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Category: Research - Topic: Economics



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

Mortgage applications decreased 6.6% from last week, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending February 16, 2018.

On an unadjusted basis, the index decreased 3% from last week.

The Refinance Index decreased 7% from the previous week. The Purchase Index also decreased 6% from last week.

The refinance share of mortgage activity decreased to 44.4% of total applications, down from 46.5% the week before to its lowest level since July.

The adjustable-rate mortgage share of activity increased to 6.4% of total applications, up from 6.3% last week.

The Federal Housing Administration’s share of applications decreased from 10.1% last week to 9.9% this week, and the Veterans Affairs' share of applications decreased from 10.1% to 10%.

The Department of Agriculture’s share of total applications remained unchanged from last week’s 0.8%.

The MBA reported mortgage interest rates for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased from last week’s 4.57% to 4.64%, the highest level since January 2014.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) increased to 4.62% from 4.55% last week, also hitting its highest level since January 2014.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.58%, up from last week’s 4.54% to its highest level since April 2011.

The average contract interest rate for 15-year fixed-rate mortgages increased to 4.02% from 4%, also the highest level since April 2011.

Lastly, the average contract interest rate for 5/1 ARMs decreased to 3.72%, down from 3.74%.


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

Firms responding to February’s Nonmanufacturing Business Outlook Survey reported that regional nonmanufacturing activity continued to expand. The firm-level index of general activity rose for the third consecutive month, and the indexes for sales/revenues and full-time employment also increased in February. Both price indicators remained positive but fell slightly. The future activity index at the firm level continues to reflect optimism about growth over the next six months.

Activity Continues to Strengthen
The survey’s indicators for current activity suggest continued improvement in the nonmanufacturing sector of the regional economy. The diffusion index for current general activity at the firm level increased 3 points to 32.1, its highest reading in 10 months. Nearly 46 percent of the firms reported increases in activity, compared with 14 percent that reported decreases. The regional activity index also increased, rising 11 points to 31.0.

The indicator for sales/revenues rose 5 points to 29.3: Nearly 47 percent of the respondents reported increases in sales/revenues, while 17 percent reported decreases. The new orders index fell 5 points to 16.7. The share of firms that reported increases in new orders fell from 37 percent in January to 29 percent in February but still exceeded the share of firms that reported decreases (12 percent).

Full-Time Employment Index Rebounds
The indicator for full-time employment returned to positive territory after a near-zero reading in January. The full-time employment index rose 18 points to 18.0, slightly above its historical average of 14.1. Although most firms (60 percent) reported no change in full-time employment, the percentage of firms reporting an increase (27 percent) exceeded the percentage reporting a decrease (9 percent). The part-time employment index dropped 4 points to 12.0, and the average workweek index fell 7 points to 12.6. The wages and benefits indicator increased slightly, rising from 29.9 in January to 34.1 in February.

Firms Continue to Report Overall Price Increases
The survey’s diffusion indexes for the prices paid by firms for inputs and received by firms for their products and services remained positive but fell slightly. The prices paid index decreased 4 points to 23.7. In February, 26 percent of the respondents reported increases in input prices, compared with only 2 percent who reported decreases; 65 percent reported no change. The prices received index fell from 17.3 in January to 12.5 in February. Although most firms reported no change (64 percent), the percentage of firms that reported an increase in prices received (18 percent) continued to exceed the percentage of firms that reported a decrease (5 percent).

Forecasts of Inflation Hold Steady
In this month’s special questions, the firms were asked to forecast the changes in the prices of their own products and services and for U.S. consumers over the next four quarters (see Special Questions). Regarding their own prices, the firms’ median forecast was for an increase of 2.0 percent, the same as when the question was last asked in November 2017. The firms forecast an increase in compensation per employee of 3.0 percent over the next year, also unchanged from last time. When asked about the average rate of inflation for U.S. consumers, the median responses were unchanged at 2.0 percent for the next year and 3.0 percent for the next 10 years.

Firms Continue to Expect Future Growth
The respondents to this month’s survey remained optimistic about future activity over the next six months. The diffusion index for future activity at the firm level decreased 4 points to 58.5 (see Chart). More than 62 percent of the firms expect to see an increase in activity at their firms over the next six months, and only 4 percent expect a decline. The future regional activity index rose 3 points to 48.7, as more than 55 percent of the firms expect to see an increase in activity in the region over the next six months.

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


University of Michigan Consumer Confidence Preliminary February Results at 99.9
Posted: February 16, 2018 at 10:00 AM (Friday)

Consumer sentiment rose in early February to its second highest level since 2004 despite lower and much more volatile stock prices. Even among households in the top third of the income distribution, the Sentiment Index rose to 112.8, the highest level since the prior peak of 114.2 was repeatedly recorded in 2007, 2004, and 2000. Stock market gyrations were dominated by rising incomes, employment growth, and by net favorable perceptions of the tax reforms. Indeed, when asked to identify any recent economic news they had heard, negative references to stock prices were spontaneously cited by just 6% of all consumers. In contrast, favorable references to government policies were cited by 35% in February, unchanged from January, and the highest level recorded in more than a half century. In addition, the largest proportion of households reported an improved financial situation since 2000, and expected larger income gains during the year ahead. To be sure, higher interest rates during the year ahead were expected by the highest proportion of consumers since August 2005. Consumers also anticipated a slightly higher inflation rate, although the year-ahead inflation rate has remained relatively low and unchanged for the past three months. Purchase plans have been transformed from the attraction of deeply discounted prices and interest rates that outweighed economic uncertainty, to being based on a sense of greater income and job security as the fewest consumers in decades mentioned the favorable impact of low prices and interest rates. Overall, the data signal an expected gain of 2.9% in real personal consumption expenditures during 2018.


U.S. Import Price Index increased 1.0% in January
Posted: February 16, 2018 at 08:30 AM (Friday)

U.S. import prices increased 1.0 percent in January, the U.S. Bureau of Labor Statistics reported today, after rising 0.2 percent in December. Higher prices for both nonfuel imports and fuel imports contributed to the January advance. Prices for U.S. exports rose 0.8 percent in January following a 0.1-percent increase the previous month.

Imports
All Imports: The price index for U.S. imports rose 1.0 percent in January, after increases of 0.2 percent in December and 1.0 percent in November. The 1.0-percent advances were the largest 1-month rises since the index increased 1.2 percent in May 2016. Import prices advanced 3.6 percent between January 2017 and January 2018.

Fuel Imports: Fuel prices increased 4.7 percent in January following a 2.9-percent advance in December and a 9.8-percent rise in November. Higher prices for petroleum and natural gas contributed to the increases in all 3 months. Prices for petroleum advanced 4.3 percent in January, after rising 2.3 percent the previous month and 9.5 percent in November. The price index for natural gas increased 20.7 percent in January following advances of 20.0 percent in December and 25.7 percent in November. Prices for fuel imports rose 19.7 percent over the past 12 months. Petroleum prices increased 20.9 percent for the year ended in January and prices for natural gas advanced 16.2 percent over the same period.

All Imports Excluding Fuel: Prices for nonfuel imports advanced 0.4 percent in January, after edging down 0.1 percent the previous month. The January increase was the largest monthly advance since the index rose 0.4 percent in March 2012. The last time the index increased more than 0.4 percent was a 0.8-percent rise in April 2011. Prices for nonfuel industrial supplies and materials; automotive vehicles; foods, feeds, and beverages; and capital goods all contributed to the January advance. The price index for nonfuel imports increased 1.9 percent over the past 12 months, the largest over-the-year rise since the index advanced 2.0 percent in March 2012. The January 12-month advance was primarily driven by rising prices for nonfuel industrial supplies and materials.

Exports
All Exports: U.S. export prices increased 0.8 percent in January. The index has not risen by more than 0.8 percent since the index advanced 1.1 percent in May 2016. In January, the increase in nonagricultural prices more than offset a decline in agricultural prices. The price index for exports increased 3.4 percent over the past 12 months.

Agricultural Exports: Prices for agricultural exports edged down 0.1 percent in January, after falling 0.3 percent the previous month. The January drop was driven by a 5.8-percent decline in soybean and other oilseeds prices. Despite the recent decreases, prices for agricultural exports rose 1.4 percent over the past year. Rising meat prices were the primary contributor to the advance in agricultural prices for the year ended in January.

All Exports Excluding Agriculture: Nonagricultural export prices advanced 0.9 percent in January following a 0.1-percent rise in December. The price indexes for nonagricultural industrial supplies and materials; capital goods; automotive vehicles; and consumer goods all rose in January. Prices for nonagricultural export indexes advanced 3.7 percent from January 2017 to January 2018, the largest 12-month increase since a 4.0-percent rise for the year ended December 2011.

Import Prices
Imports by Locality of Origin: Prices for imports from Japan increased 0.6 percent in January, after recording no change the previous month. The January advance was the first monthly rise since the index ticked up 0.1 percent in September and the largest 1-month advance since a 0.6-percent rise in January 2011. In January, import prices from China recorded no change for the second consecutive month. The price index for imports from China rose 0.2 percent for the year ended in January, the first 12-month advance since the index increased 0.1 percent in October 2014 and the largest since the index advanced 0.3 percent in July 2014. Higher fuel prices led the January increase for import prices from Canada, up 2.5 percent, and Mexico, up 0.7 percent. Prices for imports from the European Union also rose, increasing 0.5 percent.

Nonfuel Industrial Supplies and Materials: The price index for nonfuel industrial supplies and materials increased 1.8 percent in January following a 0.2-percent drop in December. The January rise was driven by higher metals prices and was the largest monthly advance since a 2.0-percent rise in March 2011.

Finished Goods: Finished goods prices were mostly up in January. Prices for automotive vehicles advanced
0.5 percent in January led by rising prices for passenger cars. The price index for capital goods also rose in
January, ticking up 0.1 percent. Consumer goods prices recorded no change.

Foods, Feeds, and Beverages: Foods, feeds, and beverages prices rose 0.8 percent in January following a 0.9 percent decline in December. The January increase was driven by higher prices for fruit, bakery products, and vegetables.

Transportation Services: Import air passenger fares fell 3.2 percent in January, after increasing 6.5 percent in December. The January decline was led by an 11.1-percent drop in Asian fares and a 13.0-percent decrease in Latin American/Caribbean fares, which more than offset higher European fares. Despite the January decline, import air passenger fares rose 2.6 percent over the past year. The price index for import air freight prices decreased 3.0 percent in January and increased 8.7 percent over the past 12 months.

Export Prices
Nonagricultural Industrial Supplies and Materials: Nonagricultural industrial supplies and materials prices increased 2.1 percent in January, after edging down 0.1 percent in December. The January advance was driven by a 4.5-percent rise in fuel prices and a 3.0-percent increase in metals prices.

Finished Goods: Prices for each of the major finished goods categories increased in January. Capital goods prices advanced 0.5 percent. Higher prices for nonelectrical machinery, transportation equipment, and electrical machinery all contributed to the January advance. The price indexes for consumer goods and automotive vehicles also rose in January, each increasing 0.3 percent.

Transportation Services: Export air passenger fares advanced 5.6 percent in January following a 3.3 percent rise the previous month. Both increases were driven by higher Asian and Latin American/Caribbean fares which more than offset lower European fares in January and December. Despite the recent increases, export air passenger fares fell 1.0 percent for the year ended in January. Prices for export air freight increased 0.2 percent in January and 7.5 percent over the past year


January Housing Starts increased 9.7%, Permits up 7.4%
Posted: February 16, 2018 at 08:30 AM (Friday)

Building Permits
Privately-owned housing units authorized by building permits in January were at a seasonally adjusted annual rate of 1,396,000. This is 7.4 percent (±1.2 percent) above the revised December rate of 1,300,000 and is 7.4 percent (±1.9 percent) above the January 2017 rate of 1,300,000. Single-family authorizations in January were at a rate of 866,000; this is 1.7 percent (±1.3 percent) below the revised December figure of 881,000. Authorizations of units in buildings with five units or more were at a rate of 479,000 in January.

Housing Starts
Privately-owned housing starts in January were at a seasonally adjusted annual rate of 1,326,000. This is 9.7 percent (±16.8 percent)* above the revised December estimate of 1,209,000 and is 7.3 percent (±15.0 percent)* above the January 2017 rate of 1,236,000. Single-family housing starts in January were at a rate of 877,000; this is 3.7 percent (±9.7 percent)* above the revised December figure of 846,000. The January rate for units in buildings with five units or more was 431,000.

Housing Completions
Privately-owned housing completions in January were at a seasonally adjusted annual rate of 1,166,000. This is 1.9 percent (±7.8 percent)* below the revised December estimate of 1,188,000, but is 7.7 percent (±11.9 percent)* above the January 2017 rate of 1,083,000. Single-family housing completions in January were at a rate of 850,000; this is 2.2 percent (±8.3 percent)* above the revised December rate of 832,000. The January rate for units in buildings with five units or more was 305,000.


Treasury International Capital Data for December 2017
Posted: February 15, 2018 at 04:00 PM (Thursday)

The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for December 2017. The sum total in December of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC outflow of $119.3 billion. Of this, net foreign private outflows were $70.0 billion, and net foreign official outflows were $49.3 billion.

Foreign residents increased their holdings of long-term U.S. securities in December; net purchases were $34.3 billion. Net purchases by private foreign investors were $42.3 billion, while net sales by foreign official institutions were $8.0 billion. U.S. residents increased their holdings of long-term foreign securities, with net purchases of $7.0 billion.

Taking into account transactions in both foreign and U.S. securities, net foreign purchases of long-term securities were $27.3 billion. After including adjustments, such as estimates of unrecorded principal payments to foreigners on U.S. asset-backed securities, overall net foreign purchases of long-term securities are estimated to have been $11.9 billion in December.

Foreign residents decreased their holdings of U.S. Treasury bills by $9.7 billion. Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities decreased by $24.1 billion. Banks' own net dollar-denominated liabilities to foreign residents decreased by $107.1 billion.


Builder Confidence unchanged at 72 in February
Posted: February 15, 2018 at 10:00 AM (Thursday)

Builder confidence in the market for newly-built single-family homes remained unchanged at a healthy level of 72 in February on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Demand conditions are positive, but supply-side construction hurdles need to be managed, as scarce labor and building material price increases remain top concerns.

In particular, the HMI gauge of future sales expectations has reached a post-recession high, an indicator that consumer demand for housing should grow in the months ahead. With ongoing job creation, increasing owner-occupied household formation, and a tight supply of existing home inventory, the single-family housing sector should continue to strengthen at a gradual but consistent pace.

The HMI component charting sales expectations in the next six months rose two points to 80, the index measuring buyer traffic held steady at 54, and the component gauging current sales conditions dropped one point to 78.

Looking at the three-month moving averages for regional HMI scores, the Midwest rose two points to 72, the South increased one point to 74, the West remained unchanged at 81, and Northeast fell two points to 56.


