipped 4.2 percent to 108.0 in May, and is now 1.8 percent below May 2015.

Pending home sales in the South declined 3.1 percent to an index of 126.6 in May but are still 0.6 percent higher than last May. The index in the West decreased 3.4 percent in May to 102.6, and is now 0.1 percent below a year ago.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.


Personal Income increased 0.2%, Spending increased 0.4%
Posted: June 29, 2016 at 08:30 AM (Wednesday)

Personal income increased $37.1 billion, or 0.2 percent, and disposable personal income (DPI) increased $33.9 billion, or 0.2 percent, in May, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $53.5 billion, or 0.4 percent. In April, personal income increased $75.4 billion, or 0.5 percent, DPI increased $68.6 billion, or 0.5 percent, and PCE increased $141.2 billion, or 1.1 percent, based on revised estimates.

Real DPI increased 0.1 percent in May, compared with an increase of 0.2 percent in April. Real PCE increased 0.3 percent, compared with an increase of 0.8 percent.


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: June 29, 2016 at 07:00 AM (Wednesday)

Mortgage applications decreased 2.6 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending June 24, 2016.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3 percent compared with the previous week. The Refinance Index decreased 2 percent from the previous week. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index decreased 4 percent compared with the previous week and was 13 percent higher than the same week one year ago.

The refinance share of mortgage activity increased to 58.1 percent of total applications from 57.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.9 percent of total applications.

The FHA share of total applications decreased to 10.6 percent from 11.7 percent the week prior. The VA share of total applications increased to 12.2 percent from 11.1 percent the week prior. The USDA share of total applications increased to 0.7 percent from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) to its lowest level since May 2013, 3.75 percent, from 3.76 percent, with points increasing to 0.36 from 0.33 (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 $417,000) increased to 3.74 percent from 3.70 percent, with points increasing to 0.34 from 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged at 3.61 percent, with points increasing to 0.37 from 0.24 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.02 percent from 3.04 percent, with points increasing to 0.38 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 2.88 percent from 2.92 percent, with points increasing to 0.30 from 0.21 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.


Richmond Fed's Current Activity Index dropped 6 points to a reading of -7
Posted: June 28, 2016 at 10:00 AM (Tuesday)

Fifth District manufacturing activity weakened in June, according to the most recent survey by the Federal Reserve Bank of Richmond. New orders and shipments declined this month, while backlogs decreased further compared to last month. Manufacturing employment softened, while firms continued to increase wages. Prices of raw materials rose somewhat more slowly this month and finished goods prices rose slightly faster in June, compared to last month.

Manufacturers' positive expectations faded in June. Producers anticipated mild growth in shipments and in the volume of new orders in the next six months. Compared to last month's outlook, backlogs and capacity utilization were expected to level off. Firms looked for vendor lead times to lengthen slightly during the six months ahead.

Looking ahead, more survey participants expected slower growth in the number of employees and a shorter average workweek. However, an increasing number of firms anticipated wage increases. Producers expected faster growth in prices paid and received.

Overall, manufacturing conditions weakened in June. The composite index for manufacturing dropped to a reading of −7. The indicators for shipments and order backlogs remained in negative territory this month. Those indexes ended at readings of −3 and −17, respectively. The volume of new orders dropped sharply in June; the index lost 14 points, ending at −14. Additionally, the third component of the composite index, the employment index, flattened this month. That indicator moved down five points to end −1.

The capacity utilization index slipped four points this month, pulling the index down to a reading of −10. Vendor lead time was unchanged compared to last month, with that indicator moving down five points to end at 1. Finished goods inventories rose across more firms compared to a month ago; that index gained eight points, ending at a reading of 27. Growth in raw materials inventories broadened at a slightly faster pace in June, with that indicator adding one point to end the survey period at 26.


Consumer Confidence improved in June to 98.0
Posted: June 28, 2016 at 10:00 AM (Tuesday)

The Conference Board Consumer Confidence Index®, which had decreased in May, improved in June. The Index now stands at 98.0 (1985=100), up from 92.4 in May. The Present Situation Index increased from 113.2 to 118.3, while the Expectations Index rose from 78.5 to 84.5 in June.

