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Kansas City Fed Manufacturing Activity rebounded moderately in September
Posted: September 22, 2016 at 11:00 AM (Thursday)

Tenth District manufacturing activity rebounded moderately in September, and producers’ expectations for future activity remained positive. The price indexes were mixed. The month-over-month composite index was 6 in September, up from -4 in August and -6 in July. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Non-durable goods activity grew modestly, while durable goods production grew strongly, particularly for machinery and metals production. Most month-over-month indexes improved markedly in September. The production index climbed from -7 to 15, and the shipments and new orders indexes also rose considerably. The employment, new export orders, order backlog indexes were modestly higher, while the supplier delivery time index fell into negative territory. The raw materials inventory index rose from -1 to 8, and the finished goods inventory index inched higher.

Year-over-year factory indexes improved further but remained below zero. The composite year-over-year index inched higher from -12 to -9, and the new orders and new orders for exports indexes also rose somewhat. The production, shipments, and capital spending indexes were moderately higher, while the employment and order backlog indexes were unchanged. The supplier delivery time index eased to -5. The raw materials inventory index increased from -10 to -4, and the finished goods inventory index moved up to -7.

Most future factory indexes remained positive. The future composite index inched lower from 11 to 10, and the future production and supplier delivery time indexes were also slightly lower. However, the future capital spending index jumped to 14, the highest in over a year, and the future new orders for exports and employee workweek indexes rose modestly. The future employment and new orders indexes also edged higher, while the future shipments and order backlog indexes stayed flat. The future raw materials inventory index edged down -7, while the future finished goods index rose from -8 to -5.

Price indexes remained mixed in September. The month-over-month finished goods price index was unchanged at -7, while the raw materials price index edged lower again. The year-over-year finished goods price index fell into negative territory, while the raw materials price index rose slightly from -4 to -2. The future finished goods price index declined from 17 to 7, while the future raw materials price index increased to 26.


U.S. Leading Economic Index declined 0.2% in August
Posted: September 22, 2016 at 10:00 AM (Thursday)

The Conference Board Leading Economic Index® (LEI) for the U.S. declined 0.2 percent in August to 124.1 (2010 = 100), following a 0.5 percent increase in July, and a 0.2 percent increase in June.

“While the U.S. LEI declined in August, its trend still points to moderate economic growth in the months ahead,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “Although strengths and weaknesses among the leading indicators are roughly balanced, positive contributions from the financial indicators were more than offset by weakening of nonfinancial indicators, such as leading indicators of labor markets, suggesting some risks to growth persist.”

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.1 percent in August to 114.1 (2010 = 100), following a 0.3 percent increase in July, and a 0.3 percent increase in June.

The Conference Board Lagging Economic Index® (LAG) for the U.S. increased 0.2 percent in August to 122.1 (2010 = 100), following a 0.2 percent increase in July, and a 0.2 percent decline in June.


Existing-Home Sales declined 0.9% in August
Posted: September 22, 2016 at 10:00 AM (Thursday)

Existing-home sales eased up in August for the second consecutive month despite mortgage rates near record lows as higher home prices and not enough inventory for sale kept some would-be buyers at bay, according to the National Association of Realtors®. Only the Northeast region saw a monthly increase in closings in August, where inventory is currently more adequate.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, declined 0.9 percent to a seasonally adjusted annual rate of 5.33 million in August from a downwardly revised 5.38 million in July. After last month's decline, sales are at their second-lowest pace of 2016, but are still slightly higher (0.8 percent) than a year ago (5.29 million).

Lawrence Yun, NAR chief economist, says recent job growth is not yielding higher home sales. "Healthy labor markets in most the country should be creating a sustained demand for home purchases," he said. "However, there's no question that after peaking in June, sales in a majority of the country have inched backwards because inventory isn't picking up to tame price growth and replace what's being quickly sold."

Added Yun, "Hopes of a meaningful sales breakthrough as a result of this summer's historically low mortgage rates failed to materialize because supply and affordability restrictions continue to keep too many would-be buyers on the sidelines."

The median existing-home price for all housing types in August was $240,200, up 5.1 percent from August 2015 ($228,500). August's price increase marks the 54th consecutive month of year-over-year gains.

Total housing inventory at the end of August fell 3.3 percent to 2.04 million existing homes available for sale, and is now 10.1 percent lower than a year ago (2.27 million) and has declined year-over-year for 15 straight months. Unsold inventory is at a 4.6-month supply at the current sales pace, which is down from 4.7 months in July.

The share of first-time buyers was 31 percent in August, which is down from 32 percent both in July and a year ago. First-time buyers represented 30 percent of sales in all of 2015.

"It's very concerning to see that inventory conditions not only show no signs of improving but have actually worsened in recent months from their already suppressed levels a year ago," added Yun. "While recent data from the U.S. Census Bureau (link is external) shows that household incomes rose strongly last year, home prices are still outpacing incomes in many metro areas because of the persistent shortage of new and existing homes for sale. Without more supply, the U.S. homeownership rate will remain near 50-year lows."

According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage was 3.44 percent in August for the second consecutive month and remained at its lowest rate since January 2013 (3.41 percent). The average commitment rate for all of 2015 was 3.85 percent.

Properties typically stayed on the market for 36 days in August, unchanged from July and down considerably from a year ago (47 days). Short sales were on the market the longest at a median of 144 days in August, while foreclosures sold in 42 days and non-distressed homes took 35 days. Forty-six percent of homes sold in August were on the market for less than a month.

NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Florida, says in today's fast-moving market, a Realtor® who knows about down payment options and their target area is essential to a successful buying experience. "Given the inventory shortages in most markets, new listings at affordable prices are receiving multiple offers and going under contract almost immediately upon becoming available," he said. "Home shoppers serious about buying need to be ready with a pre-approval. This allows a Realtor® to hone in only on homes within the buyer's price range and ensures any offer presented to the seller is taken seriously."

Inventory data from Realtor.com® reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in August were San Francisco-Oakland-Hayward, Calif., San Jose-Sunnyvale-Santa Clara, Calif., and Seattle-Tacoma-Bellevue, Wash., all at a median of 33 days; Denver-Aurora-Lakewood, Colo., 36 days; and Vallejo-Fairfield, Calif., at a median of 37 days.

All-cash sales were 22 percent of transactions in August, up from 21 percent in July and unchanged from a year ago. Individual investors, who account for many cash sales, purchased 13 percent of homes in August, up from 11 percent in July and 12 percent a year ago. Sixty-two percent of investors paid in cash in August.

Distressed sales — foreclosures and short sales — were 5 percent of sales in August (lowest since NAR began tracking in October 2008), unchanged from last month and down from 7 percent a year ago. Four percent of August sales were foreclosures and 1 percent were short sales. Foreclosures sold for an average discount of 12 percent below market value in August (18 percent in July), while short sales were discounted 14 percent (16 percent in July).

Single-family and Condo/Co-op Sales
Single-family home sales declined 2.3 percent to a seasonally adjusted annual rate of 4.70 million in August from 4.81 million in July, but are still 0.6 percent above the 4.67 million pace a year ago. The median existing single-family home price was $242,200 in August, up 5.3 percent from August 2015.

Existing condominium and co-op sales leaped 10.5 percent to a seasonally adjusted annual rate of 630,000 units in August from 570,000 in July, and are now 1.6 percent above August 2015 (620,000 units). The median existing condo price was $225,100 in August, which is 3.7 percent above a year ago.

Regional Breakdown
August existing-home sales in the Northeast jumped 6.1 percent to an annual rate of 700,000, which is unchanged from a year ago. The median price in the Northeast was $274,100, which is 0.8 percent above August 2015.

In the Midwest, existing-home sales decreased 0.8 percent to an annual rate of 1.27 million in August, but are still 0.8 percent above a year ago. The median price in the Midwest was $190,700, up 5.5 percent from a year ago.

Existing-home sales in the South in August fell 2.7 percent to an annual rate of 2.16 million, but are still 0.9 percent above August 2015. The median price in the South was $209,700, up 6.7 percent from a year ago.

Existing-home sales in the West lessened 1.6 percent to an annual rate of 1.20 million in August, but are still 0.8 percent higher than a year ago. The median price in the West was $347,400, which is 9.2 percent above August 2015.


Chicago Fed National Activity slowed in August
Posted: September 22, 2016 at 08:30 AM (Thursday)

The index’s three-month moving average, CFNAI-MA3, ticked up to –0.07 in August from –0.09 in July. August’s CFNAI-MA3 suggests that growth in national economic activity was slightly below its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.

The CFNAI Diffusion Index, which is also a three-month moving average, ticked down to –0.02 in August from –0.01 in July. Nineteen of the 85 individual indicators made positive contributions to the CFNAI in August, while 66 made negative contributions. Twenty-one indicators improved from July to August, while 63 indicators deteriorated and one was unchanged. Of the indicators that improved, 13 made negative contributions.

The contribution from production-related indicators to the CFNAI fell to –0.33 in August from +0.15 in July. Industrial production moved down 0.4 percent in August after rising 0.6 percent in July; and manufacturing industrial production decreased 0.4 percent in August after increasing 0.4 percent in the previous month. The sales, orders, and inventories category made a contribution of –0.05 to the CFNAI in August, down from a neutral reading in July.