Industrial Production edged down 0.1%
Capacity Utilization fell to 77.5%

Posted: February 15, 2018 at 09:15 AM (Thursday)

Industrial production edged down 0.1 percent in January following four consecutive monthly increases. Manufacturing production was unchanged in January. Mining output fell 1.0 percent, with all of its major component industries recording declines, while the index for utilities moved up 0.6 percent. At 107.2 percent of its 2012 average, total industrial production was 3.7 percent higher in January than it was a year earlier. Capacity utilization for the industrial sector fell 0.2 percentage point in January to 77.5 percent, a rate that is 2.3 percentage points below its long-run (1972–2017) average.


Producer Price Index increased 0.4% in January, ex Fd & Engy up 0.4%
Posted: February 15, 2018 at 08:30 AM (Thursday)

The Producer Price Index for final demand increased 0.4 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices were unchanged in December and moved up 0.4 percent in November. (See table A.) On an unadjusted basis, the final demand index rose 2.7 percent for the 12 months ended in January.

In January, the rise in the index for final demand is attributable to a 0.3-percent increase in prices for final demand services and a 0.7-percent advance in the index for final demand goods.

The index for final demand less foods, energy, and trade services rose 0.4 percent in January, the largest advance since increasing 0.5 percent in April 2017. For the 12 months ended in January, prices for final demand less foods, energy, and trade services moved up 2.5 percent, the largest rise since 12-month percent change data were available in August 2014.

Final Demand
Final demand services: Prices for final demand services advanced 0.3 percent in January following a 0.1-percent decline a month earlier. Nearly two-thirds of the broad-based increase is attributable to the index for final demand services less trade, transportation, and warehousing, which moved up 0.4 percent. Margins for final demand trade services rose 0.3 percent, and prices for final demand transportation and warehousing services advanced 0.4 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: A major factor in the January increase in prices for final demand services was the index for hospital outpatient care, which rose 1.0 percent. The indexes for apparel, footwear, and accessories retailing; health, beauty, and optical goods retailing; residential real estate services (partial); long-distance motor carrying; and hospital inpatient care also moved higher. In contrast, margins for chemicals and allied products wholesaling declined 2.3 percent. Prices for wireless telecommunication services and airline passenger services also fell. (See table 4.)

Final demand goods: The index for final demand goods jumped 0.7 percent in January, the sixth consecutive increase. Over 80 percent of the January advance can be traced to prices for final demand energy, which climbed 3.4 percent. The index for final demand goods less foods and energy rose 0.2 percent. Conversely, prices for final demand foods fell 0.2 percent.

Product detail: Nearly half of the January increase in the index for final demand goods is attributable to prices for gasoline, which climbed 7.1 percent. The indexes for residential electric power, iron and steel scrap, diesel fuel, jet fuel, and fresh and dry vegetables also moved higher. In contrast, prices for chicken eggs fell 38.9 percent. The indexes for residential natural gas and for power cranes, draglines, and shovels also declined.


Philadelphia Fed Outlook Reported Activity Continues to Expand in February
Posted: February 15, 2018 at 08:30 AM (Thursday)

Results from the Manufacturing Business Outlook Survey suggest that the region’s manufacturing sector continues to expand in February. The indexes for general activity, new orders, and employment were all positive this month and increased from their readings last month. Price increases for inputs were more widespread this month, according to the respondents. The survey’s future indexes, reflecting expectations for the next six months, suggest continued optimism.

Most Current Indicators Improved This Month
The index for current manufacturing activity increased 4 points in February to a reading of 25.8. The index has stayed within a relatively narrow range over the past nine months. Nearly 41 percent of the firms indicated increases in activity this month, while 15 percent reported decreases. The demand for manufactured goods, as measured by the survey’s current new orders index, showed notable improvement: The diffusion index increased 14 points, with 41 percent of the firms reporting an increase in new orders this month. The current shipments index remained positive but fell 15 points to 15.5. Both the unfilled orders and delivery times indexes were positive, suggesting an increase in unfilled orders and slower deliveries.

The survey’s indicators for labor market conditions suggest a pickup in hiring this month. Over 30 percent of the firms reported increases in employment this month, up from 24 percent in January. The employment index increased 8 points. The firms also reported overall higher average work hours in February, although the workweek index fell 3 points to 13.7.

Input Prices Increases Are More Widespread​
Cost pressures were more widespread this month among the reporting manufacturers: The prices paid index increased 12 points to 45.0, its highest reading since May 2011. Forty-six percent of the firms reported higher input prices this month compared with 33 percent in January. With respect to prices received for manufactured goods, 25 percent of the firms reported higher prices, and 1 percent reported lower prices. The prices received index edged down 1 point to 23.9.

Firms’ Expected Price Increases Edged Higher Along with Inflation Forecast
In this month’s special questions, the firms were asked to forecast the changes in the prices of their own products and for U.S. consumers over the next four quarters (see Special Questions). Regarding their own prices, the firms’ median forecast was for an increase of 3.0 percent, up from 2.0 percent when the same question was last asked in November 2017. When asked about the rate of inflation for U.S. consumers over the next year, the firms’ median forecast was 2.5 percent, an increase from the previous forecast of 2.0 percent in November. The firms expect their employee compensation costs (wages plus benefits on a per employee basis) to rise 3.0 percent over the next four quarters, the same as the previous forecast. The firms’ forecast for the long-run (10-year average) inflation rate rose from 2.5 percent to 3.0 percent.

Firms Remain Optimistic
The survey’s six-month indicators remained at high readings in February. The diffusion index for future general activity declined 1 point to 41.2 in February. Over 55 percent of the manufacturers expect increases in activity over the next six months, while 14 percent expect declines. The indexes for future new orders and shipments improved: The future new orders index increased 3 points, while the future shipments index increased 2 points. The future employment diffusion index increased 6 points to 40.4. Forty-five percent of the firms expect to increase employment over the next six months. Over 44 percent of the responding firms expect to increase capital spending over the next six months, with the future capital spending index increasing 4 points in February, its highest reading since April 1984.
Summary

The February Manufacturing Business Outlook Survey indicates continued growth in regional manufacturing this month. The demand for manufactured goods, as reflected in new orders, showed improvement this month, and more firms added to their payrolls. The firms reported more widespread price increases for purchased inputs this month. In special questions this month, the firms’ forecast for their own price changes for the next year edged higher compared with their forecast three months ago. The indicators reflecting the firms’ overall expectations for manufacturing conditions over the next six months remained at high levels. The firms’ expectations for future employment and capital spending showed notable improvement this month.


Empire State Manufacturing Survey Conditions expanded at a slower pace in February
Posted: February 15, 2018 at 08:30 AM (Thursday)

Business activity continued to expand in New York State, according to firms responding to the February 2018 Empire State Manufacturing Survey. The headline general business conditions index fell five points to 13.1, suggesting a somewhat slower pace of growth than in January. The new orders index and the shipments index were little changed, and indicated ongoing growth in orders and shipments. Unfilled orders increased slightly, and delivery times lengthened. Labor market conditions pointed to a modest increase in employment and hours worked. Input price increases picked up noticeably, with the prices paid index reaching its highest level in several years. Firms remained very optimistic about future business conditions, and capital spending plans continued to be robust.

Growth Continues
Manufacturing firms in New York State reported that business activity continued to expand, though at a somewhat slower pace than last month. The general business conditions index moved down five points to 13.1. Thirty-seven percent of respondents reported that conditions had improved over the month, while 24 percent reported that conditions had worsened. The new orders index was little changed at 13.5, and the shipments index was also little changed at 12.5—readings that indicated ongoing growth in orders and shipments. The unfilled orders index remained positive for a second consecutive month, reflecting a small increase in unfilled orders. The delivery time index rose eight points to 11.1, a sign that delivery times lengthened. The inventories index declined but remained positive at 4.9, suggesting that inventory levels edged higher.

Input Price Increases Pick Up
The index for number of employees rose to 10.9, signaling a modest increase in employment levels, and the average workweek index rose to 4.6, indicating that hours worked also climbed. Input price increases were noticeably higher. The prices paid index climbed twelve points to 48.6, its highest level in nearly six years. The prices received index held steady at 21.5, a level pointing to continued moderate selling price increases.

Firms Remain Optimistic about Future Conditions
Looking ahead, firms continued to be optimistic about the six-month outlook. The index for future business conditions edged up two points to 50.5. The index for future delivery times reached a record high of 15.3, indicating that firms expected longer delivery times in the months ahead. The index for future prices paid stayed close to last month’s multiyear high, and the capital expenditures index, at 31.9, showed that firms’ capital spending plans remained strong.


Weekly Initial Unemployment Claims Increase 7,000 to 230,000
Posted: February 15, 2018 at 08:30 AM (Thursday)

In the week ending February 10, the advance figure for seasonally adjusted initial claims was 230,000, an increase of 7,000 from the previous week's revised level. The previous week's level was revised up by 2,000 from 221,000 to 223,000. The 4-week moving average was 228,500, an increase of 3,500 from the previous week's revised average. The previous week's average was revised up by 500 from 224,500 to 225,000. Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.

The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending February 3, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending February 3 was 1,942,000, an increase of 15,000 from the previous week's revised level. The previous week's level was revised up 4,000 from 1,923,000 to 1,927,000. The 4-week moving average was 1,941,250, a decrease of 5,750 from the previous week's revised average. The previous week's average was revised up by 1,000 from 1,946,000 to 1,947,000.


Business Inventories up 0.4% in December
Posted: February 14, 2018 at 10:00 AM (Wednesday)

The combined value of distributive trade sales and manufacturers’ shipments for December, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,431.3 billion, up 0.6 percent (±0.3 percent) from November 2017 and was up 6.7 percent (±0.4 percent) from December 2016.

Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,902.2 billion, up 0.4 percent (±0.1 percent) from November 2017 and were up 3.2 percent (±0.3 percent) from December 2016.

The total business Inventories/Sales Ratio based on seasonally adjusted data at the end of December was 1.33. The December 2016 ratio was 1.37.


Consumer Price Index 0.5% in January, Ex Fd & Engy rose 0.3%
Posted: February 14, 2018 at 08:30 AM (Wednesday)

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.5 percent in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.1 percent before seasonal adjustment.

The seasonally adjusted increase in the all items index was broad-based, with increases in the indexes for gasoline, shelter, apparel, medical care, and food all contributing. The energy index rose 3.0 percent in January, with the increase in the gasoline index more than offsetting declines in other energy component indexes. The food index rose 0.2 percent with the indexes for food at home and food away from home both rising.

The index for all items less food and energy increased 0.3 percent in January. Along with shelter, apparel, and medical care, the indexes for motor vehicle insurance, personal care, and used cars and trucks also rose in January. The indexes for airline fares and new vehicles were among those that declined over the month.

The all items index rose 2.1 percent for the 12 months ending January, the same increase as for the 12 months ending December. The index for all items less food and energy rose 1.8 percent over the past year, while the energy index increased 5.5 percent and the food index advanced 1.7 percent.

Food
The food index increased 0.2 percent in January. The index for food away from home increased 0.4 percent, its largest monthly increase since last January. The food at home index increased 0.1 percent. Major grocery store food group indexes were mixed, with two rising, one falling, and three unchanged. The index for fruits and vegetables rose 0.5 percent reflecting a 1.9-percent increase in the fresh fruits index and a 1.2-percent decline in the index for fresh vegetables. The index for cereals and bakery products rose in January, increasing 0.3 percent.

The index for meats, poultry, fish, and eggs declined in January, falling 0.2 percent after rising in December. The indexes for dairy and related products, nonalcoholic beverages, and other food at home were all unchanged in January.

Over the last 12 months, the index for food away from home increased 2.5 percent. The food at home index rose 1.0 percent, with four of the six major grocery store food groups rising over the span. The fruits and vegetables index increased the most, at 3.5 percent, while the indexes for dairy and related products and cereals and bakery products both declined over the last year.

Energy
The energy index rose 3.0 percent in January. The gasoline index increased 5.7 percent in January after falling in December. (Before seasonal adjustment, gasoline prices increased 3.2 percent in January.) The fuel oil index also increased in January, rising 9.5 percent. In contrast, the index for natural gas fell 2.6 percent in January and the electricity index decreased 0.2 percent.

All the major energy component indexes increased over the past 12 months. The gasoline index rose 8.5 percent and the fuel oil index rose 22.5 percent. The electricity index rose more modestly, increasing 2.4 percent, and the index for natural gas increased slightly, rising 0.2 percent.

All items less food and energy
The index for all items less food and energy increased 0.3 percent in January. The shelter index increased 0.2 percent as the indexes for rent and owners' equivalent rent both rose 0.3 percent, while the index for lodging away from home declined 2.0 percent over the month. The apparel index rose sharply in January, increasing 1.7 percent after falling in previous months. The medical care index increased as well, rising 0.4 percent. The index for hospital services increased 1.3 percent, and the physicians' services index rose 0.3 percent; the index for prescription drugs, however, declined 0.2 percent.

The index for motor vehicle insurance continued to rise in January, increasing 1.3 percent, its largest 1-month increase since November 2001. The personal care index rose 0.5 percent; this was its largest increase since January 2015. The used cars and trucks index also continued to rise, advancing 0.4 percent in January. The indexes for household furnishings and operations, education, and tobacco also increased in January.

A few indexes declined in January, including airlines fares, which fell for the third consecutive month, decreasing 0.6 percent. The new vehicles index decreased 0.1 percent. The indexes for recreation, communication, and alcoholic beverages were all unchanged in January.

The index for all items less food and energy rose 1.8 percent over the past year. The index for motor vehicle insurance rose 8.5 percent over the past 12 months, its largest 12-month increase since the period ending June 2003. The shelter index increased 3.2 percent over the last 12 months, and the medical care index rose 2.0 percent. The indexes for airline fares, new vehicles, used cars and trucks, and apparel declined over the past 12 months.

Not seasonally adjusted CPI measures
The Consumer Price Index for All Urban Consumers (CPI-U) increased 2.1 percent over the last 12 months to an index level of 247.867 (1982-84=100). For the month, the index increased 0.5 percent prior to seasonal adjustment.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 2.1 percent over the last 12 months to an index level of 241.919 (1982-84=100). For the month, the index increased 0.6 percent prior to seasonal adjustment.

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) increased 1.9 percent over the last 12 months. For the month, the index increased 0.5 percent on a not seasonally adjusted basis. Please note that the indexes for the past 10 to 12 months are subject to revision


Real Average Hourly Earnings decreased 0.2% in January
Posted: February 14, 2018 at 08:30 AM (Wednesday)

Real average hourly earnings for all employees decreased 0.2 percent from December to January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from a 0.3-percent increase in average hourly earnings offset by a 0.5-percent increase in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings decreased 0.8 percent over the month due to the decrease in real average hourly earnings combined with a 0.6-percent decrease in the average workweek.