“Consumer confidence rebounded in June, after declining in May,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers were less negative about current business and labor market conditions, but only moderately more positive, suggesting no deterioration in economic conditions, but no strengthening either. Expectations regarding business and labor market conditions, as well as personal income prospects, improved moderately. Overall, consumers remain cautiously optimistic about economic growth in the short-term.”

Consumers’ appraisal of current conditions improved in June. Those stating business conditions are “good” increased slightly from 26.1 percent to 26.9 percent, while those saying business conditions are “bad” decreased from 21.4 percent to 17.7 percent. Consumers’ assessment of the labor market was mixed. Those claiming jobs are “plentiful” declined from 24.5 percent to 23.4 percent, however those claiming jobs are “hard to get” also decreased from 24.5 percent to 23.3 percent.

Consumers’ optimism regarding the short-term outlook improved in June. Those expecting business conditions to improve over the next six months increased from 15.0 percent to 16.8 percent, while those expecting business conditions to worsen decreased slightly, from 11.7 percent to 11.4 percent.

Consumers’ outlook for the labor market was more favorable than last month. The percentage anticipating more jobs in the months ahead increased from 12.5 percent to 14.2 percent, while those anticipating fewer jobs decreased marginally from 18.2 percent to 17.9 percent. The proportion of consumers expecting their incomes to increase improved from 16.5 percent to 18.2 percent, while the proportion expecting a reduction edged down from 12.6 percent to 11.5 percent.


S&P/Case-Shiller Home Price Indices gained 1.0% in April
Posted: June 28, 2016 at 09:00 AM (Tuesday)

S&P Dow Jones Indices today released the latest results for the S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices. Data released today for April 2016 shows that home prices continued their rise across the country over the last 12 months.

YEAR-OVER-YEAR
The S&P/Case-Shiller U.S. National Home Price Index, covering all nine U.S. census divisions, reported a 5.0% annual gain in April, down from 5.1% the previous month. The 10-City Composite posted a 4.7% annual increase, down from 4.8% in March. The 20-City Composite reported a year-over-year gain of 5.4%, down from 5.5% from the prior month.

Portland, Seattle, and Denver reported the highest year-over-year gains among the 20 cities with another month of annual price increases. Portland led the way with a 12.3% year-over-year price increase, followed by Seattle at 10.7%, and Denver with a 9.5% increase. Nine cities reported greater price increases in the year ending April 2016 versus the year ending March 2016.

MONTH-OVER-MONTH
Before seasonal adjustment, the National Index posted a month-over-month gain of 1.0% in April. The 10-City Composite recorded a 1.0% month-over-month increase, while the 20-City Composite posted a 1.1% increase in April. After seasonal adjustment, the National Index recorded a 0.1% month-over-month increase, the 10-City Composite posted a 0.3% increase, and the 20-City Composite reported a 0.5% month-over-month increase. After seasonal adjustment, 15 cities saw prices rise, two cities were unchanged, and three cities experienced negative monthly prices changes.

ANALYSIS
”The housing sector continues to turn in a strong price performance with the S&P/Case-Shiller National Index rising at a 5% or greater annual rate for six consecutive months,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “The home price increases reflect the low unemployment rate, low mortgage interest rates, and consumers’ generally positive outlook. One result is that an increasing number of cities have surpassed the high prices seen before the Great Recession. Currently, seven cities – Denver, Dallas, Portland OR, San Francisco, Seattle, Charlotte, and Boston – are setting new highs.

“However, the outlook is not without a lot of uncertainty and some risk. Last week’s vote by Great Britain to leave the European Union is the most recent political concern while the U.S. elections in the fall raise uncertainty and will distract home buyers and investors in the coming months. The details in the S&P/Case-Shiller Home Price data also hint at possible softness. Seasonally adjusted figures in the report show that three cities saw lower prices in April compared to only one city in March. Among the 20 cities, 16 saw either declines or smaller increases in monthly prices in the seasonally adjusted numbers.”

The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 5.0% annual gain in April 2016. The 10-City and 20-City Composites reported year-over-year increases of 4.7% and 5.4%.

As of April 2016, average home prices for the MSAs within the 10-City and 20-City Composites are back to their winter 2007 levels. Measured from their June/July 2006 peaks, the peak-to-current decline for both Composites is approximately 10.7-12.7%. Since the March 2012 lows, the 10-City and 20-City Composites have recovered 37.7% and 39.2%.