Employment-related indicators contributed –0.09 to the CFNAI in August, down from +0.15 in July. Nonfarm payrolls increased by 151,000 in August after rising by 275,000 in July; and civilian nonagricultural employment decreased by 37,000 in August after increasing by 515,000 in the previous month.

The contribution of the personal consumption and housing category to the CFNAI ticked down to –0.08 in August from –0.06 in July. Housing starts decreased to 1,142,000 annualized units in August from 1,212,000 in July, and housing permits edged down to 1,139,000 annualized units in August from 1,144,000 in the previous month.

The CFNAI was constructed using data available as of September 20, 2016. At that time, August data for 50 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index. The July monthly index value was revised to +0.24 from an initial estimate of +0.27, and the June monthly index value was revised to +0.09 from last month’s estimate of +0.05. Revisions to the monthly index value can be attributed to two main factors: revisions in previously published data and differences between the estimates of previously unavailable data and subsequently published data. The revision to the July monthly index value was primarily due to the former, while the revision to the June monthly index value was primarily due to the latter.


Weekly Initial Unemployment Claims Decrease 8,000 to 252,000
Posted: September 22, 2016 at 08:30 AM (Thursday)

In the week ending September 17, the advance figure for seasonally adjusted initial claims was 252,000, a decrease of 8,000 from the previous week's unrevised level of 260,000. The 4-week moving average was 258,500, a decrease of 2,250 from the previous week's unrevised average of 260,750. There were no special factors impacting this week's initial claims. This marks 81 consecutive weeks of initial claims below 300,000, the longest streak since 1970.

The advance seasonally adjusted insured unemployment rate was 1.5 percent for the week ending September 10, a decrease of 0.1 percentage point from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending September 10 was 2,113,000, a decrease of 36,000 from the previous week's revised level. The previous week's level was revised up 6,000 from 2,143,000 to 2,149,000. The 4-week moving average was 2,140,250, a decrease of 8,000 from the previous week's revised average. The previous week's average was revised up by 1,500 from 2,146,750 to 2,148,250.


FOMC target funds rate reaffirmed at 1/4 to 1/2%
Posted: September 21, 2016 at 02:00 PM (Wednesday)

Information received since the Federal Open Market Committee met in July indicates that the labor market has continued to strengthen and growth of economic activity has picked up from the modest pace seen in the first half of this year. Although the unemployment rate is little changed in recent months, job gains have been solid, on average. Household spending has been growing strongly but business fixed investment has remained soft. Inflation has continued to run below the Committee's 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.

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

Against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.

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

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; James Bullard; Stanley Fischer; Jerome H. Powell; and Daniel K. Tarullo. Voting against the action were: Esther L. George, Loretta J. Mester, and Eric Rosengren, each of whom preferred at this meeting to raise the target range for the federal funds rate to 1/2 to 3/4 percent.


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: September 21, 2016 at 07:00 AM (Wednesday)

Mortgage applications decreased 7.3 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending September 16, 2016. The prior week's results included an adjustment for the Labor Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 7.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 15 percent compared with the previous week. The Refinance Index decreased 8 percent from the previous week to the lowest level since June 2016. The seasonally adjusted Purchase Index decreased 7 percent from one week earlier. The unadjusted Purchase Index increased 15 percent compared with the previous week and was 3 percent higher than the same week one year ago.

The refinance share of mortgage activity increased to 63.1 percent of total applications from 62.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 4.4 percent of total applications.

The FHA share of total applications increased to 10.2 percent from 9.6 percent the week prior. The VA share of total applications decreased to 11.6 percent from 12.0 percent the week prior. The USDA share of total applications remained unchanged from 0.7 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to its highest level since June 2016, 3.70 percent, from 3.67 percent, with points increasing to 0.38 from 0.36 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 3.69 percent from 3.64 percent, with points decreasing to 0.29 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 3.56 percent from 3.50 percent, with points decreasing to 0.23 from 0.27 (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 2.99 percent from 2.97 percent, with points increasing to 0.35 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to 2.96 percent from 2.87 percent, with points decreasing to 0.26 from 0.37 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


August Housing Starts down 5.8%, Permits down 0.4%
Posted: September 20, 2016 at 08:30 AM (Tuesday)

BUILDING PERMITS
Privately-owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 1,139,000. This is 0.4 percent (±1.6%) below the revised July rate of 1,144,000 and is 2.3 percent (±1.5%) below the August 2015 estimate of 1,166,000. Single-family authorizations in August were at a rate of 737,000; this is 3.7 percent (±3.0%) above the revised July figure of 711,000. Authorizations of units in buildings with five units or more were at a rate of 370,000 in August.

HOUSING STARTS
Privately-owned housing starts in August were at a seasonally adjusted annual rate of 1,142,000. This is 5.8 percent (±9.7%) below the revised July estimate of 1,212,000, but is 0.9 percent (±12.5%) above the August 2015 rate of 1,132,000. Single-family housing starts in August were at a rate of 722,000; this is 6.0 percent (±8.2%) below the revised July figure of 768,000. The August rate for units in buildings with five units or more was 403,000.

HOUSING COMPLETIONS
Privately-owned housing completions in August were at a seasonally adjusted annual rate of 1,043,000. This is 3.4 percent (±10.9%) below the revised July estimate of 1,080,000, but is 8.3 percent (±11.8%) above the August 2015 rate of 963,000. Single-family housing completions in August were at a rate of 752,000; this is 0.3 percent (±10.2%) below the revised July rate of 754,000. The August rate for units in buildings with five units or more was 283,000.


Philadelphia NonManufacturing Activity Suggest Slightly Slower Growth Pace
Posted: September 20, 2016 at 08:30 AM (Tuesday)

Regional nonmanufacturing activity in September grew at a slightly slower pace, according to firms responding to this month’s Nonmanufacturing Business Outlook Survey. The survey’s indexes for current general activity at the firm level and in the region remained positive but suggest a continuation of a slight softening in the region. In addition, firms reported slower growth in sales and new orders. The index for full-time employment rose, however. Firms reported stronger increases in prices for inputs than in prices received for their goods and services. Despite declines in the survey’s current activity indicators, the respondents expressed greater optimism about activity over the next six months.

Firms Report Lower Growth
The diffusion index for current activity at the firm level fell from 19.5 in August to 16.7 in September. This index is lower than any value recorded over the prior 12 months and is also below its historical average (28.5), which suggests a slowdown in growth for nonmanufacturing firms in the region. Nonetheless, more firms reported an increase in activity at their firm (41 percent) than reported a decrease (25 percent). In the prior month, however, a larger share (47 percent) reported an increase in activity at their firm, while the share who reported a decrease was little changed. The diffusion index for current general activity in the region decreased 1 point, to 23.7. This index is close to its historical average (23.0).

New Orders and Sales Weaken
Firms reported a decline in the growth of new orders and sales this month. The new orders index fell 4 points, to 10.6. While the share of firms reporting increases in new orders (33 percent) exceeded the share of firms reporting decreases (23 percent), the share of firms reporting an increase was higher last month (38 percent). The sales/revenues index also fell, dropping 11 points to 11.1. The share of firms reporting a decline in sales grew, from 22 percent last month to almost 30 percent this month.

Full-time Employment Improves
In September, the index for full-time employment rose 9 points, to 19.3. This is only the second month in 2016 that this index has been above its historical average of 14.2. Conditions for part-time employment deteriorated, however, as the index for part-time employment decreased 24 points, to -5.0. The workweek index held steady at 12.5, and the wages and benefits index fell 1 point, to 30.5.

Firms Report Increases in Prices Paid
The prices paid index rose 19 points, to 29.9, in September. Thirty percent of the firms reported an increase in input prices, and none reported a decrease. Fewer firms reported increases in prices for their own goods and services compared with last month. Nonetheless, the index for prices received rose 3 points, to 13.2, due to a drop in the share who reported decreases in prices for their own goods and services.

Firms Increase Capital Spending
The index for capital spending on physical plant rose 4 points, to 13.1, as the share of firms reporting increased spending in this category rose 5 points from last month’s reading. The index for equipment and software spending fell 10 points, to 19.0. The share of the respondents who reported increases in spending on software and equipment remains relatively high at 30 percent.

Reasons for Capital Spending
In this month’s special questions, firms were asked about spending plans related to achieving company growth. Modernization of business processes (76 percent) was the most frequently cited goal, followed by expansion of facilities (36 percent). Fewer firms, but still notable percentages, indicated other goals to achieve growth: launching of new units (22 percent), joint ventures (22 percent), and acquisition of another company (12 percent).

Optimism for Future Activity Remained High
Respondents continue to be optimistic about future activity. The firm-level future activity index rose 9 points, to 52.7 (see Chart 1). Nearly 61 percent of the respondents expect activity to increase at their firms, while 8 percent expect activity to decrease. The regional future activity index moved up 5 points, to 39.8. Forty-nine percent of the firms expect activity to increase in the region, while 9 percent expect activity to decrease in the region.
Summary

Results from the Nonmanufacturing Business Outlook Survey suggest a slight weakening in current conditions. The indicators for general activity at the firm level were more pessimistic than indicators for general activity in the region. While full-time employment improved, other employment indicators weakened. The index for prices paid rose more than the index for prices received. The respondents were optimistic about growth over the next six months.