Real average hourly earnings increased 0.8 percent, seasonally adjusted, from January 2017 to January 2018. The increase in real average hourly earnings combined with a 0.3-percent decrease in the average workweek resulted in a 0.4-percent increase in real average weekly earnings over this period.

Production and nonsupervisory employees
Real average hourly earnings for production and nonsupervisory employees decreased 0.5 percent from December to January, seasonally adjusted. This result stems from a 0.1-percent increase in average hourly earnings offset by a 0.6-percent increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Real average weekly earnings decreased 0.8 percent over the month due to the decrease in real average hourly earnings combined with a 0.3-percent decrease in average weekly hours.

From January 2017 to January 2018, real average hourly earnings increased 0.1 percent, seasonally adjusted. The increase in real average hourly earnings combined with no change in the average workweek resulted in a 0.2-percent increase in real average weekly earnings over this period.


U.S. Retail Sales for January Decrease 0.3%, Ex-Auto unch%
Posted: February 14, 2018 at 08:30 AM (Wednesday)

Advance estimates of U.S. retail and food services sales for January 2018, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $492.0 billion, a decrease of 0.3 percent (±0.5 percent)* from the previous month, but 3.6 percent (±0.7 percent) above January 2017. Total sales for the November 2017 through January 2018 period were up 4.9 percent (±0.5 percent) from the same period a year ago. The November 2017 to December 2017 percent change was revised from up 0.4 percent (±0.5 percent)* to virtually unchanged (±0.3 percent)*.

Retail trade sales were down 0.3 percent (±0.5 percent)* from December 2017, but 3.9 percent (±0.7 percent) above last year. Nonstore Retailers were up 10.2 percent (±1.4 percent) from January 2017, while Gasoline Stations were up 9.0 percent (±1.6 percent) from last year.


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: February 14, 2018 at 07:00 AM (Wednesday)

Mortgage applications decreased 4.1 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending February 9, 2018.

The Market Composite Index, a measure of mortgage loan application volume, decreased 4.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 2 percent compared with the previous week. The Refinance Index decreased 2 percent from the previous week. The seasonally adjusted Purchase Index decreased 6 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 4 percent higher than the same week one year ago.

The refinance share of mortgage activity increased to 46.5 percent of total applications from 46.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.3 percent of total applications.

The FHA share of total applications decreased to 10.1 percent from 10.4 percent the week prior. The VA share of total applications remained unchanged at 10.1 percent from the week prior. The USDA share of total applications increased to 0.8 percent from 0.7 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to its highest rate since January 2014, 4.57 percent, from 4.50 percent, with points increasing to 0.59 from 0.57 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) increased to its highest rate since January 2014, 4.55 percent, from 4.47 percent, with points increasing to 0.47 from 0.44 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.54 percent from 4.47 percent, with points increasing to 0.73 from 0.69 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to its highest rate since April 2011, 4.00 percent, from 3.92 percent, with points increasing to 0.65 from 0.65 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.74 percent from 3.77 percent, with points decreasing to 0.37 from 0.42 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


NFIB Small Business Optimism Index jumped 2 points to 106.9 in January
Posted: February 13, 2018 at 07:00 AM (Tuesday)

The Index of Small Business Optimism gained 2.0 points in January, rising to 106.9, again one of the strongest readings in the 45-year history of the NFIB surveys. The highest reading of 108.0 was reached in July 1983 and the lowest reading of 79.7 occurred in April 1980. Six of the 10 Index components posted a gain, two declined, and two were unchanged. The gain left the Index historically strong and maintained a string of exceptional readings that started the day after the 2016 election results were announced. A year after the election-induced surge in Optimism, small-business owners remain confident about the future.

LABOR MARKETS
Job creation was solid in the small-business sector as owners reported a seasonally adjusted average employment change per firm of 0.23 workers, a strong showing. The lack of “qualified” workers is impeding growth in employment. Thirteen percent (unchanged) reported increasing employment an average of 2.4 workers per firm and 9 percent (down 1 point) reported reducing employment an average of 3.4 workers per firm (seasonally adjusted). Fifty-five percent reported hiring or trying to hire (down 4 points), but 49 percent (89 percent of those hiring or trying to hire) reported few or no qualified applicants for the positions they were trying to fill. Twenty-two percent of owners cited the difficulty of finding qualified workers as their Single Most Important Business Problem (up 3 points), exceeding the percentage citing taxes or the cost of regulation as their top business problem. Thirty-four percent of all owners reported job openings they could not fill in the current period, up 3 points from December. Twelve percent reported using temporary workers, unchanged. A seasonally adjusted net 20 percent plan to create new jobs, unchanged from December and at record high levels. Labor markets have become very tight, for both skilled and unskilled workers.

SALES AND INVENTORIES
The net percent of all owners (seasonally adjusted) reporting higher nominal sales in the past three months compared to the prior three months was a net 5 percent, a 4 point decline following a 14 point improvement in December. The net percent of owners expecting higher real sales volumes fell 3 points, falling to a net 25 percent of owners, still one of the best readings since 2007.

The net percent of owners reporting inventory increases rose 6 percentage points to a net 4 percent (seasonally adjusted). The net percent of owners viewing current inventory stocks as “too low” was a net negative 5 percent, 3 points lower than December. Apparently the buildup of inventories left stocks a bit larger than owners wanted, based on expected sales volumes. However, the net percent of owners planning to add to inventory rose 4 points from December to a net 3 percent. Plans averaged 4 percent in the last six months of 2017 as firms geared up for a solid holiday season.

CAPITAL SPENDING
Sixty-one percent reported capital outlays, unchanged from December and the second highest reading in this recovery to date. This anticipates a substantial increase in capital spending. Of those making expenditures, 44 percent reported spending on new equipment (up 1 point), 28 percent acquired vehicles (up 5 points), and 16 percent improved or expanded facilities (unchanged). Six percent acquired new buildings or land for expansion (unchanged) and 13 percent spent money for new fixtures and furniture (down 2 points). Twenty-nine percent plan capital outlays in the next few months, up 2 points from December. Improvements in productivity depend crucially on investment spending in the labor intensive small-business sector. Improved earnings trends and lower taxes increase the pool of capital available for firms to invest in their businesses. Many of these investments do not involve “high” or new technology, just improvements in standard equipment and processes.

COMPENSATION AND EARNINGS
Reports of higher worker compensation rose 4 percentage points to a net 31 percent, the highest reading since 2000 and among the highest in survey history. Twenty-two percent (up 3 points) selected “finding qualified labor” as their top business problem, the highest reading since 2000, the peak of the last expansion. Plans to raise compensation rose 1 point in frequency to a net 24 percent in response to tighter labor markets, the highest reading since 1989. Small firms are raising compensation to attract and keep the employees they need. The frequency of reports of positive profit trends improved a huge 11 points to a net negative 4 percent reporting quarter on quarter profit improvements, the best reading since March of 1988.

INFLATION
The net percent of owners raising average selling prices rose 3 points to a net 11 percent seasonally adjusted, the highest reading since July 2014. Unadjusted, 9 percent of owners reported reducing their average selling prices in the past three months (down 2 points), and 19 percent reported price increases (up 4 points). Seasonally adjusted, a net 23 percent plan price hikes (up 1 point), although far fewer will report actually doing so in the following months. There is a strong dynamic in price adjustments on Main Street that is typical of a less regulated market.

CREDIT MARKETS
Three percent of owners reported that all their borrowing needs were not satisfied, unchanged and historically low. Thirty-one percent reported all credit needs met (down 1 point) and 52 percent said they were not interested in a loan, unchanged. Only 2 percent reported that financing was their top business problem. Three percent reported loans “harder to get’, unchanged and at historic lows. Thirty-one percent of all owners reported borrowing on a regular basis (down 3 points). The average rate paid on short maturity loans was down 20 basis points at 5.9 percent. If the Federal Reserve raises rates the anticipated three times this year, variable rate loan costs will respond immediately, although longer term rates are not likely to reflect the full hike.

COMMENTARY
The new tax law, the Tax Cuts and Jobs Act, produced the most recent boost to small business optimism. And federal government related cost pressures continue to abate, offering a more supportive business climate for small firms. Consumer spending remains supportive, and business spending and housing remain strong.

On the Federal Reserve front, the minutes of their last meeting revealed a discussion of inflation that mirrored much of the recent public discussion by Former Chair Yellen, who acknowledged the difficulties the committee has in understanding current inflation dynamics and why inflation continues to remain below target, despite very accommodative policies. It is worrisome that our central bank wants to create inflation and assumes that once it has “enough”, it can keep inflation from going higher. The Federal Reserve’s forecast is that inflation will continue to rise and then stop at their target of 2 percent, they offer no explanation of why or how it will stop. And, there is no rigorous explanation of why 2 percent is the “right’ level for the economy. If it is not, pursing policies that try to increase inflation could become even more damaging to the economy, hurting the small business sector. In the meantime, the Federal Reserve will continue to raise rates.

The U.S. ranked second in the World Economic Forum (Davos)’s assessment of global competitiveness. Strong points included inflation, venture capital, business sophistication, innovation, financial market development, labor market efficiency, and higher education and training. Not so good U.S. ranking included 61st (out of 137 economies studied) on business costs of crime and violence, 57th on organized crime, 39th for internet use penetration and 95th on tax rate as a percent of profits (pre tax law). The extensive size and performance of our small business sector plays a key role in supporting these rankings and now government policies are more focused on strengthening the competitiveness and performance of this sector by reducing regulatory and tax restrictions that waste time and capital. The new tax law is one more significant step towards establishing a pro-growth environment supporting the small business sector.


Wholesale Inventories up 0.4% in December
Posted: February 9, 2018 at 10:00 AM (Friday)

December 2017 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 $500.2 billion, up 1.2 percent (±0.7 percent) from the revised November level and were up 9.1 percent (±1.1 percent) from the December 2016 level. The October 2017 to November 2017 percent change was revised from the preliminary estimate of up 1.5 percent (±0.5 percent) to up 1.9 percent (±0.7 percent).

Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $612.1 billion at the end of December, up 0.4 percent (±0.4 percent)* from the revised November level. Total inventories were up 3.4 percent (±0.7 percent) from the revised December 2016 level. The November 2017 to December 2017 percent change was revised from the advance estimate of up 0.2 percent (±0.4 percent)* to up 0.4 percent (±0.4 percent)*.

The December Inventories/Sales Ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.22. The December 2016 ratio was 1.29.


Forecasters See Stronger Output Growth and Brighter Labor Market
Posted: February 9, 2018 at 10:00 AM (Friday)

The U.S. economy looks stronger now than it did three months ago, according to 36 forecasters surveyed by the Federal Reserve Bank of Philadelphia. The forecasters predict real GDP will grow at an annual rate of 3.0 percent this quarter and 2.9 percent next quarter. On an annual-average over annual-average basis, the forecasters predict real GDP growing 2.8 percent in 2018, 2.5 percent in 2019, and 2.0 percent in 2020. The forecasts for 2018, 2019, and 2020 are higher than the estimates of three months ago. For 2021, real GDP is estimated to grow 1.7 percent.

A brighter outlook for the labor market accompanies the outlook for stronger output growth. The forecasters predict the unemployment rate will average 4.0 percent in 2018, 3.8 percent in 2019, 3.9 percent in 2020, and 4.0 percent in 2021. The projections for 2018, 2019, and 2020 are below those of the last survey, indicating a brighter outlook for unemployment.

The panelists also predict an improvement in employment for 2018. The projections for the annual-average level of nonfarm payroll employment suggest job gains at a monthly rate of 175,100 in 2018, up from the previous estimate of 163,400. (These annual-average estimates are computed as the year-to-year change in the annual-average level of nonfarm payroll employment, converted to a monthly rate.)

The charts below provide some insight into the degree of uncertainty the forecasters have about their projections for the rate of growth in the annual-average level of real GDP. Each chart (except the one for 2021) presents the forecasters’ previous and current estimates of the probability that growth will fall into each of 11 ranges. The charts show the forecasters have revised upward their estimates of the probability that real GDP growth will be between 2.0 percent and 2.9 percent in 2018, 2019, and 2020.

The forecasters' density projections for unemployment, shown below, shed light on uncertainty about the labor market over the next four years. Each chart presents the forecasters’ current estimates of the probability that unemployment will fall into each of 10 ranges. The charts show the panelists are raising their density estimates substantially for an unemployment rate below 4.0 percent over the next three years.

The forecasters expect current-quarter headline CPI inflation to average 2.7 percent, up from 2.1 percent in the last survey. Headline PCE inflation for the current quarter will rise to 2.1 percent, up 0.4 percentage point from the previous estimate.

Notably, the forecasters see little reason to change their projections for inflation beyond the current quarter. Measured on a fourth-quarter over fourth-quarter basis, headline CPI inflation is expected to average 2.1 percent in 2018 and 2.2 percent in 2019, little changed from the last survey. The forecasters have revised slightly their projections for headline PCE inflation in 2018 to 1.9 percent, up from 1.8 percent in the survey of three months ago.

Over the next 10 years, 2018 to 2027, the forecasters expect headline CPI inflation to average 2.25 percent at an annual rate. The corresponding estimate for 10-year annual-average PCE inflation is 2.00 percent.

The charts below show the median projections (the red line) and the associated interquartile ranges (gray areas around the red line) for the projections for 10-year annual-average CPI and PCE inflation. The charts highlight a marginally higher level of the long-term projection for CPI inflation and an unchanged long-term projection for PCE inflation.

The figures below show the probabilities that the forecasters are assigning to the possibility that fourth-quarter over fourth-quarter core PCE inflation in 2018 and 2019 will fall into each of 10 ranges. For 2018, the forecasters have increased the probability that core PCE inflation will be above 2.0 percent, compared with their estimates in the survey of three months ago.

Lower Risk of a Negative Quarter in 2018
The forecasters have revised downward the chance of a contraction in real GDP in any of the next four quarters. For the current quarter, the forecasters predict a 5.8 percent chance of negative growth, down from 10.4 percent in the survey of three months ago. The panelists have also made downward revisions to their probability estimates for the next three quarters in 2018.

Forecasters State Their Views on House Price Growth over the Next Two Years
In a special question in this survey, panelists were asked to provide their forecasts for fourth-quarter over fourth-quarter growth in house prices, as measured by a number of alternative indices. The panelists were allowed to choose their measure from a list of indices or to write in their own index. For each index of their choosing, the panelists provided forecasts for growth in 2018 and 2019.

Sixteen panelists answered the special question. Some panelists provided projections for more than one index. The table below provides a summary of the forecasters’ responses. The number of responses (N) is low for each index. The median estimates for the seven house-price indices listed in the table below range from 3.4 percent to 5.8 percent in 2018 and from 3.1 percent to 5.1 percent in 2019.