1Q2016 GDP final estimate increased 1.1%
Posted: June 28, 2016 at 08:30 AM (Tuesday)

Real gross domestic product -- the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes -- increased at an annual rate of 1.1 percent in the first quarter of 2016, according to the "third" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2015, real GDP increased 1.4 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 0.8 percent. With the third estimate for the first quarter, the general picture of economic growth remains the same; exports increased more than previously estimated.

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

The deceleration in real GDP in the first quarter primarily reflected a deceleration in PCE, a larger decrease in nonresidential fixed investment, and a downturn in federal government spending that were partly offset by upturns in state and local government spending and exports and an acceleration in residential fixed investment.

Real gross domestic income (GDI), which measures the value of the production of goods and services in the United States as the costs incurred and the incomes earned in production, increased 2.9 percent in the first quarter, compared with an increase of 1.9 percent in the fourth. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 2.0 percent in the first quarter, compared with an increase of 1.7 percent in the fourth.

Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- increased 0.9 percent in the first quarter, compared with an increase of 1.5 percent in the fourth.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 0.2 percent in the first quarter, compared with an increase of 0.4 percent in the fourth. Excluding food and energy prices, the price index for gross domestic purchases increased 1.4 percent, compared with an increase of 1.0 percent.

Current-dollar GDP -- the market value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production -- increased 1.4 percent, or $65.3 billion, in the first quarter to a level of $18,230.1 billion. In the fourth quarter, current-dollar GDP increased 2.3 percent, or $104.6 billion.

The upward revision to the percent change in real GDP primarily reflected upward revisions to exports and to nonresidential fixed investment that were partly offset by a downward revision to PCE.


Texas Manufacturing Activity Declines Again in June
Posted: June 27, 2016 at 10:30 AM (Monday)

Texas factory activity declined again in June, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, posted a second consecutive negative reading but rose from -13.1 to -7.0, suggesting the pace of contraction eased somewhat from May.

Other measures of current manufacturing activity also reflected continued declines this month. The new orders index held steady at -14.2, while the growth rate of orders index fell four points to -18.6. The capacity utilization and shipments indexes remained negative for a second month but edged up, coming in at -9.3 and -8.6, respectively.

Perceptions of broader business conditions stayed pessimistic in June. The general business activity index has been negative since January 2015 and came in at -18.3 this month, up slightly from its May reading. The company outlook index posted a seventh consecutive negative reading but rose 5 points to -11.0.

Labor market measures indicated a sixth month of contraction in a row in June. The employment index fell to -11.5, its lowest reading since November 2009. The decline in the index was largely due to a falloff in the share of firms adding to headcounts. Only six percent of firms noted net hiring in June, down from 16 percent last month and well below the 18 percent noting net layoffs. The hours worked index edged down one point to -12.8, signaling continued contraction in workweek length.

Price pressures were mixed, and wages continued to rise. Input costs rose for a third month in a row, as the raw materials prices index held steady at 12.6. Selling prices continued to decline, with the finished goods prices index edging down to -5.2 in June. Meanwhile, the wages and benefits index stayed positive and relatively unchanged at 21.6, suggesting a continued rise in compensation.

Expectations regarding future business conditions improved in June. The index of future general business activity bounced back to a positive reading of 2.6 after dipping below zero last month. The index of future company outlook also ticked up, coming in at 7.9. Most indexes for future manufacturing activity pushed further into positive territory in June.


University of Michigan Consumer Confidence dropped in June to 93.5
Posted: June 24, 2016 at 10:00 AM (Friday)

Consumers were a bit less optimistic in June due to rising concerns about prospects for the economy. While no recession is anticipated, consumers increasingly expect a slower pace of growth in the year ahead. Importantly, the persistent strength in personal finances will keep consumer spending at relatively high levels and support an uninterrupted economic expansion. Although the data are consistent with GDP growth falling slightly below 2.0% in 2016, real consumer spending can be expected to rise by 2.5% in 2016 and 2.7% in 2017.