Builder Confidence jumped six points to 65 in September
Posted: September 19, 2016 at 10:00 AM (Monday)

Builder confidence in the market for newly built, single-family homes in September jumped six points to 65 from a downwardly revised August reading of 59 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today. This marks the highest HMI level since October 2015.

“As household incomes rise, builders in many markets across the nation are reporting they are seeing more serious buyers, a positive sign that the housing market continues to move forward,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill. “The single-family market continues to make gradual gains and we expect this upward momentum will build throughout the remainder of the year and into 2017.”

“With the inventory of new and existing homes remaining tight, builders are confident that if they can build more homes they can sell them,” said NAHB Chief Economist Robert Dietz. “Though solid job creation and low interest rates are also fueling demand, builders continue to be hampered by supply-side constraints that include shortages of labor and lots.”

All three HMI components moved higher in September. The component measuring current sales expectations rose six points to 71 and the gauge charting sales expectations in the next six months increased five points to also stand at 71. The index measuring traffic of prospective buyers posted a four-point gain to 48.

The three-month moving averages for HMI scores posted gains in three out of the four regions. The Northeast and South each registered a one-point gain to 42 and 64, respectively, while the West rose four points to 73. The Midwest was unchanged at 55.


Treasury International Capital Data for July 2016
Posted: September 16, 2016 at 04:00 PM (Friday)

The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for July 2016. The sum total in July of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC inflow of $140.6 billion. Of this, net foreign private inflows were $162.7 billion, and net foreign official outflows were $22.1 billion.

Foreign residents increased their holdings of long-term U.S. securities in July; net purchases were $72.6 billion. Net purchases by private foreign investors were $90.5 billion, while net sales by foreign official institutions were $17.9 billion. U.S. residents decreased their holdings of long-term foreign securities, with net sales of $31.3 billion.

Taking into account transactions in both foreign and U.S. securities, net foreign purchases of long-term securities were $103.9 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 $101.8 billion in July.

Foreign residents decreased their holdings of U.S. Treasury bills by $4.5 billion. Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities increased by $8.8 billion. Banks' own net dollar-denominated liabilities to foreign residents increased by $47.6 billion.


University of Michigan Consumer Confidence Preliminary September Results were Unch
Posted: September 16, 2016 at 10:00 AM (Friday)

Confidence was unchanged in early September from the August final and barely different from the July reading. Small and offsetting changes have taken place in the third quarter 2016 surveys: modest gains in the outlook for the national economy have been offset by small declines in income prospects as well as buying plans. While income gains expected during the year ahead have edged upward, declines in inflation expectations were the main reasons future financial prospects improved, as both near and long term inflation expectations fell to near record lows. Nonetheless, buying plans suffered from the perception that no additional price discounts would be offered. Even the more optimistic outlook for the economy had little if any impact on the expected growth rate in new jobs. Importantly, all of these changes were relatively minor. Overall, consumers remain reasonably optimistic about their economic prospects. Real personal consumption expenditures can be expected to grow by 2.6% through mid 2017.


Consumer Price Index increased 0.2% in August, Ex Fd & Engy up 0.3%
Posted: September 16, 2016 at 08:30 AM (Friday)

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in August on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 1.1 percent before seasonal adjustment.

The seasonally adjusted increase in the all items index was caused by a rise in the index for all items less food and energy. It increased 0.3 percent in August, as the indexes for shelter and medical care advanced.

The energy and food indexes were both unchanged in August. Major energy component indexes were mixed, with increases in the indexes for natural gas and electricity offsetting declines in the gasoline and fuel oil indexes. The food at home index declined for the fourth month in a row, offsetting an increase in the index for food away from home.

The 0.3-percent increase in the index for all items less food and energy was the largest rise since February 2016. Along with shelter and medical care, the indexes for motor vehicle insurance, apparel, communication, and tobacco all increased. In contrast, the indexes for used cars and trucks, household furnishings and operations, recreation, and airline fares all declined in August.

The all items index rose 1.1 percent for the 12 months ending August, a larger increase than the 0.8-percent rise for the 12 months ending July. The index for all items less food and energy rose 2.3 percent for the 12 months ending August. The food index was unchanged over the last year, while the energy index declined 9.2 percent.


Real Average Hourly Earnings decreased 0.1% in August
Posted: September 16, 2016 at 08:30 AM (Friday)

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

Real average weekly earnings decreased 0.4 percent over the month due to the decrease in real average hourly earnings combined with a 0.3-percent decrease in the average workweek.

Real average hourly earnings increased 1.3 percent, seasonally adjusted, from August 2015 to August 2016. This increase in real average hourly earnings combined with a 0.9-percent decrease in the average workweek resulted in a 0.4-percent increase in real average weekly earnings over this period.


Business Inventories unch% in July
Posted: September 15, 2016 at 10:00 AM (Thursday)

The U.S. Census Bureau announced today that the combined value of distributive trade sales and manufacturers’ shipments for July, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,303.6 billion, down 0.2 percent (±0.1%) from June 2016 and was down 0.8 percent (±0.4%) from July 2015.

Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,813.2 billion, virtually unchanged (±0.1%)* from June 2016, but were up 0.5 percent (±0.6%)* from July 2015.

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


Industrial Production decreased 0.4%
Capacity Utilization decreased to 75.5%

Posted: September 15, 2016 at 09:15 AM (Thursday)

Industrial production decreased 0.4 percent in August after rising 0.6 percent in July. Manufacturing output also declined 0.4 percent in August, reversing its increase in July; the level of the index in August is little changed from its level in March. Following two consecutive monthly increases, the index for utilities fell back 1.4 percent in August. Even so, the index was 1.7 percent above its year-earlier level, as hot temperatures this summer boosted the usage of air conditioning. The output of mining moved up 1.0 percent in August, its fourth consecutive monthly increase following an extended downturn; the index, however, was still about 9 percent below its year-ago level. At 104.4 percent of its 2012 average, total industrial production in August was 1.1 percent lower than its year-earlier level. Capacity utilization for the industrial sector decreased 0.4 percentage point in August to 75.5 percent, a rate that is 4.5 percentage points below its long-run (1972–2015) average.


2Q2016 Current Account Deficit Decreased
Posted: September 15, 2016 at 08:30 AM (Thursday)

The U.S. current-account deficit decreased to $119.9 billion (preliminary) in the second quarter of 2016 from $131.8 billion (revised) in the first quarter of 2016, according to statistics released by the Bureau of Economic Analysis (BEA). The deficit decreased to 2.6 percent of current-dollar gross domestic product (GDP) from 2.9 percent in the first quarter.

The $12.0 billion decrease in the deficit reflected an $8.9 billion increase in the surplus on primary income to $42.9 billion, a $3.1 billion decrease in the deficit on secondary income to $37.6 billion, and a $0.4 billion increase in the surplus on services to $61.5 billion. These changes were partly offset by a $0.5 billion increase in the deficit on goods to $186.7 billion.


Producer Price Index unch% in August, ex Fd & Engy up 0.3%
Posted: September 15, 2016 at 08:30 AM (Thursday)

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

In August, a 0.1-percent advance in the index for final demand services offset a 0.4-percent decrease in prices for final demand goods.

Prices for final demand less foods, energy, and trade services increased 0.3 percent in August after no change in July. For the 12 months ended in August, the index for final demand less foods, energy, and trade services moved up 1.2 percent, the largest rise since climbing 1.3 percent for the 12 months ended December 2014.


U.S. Retail Sales for August Decrease 0.3%, Ex-Auto down 0.1%
Posted: September 15, 2016 at 08:30 AM (Thursday)

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for August, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $456.3 billion, a decrease of 0.3 percent (±0.5%) from the previous month, and 1.9 percent (±0.7%) above August 2015. Total sales for the June 2016 through August 2016 period were up 2.4 percent (±0.5%) from the same period a year ago. The June 2016 to July 2016 percent change was revised from virtually unchanged (±0.5%) to up 0.1 percent (±0.2%).

Retail trade sales were down 0.5 (±0.5%) from July 2016, and up 1.4 percent (±0.7%) from last year. Nonstore retailers were up 10.9 percent (±1.4%) from August 2015, while Health and Personal Care Stores were up 7.8 percent (±2.3%) from last year.


Philadelphia Fed Outlook Reported Activity Picks Up in September
Posted: September 15, 2016 at 08:30 AM (Thursday)

Results from the Manufacturing Business Outlook Survey suggest that regional manufacturing conditions continued to improve in September. Indicators for general activity and new orders were positive and increased from their readings last month. Indicators for shipments and employment, however, were negative, suggesting weaker performance for the sector. Firms remain optimistic about growth over the next six months and were more positive about increasing employment.