Forecasters See Lower Long-Run Growth in Output and Productivity
In our first-quarter surveys, the forecasters provide their long-run projections for an expanded set of variables, including growth in output and productivity, as well as returns on financial assets.

As the table below shows, the forecasters have cut their estimates for the annual-average rate of growth in real GDP over the next 10 years. Currently, the forecasters expect real GDP to grow at an annual-average rate of 2.15 percent over the next 10 years, down from their projection of 2.45 percent in the first-quarter survey of 2017. Ten-year annual-average productivity growth is now expected to be 1.50 percent, down from 1.60 percent.

The forecasters see the S&P 500 returning an annual-average 6.00 percent over the next 10 years, unchanged from last year’s first-quarter survey. The forecasters expect the rate on 10-year Treasuries to average 3.70 percent over the next 10 years, down from 3.86 percent in last year’s first-quarter survey. Three-month Treasury bills will return an annual-average 2.75 percent over the next 10 years, up from 2.50 percent.

The Federal Reserve Bank of Philadelphia thanks the following forecasters for their participation in recent surveys:

Lewis Alexander, Nomura Securities; Scott Anderson, Bank of the West (BNP Paribas Group); Robert J. Barbera, Johns Hopkins University Center for Financial Economics; Peter Bernstein, RCF Economic and Financial Consulting, Inc.; Christine Chmura, Ph.D., and Xiaobing Shuai, Ph.D., Chmura Economics & Analytics; Gary Ciminero, CFA, GLC Financial Economics; Gregory Daco, Oxford Economics USA, Inc.; Rajeev Dhawan, Georgia State University; Gabriel Ehrlich, Daniil Manaenkov, Ben Meiselman, Owen Nie, and Aditi Thapar, RSQE, University of Michigan; Michael R. Englund, Action Economics, LLC; J.D. Foster, U.S. Chamber of Commerce; Michael Gapen, Barclays Capital; Sacha Gelfer, Bentley University; James Glassman, JPMorgan Chase & Co.; Jan Hatzius, Goldman Sachs; Keith Hembre, Nuveen Asset Management; Peter Hooper, Deutsche Bank Securities, Inc.; Sam Kahan, Kahan Consulting Ltd. (ACT Research LLC); N. Karp, BBVA Research USA; Walter Kemmsies, Jones Lang LaSalle; Jack Kleinhenz, Kleinhenz & Associates, Inc.; Thomas Lam, Independent Economist; L. Douglas Lee, Economics from Washington; John Lonski, Moody’s Capital Markets Group; Macroeconomic Advisers, IHS Markit; R. Anthony Metz, Pareto Optimal Economics; Michael Moran, Daiwa Capital Markets America; Joel L. Naroff, Naroff Economic Advisors; Michael Neal, National Association of Home Builders; Mark Nielson, Ph.D., MacroEcon Global Advisors; Luca Noto, Anima Sgr; Brendon Ogmundson, BC Real Estate Association; Arun Raha and Maira Trimble, Eaton Corporation; Philip Rothman, East Carolina University; Chris Rupkey, MUFG Union Bank; John Silvia, Wells Fargo; Sean M. Snaith, Ph.D., University of Central Florida; Constantine G. Soras, Ph.D., CGS Economic Consulting; Stephen Stanley, Amherst Pierpont Securities; Charles Steindel, Ramapo College of New Jersey; Susan M. Sterne, Economic Analysis Associates, Inc.; James Sweeney, Credit Suisse; Thomas Kevin Swift, American Chemistry Council; Richard Yamarone, Bloomberg, LP; Mark Zandi, Moody’s Analytics.


Weekly Initial Unemployment Claims Decrease 9,000 to 221,000
Posted: February 8, 2018 at 08:30 AM (Thursday)

In the week ending February 3, the advance figure for seasonally adjusted initial claims was 221,000, a decrease of 9,000 from the previous week's unrevised level of 230,000. The 4-week moving average was 224,500, a decrease of 10,000 from the previous week's unrevised average of 234,500. This is the lowest level for this average since March 10, 1973 when it was 222,000. Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.

The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending January 27, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 27 was 1,923,000, a decrease of 33,000 from the previous week's revised level. The previous week's level was revised up 3,000 from 1,953,000 to 1,956,000. The 4-week moving average was 1,946,000, an increase of 12,500 from the previous week's revised average. The previous week's average was revised up by 750 from 1,932,750 to 1,933,500.


Consumer Credit Increased at an annual rate of 7.75%
Posted: February 7, 2018 at 03:00 PM (Wednesday)

Consumer credit increased at a seasonally adjusted annual rate of 7-3/4 percent during the fourth quarter. Revolving credit increased at an annual rate of 9-3/4 percent, while nonrevolving credit increased at an annual rate of 7 percent. In December, consumer credit increased at an annual rate of 5-3/4 percent.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: February 7, 2018 at 07:00 AM (Wednesday)

Mortgage applications increased 0.7 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending February 2, 2018.

The Market Composite Index, a measure of mortgage loan application volume, increased 0.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 4 percent compared with the previous week. The Refinance Index increased 1 percent from the previous week. The seasonally adjusted Purchase Index remained unchanged from one week earlier. The unadjusted Purchase Index increased 7 percent compared with the previous week and was 8 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 46.4 percent of total applications, its lowest level since July 2017, from 47.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.1 percent of total applications.

The FHA share of total applications decreased to 10.4 percent from 10.7 percent the week prior. The VA share of total applications remained unchanged at 10.1 percent from the week prior. The USDA share of total applications decreased to 0.7 percent from 0.8 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to its highest level since April 2014, 4.50 percent, from 4.41 percent, with points increasing to 0.57 from 0.56 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) increased to its highest level since April 2014, 4.47 percent, from 4.34 percent, with points increasing to 0.44 from 0.40 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.47 percent from 4.40 percent, with points increasing to 0.69 from 0.68 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to its highest level since April 2011, 3.92 percent, from 3.85 percent, with points increasing to 0.65 from 0.60 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.77 percent from 3.79 percent, with points increasing to 0.42 from 0.41 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


Job Openings lower at 5.8 million in December
Posted: February 6, 2018 at 10:00 AM (Tuesday)

The number of job openings was little changed at 5.8 million on the last business day of December, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were little changed at 5.5 million and 5.2 million, respectively. Within separations, the quits rate and the layoffs and discharges rate were little changed at 2.2 percent and 1.1 percent, respectively. This release includes estimates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and by four geographic regions.

Job Openings
On the last business day of December, there were 5.8 million job openings, little changed from November. The job openings rate was 3.8 percent in December. The number of job openings was little changed for total private and for government. Job openings increased in information (+33,000) and federal government (+13,000). Job openings decreased in a number of industries with the largest decreases occurring in professional and business services (-119,000), retail trade (-85,000), and construction (-52,000). The number of job openings was little changed in all four regions.

Hires
The number of hires was little changed at 5.5 million in December. The hires rate was 3.7 percent. The number of hires was little changed for total private, for government, and in all industries and regions.

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

The number of total separations was little changed at 5.2 million in December. The total separations rate was 3.6 percent. The number of total separations was little changed for total private and for government. Total separations increased in state and local government education (+17,000). The number of total separations increased in the Midwest region.

The number of quits was little changed at 3.3 million in December. The quits rate was 2.2 percent. The number of quits was little changed for total private and for government. Quits decreased in federal government (-4,000). The number of quits increased in the Midwest region.

There were 1.6 million layoffs and discharges in December, little changed from November. The layoffs and discharges rate was 1.1 percent in December. The number of layoffs and discharges was little changed for total private and for government. Layoffs and discharges increased in state and local government education (+15,000). The number of layoffs and discharges was little changed in all four regions.

The number of other separations was little changed in December at 334,000. The number of other separations was little changed for total private and edged down for government. Other separations decreased in state and local government, excluding education (-11,000). The number of other separations was little changed in all four regions.

Net Change in Employment
Large numbers of hires and separations occur every month throughout the business cycle. Net employment change results from the relationship between hires and separations. When the number of hires exceeds the number of separations, employment rises, even if the hires level is steady or declining. Conversely, when the number of hires is less than the number of separations, employment declines, even if the hires level is steady or rising. Over the 12 months ending in December, hires totaled 64.7 million and separations totaled 62.6 million, yielding a net employment gain of 2.2 million. These totals include workers who may have been hired and separated more than once during the year.


Goods and Services Deficit Increased in December 2017
Posted: February 6, 2018 at 08:30 AM (Tuesday)

The nation's international trade deficit in goods and services increased to $53.1 billion in December from $50.4 billion in November (revised), as imports increased more than exports. The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $53.1 billion in December, up $2.7 billion from $50.4 billion in November, revised. December exports were $203.4 billion, $3.5 billion more than November exports. December imports were $256.5 billion, $6.2 billion more than November imports.

The December increase in the goods and services deficit reflected an increase in the goods deficit of $2.6 billion to $73.3 billion and a decrease in the services surplus of $0.1 billion to $20.2 billion.

For 2017, the goods and services deficit increased $61.2 billion, or 12.1 percent, from 2016. Exports increased $121.2 billion or 5.5 percent. Imports increased $182.5 billion or 6.7 percent.


Employment Trends Index Increased in January to 106.93
Posted: February 5, 2018 at 10:00 AM (Monday)

The Conference Board Employment Trends Index™ (ETI) increased in January, after increasing in December. The index now stands at 106.93, up from 106.59 (a downward revision) in December. The change represents a 5.4 percent gain in the ETI compared to a year ago.

“The Employment Trends Index continues its solid path upwards and shows no sign of slowing down,” said Gad Levanon, Chief Economist, North America, at The Conference Board. “A strong US economy provides additional tailwinds to employment growth, bringing down the unemployment rate even further and encouraging more men and women to join the labor force.”

January’s increase in the ETI was fueled by positive contributions from five out of the eight components. From the largest positive contributor to the smallest, these were: Percentage of Firms with Positions Not Able to Fill Right Now, Industrial Production, Initial Claims for Unemployment Insurance, Real Manufacturing and Trade Sales, and Number of Employees Hired by the Temporary-Help Industry.


ISM Non-Manufacturing Index increased to 59.99% in January
Posted: February 5, 2018 at 10:00 AM (Monday)

Economic activity in the non-manufacturing sector grew in January for the 96th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The NMI® registered 59.9 percent, which is 3.9 percentage points higher than the seasonally adjusted December reading of 56 percent. This represents continued growth in the non-manufacturing sector at a faster rate. The Non-Manufacturing Business Activity Index increased to 59.8 percent, 2 percentage points higher than the seasonally adjusted December reading of 57.8 percent, reflecting growth for the 102nd consecutive month, at a faster rate in January. The New Orders Index registered 62.7 percent, 8.2 percentage points higher than the seasonally adjusted reading of 54.5 percent in December. The Employment Index increased 5.3 percentage points in January to 61.6 percent from the seasonally adjusted December reading of 56.3 percent. The Prices Index increased by 2 percentage points from the seasonally adjusted December reading of 59.9 percent to 61.9 percent, indicating that prices increased in January for the 23rd consecutive month. According to the NMI®, 15 non-manufacturing industries reported growth. The non-manufacturing sector reflected strong growth in January after two consecutive months of pullback. Overall, the majority of respondents’ comments are positive about business conditions and the economy. They also indicated that recent tax changes have had a positive impact on their respective businesses.

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


New orders for manufactured goods increased 1.37% in December
Posted: February 2, 2018 at 10:00 AM (Friday)

New orders for manufactured goods in December, up six of the last seven months, increased $8.5 billion or 1.7 percent to $498.2 billion, the U.S. Census Bureau reported today. This followed a 1.7 percent November increase. Shipments, up twelve of the last thirteen months, increased $2.9 billion or 0.6 percent to $495.4 billion. This followed a 1.4 percent November increase. Unfilled orders, up four consecutive months, increased $7.1 billion or 0.6 percent to $1,144.4 billion. This followed a 0.1 percent November increase. The unfilled orders-to-shipments ratio was 6.59, up from 6.58 in November. Inventories, up thirteen of the last fourteen months, increased $3.3 billion or 0.5 percent to $669.2 billion. This followed a 0.5 percent November increase. The inventories-to-shipments ratio was 1.35, unchanged from November.

New Orders
New orders for manufactured durable goods in December, up four of the last five months, increased $6.8 billion or 2.8 percent to $249.3 billion, down from the previously published 2.9 percent increase. This followed a 1.7 percent November increase. Transportation equipment, also up four of the last five months, led the increase, $5.7 billion or 7.1 percent to $86.9 billion. New orders for manufactured nondurable goods increased $1.7 billion or 0.7 percent to $248.9 billion.

Shipments
Shipments of manufactured durable goods in December, up seven of the last eight months, increased $1.2 billion or 0.5 percent to $246.5 billion, down from the previously published 0.6 percent increase. This followed a 1.3 percent November increase. Primary metals, up five of the last six months, led the increase, $0.5 billion or 2.5 percent to $20.7 billion. Shipments of manufactured nondurable goods, up eight of the last nine months, increased $1.7 billion or 0.7 percent to $248.9 billion. This followed a 1.6 percent November increase. Petroleum and coal products, up six consecutive months, led the increase, $0.7 billion or 1.4 percent to $50.2 billion.

Unfilled Orders
Unfilled orders for manufactured durable goods in December, up four consecutive months, increased $7.1 billion or 0.6 percent to $1,144.4 billion, unchanged from the previously published increase. This followed a 0.1 percent November increase. Transportation equipment, up following two consecutive monthly decreases, led the increase, $6.0 billion or 0.8 percent to $775.9 billion.

Inventories
Inventories of manufactured durable goods in December, up seventeen of the last eighteen months,increased $1.4 billion or 0.3 percent to $406.8 billion, unchanged from the previously published increase. This followed a 0.3 percent November increase. Machinery, up ten of the last eleven months, led the increase, $0.4 billion or 0.5 percent to $70.4 billion. Inventories of manufactured nondurable goods, up seven consecutive months, increased $1.9 billion or 0.7 percent to $262.4 billion. This followed a 0.9 percent November increase. Petroleum and coal products, up six consecutive months, led the increase, $0.9 billion or 2.1 percent to $41.4 billion. By stage of fabrication, December materials and supplies decreased 0.1 percent in durable goods and were virtually unchanged in nondurable goods. Work in process increased 0.4 percent in durable goods and increased 2.1 percent in nondurable goods. Finished goods increased 0.8 percent in durable goods and increased 0.7 percent in nondurable goods.


University of Michigan Consumer Confidence dipped in January to 95.7
Posted: February 2, 2018 at 10:00 AM (Friday)

Consumer sentiment has remained largely unchanged for more than a year at very favorable levels, according to the University of Michigan Surveys of Consumers.

The January Sentiment figure was just 0.2 Index-points below December's, and just 1.1 points below the 2017 average of 96.8—which was the highest yearly average since 2000, said U-M economist Richard Curtin, director of the surveys.