Personal Finances Best Since 2000
Consumers voiced the most positive assessments of their finances since late 2000 due to near record references to income increases and the fewest complaints about inflation. Recently improved finances were cited by 49% in June, unchanged from May, and the highest level in the last decade. Indeed, expected gains in inflation adjusted incomes reached their highest level since January 2007 despite the fact that consumers anticipated nominal income gains of just 1.6% in June.

Favorable Buying Attitudes
Favorable vehicle buying plans were dominated by low interest rates on credit purchases, especially among higher income and middle age groups, the most likely to purchase new vehicles. Home selling conditions have benefitted from higher home prices but home buying conditions became slightly less favorable due to those same price gains. Low mortgage rates, however, have dominated both buying and selling conditions, especially among households who have a higher probability of purchase.

Consumer Sentiment Index
The Sentiment Index was 93.5 in the June 2016 survey, below the 94.7 in May, and last June’s 96.1. The Current Conditions Index rose to 110.8 in June, reaching its highest level since the last cyclical peak in January 2007. The Expectations Index fell to 82.4 in June, down from 84.9 in May and 87.8 last June. This modest decline is not unexpected since the expansion has lasted for seven years. The data indicate a slower overall pace of growth in the national economy during the year ahead.

Consumer sentiment has remained at high levels and has shown only minor month-to-month variations in the past 18 months. This relative stability stands in sharp contrast to the much more volatile path of GDP. Most of the persistent strength can be trace to more favorable personal finances, despite rather small income gains. Overall, these favorable assessments represent an accommodation for financial planning purposes, but not an acceptance of the inevitability of such a lackluster outcome. Indeed, when asked to evaluate current economic policies, nearly twice as many consumers in June judged economic policies as poor rather than rating them favorably.


May New Orders for Durable Goods decreased 2.2%, Ex-Trans down 0.3%
Posted: June 24, 2016 at 08:30 AM (Friday)

New Orders
New orders for manufactured durable goods in May decreased $5.3 billion or 2.2 percent to $230.7 billion, the U.S. Census Bureau announced today. This decrease, down following two consecutive monthly increases, followed a 3.3 percent April increase. Excluding transportation, new orders decreased 0.3 percent. Excluding defense, new orders decreased 0.9 percent. Transportation equipment, also down following two consecutive monthly increases, led the decrease, $4.8 billion or 5.6 percent to $81.9 billion.

Shipments
Shipments of manufactured durable goods in May, down three of the last four months, decreased $0.5 billion or 0.2 percent to $231.7 billion. This followed a 0.4 percent April increase. Transportation equipment, also down three of the last four months, led the decrease, $0.4 billion or 0.5 percent to $80.0 billion.

Unfilled Orders
Unfilled orders for manufactured durable goods in May, up four of the last five months, increased $2.0 billion or 0.2 percent to $1,139.4 billion. This followed a 0.6 percent April increase. Transportation equipment, up three consecutive months, led the increase, $1.9 billion or 0.2 percent to $785.2 billion.

Inventories
Inventories of manufactured durable goods in May, down ten of the last eleven months, decreased $1.1 billion or 0.3 percent to $382.5 billion. This followed a 0.4 percent April decrease. Machinery, down nine of the last ten months, led the decrease, $0.5 billion or 0.8 percent to $65.4 billion.

Capital Goods
Nondefense new orders for capital goods in May decreased $0.6 billion or 0.8 percent to $73.8 billion. Shipments increased $0.8 billion or 1.2 percent to $72.8 billion. Unfilled orders increased $1.1 billion or 0.2 percent to $708.6 billion. Inventories decreased $0.6 billion or 0.3 percent to $171.3 billion. Defense new orders for capital goods in May decreased $3.7 billion or 28.0 percent to $9.5 billion. Shipments increased $0.2 billion or 2.1 percent to $9.8 billion. Unfilled orders decreased $0.3 billion or 0.2 percent to $140.3 billion. Inventories decreased $0.1 billion or 0.3 percent to $20.8 billion.

Revised April Data
Revised seasonally adjusted April figures for all manufacturing industries were: new orders, $460.1 billion (revised from $460.5 billion); shipments, $456.4 billion (revised from $456.8 billion); unfilled orders, $1,137.4 billion (revised from $1,137.3 billion); and total inventories, $619.8 billion (revised from $620.8 billion).


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