Activity Picks Up, but Employment Still Weak
The index for current manufacturing activity in the region increased 11 points to 12.8. For the first time since August of last year, the index has registered two consecutive positive readings (see Chart 1). The new orders index also improved, increasing from -7.2 to 1.4. The percentage of firms reporting increases in new orders this month edged up to 30 percent from 27 percent last month. Other current indicators suggested weaker conditions, however. The current shipments index declined from 8.4 in August to -8.8 this month. Both the delivery times and unfilled orders indexes remained weak, with both indexes staying in negative territory. Firms also reported declines in inventories this month: The inventories index declined from -9.2 to -26.2. The indicators for unfilled orders, delivery times, and inventories have been negative for most of this year.

Firms reported continued weakness in manufacturing employment. The percentage of firms reporting a decrease in employees in September (17 percent) exceeded the percentage reporting an increase (12 percent). The current employment index remained negative for the ninth consecutive month, although it improved from -20.0 in August to -5.3 this month. Firms reported overall decreases in the average workweek: The percentage of firms reporting a shorter workweek (23 percent) was greater than the percentage reporting a longer workweek (11 percent).

Most Firms Report Steady Prices, but Price Indexes Edge Up
Input prices continued to increase for many of the reporting manufacturers: The prices paid index edged 1 point higher, to 20.6, its sixth consecutive positive reading (see Chart 2). Although nearly 71 percent of the firms reported that input prices were unchanged, the percentage of firms reporting price increases (23 percent) exceeded the percentage reporting price decreases (3 percent). With respect to prices received for firms’ own manufactured goods, the largest percentage of firms (75 percent) reported no change in prices. The percentage of firms reporting price increases for their own products (16 percent) exceeded the percentage reporting price decreases (6 percent) for the seventh consecutive month. The index for current prices received edged 3 points higher, to 9.7.

Expectations Are Still Positive, and the Employment Forecast Improves
Overall, firms remain optimistic about business conditions over the next six months and were more upbeat about prospects for employment. The diffusion index for future activity declined from 45.8 in August to 37.5 in September but remains slightly above its average reading over the past 12 months (see Chart 1). Nearly 50 percent of the firms expect increases in activity over the next six months, and 54 percent expect increases in new orders. Firms are now forecasting longer delivery times as well as increases in inventories and unfilled orders. The future employment index increased sharply this month, from 12.9 to 24.9. Nearly 34 percent of the firms said they expected to expand employment over the next six months, while 9 percent expected to reduce employment.
Weak Economic Conditions Cited as Major Reason for Shifted Capital Spending Goal

In this month’s special questions, firms were asked about spending plans related to achieving company growth. Modernization of manufacturing processes (64 percent) was the most frequently cited goal of capital spending, followed by expansion of facilities (30 percent). Fewer firms, but still notable percentages, indicated other goals to achieve growth: launching of new units (19 percent), acquisition of other companies (17 percent), and the purchase of other companies’ assets (16 percent). Internationalization and joint ventures were cited by slightly smaller percentages: 13 percent and 12 percent, respectively.

Firms were also asked about how these same cited goals had changed over the past five years. Over 59 percent of the firms indicated that modernization had become more important, while only 4 percent indicated it was less important. On balance, expansion of facilities had become less important: Thirty-three percent of the respondents cited it as less important compared with 28 percent indicating it was more important. Firms cited weak economic conditions as the most important reason capital spending for either expansion of facilities or modernization had become “less important” over the past five years. Fifteen percent of the firms cited fewer profitable opportunities. Smaller but notable percentages of firms gave other reasons: policy uncertainty (12 percent), regulations (12 percent), and tax policies (7 percent).

Summary
The Manufacturing Business Outlook Survey suggests continued growth of the region’s manufacturing sector in September. Indexes for both general activity and new orders indicated expansion. However, firms reported an overall reduction in shipments this month, and employment indicators suggested continued weakness. Firms remained optimistic about increases in overall business activity over the next six months and were more upbeat with regard to their employment forecasts.


Empire State Manufacturing Survey Conditions edged lower in September
Posted: September 15, 2016 at 08:30 AM (Thursday)

Business activity edged lower in New York State, according to firms responding to the September 2016 Empire State Manufacturing Survey. The headline general business conditions index held below zero, and was little changed at -2.0. The new orders index fell eight points to -7.5 and the shipments index fell eighteen points to -9.4—developments that pointed to a marked decline in both orders and shipments. Labor market conditions weakened, with both employment levels and the average workweek reported as lower. Price indexes remained close to last month’s levels, and indicated ongoing moderate input price increases coupled with a continued slight increase in selling prices. Indexes for the six-month outlook suggested that firms generally expect conditions to improve in the months ahead.

Business Conditions Remain Weak
Echoing their August assessment, manufacturing firms in New York State reported a slight decline in business activity in September. The general business conditions index inched up two points, but remained negative at -2.0. Twenty-two percent of respondents reported that conditions had improved over the month, while 24 percent reported that conditions had worsened. The new orders index fell eight points to -7.5, indicating that orders dropped, and the shipments index tumbled eighteen points to -9.4, pointing to a pronounced reduction in shipments. The unfilled orders index slipped to -11.6. The delivery time index fell to -6.3, signaling shorter delivery times. The inventories index moved down eight points to -12.5, indicating that inventory levels declined at a faster pace than in August.

Labor Market Deteriorates
The employment index fell thirteen points to -14.3, indicating that employment levels contracted. The average workweek index posted a similar decline, falling fourteen points to -11.6—a sign of retrenchment in hours worked. Both of these indexes reached their lowest levels of 2016. The prices paid index was little changed at 17.0, indicating that input prices continued to rise at a moderate pace, and the prices received index held steady at 1.8, signaling that selling prices edged slightly higher.

Outlook Remains Optimistic
Indexes for the six-month outlook suggested that respondents were more optimistic about future conditions than they were last month. The index for future business conditions climbed eleven points to 34.5. The index for future new orders advanced to a similar level, while the index for future shipments, though positive, declined. The index for future employment moved up into positive territory, suggesting that firms expected to expand employment in the months ahead. Indexes for future prices rose considerably, suggesting that firms expected both input prices and selling prices to increase more significantly over the next six months. The capital expenditures and technology spending indexes both climbed to 10.7.


Weekly Initial Unemployment Claims Increase 1,000 to 260,000
Posted: September 15, 2016 at 08:30 AM (Thursday)

In the week ending September 10, the advance figure for seasonally adjusted initial claims was 260,000, an increase of 1,000 from the previous week's unrevised level of 259,000. The 4-week moving average was 260,750, a decrease of 500 from the previous week's unrevised average of 261,250. There were no special factors impacting this week's initial claims. This marks 80 consecutive weeks of initial claims below 300,000, the longest streak since 1970.

The advance seasonally adjusted insured unemployment rate was 1.6 percent for the week ending September 3, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending September 3 was 2,143,000, an increase of 1,000 from the previous week's revised level. The previous week's level was revised down by 2,000 from 2,144,000 to 2,142,000. The 4-week moving average was 2,146,750, a decrease of 8,000 from the previous week's revised average. The previous week's average was revised up by 1,000 from 2,153,750 to 2,154,750.


U.S. Import Price Index declined 0.2% in August
Posted: September 14, 2016 at 08:30 AM (Wednesday)

U.S. import prices declined 0.2 percent in August, the U.S. Bureau of Labor Statistics reported today, after ticking up 0.1 percent in July. The August downturn was driven by lower fuel prices. Prices for U.S. exports decreased 0.8 percent in August following a 0.2-percent increase in July.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: September 14, 2016 at 07:00 AM (Wednesday)

Mortgage applications increased 4.2 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending September 9, 2016. This week's results included an adjustment for the Labor Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 4.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 17 percent compared with the previous week. The Refinance Index increased 2 percent from the previous week. The seasonally adjusted Purchase Index increased 9 percent from one week earlier. The unadjusted Purchase Index decreased 15 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 62.9 percent of total applications from 64.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 4.6 percent of total applications.

The FHA share of total applications increased to 9.6 percent from 9.5 percent the week prior. The VA share of total applications increased to 12.0 percent from 11.9 percent the week prior. The USDA share of total applications increased to 0.7 percent from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.67 percent from 3.68 percent, with points decreasing to 0.36 from 0.37 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 3.64 percent from 3.66 percent, with points increasing to 0.36 from 0.30 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.50 percent from 3.52 percent, with points decreasing to 0.27 from 0.35 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 2.97 percent from 2.96 percent, with points unchanged at 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs remained unchanged at 2.87 percent, with points increasing to 0.37 from 0.30 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


NFIB Small Business Optimism Index fell 0.2 points in August to 94.4
Posted: September 13, 2016 at 07:00 AM (Tuesday)

The Index of Small Business Optimism fell 0.2 points to 94.4, still well below the 40 year average of 98. Five of the 10 Index components posted a gain, four declined and one was unchanged. GDP growth in the last three quarters has averaged 1 percent, not a recession but only matching the growth in the population. Hard to figure how the capital stock producing that output is valued at record high levels as reflected in the S&P 500 for example. Maybe the Federal Reserve targeting asset prices with record low interest rates has something to do with that absurdity. NFIB data also reveal another cause of subpar growth this expansion, a sluggish small business sector, historically half of private sector GDP. Compared to the 1983 expansion which followed even higher unemployment rates, this recovery has been subpar in all dimensions, and particularly in job creation. What hasn’t been subpar is the growth in pages of regulation in the Congressional Record and the size of the Federal debt.