Stock price increases and tax reforms were mentioned by all-time record numbers of consumers. To be sure, there were small offsetting declines among lower income households and residents of the Northeast.

Consumers continued to expect growth in jobs and incomes, but anticipated a slightly higher inflation rate during the year ahead. Overall, the data indicate that real personal consumption expenditures will expand by 2.8 percent in 2018.

"Perhaps the most significant change in economic assessments involves the motivating factors behind discretionary purchase decisions," Curtin said. "These forces have shifted from discounts on price and interest rates to increased confidence in future job security, growth in wages and financial assets.

"This basic sense of economic confidence only occurs after uncertainty is substantially reduced. Unlike earlier in the expansion when consumers were apprehensive about future prospects, this renewed sense of confidence has been responsible for spending decisions that pushed the savings rates to recent lows. Further gains in the pace of spending will crucially depend on the impact of tax cuts on spending decisions."

Tax Reforms Viewed Positively on Balance
In the January survey, spontaneously favorable references to government economic policies were made by 35 percent of all consumers, the highest level recorded in more than a half century. Most of these references involved the recently passed tax reforms.

Across all respondents and all open-ended questions, 22 percent of consumers spontaneously mentioned that the recent tax reforms would have a favorable impact, 6 percent cited a negative impact, and 4 percent mentioned both negative and positive aspects of the tax reform. Moreover, consumers who favorably mentioned the tax legislation had values on the Expectation Index that were twice as high as those with negative views.

Gains in Jobs, Wages, Stock Prices
The finances of consumers continued to benefit from gains in jobs, wages and financial assets. When asked to explain in their own words how their personal finances had changed, the highest proportion ever recorded mentioned that the value of their household's asset holding had increased. These favorable reports were concentrated among those with incomes in the top third, with 29 percent reporting increased net wealth holding—the second highest since 32 percent in 2007.

Expected income gains also improved slightly, as consumers anticipated an annual gain of 2.1 percent, up from 1.9 percent one month and one year ago; those under age 45 anticipated an income gain of 3.4 percent.

Consumer Sentiment Index
The Consumer Sentiment Index was 95.7 in the January 2018 survey, marginally below the 95.9 in December, and down from 98.5 in January 2017. The Current Conditions Index was 110.5 in January, down from last month's 113.8 and last year's 111.3. The Expectations Index was 86.3 in January, between last month's 84.3 and last year's 90.3.

Consumer sentiment has remained largely unchanged for more than a year at very favorable levels. The January Sentiment figure was just 0.2 Index-points below December's, and just 1.1 points below the 2017 average of 96.8--which was the highest yearly average since 2000. Stock price increases and the passage of tax reforms were mentioned by all-time record numbers of consumers. To be sure, there were small offsetting declines among lower income households and residents of the Northeast. Consumers continued to expect growth in jobs and incomes, but anticipated a slightly higher inflation rate. Importantly, the motivating force behind purchase decisions has shifted from discounts on prices and interest rates to increased confidence in future job security and growth in wages as well as financial assets. This renewed sense of confidence was responsible for the recent declines in savings rates. The tax cuts will increase discretionary spending once higher energy bills due to the unusually cold weather are paid. Monetary policy will need to tighten in the year ahead, but given consumers' decade long experience with record low interest rates, only modest increases in interest rates will be sufficient to curb any excesses. Overall, the data signal an expected gain of 2.8% in real personal consumption expenditures during 2018.


December Employment rose by 200,000
Unemployment Rate unchanged at 4.1%

Posted: February 2, 2018 at 08:30 AM (Friday)

Total nonfarm payroll employment increased by 200,000 in January, and the unemployment rate was unchanged at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in construction, food services and drinking places, health care, and manufacturing.

Household Survey Data
In January, the unemployment rate was 4.1 percent for the fourth consecutive month. The number of unemployed persons, at 6.7 million, changed little over the month. (See table A-1. For information about annual population adjustments to the household survey estimates, see the note at the end of this news release and tables B and C.)

Among the major worker groups, the unemployment rate for Blacks increased to 7.7 percent in January, and the rate for Whites edged down to 3.5 percent. The jobless rates for adult men (3.9 percent), adult women (3.6 percent), teenagers (13.9 percent), Asians (3.0 percent), and Hispanics (5.0 percent) showed little change. (See tables A-1, A-2, and A-3.)

The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.4 million in January and accounted for 21.5 percent of the unemployed. (See table A-12.)

The civilian labor force and total employment, as measured by the household survey, changed little in January (after accounting for the annual adjustments to the population controls). The labor force participation rate was 62.7 percent for the fourth consecutive month and the employment-population ratio was 60.1 percent for the third month in a row. (See table A-1. For additional information about the effects of the population adjustments, see table C.)

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 5.0 million in January. 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. (See table A-8.)

In January, 1.7 million persons were marginally attached to the labor force, little changed 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. (See table A-16.)

Among the marginally attached, there were 451,000 discouraged workers in January, little changed from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.2 million persons marginally attached to the labor force in January had not searched for work for reasons such as school attendance or family responsibilities. (See table A-16.)

Establishment Survey Data
Total nonfarm payroll employment rose by 200,000 in January. Employment continued to trend up in construction, food services and drinking places, health care, and manufacturing. (See table B-1. For information about the annual benchmark process, see the note and table A.)

Construction added 36,000 jobs in January, with most of the increase occurring among specialty trade contractors (+26,000). Employment in residential building construction continued to trend up over the month (+5,000). Over the year, construction employment has increased by 226,000.

Employment in food services and drinking places continued to trend up in January (+31,000). The industry has added 255,000 jobs over the past 12 months.

Employment in health care continued to trend up in January (+21,000), with a gain of 13,000 in hospitals. In 2017, health care added an average of 24,000 jobs per month.

In January, employment in manufacturing remained on an upward trend (+15,000). Durable goods industries added 18,000 jobs. Manufacturing has added 186,000 jobs over the past 12 months.

Employment in other major industries, including mining, wholesale trade, retail trade, transportation and warehousing, information, financial activities, professional and business services, and government, changed little over the month.

The average workweek for all employees on private nonfarm payrolls declined by 0.2 hour to 34.3 hours in January. In manufacturing, the workweek declined by 0.2 hour to 40.6 hours, while overtime remained at 3.5 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged down by 0.1 hour to 33.6 hours. (See tables B-2 and B-7.)

In January, average hourly earnings for all employees on private nonfarm payrolls rose by 9 cents to $26.74, following an 11-cent gain in December. Over the year, average hourly earnings have risen by 75 cents, or 2.9 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 3 cents to $22.34 in January. (See tables B-3 and B-8.)

The change in total nonfarm payroll employment for November was revised down from +252,000 to +216,000, and the change for December was revised up from +148,000 to +160,000. With these revisions, employment gains in November and December combined were 24,000 less than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors. The annual benchmark process also contributed to the November and December revisions.) After revisions, job gains have averaged 192,000 over the last 3 months.


New York Purchasing Managers Business Activity jumped to 72.5 in January
Posted: February 2, 2018 at 08:30 AM (Friday)

In January, New York City purchasing managers reported the highest current business conditions in over a decade according to the survey taken by the Institute for Supply Management-New York.

New York Metro
Current Business Conditions were at 72.5 in January, up from 56.3 in December. This marks the highest level reported since November of 2006 when current business conditions were at 77.1. In November 2006, the Six-Month Outlook was also in growth territory at 73.0, but was lower than we see this month. The Six-Month Outlook fell from the 11 plus year high of 85.7 seen in December to 76.1 in January. If not for the spike reported in December, January’s outlook would represent a 4 year high. The six-month outlook has been a reliable short-run guide for current business conditions over time.

Company Specific
Employment, a seasonally adjusted index, was 58.4 in January, back up from the 42.9 reported in December. This is the second highest level this index has reached in 2.5 years, failing to top the high point of 64.6 in November of 2017. Quantity of Purchases dropped to 50.0 from 55.0 in December, down for the second month in a row. In January, top line and forward revenue guidance moved in different directions, with current revenues making the greater move. Current Revenues fell to 47.4, down 7.6 from 55.0 in December. Expected Revenues rose to 68.4 in January, up 4.8 from 63.6 in December. Prices Paid fell after four months of increases, coming in at 60.5 in January, down from 66.7 in December.


Construction Spending increased 0.7% in December
Posted: February 1, 2018 at 10:00 AM (Thursday)

Total Construction
Construction spending during December 2017 was estimated at a seasonally adjusted annual rate of $1,253.3 billion, 0.7 percent (±1.0 percent)* above the revised November estimate of $1,245.1 billion. The December figure is 2.6 percent (±1.3 percent) above the December 2016 estimate of $1,221.6 billion. The value of construction in 2017 was $1,230.6 billion, 3.8 percent (±1.0 percent) above the $1,185.7 billion spent in 2016.

Private Construction
Spending on private construction was at a seasonally adjusted annual rate of $963.2 billion, 0.8 percent (±1.2 percent)* above the revised November estimate of $955.9 billion. Residential construction was at a seasonally adjusted annual rate of $526.1 billion in December, 0.5 percent (±1.3 percent)* above the revised November estimate of $523.8 billion. Nonresidential construction was at a seasonally adjusted annual rate of $437.1 billion in December, 1.1 percent (±1.2 percent)* above the revised November estimate of $432.1 billion.

The value of private construction in 2017 was $950.7 billion, 5.8 percent (±1.0 percent) above the $898.7 billion spent in 2016. Residential construction in 2017 was $515.9 billion, 10.6 percent (±2.1 percent) above the 2016 figure of $466.6 billion and nonresidential construction was $434.8 billion, 0.6 percent (±1.0 percent)* above the $432.1 billion in 2016.


January Manufacturing ISM expanded slower to 59.1
Posted: February 1, 2018 at 10:00 AM (Thursday)

Economic activity in the manufacturing sector expanded in January, and the overall economy grew for the 105th consecutive month, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®.

The January PMI® registered 59.1 percent, a decrease of 0.2 percentage point from the seasonally adjusted December reading of 59.3 percent. The New Orders Index registered 65.4 percent, a decrease of 2 percentage points from the seasonally adjusted December reading of 67.4 percent. The Production Index registered 64.5 percent, a 0.7 percentage point decrease compared to the seasonally adjusted December reading of 65.2 percent. The Employment Index registered 54.2 percent, a decrease of 3.9 percentage points from the seasonally adjusted December reading of 58.1 percent. The Supplier Deliveries Index registered 59.1 percent, a 1.9 percentage point increase from the seasonally adjusted December reading of 57.2 percent. The Inventories Index registered 52.3 percent, an increase of 3.8 percentage points from the December reading of 48.5 percent. The Prices Index registered 72.7 percent in January, a 4.4 percentage point increase from the December reading of 68.3 percent, indicating higher raw materials prices for the 23rd consecutive month. Comments from the panel reflect expanding business conditions, with new orders and production maintaining high levels of expansion; employment expanding at a slower rate; order backlogs expanding at a faster rate; and export orders and imports continuing to grow faster in January. Supplier deliveries continued to slow (improving) at a faster rate. Price increases occurred across all industry sectors. The Customers’ Inventories Index indicates levels are still too low. Capital expenditure lead times increased 8 percent during the month of January.

Of the 18 manufacturing industries, 14 reported growth in January in the following order: Textile Mills; Fabricated Metal Products; Plastics & Rubber Products; Primary Metals; Machinery; Transportation Equipment; Apparel, Leather & Allied Products; Chemical Products; Computer & Electronic Products; Paper Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; and Food, Beverage & Tobacco Products. Four industries reported contraction during the period: Printing & Related Support Activities; Wood Products; Furniture & Related Products; and Nonmetallic Mineral Products.


4Q2017 Productivity Growth decreased 0.1%
Posted: February 1, 2018 at 08:30 AM (Thursday)

Nonfarm business sector labor productivity decreased 0.1 percent during the fourth quarter of 2017, the U.S. Bureau of Labor Statistics reported today, as output increased 3.2 percent and hours worked increased 3.3 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the fourth quarter of 2016 to the fourth quarter of 2017, productivity increased 1.1 percent, reflecting a 3.2-percent increase in output and a 2.1-percent increase in hours worked. Annual average productivity increased 1.2 percent from 2016 to 2017.

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

Unit labor costs in the nonfarm business sector increased 2.0 percent in the fourth quarter of 2017, due primarily to a 1.8-percent increase in hourly compensation. Unit labor costs increased 1.3 percent over the last four quarters.

Manufacturing sector labor productivity increased 5.7 percent in the fourth quarter of 2017, as output increased 7.3 percent and hours worked rose 1.5 percent. These were the largest quarterly increases in manufacturing sector productivity and output since the second quarter of 2010, when output per hour increased 7.0 percent and output jumped 10.7 percent. Productivity increased 6.7 percent in the durable goods manufacturing sector and 4.5 percent in the nondurable goods sector in the fourth quarter of 2017. Over the last four quarters, total manufacturing sector productivity increased 1.1 percent, as output increased 2.7 percent and hours worked increased 1.6 percent. Unit labor costs in manufacturing decreased 3.7 percent in the fourth quarter of 2017 and increased 1.1 percent from the same quarter a year ago.

Revised measures
Revised and previously published measures for the third quarter of 2017 are shown in tables A2 and B1 and cover the following major sectors: nonfarm business, business, manufacturing, and nonfinancial corporations.

In the third quarter of 2017, nonfarm business productivity was revised down 0.3 percentage point, to an increase of 2.7 percent. (See table B1.) Unit labor costs in the nonfarm business sector decreased 0.1 percent in the third quarter--rather than declining 0.2 percent as previously reported.

In the manufacturing sector, productivity was revised down 0.5 percentage point, to a decrease of 4.9 percent. Manufacturing unit labor costs increased 5.4 percent, a 0.6 percentage point increase over the previously reported figure.

In the nonfinancial corporate sector, productivity was revised down 0.4 percentage point in the third quarter of 2017, to a decrease of 0.4 percent. This downward revision to productivity is due primarily to a 0.3-percentage point downward revision to output.

Annual averages
Table C1 presents annual average changes for the most recent 5 years for the nonfarm business sector and the total manufacturing sector. Nonfarm business sector productivity grew 1.2 percent in 2017, as output and hours increased 2.9 percent and 1.6 percent, respectively. In 2016, productivity declined 0.1 percent. The average annual rate of nonfarm business sector productivity growth from 2007 to 2017—corresponding to the current business cycle--is 1.2 percent, which is below the long-term rate from 1947 to 2017 of 2.1 percent.

Unit labor costs in the nonfarm business sector increased 0.2 percent in 2017, reflecting increases of 1.5 percent in hourly compensation and 1.2 percent in productivity. Real hourly compensation, which takes into account changes in consumer prices, decreased 0.7 percent in 2017.