After nine months of 1 percent GDP growth, the economy is set to turn in a better performance. This will result because the denominator in the change calculation is low, and because the huge inventory reduction that knocked a point off the GDP growth rate appears to be over, with an ever so modest increase in plans to build inventory. Consumer spending looks like it will maintain some strength, including car sales, although there are mixed signals on consumer sentiment. It doesn’t appear that capital spending is ready to pick up, but housing will continue to add to growth, even though it is supply constrained, due to a shortage of skilled labor and permitted land.

The Federal Reserve has started its regular “hide the rate hike” game, sending observers looking under every rock of data to see if there are 25 basis points underneath. Most of the “rocks” look like pebbles, there’s not a lot of growth in the landscape, and there’s that darn international thing, the value of the dollar (which is officially not the province of the Fed) and all that. The inflation and employment goals are defined “downward” in terms of what the Fed might accept, along with prognostications that assure “full” attainment by 2018. Comments by Chicago Fed president Charles Evans, in remarks to the Shanghai Advanced Institute of Finance in Beijing, indicate that the Fed thinks it is the determining force shaping interest rates, not markets, a very troubling view. He said, "Long-run expectations for policy rates provide an anchor to long-run interest rates," continuing with "So lower policy rate expectations act as a restraint on how much long-term rates could rise following a surprise over the nearterm policy path." These contortions in policy cannot be maintained. We will regret this arrogance even more over the next decade as our private financial institutions become unable to meet the promises they have made.

Population growth will continue to push fundamental growth ahead with more haircuts and houses. Another 120,000 jobs will keep the unemployment rate steady, but with job openings at the highest level in this recovery, any more than that will likely lower the rate. Health insurance costs keep rising, diverting compensation gains into benefits rather than take home pay. Other regulatory pressures such as a rising minimum wage and mandatory paid leave also put an upward pressure on reports of compensation increases. Capital spending will remain M.I.A., plans are at the highest level for the recovery, matching the previous peak in 2014, but not typical of an expansion and reports of actual spending have been weakening. Inventory investment will reverse the reductions of the first half of the year and that will add to growth. Overall, a return to 2 percent growth for the year is expected.


Consumer Credit Increased at an annual rate of 5.75%
Posted: September 8, 2016 at 03:00 PM (Thursday)

In July, consumer credit increased at a seasonally adjusted annual rate of 5-3/4 percent. Revolving credit increased at an annual rate of 3-1/2 percent, while nonrevolving credit increased at an annual rate of 6-3/4 percent.


Weekly Initial Unemployment Claims Decrease 4,000 to 259,000
Posted: September 8, 2016 at 08:30 AM (Thursday)

In the week ending September 3, the advance figure for seasonally adjusted initial claims was 259,000, a decrease of 4,000 from the previous week's unrevised level of 263,000. The 4-week moving average was 261,250, a decrease of 1,750 from the previous week's unrevised average of 263,000. There were no special factors impacting this week's initial claims. This marks 79 consecutive weeks of initial claims below 300,000, the longest streak since 1970.

The advance seasonally adjusted insured unemployment rate was 1.6 percent for the week ending August 27, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending August 27 was 2,144,000, a decrease of 7,000 from the previous week's revised level. The previous week's level was revised down by 8,000 from 2,159,000 to 2,151,000. The 4-week moving average was 2,153,750, a decrease of 4,000 from the previous week's revised average. The previous week's average was revised down by 2,000 from 2,159,750 to 2,157,750.


Beige Book: Economic Activity continued to expand at a modest pace
Posted: September 7, 2016 at 02:00 PM (Wednesday)

Reports from the twelve Federal Reserve Districts suggest that national economic activity continued to expand at a modest pace on balance during the reporting period of July through late August. Most Districts reported a "modest" or "moderate" pace of overall growth. However, Kansas City and New York reported no change in activity, and Philadelphia and Richmond noted that, while still expanding, activity slowed from the previous period. Contacts across the twelve Districts generally expect moderate economic growth in coming months. Overall consumer spending was little changed in most Districts, and auto sales declined somewhat but remained at high levels. Tourism activity was flat from the previous report but above year-earlier levels. Sales of nonfinancial services gained further momentum. Manufacturing activity rose slightly in most Districts. Activity in residential real estate markets grew at a moderate pace, but the pace of sales was constrained in a few Districts by shortages of available homes. Commercial real estate activity expanded further. Demand for business and consumer credit varied across Districts but appeared to expand at a moderate pace overall, with stable credit quality. Agricultural conditions were mixed, with price declines largely offsetting growing volumes. Overall demand for energy-related products and services weakened.

Labor market conditions remained tight in most Districts, with moderate payroll growth noted in general. Upward wage pressures increased further and were moderate on balance, with more rapid gains reported for workers with selected specialized skill sets. Price increases remained slight overall.


Job Openings increased to 5.9 million in July
Posted: September 7, 2016 at 10:00 AM (Wednesday)

The number of job openings increased to 5.9 million on the last business day of July, the U.S. Bureau of
Labor Statistics reported today. Hires and separations were little changed at 5.2 million and 4.9 million,
respectively. Within separations, the quits rate was 2.1 percent and the layoffs and discharges rate was
1.1 percent. This release includes estimates of the number and rate of job openings, hires, and
separations for the nonfarm sector by industry and by four geographic regions.

On the last business day of July, there were 5.9 million job openings, an increase of 228,000 from June.
The job openings rate was 3.9 percent in July. The number of job openings increased over the month for
total private (+243,000) and was little changed for government. Job openings increased in professional
and business services (+166,000) and durable goods manufacturing (+27,000) but decreased in health
care and social assistance (-63,000). The number of job openings was little changed in all four regions.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: September 7, 2016 at 07:30 AM (Wednesday)

Mortgage applications increased 0.9 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending September 2, 2016.

The Market Composite Index, a measure of mortgage loan application volume, increased 0.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 0.1 percent compared with the previous week. The Refinance Index increased 1 percent from the previous week. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 7 percent higher than the same week one year ago.

The refinance share of mortgage activity increased to 64.0 percent of total applications from 63.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 4.3 percent of total applications.

The FHA share of total applications decreased to 9.5 percent from 9.7 percent the week prior. The VA share of total applications decreased to 11.9 percent from 12.5 percent the week prior. The USDA share of total applications remained unchanged at 0.6 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 3.68 percent from 3.67 percent, with points increasing to 0.37 from 0.33 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 3.66 percent from 3.63 percent, with points increasing to 0.30 from 0.27 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.52 percent from 3.54 percent, with points decreasing to 0.35 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 2.96 percent, with points increasing to 0.34 from 0.31 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 5/1 ARMs decreased to 2.87 percent from 2.90 percent, with points increasing to 0.30 from 0.24 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


Employment Trends Index decreased in August to 128.02
Posted: September 6, 2016 at 10:00 AM (Tuesday)

The Conference Board Employment Trends Index™ (ETI) decreased in August, after increasing in the prior two months. The index now stands at 128.02, down from 128.44 (an upward revision) in July. The change represents a 0.8 percent gain in the ETI compared to a year ago.

“The Employment Trends Index is consistent with moderating job growth in the second half of 2016,” said Gad Levanon, Chief Economist, North America, at The Conference Board. “With the ongoing massive retirement of baby boomers, even moderate job growth is enough to continue to tighten the US labor market.”

August’s decrease in the ETI was fueled by negative contributions from seven of the eight components. In order from the largest negative contributor to the smallest, these were: Percentage of Respondents Who Say They Find “Jobs Hard to Get,” Ratio of Involuntarily Part-time to All Part-time Workers, Job Openings, Initial Claims for Unemployment Insurance, Industrial Production, Real Manufacturing and Trade Sales, and the Number of Employees Hired by the Temporary-Help Industry.

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


ISM Non-Manufacturing Index grew slower at 51.4% in August
Posted: September 6, 2016 at 10:00 AM (Tuesday)

Economic activity in the non-manufacturing sector grew in August for the 79th consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The NMI® registered 51.4 percent in August, 4.1 percentage points lower than the July reading of 55.5 percent. This represents continued growth in the non-manufacturing sector at a slower rate. The Non-Manufacturing Business Activity Index decreased substantially to 51.8 percent, 7.5 percentage points lower than the July reading of 59.3 percent, reflecting growth for the 85th consecutive month, at a notably slower rate in August. The New Orders Index registered 51.4 percent, 8.9 percentage points lower than the reading of 60.3 percent in July. The Employment Index decreased 0.7 percentage point in August to 50.7 percent from the July reading of 51.4 percent. The Prices Index decreased 0.1 percentage point from the July reading of 51.9 percent to 51.8 percent, indicating prices increased in August for the fifth consecutive month. According to the NMI®, 11 non-manufacturing industries reported growth in August. The majority of the respondents’ comments indicate that there has been a slowing in the level of business for their respective companies.

INDUSTRY PERFORMANCE
The 11 non-manufacturing industries reporting growth in August — listed in order — are: Utilities; Real Estate, Rental & Leasing; Accommodation & Food Services; Finance & Insurance; Educational Services; Health Care & Social Assistance; Public Administration; Management of Companies & Support Services; Professional, Scientific & Technical Services; Information; and Construction. The seven industries reporting contraction in August — listed in order — are: Other Services; Mining; Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; Wholesale Trade; Retail Trade; and Arts, Entertainment & Recreation.


New orders for manufactured goods increased 1.9% in July
Posted: September 2, 2016 at 10:00 AM (Friday)

New orders for manufactured goods in July, up following two consecutive monthly decreases, increased $8.4 billion or 1.9 percent to $454.8 billion, the U.S. Census Bureau reported today. This followed a 1.8 percent June decrease.

Shipments, down following four consecutive monthly increases, decreased $0.9 billion or 0.2 percent to $458.9 billion. This followed a 0.6 percent June increase.

Unfilled orders, down two consecutive months, decreased $1.0 billion or 0.1 percent to $1,126.3 billion. This followed a 0.9 percent June decrease. The unfilled orders-to-shipments ratio was 6.79, down from 6.81 in June.

Inventories, up following twelve consecutive monthly decreases, increased $0.9 billion or 0.1 percent to $620.3 billion. This followed a virtually unchanged June decrease. The inventories-to-shipments ratio was 1.35, unchanged from June.


August Employment increased by 151,000
Unemployment Rate unchanged at 4.9%

Posted: September 2, 2016 at 08:30 AM (Friday)

Total nonfarm payroll employment increased by 151,000 in August, and the unemployment rate remained at 4.9 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in several service-providing industries.

The number of unemployed persons was essentially unchanged at 7.8 million in August, and the unemployment rate was 4.9 percent for the third month in a row. Both measures have shown little movement over the year, on net.

Among the major worker groups, the unemployment rates for adult men (4.5 percent), adult women (4.5 percent),teenagers (15.7 percent), Whites (4.4 percent), Blacks (8.1 percent), Asians (4.2percent), and Hispanics (5.6 percent) showed little change in August.

The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 2.0 million in August. These individuals accounted for 26.1 percent of the unemployed.

Both the labor force participation rate, at 62.8 percent, and the employment-population ratio, at 59.7 percent, were unchanged in August.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed at 6.1 million in August. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job.

In August, 1.7 million persons were marginally attached to the labor force, about the same as a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 576,000 discouraged workers in August, little different from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.1 million persons marginally attached to the labor force in August had not searched for work for reasons such as school attendance or family responsibilities.

Total nonfarm payroll employment rose by 151,000 in August, compared with an average monthly gain of 204,000 over the prior 12 months. Employment continued to trend up in several service-providing industries.

Employment in food services and drinking places continued to trend up over the month (+34,000). Over the year, the industry has added 312,000 jobs.

Social assistance added 22,000 jobs over the month, with most of the growth in individual and family services (+17,000).

In August, employment in professional and technical services edged up (+20,000), about in line with its average monthly gain over the prior 12 months (+24,000).

Financial activities employment continued on an upward trend in August (+15,000), with a gain in securities, commodity contracts, and investments (+6,000). Over the year, financial activities has added 167,000 jobs.

Health care employment continued to trend up in August (+14,000), but at a slower pace than the average monthly gain over the prior 12 months (+39,000). In August, hospitals added 11,000 jobs, and employment in ambulatory health care services trended up (+13,000). A job loss in nursing and residential care facilities (-9,000) offset a gain in July.

Employment in mining continued to trend down in August (-4,000). Since reaching a peak in September 2014, employment in mining has declined by 223,000, with losses concentrated in support activities for mining.

Employment in several other industries--including construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, temporary help services, and government--changed little over the month.

The average workweek for all employees on private nonfarm payrolls decreased by 0.1 hour to 34.3 hours in August. In manufacturing, the workweek declined by 0.2 hour to 40.6 hours, while overtime was unchanged at 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls decreased by 0.1 hour to 33.6 hours.

In August, average hourly earnings for all employees on private nonfarm payrolls rose by 3 cents to $25.73. Over the year, average hourly earnings have risen by 2.4 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 4 cents to $21.64 in August.

The change in total nonfarm payroll employment for June was revised down from +292,000 to +271,000, and the change for July was revised up from +255,000 to +275,000. With these revisions, employment gains in June and July combined were 1,000 less than previously reported. Over the past 3 months, job gains have averaged 232,000 per month.


Goods and Services Deficit Decreased in July 2016
Posted: September 2, 2016 at 08:30 AM (Friday)

The Nation's international trade deficit in goods and services decreased to $39.5 billion in July from $44.7 billion in June (revised), as exports increased and imports decreased.

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $39.5 billion in July, down $5.2 billion from $44.7 billion in June, revised. July exports were $186.3 billion, $3.4 billion more than June exports. July imports were $225.8 billion, $1.8 billion less than June imports.

The July decrease in the goods and services deficit reflected a decrease in the goods deficit of $5.3 billion to $60.3 billion and a decrease in the services surplus of $0.1 billion to $20.9 billion.

Year-to-date, the goods and services deficit decreased $0.5 billion, or 0.2 percent, from the same period in 2015. Exports decreased $63.7 billion or 4.8 percent. Imports decreased $64.2 billion or 4.0 percent.


New York Purchasing Managers Business Activity eased in August to 47.5
Posted: September 2, 2016 at 08:30 AM (Friday)

New York City business activity eased in August after a seven month high in July, according to the survey taken by the Institute for Supply Management-New York. Short term expectations seem measured, with volume of purchases, revenues, and expected revenues all either contracting or staying flat.

New York Metro
Current Business Conditions returned to 47.5, nearly the same level reported in June, after rising to a 7 month high of 60.7 in July. Despite the reversal in current business conditions, the Six-Month Outlook increased to 65.5 in August, the highest level reported since February. The six-month outlook has been a reliable short-run guide for current business conditions over time.

Company Specific
Employment rose to 54.9 in August, showing an increased pace of growth for only the second time in 12 months. Quantity of Purchases came in at 44.6 in August, falling slightly from the levels seen in June and July but staying above the 7-year low of 37.5 reported in May.

News for the top line and forward guidance moved into neutral/negative territory. Current Revenues were 50.0 in August, indicating no change from July. Expected Revenues fell to 57.1 in August. Cost pressures reversed the recent downward trend. Prices Paid increased to 60.3 in August.


Construction Spending unch% in July
Posted: September 1, 2016 at 10:00 AM (Thursday)

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during July 2016 was estimated at a seasonally adjusted annual rate of $1,153.2 billion, nearly the same as (±1.5%)* the revised June estimate of $1,153.5 billion. The July figure is 1.5 percent (±2.3%)* above the July 2015 estimate of $1,135.9 billion. During the first 7 months of this year, construction spending amounted to $647.7 billion, 5.6 percent (±1.3%) above the $613.1 billion for the same period in 2015.

PRIVATE CONSTRUCTION
Spending on private construction was at a seasonally adjusted annual rate of $875.0 billion, 1.0 percent (±1.5%)* above the revised June estimate of $866.5 billion. Residential construction was at a seasonally adjusted annual rate of $445.5 billion in July, 0.3 percent (±1.3%)* above the revised June estimate of $444.0 billion. Nonresidential construction was at a seasonally adjusted annual rate of $429.5 billion in July, 1.7 percent (±1.5%) above the revised June estimate of $422.5 billion.

PUBLIC CONSTRUCTION
In July, the estimated seasonally adjusted annual rate of public construction spending was $278.2 billion, 3.1 percent (±2.6%) below the revised June estimate of $287.0 billion. Educational construction was at a seasonally adjusted annual rate of $64.6 billion, 8.3 percent (±3.9%) below the revised June estimate of $70.4 billion. Highway construction was at a seasonally adjusted annual rate of $89.8 billion, 0.3 percent (±6.4%)* above the revised June estimate of $89.5 billion.


August Manufacturing ISM registered 49.4
Posted: September 1, 2016 at 10:00 AM (Thursday)

Economic activity in the manufacturing sector contracted in August following five consecutive months of expansion, while the overall economy grew for the 87th consecutive month, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®.

The August PMI® registered 49.4 percent, a decrease of 3.2 percentage points from the July reading of 52.6 percent. The New Orders Index registered 49.1 percent, a decrease of 7.8 percentage points from the July reading of 56.9 percent. The Production Index registered 49.6 percent, 5.8 percentage points lower than the July reading of 55.4 percent. The Employment Index registered 48.3 percent, a decrease of 1.1 percentage points from the July reading of 49.4 percent. Inventories of raw materials registered 49 percent, a decrease of 0.5 percentage point from the July reading of 49.5 percent. The Prices Index registered 53 percent, a decrease of 2 percentage points from the July reading of 55 percent, indicating higher raw materials prices for the sixth consecutive month. Manufacturing contracted in August for the first time since February of this year, as only six of our 18 industries reported an increase in new orders in August (down from 12 in July), and only eight of our 18 industries reported an increase in production in August (down from nine in July)."