In the manufacturing sector, productivity increased 0.7 percent in 2017, as output increased 1.7 percent and hours worked increased 1.0 percent. Manufacturing sector productivity has grown less than 1.0 percent in each of the last 7 years. The average annual rate of manufacturing productivity growth from 2007 to 2017 is 0.8 percent, well below the long-term rate from 1987 to 2017 of 2.7 percent. Unit labor costs increased 0.9 percent in 2017.


Weekly Initial Unemployment Claims Decrease 1,000 to 230,000
Posted: February 1, 2018 at 08:30 AM (Thursday)

In the week ending January 27, the advance figure for seasonally adjusted initial claims was 230,000, a decrease of 1,000 from the previous week's revised level. The previous week's level was revised down by 2,000 from 233,000 to 231,000. The 4-week moving average was 234,500, a decrease of 5,000 from the previous week's revised average. The previous week's average was revised down by 500 from 240,000 to 239,500. Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.

The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending January 20, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 20 was 1,953,000, an increase of 13,000 from the previous week's revised level. The previous week's level was revised up 3,000 from 1,937,000 to 1,940,000. The 4-week moving average was 1,932,750, an increase of 12,000 from the previous week's revised average. The previous week's average was revised up by 750 from 1,920,000 to 1,920,750.


Challenger Layoffs Increased to 44,653 in January
Posted: February 1, 2018 at 07:30 AM (Thursday)

The nation’s employers announced plans to cut 44,653 jobs in January, 37.7 percent more than the 32,423 cuts announced in December, according to a report released Thursday by global outplacement consultancy Challenger, Gray & Christmas, Inc.

While January cuts were up from the previous month, they were 2.8 percent lower than the same month one year ago, when 45,934 cuts were announced.

“Many companies are enjoying relative financial health and a strong economy right now. The good news for those who are finding themselves separated from their previous companies is that employers are scrambling to find talent,” said John Challenger, Chief Executive Officer of Challenger, Gray & Christmas, Inc.

Retail leads all sectors with 15,378 job cuts, 34.4 percent of the announced cuts last month. Retailers cut 31.6 percent fewer jobs last month than in January 2017, when 22,491 were recorded. Last January, retailers saw the highest single-month total since 53,968 Retail cuts were announced in January 2009.

The Consumer Products sector announced the second highest number of job cuts last month, with 7,158, while Health Care and Products companies announced 6,531.

“Retail, Consumer Products, and Services are all sectors ripe for automation. This may spell a loss of jobs in the short term, but could create better, higher-paying jobs going forward,” said Challenger.
The Services sector announced 3,212 cuts in January, while companies in the Transportation sector announced 1,472 cuts last month.

“It remains to be seen what impact the passage of tax legislation will have on companies’ staffing plans. We’ve seen a number of companies announce one-time bonuses or a raise to their minimum wages. Other companies are planning new investments, and several have pledged new jobs,” said Challenger.

According to Challenger tracking, seven companies have announced plans to add over 37,000 new jobs, so far. This includes Apple’s announcement of creating 20,000 new jobs and Starbucks pledge to hire 8,500 new workers. Nearly 180 companies have announced some sort of investment, either through bonuses to employees, increased wages, new jobs, or new facilities.

In fact, nearly 60 companies announced they are raising wages for their workers, typically to around $15 per hour.


FOMC target funds rate maintained at 1.25% - 1.50%
Posted: January 31, 2018 at 02:00 PM (Wednesday)

Information received since the Federal Open Market Committee met in December indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate. Gains in employment, household spending, and business fixed investment have been solid, and the unemployment rate has stayed low. On a 12-month basis, both overall inflation and inflation for items other than food and energy have continued to run below 2 percent. Market-based measures of inflation compensation have increased in recent months but remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

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

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

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

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


Help Wanted OnLine Labor Demand increased 1,200 to 4,903,300 in January
Posted: January 31, 2018 at 10:00 AM (Wednesday)

Online advertised vacancies increased 1,200 to 4,903,300 in January, according to The Conference Board Help Wanted OnLine® (HWOL) Data Series,released today. The December Supply/Demand rate stands at 1.34 unemployed for each advertised vacancy, with a total of 1.7 million more unemployed workers than the number of advertised vacancies. The number of unemployed was approximately 6.6 million in December.

The Professional occupational category saw changes in Education, Training, and Library (-60.4), Computer and mathematical science (23.2) and Healthcare practitioners and technical (-12.9). The Services/Production occupational category saw gains in Sales and related (30.8), Transportation (10.7), and Installation, maintenance, and repair (8.1).


Pending Home Sales Index rose 0.5% in December
Posted: January 31, 2018 at 10:00 AM (Wednesday)

Pending home sales were up slightly in December for the third consecutive month, according to the National Association of Realtors®. In 2018, existing-home sales and price growth are forecast to moderate, primarily because of the new tax law's expected impact in high-cost housing markets.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, moved higher 0.5 percent to 110.1 in December from an upwardly revised 109.6 in November. With last month's modest increase, the index is now 0.5 percent above a year ago.

Lawrence Yun, NAR chief economist, says pending sales edged up in December and reached their highest level since last March (111.3). "Another month of modest increases in contract activity is evidence that the housing market has a small trace of momentum at the start of 2018," he said. "Jobs are plentiful, wages are finally climbing and the prospect of higher mortgage rates are perhaps encouraging more aspiring buyers to begin their search now."

Added Yun, "Sadly, these positive indicators may not lead to a stronger sales pace. Buyers throughout the country continue to be hamstrung by record low supply levels that are pushing up prices — especially at the lower end of the market."

The uninterrupted supply and demand imbalances throughout the country fueled price appreciation to 5.8 percent in 2017, which was the sixth straight year of gains at or above 5 percent. While tight inventories are still expected to put upward pressure on prices in most areas this year, Yun expects overall price growth to shrink, with some states even experiencing a decline, because of the negative effect the changes to the mortgage interest deduction and state and local deductions under the new tax law. See NAR's 2018 state forecast for a look at home price projections: http://economistsoutlook.blogs.realtor.org/2018/01/09/tax-reform-impact-and-home-price-outlook/.

"In the short term, the larger paychecks most households will see from the tax cuts may give prospective buyers the ability to save for a larger down payment this year, and the healthy labor economy and job market will continue to boost demand," said Yun. "However, there's no doubt the nation's most expensive markets with high property taxes are going to be adversely impacted by the tax law."

Added Yun, "Just how severe is still uncertain, but with homeownership now less incentivized in the tax code, sellers in the upper end of the market may have to adjust their price expectations if they want to trade down or move to less expensive areas. This could in turn lead to both a decrease in sales and home values."

After expanding 1.1 percent in 2017 to 5.51 million, Yun does anticipate a slight increase (0.5 percent) in existing sales this year (5.54 million). Single-family housing starts are forecast to jump 13.3 percent to 961,000, which will push new home sales up 15.3 percent to 701,000 (608,000 in 2016).

The PHSI in the Northeast dipped 5.1 percent to 93.9 in December, and is now 2.7 percent below a year ago. In the Midwest the index decreased 0.3 percent to 105.0 in December, but is still 0.3 percent higher than December 2016.

Pending home sales in the South grew 2.6 percent to an index of 126.9 in December and are now 4.0 percent higher than last December. The index in the West rose 1.5 percent in December to 101.7, but is still 3.1 percent below a year ago.


Chicago Purchasing Managers Index rose to 67.6 in January
Posted: January 31, 2018 at 09:45 AM (Wednesday)

The MNI Chicago Business Barometer fell 2.1 points to 65.7 in January from a previously revised 67.8 in December.

Despite losing some ground in January, the Barometer continued in the same vein of form it displayed in the second half of 2017, making for an encouraging start to the New Year. The Barometer was up 28.3% on last January and at 65.7, stands above the H2 2017 average of 63.7.

Three of the five components that comprise the Barometer fell on the month, with only Employment and Supplier Deliveries notching up gains in January.

Firms reported a moderately slower pace of both incoming orders and output in January. The New Orders indicator fell to a five-month low, contributing most to the Barometer’s decline, while the Production indicator also fell in January, albeit to a lesser extent. With less activity on these fronts it gave firms the chance to target their backlog of unfilled orders. The Order Backlogs indicator fell to its lowest level since May.

Despite the softer pace of activity in January, supplier delivery times lengthened while the pace at which firms added to their inventories was marginally lower in January, having hit a three-year high in December.

Elsewhere, hiring intentions were on the rise in January. The Employment indicator hit a near-six-year high, breaking past the 60-mark for the first time since late 2013.

This month’s special questions asked firms to gauge the likely effects of prospective monetary and fiscal policies. With more than one rate hike penciled in for 2018, firms were asked how this would likely impact their business. While the majority saw it having no effect on their business, just 3.8% felt they would be hindered by higher rates compared to 37.7% who saw their activity continuing to expand.

Firms were also asked how they thought the government’s impending tax reform bill would impact both their business as well as the wider economy. A clear majority, 63.5%, saw both parties reaping the benefits of less red tape, followed by 11.5% who felt that while beneficial to them it may not be in the best interests of the country. Just under 6% felt it would be bad for both their business and the US economy.

Inflationary pressures at the factory gate intensified again in January, rising to the highest level since September. Steel, wood and resin were said to have increased in price.

“Official data in Q1 tends to come in weaker than in reality, but our survey suggests that despite softening a little, sentiment among businesses remains robust. This was the best January result in seven years, capped off by the Employment indicator rising to its highest level in almost 6 years,” said Jamie Satchi, Economist at MNI Indicators.

“Still, inflationary pressures remain elevated and show no signs of abating, something that should be at the forefront of the Fed’s mind,” he added.


Employment Cost Index up 0.6% in 4Q2017
Posted: January 31, 2018 at 08:30 AM (Wednesday)

Compensation costs for civilian workers increased 0.6 percent, seasonally adjusted, for the 3-month period ending in December 2017, the U.S. Bureau of Labor Statistics reported today. Wages and salaries (which make up about 70 percent of compensation costs) increased 0.5 percent, and benefits (which make up the remaining 30 percent of compensation) increased 0.5 percent.

Civilian Workers
Compensation costs for civilian workers increased 2.6 percent for the 12-month period ending in December 2017. In December 2016, compensation costs increased 2.2 percent. Wages and salaries increased 2.5 percent for the 12- month period ending in December 2017 and increased 2.3 percent for the 12-month period ending in December 2016. Benefit costs increased 2.5 percent for the 12-month period ending in December 2017. In December 2016, the increase was 2.1 percent.

Private Industry Workers
Compensation costs for private industry workers increased 2.6 percent over the year. In December 2016, the increase was 2.2 percent. Wages and salaries increased 2.8 percent for the current 12-month period, a larger increase than the December 2016 increase of 2.3 percent. The cost of benefits rose 2.3 percent for the 12-month period ending in December 2017, higher than the 1.8 percent increase in December 2016.

Employer costs for health benefits increased 1.1 percent for the 12-month period ending in December 2017. (For further information, see www.bls.gov/web/eci/echealth.pdf.)

Among occupational groups, compensation cost increases for private industry workers for the 12-month period ending in December 2017 ranged from 2.4 percent for management, professional, and related occupations to 3.1 percent for production, transportation, and material moving occupations.

Among industry supersectors, compensation cost increases for private industry workers for the 12-month period ending in December 2017 ranged from 2.0 percent for education and health services and financial activities to 3.6 percent for leisure and hospitality.

State and Local Government
Compensation costs for state and local government workers increased 2.5 percent for the 12-month period ending in December 2017. In December 2016, the increase was 2.4 percent. Wages and salaries increased 2.1 percent for the 12-month period ending in December 2017, the same as the December 2016 increase. Benefit costs increased 3.2 percent for the 12-month period ending in December 2017. The prior year’s increase was 3.1 percent.


ADP National Employment Report increased by 234,000 jobs in January
Posted: January 31, 2018 at 08:15 AM (Wednesday)

Private sector employment increased by 234,000 jobs from December to January according to the January ADP National Employment Report®.

“We’ve kicked off the year with another month of unyielding job gains,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Service providers were firing on all cylinders, posting their strongest gain in more than a year. We also saw robust hiring from midsize and large companies, while job growth in smaller firms slowed slightly.”

Mark Zandi, chief economist of Moody’s Analytics, said, “The job market juggernaut marches on. Given the strong January job gain, 2018 is on track to be the eighth consecutive year in which the economy creates over 2 million jobs. If it falls short, it is likely because businesses can’t find workers to fill all the open job positions.”


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: January 31, 2018 at 07:00 AM (Wednesday)

Mortgage applications decreased 2.6 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending January 26, 2018.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 12 percent compared with the previous week. The Refinance Index decreased 3 percent from the previous week. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index increased 15 percent compared with the previous week and was 10 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 47.8 percent of total applications, its lowest level since August 2017, from 49.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.7 percent of total applications.

The FHA share of total applications decreased to 10.7 percent from 11.4 percent the week prior. The VA share of total applications decreased to 10.1 percent from 10.9 percent the week prior. The USDA share of total applications remained unchanged at 0.8 percent.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to its highest level since March 2017, 4.41 percent, from 4.36 percent, with points increasing to 0.56 from 0.54 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) increased to its highest level since March 2017, 4.34 percent, from 4.31 percent, with points increasing to 0.40 from 0.38 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to its highest level since September 2013, 4.40 percent, from 4.37 percent, with points increasing to 0.68 from 0.65 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to its highest level since April 2011, 3.85 percent, from 3.81 percent, with points increasing to 0.60 from 0.52 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to its highest level since March 2011, 3.79 percent, from 3.70 percent, with points increasing to 0.41 from 0.39 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


Consumer Confidence increased in January to 125.4
Posted: January 30, 2018 at 10:00 AM (Tuesday)

The Conference Board Consumer Confidence Index® increased in January, following a decline in December. The Index now stands at 125.4 (1985=100), up from 123.1 in December. The Present Situation Index decreased slightly, from 156.5 to 155.3, while the Expectations Index increased from 100.8 last month to 105.5 this month.

“Consumer confidence improved in January after declining in December,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current conditions decreased slightly, but remains at historically strong levels. Expectations improved, though consumers were somewhat ambivalent about their income prospects over the coming months, perhaps the result of some uncertainty regarding the impact of the tax plan. Overall, however, consumers remain quite confident that the solid pace of growth seen in late 2017 will continue into 2018.”

Consumers’ assessment of current conditions was slightly less positive in December. Consumers’ assessment of business conditions was mixed. The percentage saying business conditions are “good” decreased slightly from 35.8 percent to 34.9 percent, while those saying business conditions are “bad” increased slightly, from 11.7 percent to 12.7 percent. Consumers’ assessment of the labor market was also mixed. The percentage of consumers claiming jobs are “plentiful” increased from 36.3 percent to 37.6 percent, while those claiming jobs are “hard to get” increased marginally, from 16.0 percent to 16.4 percent.