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


2Q2016 Productivity Growth Decreased 0.6%
Posted: September 1, 2016 at 08:30 AM (Thursday)

Nonfarm business sector labor productivity decreased at a 0.6-percent annual rate during the second quarter of 2016, the U.S. Bureau of Labor Statistics reported today, as output increased 1.1 percent and hours worked increased 1.7 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the second quarter of 2015 to the second quarter of 2016, productivity decreased 0.4 percent, the first four-quarter decline in the series since a 0.6-percent decline in the second quarter of 2013.

Unit labor costs in the nonfarm business sector increased 4.3 percent in the second quarter of 2016, reflecting a 3.7-percent increase in hourly compensation and a 0.6-percent decline in productivity. Unit labor costs increased 2.6 percent over the last four quarters.

Manufacturing sector labor productivity decreased 0.4 percent in the second quarter of 2016, as output and hours worked decreased 0.8 percent and 0.4 percent, respectively. Output per hour increased 2.4 percent in the durable goods manufacturing sector reflecting a 0.7-percent increase in output and a 1.8-percent decline in hours worked. Productivity decreased 4.4 percent in the nondurable goods sector in the second quarter of 2016, following a 4.0-percent first-quarter increase. Over the last four quarters, manufacturing productivity increased 0.9 percent, as output increased 0.3 percent and hours declined 0.6 percent. (See tables A, 3, 4, and 5.) Unit labor costs in manufacturing increased 6.7 percent in the second quarter of 2016 and rose 2.5 percent from the same quarter a year ago. Hourly compensation increased 6.3 percent in the second quarter of 2016.

Preliminary second quarter 2016 measures of productivity and costs were announced for the nonfinancial corporate sector. Productivity decreased 2.1 percent in the second quarter of 2016--the largest decline since a 3.1 percent decline in the third quarter of 2013--as output decreased 0.7 percent, and hours worked increased 1.4 percent. Unit labor costs increased 5.9 percent, reflecting both a 3.7 percent increase in hourly compensation and a 2.1 percent decline in productivity.

Revised measures
In the second quarter of 2016, nonfarm business productivity was revised down slightly to a decline of 0.6 percent. Output was revised down slightly to an increase of 1.1 percent, and hours were revised down slightly to an increase of 1.7 percent. Unit labor costs increased 4.3 percent rather than increasing 2.0 percent as reported August 9, due mainly to a 2.2-percentage point upward revision to hourly compensation, in addition to the slight downward revision to productivity.

In the second quarter of 2016, manufacturing sector productivity was revised down to a decline of 0.4 percent from a previously-reported decline of 0.2 percent. Unit labor costs increased 6.7 percent, higher than the preliminary estimate of 3.1 percent. Durable and nondurable goods manufacturing unit labor costs were also revised up, to increases of 3.0 percent and 13.0 percent, respectively. After revision, nondurable goods unit labor costs had its largest gain in the series since a 13.2-percent gain in the fourth quarter of 2008.

In the first quarter of 2016, nonfarm business productivity decreased at the same 0.6-percent rate reported in the previous estimate. Unit labor costs were revised down slightly. Manufacturing sector productivity was revised down to an increase of 1.3 percent. Hourly compensation and unit labor costs were revised downward slightly.


Weekly Initial Unemployment Claims Increase 2,000 to 263,000
Posted: September 1, 2016 at 08:30 AM (Thursday)

In the week ending August 27, the advance figure for seasonally adjusted initial claims was 263,000, an increase of 2,000 from the previous week's unrevised level of 261,000. The 4-week moving average was 263,000, a decrease of 1,000 from the previous week's unrevised average of 264,000. There were no special factors impacting this week's initial claims. This marks 78 consecutive weeks of initial claims below 300,000, the longest streak since 1970.

The advance seasonally adjusted insured unemployment rate was 1.6 percent for the week ending August 20, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending August 20 was 2,159,000, an increase of 14,000 from the previous week's unrevised level of 2,145,000. The 4-week moving average was 2,159,750, an increase of 4,500 from the previous week's unrevised average of 2,155,250.


Challenger Layoffs decrease to 32,188 in August
Posted: September 1, 2016 at 07:30 AM (Thursday)

Downsizing slowed in August, as US-based employers announced plans to cut their payrolls by 32,188, a 29 percent decline from the 45,346 cuts in July, according to the report released Thursday by global outplacement consultancy Challenger, Gray & Christmas, Inc.

The August figure was the lowest monthly total since May (30,157) and the second lowest of the year. It was 22 percent lower than August 2015, when 41,186 planned job cuts were announced.
To date, employers have announced 391,288 job cuts in 2016. That is 10 percent fewer than the 434,554 job cuts recorded between January and August 2015.

The computer sector saw the heaviest job cuts during the month with 6,103. The bulk of the cuts came from Cisco Systems, which announced plans to reduce its workforce by 5,500. That was lower than the initially reported 14,000 cuts that were expected from the tech giant, but still represents a sizable downsizing in an industry that has experienced a surge in job cuts over the last 18 months.

“Since January of last year, there has been a string of large scale job cuts from major players in the technology sector, including Hewlett-Packard, Intel, Dell, Microsoft and, now, Cisco. The surge in cuts does not necessarily signal weakness in the sector, but it certainly signals a shift. In most cases, we are seeing these firms move from making hardware to providing services,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

Computer firms have announced 55,567 job cuts this year. That is up 111 percent from last year, when cuts totaled 26,374 through the first seven months.

The computer sector ranks second in year-to-date job cuts behind the energy sector, which has announced 97,366 job cuts in 2016, including 2,430 in August. Unlike most months, August energy cuts were not dominated by oil-focused firms. Surprisingly, the majority of last month’s cuts came from solar firms, including SolarCity and SunPower.

“Solar is a burgeoning segment of the energy sector that appears to be going through some growing pains. Competition is keeping prices low. Reports suggest that SolarCity is basically taking a loss on every installation. So, it is relying on volume, but the volume isn’t quite where it needs to be. Meanwhile, utilities are paying less to solar companies in the power purchase agreements that are a staple of the business model,” noted Challenger.

August also experienced heavy job cutting in the industrial goods sector and entertainment and leisure, where employers announced 3,073 and 3,037 job cuts, respectively.

Low oil prices have been a contributing factor in the industrial goods sector, where many of the firms provide materials and equipment to the energy sector. In August, oil prices were blamed in just one announcement from an industrial goods firm, but that one announcement accounted for about one-third (1,000) of the sector’s cuts during the month.

The bulk of the entertainment and leisure job cuts announced last month resulted from the closure of the Trump Taj Mahal casino and resort in Atlantic City. The closure impacted 2,845 employees.


ADP National Employment Report increased by 179,000 jobs in August
Posted: August 31, 2016 at 09:15 AM (Wednesday)

Private sector employment increased by 177,000 jobs from July to August according to the August ADP National Employment Report®.

Payrolls for businesses with 49 or fewer employees increased by 63,000 jobs in August, down from 68,000 in July. Employment at companies with 50-499 employees increased by 44,000 jobs, down from last month’s 71,000. Employment at large companies – those with 500 or more employees – increased by 70,000, up from July’s 56,000. Companies with 500-999 employees added 25,000 and companies with more than 1,000 employees added 46,000 in August.

Goods-producing employment was down by 6,000 jobs in August, following July losses of 5,000. The construction industry lost 2,000 jobs, following July losses of 5,000 jobs. Meanwhile, manufacturing jobs were flat in August, after gaining 5,000 in the previous month.

Service-providing employment rose by 183,000 jobs in August, fewer than July’s 199,000 jobs. The ADP National Employment Report indicates that professional/business services contributed 53,000 jobs, down from July’s 70,000. Trade/transportation/utilities increased by 26,000 jobs in August, down from 31,000 jobs added the previous month. Financial activities added 15,000 jobs, up from last month’s gain of 13,000 jobs.

“Job growth in August was stable and consistent with levels from previous months as consumer conditions improve,” said Ahu Yildirmaz, vice president and head of the ADP Research Institute. “Continued strong growth in service-providing jobs is offset by weakness in goods-producing areas.”

Mark Zandi, chief economist of Moody’s Analytics, said, “The American job machine continues to hum along. Job creation remains strong, with most industries and companies of all sizes adding solidly to their payrolls. The U.S. economy will soon be at full employment.”


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: August 31, 2016 at 07:00 AM (Wednesday)

Mortgage applications increased 2.8 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending August 26, 2016.

The Market Composite Index, a measure of mortgage loan application volume, increased 2.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 2 percent compared with the previous week. The Refinance Index increased 4 percent from the previous week. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 5 percent higher than the same week one year ago.

The refinance share of mortgage activity increased to 63.5 percent of total applications from 62.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 4.5 percent of total applications.