Consumers’ optimism about the short-term outlook improved in January, following a sharp decline in December. The percentage of consumers anticipating business conditions to improve over the next six months increased marginally, from 21.6 percent to 22.0 percent, while those expecting business conditions to worsen increased from 9.0 percent to 9.8 percent.

Consumers’ outlook for the job market was also less negative. The proportion expecting more jobs in the months ahead was virtually unchanged at 19.0 percent, while those anticipating fewer jobs declined from 15.9 percent to 11.8 percent. Regarding their short-term income prospects, the percentage of consumers expecting an improvement decreased from 22.7 percent to 20.4 percent, while the proportion expecting a decrease also declined, from 9.0 percent to 7.7 percent.


S&P CoreLogic Case-Shiller Home Price Indices gained 0.2% in November
Posted: January 30, 2018 at 09:00 AM (Tuesday)

S&P Dow Jones Indices today released the latest results for the S&P CoreLogic Case-Shiller Indices, the leading measure of U.S. home prices. Data released today for November 2017 shows that home prices continued their rise across the country over the last 12 months.

YEAR-OVER-YEAR
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 6.2% annual gain in November, up from 6.1% in the previous month. The 10-City Composite annual increase came in at 6.1%, up from 5.9% the previous month. The 20-City Composite posted a 6.4% year-over-year gain, up from 6.3% the previous month.

Seattle, Las Vegas, and San Francisco reported the highest year-over-year gains among the 20 cities. In November, Seattle led the way with a 12.7% year-over-year price increase, followed by Las Vegas with a 10.6% increase, and San Francisco with a 9.1% increase. Six cities reported greater price increases in the year ending November 2017 versus the year ending October 2017.

MONTH-OVER-MONTH
Before seasonal adjustment, the National Index posted a month-over-month gain of 0.2% in November. The 10-City and 20-City Composites reported increases of 0.3% and 0.2%, respectively. After seasonal adjustment, the National Index recorded a 0.7% month-over-month increase in November. The 10-City and 20-City Composites posted 0.8% and 0.7% month-over-month increases, respectively. Ten of 20 cities reported increases in November before seasonal adjustment, while all 20 cities reported increases after seasonal adjustment.

ANALYSIS
“Home prices continue to rise three times faster than the rate of inflation,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “The S&P CoreLogic Case-Shiller National Index year-over-year increases have been 5% or more for 16 months; the 20-City index has climbed at this pace for 28 months. Given slow population and income growth since the financial crisis, demand is not the primary factor in rising home prices. Construction costs, as measured by National Income and Product Accounts, recovered after the financial crisis, increasing between 2% and 4% annually, but do not explain all of the home price gains. From 2010 to the latest month of data, the construction of single family homes slowed, with single family home starts averaging 632,000 annually. This is less than the annual rate during the 2007-2009 financial crisis of 698,000, which is far less than the long-term average of slightly more than one million annually from 1959 to 2000 and 1.5 million during the 2001-2006 boom years. Without more supply, home prices may continue to substantially outpace inflation.”

“Looking across the 20 cities covered here, those that enjoyed the fastest price increases before the 2007-2009 financial crisis are again among those cities experiencing the largest gains. San Diego, Los Angeles, Miami and Las Vegas, price leaders in the boom before the crisis, are again seeing strong price gains. They have been joined by three cities where prices were above average during the financial crisis and continue to rise rapidly – Dallas, Portland OR, and Seattle.”

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, which covers all nine U.S. census divisions, recorded a 6.2% annual gain in November 2017. The 10-City and 20-City Composites reported year-over-year increases of 6.1% and 6.4%, respectively. As of November 2017, average home prices for the MSAs within the 10-City and 20-City Composites are back to their winter 2007 levels.


Paychex-IHS Small Business Jobs Index increase to 99.88 in January
Posted: January 30, 2018 at 08:30 AM (Tuesday)

The Paychex | IHS Markit Small Business Employment Watch started the year with an increase in small business job growth and wages in January. The Small Business Jobs Index stands at 99.88, a 0.18 percent increase over December. The jobs growth rate remains below last January’s level by 0.74 percent. Hourly earnings have grown $0.72 in the past year to $26.38. January’s 12-month wages growth rate of 2.81 percent marks an improvement from 2.78 percent in December.

“Small business job growth improved 0.18 percent in January, ending a string of ten straight declines,” said James Diffley, chief regional economist at IHS Markit.

“After an extended period of uncertainty, the passing of federal tax reform at the end of last year offered clarity to business owners on the immediate future of U.S. tax policy,” said Martin Mucci, Paychex president and CEO. “While it’s still too early to see the impacts of tax reform on net pay, we’ll be keeping a close eye on this in the weeks ahead.”


At 99.88, the Small Business Jobs Index increased for the first time since February 2017
At $26.38, hourly earnings increased 2.81 percent ($0.72) year-over-year
South leads regions in employment growth; West ranks highest for wage growth
Tennessee continues to lead job growth; Arizona remains first in annual hourly earnings growth
Denver ranks first in small business job growth; Phoenix leads in small business wage growth

Small business job gains in Leisure and Hospitality improve the most among industry sectors in January; Hourly earnings for Construction climb 3.36 percent


Texas Fed Manufacturing Activity Shows Expansion Continues in January
Posted: January 29, 2018 at 10:30 AM (Monday)

Texas factory activity continued to expand in January, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, remained elevated but retreated to 16.8 after surging to an 11-year high in December.

Most other measures of manufacturing activity also pointed to somewhat slower growth in January after the rapid expansion seen in December. The new orders index moved down from 30.1 to 25.5, and the growth rate of orders index fell six points to 15.5. The capacity utilization index also stayed positive but declined, dropping 12 points to 14.5. Meanwhile, the shipments index rose six points to 27.1, indicating a pickup in growth.

Perceptions of broader business conditions remained highly positive in January. The general business activity index pushed up further to 33.4, its highest reading in more than 12 years. The company outlook index remained elevated but edged down to 27.8.

Labor market measures suggested a slight deceleration in employment growth and longer workweeks this month. The employment index came in at 15.2, down five points from December. More than a quarter of firms noted net hiring, compared with 12 percent noting net layoffs. The hours worked index declined but remained positive at 13.4, suggesting a continued lengthening of workweeks.

Upward pressure on prices and wages remained elevated in January. The raw materials prices index ticked up one point to 33.5, and the finished goods prices index rose four points to 22.3. Meanwhile, the wages and benefits index stayed well above its average reading but inched down to 23.3.

Expectations regarding future business conditions were even more optimistic in January. The index of future general business activity rose four points to 44.5, its highest level since December 2004. The future company outlook index edged up to 43.2, also a relatively high level. Other indexes of future manufacturing activity pushed further into positive territory.


Personal Income increased 0.4%, Spending increased 0.4%
Posted: January 29, 2018 at 08:30 AM (Monday)

Personal income increased $58.7 billion (0.4 percent) in December according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $48.0 billion (0.3 percent) and personal consumption expenditures (PCE) increased $54.2 billion (0.4 percent).

Real DPI increased 0.2 percent in December and Real PCE increased 0.3 percent. The PCE price index increased 0.1 percent. Excluding food and energy, the PCE price index increased 0.2 percent.

The increase in personal income in December primarily reflected increases in wages and salaries and personal interest income.

The $34.4 billion increase in real PCE in December reflected an increase of $11.1 billion in spending for goods and a $23.2 billion increase in spending for services (table 7). Within goods, new motor vehicles was the leading contributor to the increase. Within services, the largest contributor to the increase was spending for electricity and gas. Detailed information on monthly real PCE spending can be found in Table 2.4.6U.

Personal outlays increased $61.5 billion in December (table 3). Personal saving was $351.6 billion in December and the personal saving rate, personal saving as a percentage of disposable personal income, was 2.4 percent.

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

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


4Q2017 GDP advance estimate increased 2.6%, 2017 GDP 2.3 %
Posted: January 26, 2018 at 08:30 AM (Friday)

Real gross domestic product (GDP) increased at an annual rate of 2.6 percent in the fourth quarter of 2017, according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.2 percent.

The Bureau emphasized that the fourth-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see "Source Data for the Advance Estimate" on page 3). The "second" estimate for the fourth quarter, based on more complete data, will be released on February 28, 2018.

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

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

Current-dollar GDP increased 5.0 percent, or $238.3 billion, in the fourth quarter to a level of $19,738.9 billion. In the third quarter, current-dollar GDP increased 5.3 percent, or $250.6 billion.

The price index for gross domestic purchases increased 2.5 percent in the fourth quarter, compared with an increase of 1.7 percent in the third quarter (table 4). The PCE price index increased 2.8 percent, compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index increased 1.9 percent, compared with an increase of 1.3 percent.

Personal Income
Current-dollar personal income increased $178.9 billion in the fourth quarter, compared with an increase of $112.3 billion in the third. The acceleration in personal income primarily reflected an upturn in personal interest income and an acceleration in nonfarm proprietors’ income.

Disposable personal income increased $139.0 billion, or 3.9 percent, in the fourth quarter, compared with an increase of $73.8 billion, or 2.1 percent, in the third. Real disposable personal income increased 1.1 percent, compared with an increase of 0.5 percent.

Personal saving was $384.4 billion in the fourth quarter, compared with $478.3 billion in the third. The personal saving rate -- personal saving as a percentage of disposable personal income -- was 2.6 percent in the fourth quarter, compared with 3.3 percent in the third.

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

The increase in real GDP in 2017 primarily reflected positive contributions from PCE, nonresidential fixed investment, and exports. Imports, which are a subtraction in the calculation of GDP, increased.

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

Current-dollar GDP increased 4.1 percent, or $762.3 billion, in 2017 to a level of $19,386.8 billion, compared with an increase of 2.8 percent, or $503.8 billion, in 2016 (table 1 and table 3).

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

During 2017 (measured from the fourth quarter of 2016 to the fourth quarter of 2017), real GDP increased 2.5 percent, compared with an increase of 1.8 percent during 2016. The price index for gross domestic purchases increased 1.9 percent during 2017, compared with an increase of 1.4 percent during 2016.


December New Orders for Durable Goods increased 2.9%, Ex-Trans up 0.6%
Posted: January 26, 2018 at 08:30 AM (Friday)

New Orders
New orders for manufactured durable goods in December increased $7.0 billion or 2.9 percent to $249.4 billion, the U.S. Census Bureau announced today. This increase, up four of the last five months, followed a 1.7 percent November increase. Excluding transportation, new orders increased 0.6 percent. Excluding defense, new orders increased 2.2 percent. Transportation equipment, also up four of the last five months, led the increase, $6.0 billion or 7.4 percent to $87.2 billion.

Shipments
Shipments of manufactured durable goods in December, up seven of the last eight months, increased $1.5 billion or 0.6 percent to $246.8 billion. This followed a 1.3 percent November increase. Fabricated metal products, also up seven of the last eight months, led the increase, $0.5 billion or 1.5 percent to $33.5 billion.

Unfilled Orders
Unfilled orders for manufactured durable goods in December, up four consecutive months, increased $6.9 billion or 0.6 percent to $1,144.1 billion. This followed a 0.1 percent November increase. Transportation equipment, up following two consecutive monthly decreases, led the increase, $6.0 billion or 0.8 percent to $775.9 billion.


Kansas City Fed Manufacturing Activity strengthened further in January
Posted: January 25, 2018 at 11:00 AM (Thursday)

Growth in Tenth District manufacturing activity strengthened further in January, and firms’ expectations for future activity increased. Most price indexes rose moderately from the previous month, with some indexes reaching five to ten year highs.

The month-over-month composite index was 16 in January, higher than 13 in December and 15 in November. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Growth in factory activity improved at both durable and non-durable goods plants, particularly for machinery, aircraft, chemicals, and plastics. Most month-over-month indexes also increased. The shipments, new orders, and order backlog indexes all rose moderately. The employment index inched higher from 16 to 18, while the production index was unchanged. The raw materials inventory index climbed from 7 to 15, and the finished goods inventory index moved into positive territory.

Most year-over-year factory indexes were slightly higher in January. The composite index rose from 30 to 35, and the production, order backlog, and new orders for exports indexes also increased. The shipments and new order indexes were unchanged, while the employment and capital expenditures indexes fell slightly. The raw materials inventory index jumped from 15 to 38, and the finished goods inventory index also increased.

Future factory activity expectations improved moderately over the previous month. The future composite index increased from 23 to 29, and the future production, shipments, new orders, and order backlog indexes also rose. The future capital expenditures index jumped from 22 to 38, while the future employment index edged lower. The future raw materials inventory index increased from 7 to 15, and the future finished goods inventory index moved slightly higher.

Most price indexes increased moderately in January. The month-over-month finished goods price index climbed from 11 to 21, and the raw materials price index rose considerably, with both reaching their highest level in approximately six years. The year-over-year finished goods price index increased from 37 to 49, its highest level since July 2011, and the year-over-year raw materials price index moved moderately higher. The future finished goods price index jumped from 31 to 44, reaching a ten-year high, and the future raw materials price index also increased.


New Home Sales in December at annual rate of 733,000
Posted: January 25, 2018 at 10:00 AM (Thursday)

New Home Sales
Sales of new single-family houses in December 2017 were at a seasonally adjusted annual rate of 625,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 9.3 percent (±11.0 percent)* below the revised November rate of 689,000, but is 14.1 percent (±13.0 percent) above the December 2016 estimate of 548,000. An estimated 608,000 new homes were sold in 2017. This is 8.3 percent (±4.1 percent) above the 2016 figure of 561,000.

Sales Price
The median sales price of new houses sold in December 2017 was $335,400. The average sales price was $398,900.

For Sale Inventory and Months’ Supply
The seasonally-adjusted estimate of new houses for sale at the end of December was 295,000. This represents a supply of 5.7 months at the current sales rate.


U.S. Leading Economic Index increased 0.6% in December
Posted: January 25, 2018 at 10:00 AM (Thursday)

The Conference Board Leading Economic Index® (LEI)for theU.S. increased 0.6 percent in December to 107.0 (2016 = 100), following a 0.5 percent increase in November, and a 1.3 percent increase in October.

“The U.S. LEI continued rising rapidly in December, pointing to a continuation of strong economic growth in the first half of 2018. The passing of the tax plan is likely to provide even more tailwind to the current expansion,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “The gains among the leading indicators have been widespread, with most of the strength concentrated in new orders in manufacturing, consumers’ outlook on the economy, improving stock markets and financial conditions.”

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.3 percent in December to 102.8 (2016 = 100), following a 0.1 percent increase in November, and a 0.4 percent increase in October.

The Conference Board Lagging Economic Index® (LAG) for the U.S. increased 0.7 percent in December to 104.0 (2016 = 100), following a 0.1 percent increase in November and a 0.3 percent increase in October.


Weekly Initial Unemployment Claims Increase 17,000 to 233,000
Posted: January 25, 2018 at 08:30 AM (Thursday)

In the week ending January 20, the advance figure for seasonally adjusted initial claims was 233,000, an increase of 17,000 from the previous week's revised level. The previous week's level was revised down by 4,000 from 220,000 to 216,000. The 4-week moving average was 240,000, a decrease of 3,500 from the previous week's revised average. The previous week's average was revised down by 1,000 from 244,500 to 243,500. The claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.

The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending January 13, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 13 was 1,937,000, a decrease of 28,000 from the previous week's revised level. The previous week's level was revised up 13,000 from 1,952,000 to 1,965,000. The 4-week moving average was 1,920,000, a decrease of 3,500 from the previous week's revised average. The previous week's average was revised up by 2,500 from 1,921,000 to 1,923,500.


Existing-Home Sales slipped 3.6% in December, 2017 Sales Up 1.1%
Posted: January 24, 2018 at 10:00 AM (Wednesday)

Existing-home sales subsided in most of the country in December, but 2017 as a whole edged up 1.1 percent and ended up being the best year for sales in 11 years, according to the National Association of Realtors®.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 1.1 percent in 2017 to a 5.51 million sales pace and surpassed 2016 (5.45 million) as the highest since 2006 (6.48 million).

In December, existing-home sales slipped 3.6 percent to a seasonally adjusted annual rate of 5.57 million from a downwardly revised 5.78 million in November. After last month’s decline, sales are still 1.1 percent above a year ago.

Lawrence Yun, NAR chief economist, says the housing market performed remarkably well for the U.S. economy in 2017, with substantial wealth gains for homeowners and historically low distressed property sales. “Existing sales concluded the year on a softer note, but they were guided higher these last 12 months by a multi-year streak of exceptional job growth, which ignited buyer demand,” said Yun. “At the same time, market conditions were far from perfect. New listings struggled to keep up with what was sold very quickly, and buying became less affordable in a large swath of the country. These two factors ultimately muted what should have been a stronger sales pace.”

Added Yun, “Closings scaled back in most areas last month for this same reason. Affordability pressures persisted, and the pool of interested buyers at the end of the year significantly outweighed what was available for sale.”

The median existing-home price for all housing types in December was $246,800, up 5.8 percent from December 2016 ($233,300). December’s price increase marks the 70th straight month of year-over-year gains.

Total housing inventory at the end of December dropped 11.4 percent to 1.48 million existing homes available for sale, and is now 10.3 percent lower than a year ago (1.65 million) and has fallen year-over-year for 31 consecutive months. Unsold inventory is at a 3.2-month supply at the current sales pace, which is down from 3.6 months a year ago and is the lowest level since NAR began tracking in 1999.

“The lack of supply over the past year has been eye-opening and is why, even with strong job creation pushing wages higher, home price gains – at 5.8 percent nationally in 2017 – doubled the pace of income growth and were even swifter in several markets,” said Yun.

First-time buyers were 32 percent of sales in December, which is up from 29 percent in November and unchanged from a year ago. NAR’s 2017 Profile of Home Buyers and Sellers – released in late 2017 – revealed that the annual share of first-time buyers was 34 percent.

According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage inched higher for the third straight month to 3.95 percent in December from 3.92 percent in November. The average commitment rate for all of 2017 was 3.99 percent.

“Rising wages and the expanding economy should lay the foundation for 2018 being the turning point towards an uptick in sales to first-time buyers,” said Yun. “However, if inventory conditions fail to improve, higher mortgage rates and prices will further eat into affordability and prevent many renters from becoming homeowners.”

Properties typically stayed on the market for 40 days in December, which is unchanged from November and down from a year ago (52 days). Forty-four percent of homes sold in December were on the market for less than a month.

Realtor.com®’s Market Hotness Index, measuring time-on-the-market data and listings views per property, revealed that the hottest metro areas in December were San Jose-Sunnyvale-Santa Clara, Calif.; San Francisco-Oakland-Hayward, Calif.; Vallejo-Fairfield, Calif.; Colorado Springs, Colo.; and Stockton-Lodi, Calif.

NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty, says improving the new tax law is a top priority for Realtors® in 2018. “Especially in high-cost, high-taxed markets, there’s still big concern that the overall structure of the final bill diminishes the tax benefits of homeownership in a way that would adversely affect home values and sales over time,” she said. “As the housing market adjusts to the new law, Realtors® will be listening to their clients and communicating to lawmakers ways to ensure owning a home is truly incentivized in the tax code.”

All-cash sales were 20 percent of transactions in December, which is down from 22 percent in November and 21 percent a year ago. Individual investors, who account for many cash sales, purchased 16 percent of homes in December, up from 14 percent both last month and a year ago. For the year, all-cash sales averaged 21 percent of sales (23 percent in 2016), and investor sales were at 15 percent (14 percent in 2016).

Distressed sales – foreclosures and short sales – were 5 percent of sales in December, up from 4 percent in November but down from 7 percent a year ago. Four percent of December sales were foreclosures and 1 percent were short sales.

Single-family and Condo/Co-op Sales
Single-family home sales declined 2.6 percent to a seasonally adjusted annual rate of 4.96 million in December from 5.09 million in November, but are still 1.0 percent above the 4.91 million pace a year ago. The median existing single-family home price was $248,100 in December, up 5.8 percent from December 2016.

Existing condominium and co-op sales fell 11.6 percent to a seasonally adjusted annual rate of 610,000 units in December, but are still 1.7 percent above a year ago. The median existing condo price was $236,500 in December, which is 6.4 percent above a year ago.

Regional Breakdown
December existing-home sales in the Northeast fell 7.5 percent to an annual rate of 740,000, and are now 2.6 percent below a year ago. The median price in the Northeast was $261,400, which is 3.0 percent above December 2016.

In the Midwest, existing-home sales dipped 6.3 percent to an annual rate of 1.33 million in December, but are still 1.5 percent above a year ago. The median price in the Midwest was $191,400, up 7.8 percent from a year ago.

Existing-home sales in the South decreased 1.7 percent to an annual rate of 2.30 million in December, but are still 3.1 percent higher than a year ago. The median price in the South was $221,200, up 5.8 percent from a year ago.

Existing-home sales in the West declined 1.6 percent to an annual rate of 1.20 million in December, and are now 0.8 percent below a year ago. The median price in the West was $367,400, up 7.3 percent from December 2016.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: January 24, 2018 at 07:00 AM (Wednesday)

Mortgage applications increased 4.5 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending January 19, 2018. This week's results included an adjustment for the MLK Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 4.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4 percent compared with the previous week. The Refinance Index increased 1 percent from the previous week. The seasonally adjusted Purchase Index increased 6 percent from one week earlier to its highest level since April 2010. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 7 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 49.4 percent of total applications from 52.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 5.2 percent of total applications.

The FHA share of total applications decreased to 11.4 percent from 11.7 percent the week prior. The VA share of total applications increased to 10.9 percent from 10.7 percent the week prior. The USDA share of total applications remained unchanged at 0.8 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to its highest level since March 2017, 4.36 percent, from 4.33 percent, with points remaining unchanged at 0.54 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) increased to its highest level since March 2017, 4.31 percent, from 4.25 percent, with points increasing to 0.38 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to its highest level since September 2013, 4.37 percent, from 4.30 percent, with points remaining unchanged at 0.65 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to its highest level since September 2013, 3.81 percent, from 3.77 percent, with points increasing to 0.52 from 0.44 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to its highest level since April 2011, 3.70 percent, from 3.62 percent, with points decreasing to 0.39 from 0.48 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


Richmond Fed's Current Activity Index moved down from 20 to 14
Posted: January 23, 2018 at 10:00 AM (Tuesday)

According to the latest survey by the Federal Reserve Bank of Richmond, Fifth District manufacturing firms saw slower growth in January, even as each of the expansion metrics remained positive. The composite index moved down from 20 to 14. This decrease resulted from a decline in the metrics for both shipments and employment. The third component, new orders, held steady. However, manufacturing firms saw an increase in backlogs in January, after a decrease in December, as the index rose from −4 to 5. Firms reported that they expect growth to strengthen in the coming months.

District manufacturing firms saw continued price increases in January. However, prices received grew at a slower rate than they had in December, while increases in prices paid was unchanged. Firms expect prices to rise at a faster rate in the next six months, although expectations of price growth were below their December values.


Philadelphia NonManufacturing Activity Suggest a Pickup in Growth in January
Posted: January 23, 2018 at 08:30 AM (Tuesday)

Respondents to the January Nonmanufacturing Business Outlook Survey reported that business activity continued to expand in the region. The firm-level general activity index rose for the second consecutive month, and the indicator for new orders also improved. The sales/revenues index decreased but remained positive. However, the full-time employment index fell to near zero. More firms reported increases in prices for their own products this month compared with last month, pushing up the prices received index. The diffusion index for future general activity at the firm level rose sharply.

Firm-Level Indicators Suggest a Pickup in Growth
The diffusion index for current general activity at the firm level increased for the second consecutive month, rising 9 points from a revised reading of 20.6 in December to 29.3 in January (see Chart).* More than 46 percent of the firms reported an increase in activity this month, while 17 percent reported a decrease. The new orders index also improved, but the sales/revenues index edged down. The diffusion index for new orders increased 9 points to 21.6, as the share of firms reporting an increase in new orders rose from 28 percent in December to 37 percent in January. Meanwhile, the share of firms that indicated an increase in sales/revenues (42 percent) exceeded the share that indicated a decrease (18 percent). Nonetheless, the sales/revenues index fell by 5 points to 23.9. The firms’ perceptions of activity in the region also weakened, as the regional activity index fell 10 points to 19.5.

Full-Time Employment Levels Hold Mostly Steady
Most firms (73 percent) reported no change in full-time employment. The share of firms that reported an increase in full-time employment (11 percent) was about the same as the share that reported a decrease (12 percent), and the full-time employment index fell 11 points to near zero. The part-time employment index edged up, however, from 12.1 in December to 15.5 in January. The average workweek index fell 4 points to 19.2, while the wages and benefits index fell 4 points to 29.9.

Firms Report Increases in Prices
The price indicators rose for the second consecutive month, as firms continued to report increases in both prices received and prices paid. The prices received index rose 7 points to 17.3. In January, 20 percent of the firms reported an increase in prices received for their products, and only 3 percent reported a decrease. With respect to prices paid by the firms, a higher share reported an increase in prices for inputs (32 percent). Nonetheless, the prices paid index increased less than a full point to 27.8.

Capital Expenditures Rise
The indexes for spending on equipment and software and on physical plant rose. The index for equipment and software spending increased 7 points to 27.8. The share of firms reporting increased spending on equipment and software (31 percent) exceeded the share reporting decreased spending (3 percent). The index for physical plant spending rose 5 points to 27.2.

Firms Report That Demand Rose in 2017
In this month’s special question, firms were asked to assess the underlying demand for their products and/or services over the course of the past year. Most firms (61 percent) reported an increase in underlying demand; 46 percent characterized the increase as modest. More than 20 percent reported no change, and 19 percent reported a modest decrease.

Firms Are More Optimistic About Future Growth
The respondents to this month’s survey expressed a high degree of optimism about activity over the next six months. The diffusion index for future activity at the firm level rose to 62.6, a 17 point improvement over the revised December reading (see Chart). More than 68 percent of the respondents expect an increase in activity at their firms, while 6 percent expect a decrease. The respondents’ views about overall growth in the region over the next six months also strengthened: The future regional activity index increased 7 points to 45.4.

Summary
The firms responding to this month’s Nonmanufacturing Business Outlook Survey reported a pickup in the pace of business activity at their companies. Although the index for sales/revenues fell, the indicators for current general activity at the firm level and new orders rose. The index for full-time employment fell to a near-zero reading, and the indicators for prices received and prices paid rose. The firm-level future activity index suggests a high degree of optimism.


Chicago Fed National Activity Points to a Pickup in Economic Growth in December
Posted: January 22, 2018 at 08:30 AM (Monday)

The CFNAI Diffusion Index, which is also a three-month moving average, edged down to +0.23 in December from +0.26 in November. Forty-three of the 85 individual indicators made positive contributions to the CFNAI in December, while 42 made negative contributions. Thirty-seven indicators improved from November to December, while 47 indicators deteriorated and one was unchanged. Of the indicators that improved, nine made negative contributions.

The contribution from production-related indicators to the CFNAI rose to +0.25 in December from –0.02 in November. Total industrial production increased 0.9 percent in December after moving down 0.1 percent in November. The sales, orders, and inventories category made a contribution of +0.08 to the CFNAI in December, up slightly from +0.04 in November.

Employment-related indicators contributed +0.01 to the CFNAI in December, down from +0.12 in November. Nonfarm payrolls increased by 148,000 in December after increasing by 252,000 in November. The contribution of the personal consumption and housing category to the CFNAI edged down to –0.07 in December from –0.03 in November. Housing starts decreased to 1,192,000 annualized units in December from 1,299,000 in November.

The CFNAI was constructed using data available as of January 18, 2018. At that time, December data for 49 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index. The November monthly index value was revised to +0.11 from an initial estimate of +0.15, and the October monthly index value was revised to +0.87 from last month’s estimate of +0.76. Revisions to the monthly index can be attributed to two main factors: revisions in previously published data and differences
between the estimates of previously unavailable data and subsequently published data. The revisions to both the November and October monthly index values were primarily due to the former.

Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) moved up to +0.27 in December from +0.11 in November. Two of the four broad categories of indicators that make up the index increased from November, and three of the four categories made positive contributions to the index in December. The index’s three-month moving average, CFNAI-MA3, ticked down to +0.42 in December from +0.43 in November.


University of Michigan Consumer Confidence Preliminary January Results at 94.4
Posted: January 19, 2018 at 10:00 AM (Friday)

While the preliminary January reading for the Sentiment Index was largely unchanged from last month (-1.5%), consumers evaluated current economic conditions less favorably (-4.6%). This small decrease in current conditions produced a small overall decline. Importantly, the survey recorded persistent strength in personal finances and buying plans, while favorable levels of buying conditions for household durables have receded to preholiday levels in early January, largely due to less attractive pricing. The Expectations Index remained virtually unchanged at 84.8. Tax reform was spontaneously mentioned by 34% of all respondents; 70% of those who mentioned tax reform thought the impact would be positive, and 18% said it would be negative. The disconnect between the future outlook assessment and the largely positive view of the tax reform is due to uncertainties about the delayed impact of the tax reforms on the consumers. Some of the uncertainty is related to how much a cut or an increase people, especially high income households who live in high-tax states, face. Near and long term gas price expectations inched upward in early January but remained significantly below their peak. While long term inflation expectation remained at its 2017 average level and short term inflation expectation inched upward, consumers continued to remain very optimistic about the low national unemployment rate


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