The FHA share of total applications increased to 9.7 percent from 8.9 percent the week prior. The VA share of total applications increased to 12.5 percent from 12.4 percent the week prior. The USDA share of total applications remained unchanged to 0.6 percent from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) remained unchanged at 3.67 percent, with points decreasing to 0.33 from 0.34 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 3.63 percent from 3.62 percent, with points decreasing to 0.27 from 0.35 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.54 percent from 3.53 percent, with points increasing to 0.36 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 2.96 percent from 2.95 percent, with points decreasing to 0.31 from 0.38 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs increased to 2.90 percent from 2.84 percent, with points decreasing to 0.24 from 0.37 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


Consumer Confidence increased in August to 101.1
Posted: August 30, 2016 at 10:00 AM (Tuesday)

The Conference Board Consumer Confidence Index®, which had decreased slightly in July, increased in August. The Index now stands at 101.1 (1985=100), compared to 96.7 in July. The Present Situation Index rose from 118.8 to 123.0, while the Expectations Index improved from 82.0 last month to 86.4.

The monthly Consumer Confidence Survey®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was August 18.

“Consumer confidence improved in August to its highest level in nearly a year, after a marginal decline in July,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of both current business and labor market conditions was considerably more favorable than last month. Short-term expectations regarding business and employment conditions, as well as personal income prospects, also improved, suggesting the possibility of a moderate pick-up in growth in the coming months.”

Consumers’ appraisal of current conditions improved in August. Those stating business conditions are “good” increased from 27.3 percent to 30.0 percent, while those saying business conditions are “bad” remained virtually unchanged at 18.4 percent. Consumers’ assessment of the labor market was also more favorable. Those claiming jobs were more “plentiful” increased from 23.0 percent to 26.0 percent, however, those claiming jobs are “hard to get” also rose, from 22.1 percent to 23.4 percent.

Consumers’ optimism regarding the short-term outlook picked up in August. The percentage of consumers expecting business conditions to improve over the next six months increased from 15.7 percent to 17.3 percent, while those expecting business conditions to worsen decreased from 12.4 percent to 11.1 percent.

Consumers’ outlook for the labor market was also more favorable than in July. The proportion expecting more jobs in the months ahead rose from 13.5 percent to 14.2 percent, while those anticipating fewer jobs remained virtually unchanged at 17.5 percent. The percentage of consumers expecting their incomes to increase improved from 17.1 percent to 18.8 percent, while the proportion expecting a decline decreased marginally from 11.0 percent to 10.7 percent.


S&P/Case-Shiller Home Price Indices gained 1.0% in June
Posted: August 30, 2016 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 June 2016 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 5.1% annual gain in June, unchanged from last month. The 10-City Composite posted a 4.3% annual increase, down from 4.4% the previous month. The 20-City Composite reported a year-over-year gain of 5.1%, down from 5.3% in May.

Portland, Seattle, and Denver reported the highest year-over-year gains among the 20 cities over each of the last five months. In June, Portland led the way with a 12.6% year-over-year price increase, followed by Seattle at 11.0%, and Denver with a 9.2% increase. Six cities reported greater price increases in the year ending June 2016 versus the year ending May 2016.

MONTH-OVER-MONTH
Before seasonal adjustment, the National Index posted a month-over-month gain of 1.0% while both the 10-City Composite and the 20-City Composite posted a 0.8% increase in June. After seasonal adjustment, the National Index recorded a 0.2% month-over-month increase, and both the 10-City Composite and 20-City Composite posted 0.1% month-over-month decreases. After seasonal adjustment, nine cities saw prices rise, two cities were unchanged, and nine cities experienced negative monthly prices changes.

ANALYSIS
“Home prices continued to rise across the country led by the west and the south,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “In the strongest region, the Pacific Northwest, prices are rising at more than 10%; in the slower Northeast, prices are climbing a bit faster than inflation. Nationally, home prices have risen at a consistent 4.8% annual pace over the last two years without showing any signs of slowing.

“Overall, residential real estate and housing is in good shape. Sales of existing homes are at running at about 5.5 million units annually with inventory levels under five months, indicating a fairly tight market. Sales of new single family homes were at a 654,000 seasonally adjusted annual rate in July, the highest rate since November 2007. Housing starts in July topped an annual rate of 1.2 million units. While the real estate sector and consumer spending are contributing to economic growth, business capital spending continues to show weakness.”

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, which covers all nine U.S. census divisions, recorded a 5.1% annual gain in June 2016. The 10-City and 20-City Composites reported year-over-year increases of 4.3% and 5.1%. As of June 2016, 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 remained steady at 100.70 in August
Posted: August 30, 2016 at 08:30 AM (Tuesday)

The Paychex | IHS Small Business Jobs Index remained steady in August, up modestly, 0.02 percent, from the previous month. At 100.70, the national index is up 0.22 percent from a year ago. Mountain reclaimed its lead among regions, pushing South Atlantic to the second-ranked spot. Washington continued as the top-ranked state index at 104.30, while California is down 0.82 percent from a year ago and nearing a five-year low. Seattle increased its lead among metros with the strongest one-month gain at 0.92 percent. There was little movement among industries in August, yet Manufacturing continues to struggle, down 0.85 percent from a year ago.

“The Paychex | IHS Small Business Jobs Index has plateaued this year, albeit at a solid pace of employment gains,” said James Diffley, chief regional economist at IHS Markit. “At 100.70, the August index moved up just 0.02 percent from July and is off 0.01 percent from the 2016 average of 100.71.”

“The August index reflects a year-to-date trend of steady employment growth” said Martin Mucci, president and CEO of Paychex. “Additionally, the growth appears to be wide-spread, with all nine regions above the national baseline of 100.”


Texas Manufacturing Activity Stabilizes in August
Posted: August 29, 2016 at 10:30 AM (Monday)

Texas factory activity held steady in July, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, came in near zero after two months of negative readings, suggesting output stopped falling this month.

Some other measures of current manufacturing activity also reflected stabilization, and demand declines abated somewhat. The capacity utilization and shipments indexes posted near-zero readings, up from negative territory in May and June. The new orders index rose six points to –8.0, while the growth rate of orders index rose nine points to –9.7.

Perceptions of broader business conditions were notably less pessimistic. While the general business activity index remained negative for a nineteenth month in a row, it jumped 17 points to –1.3 in July. The company outlook index also remained negative but rose, climbing from –11 to –2.3.

Labor market measures indicated slight employment declines and stable workweek length. The employment index came in at –2.6, up from a post-recession low of –11.5 last month. Fourteen percent of firms noted net hiring, while 17 percent noted net layoffs. The hours worked index pushed up to near zero in July—which suggests no change in workweek length—after a reading of –12.8 in June.

Price pressures were mixed, and wages continued to rise. Input costs rose for a fourth month in a row, with the raw materials prices index staying positive but moving down to 7.6. Selling prices continued to decline, as the finished goods prices index held steady at –5.7. Meanwhile, the wages and benefits index suggested a slower rise in compensation, posting a double-digit decline to a reading of 10.5 in July. More than 85 percent of manufacturers noted no change in compensation costs this month.

Expectations regarding future business conditions improved again in July. The index of future general business activity posted a second positive reading in a row and rose 16 points to 18.4. The index of future company outlook also rose markedly, coming in at 22.8. Other indexes for future manufacturing activity also made double-digit gains in July, pushing further into positive territory.


Personal Income increased 0.4%, Spending increased 0.3%
Posted: August 29, 2016 at 08:30 AM (Monday)

Personal income increased $71.6 billion (0.4 percent) in July according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $60.1 billion (0.4 percent) and personal consumption expenditures (PCE) increased $42.0 billion (0.3 percent).

Real DPI increased 0.4 percent in July and Real PCE increased 0.3 percent. The PCE price index was unchanged from June. Excluding food and energy, the PCE price index increased 0.1 percent in July.


University of Michigan Consumer Confidence dropped in August to 89.8
Posted: August 26, 2016 at 10:00 AM (Friday)

Consumers were a bit less optimistic in August than one month or one year ago, although consumer confidence remains at a reasonably high level. Less favorable personal financial prospects were largely offset by a slight improvement in the outlook for the overall economy. Most of the weakness in personal finances was among younger households who cited higher expenses than anticipated as well as slightly smaller expected income gains. Importantly, long term inflation expectations fell to the lowest level ever recorded, with near term inflation expectations anchored to that same low level. Low interest rates have increasingly become the sole driver of large discretionary expenditures. Strength in personal finances and low interest rates will maintain the growth in real consumption at 2.6% through mid 2017.

Mixed Changes in Personal Finances
Among all households, 44% reported that their financial situation had recently improved, unchanged from one month or one year ago. One-third of all households reported recent income gains in August, the same as in July. Financial prospects for the year ahead declined in August, as just 29% expected their finances to improve, down from 36% in July and the lowest level since late 2014. Most all of the decline was among those under age 35.

Favorable Buying Attitudes
The source of favorable buying plans has shifted from attractive pricing to low interest rates. Home buying has become particularly dependent on low mortgage rates, with net references to low rates mentioned by 53%—this figure has been exceeded in only one month in the past ten years. In contrast, low housing prices were cited by just 26%, for the fourth time in the last 5 months, and the lowest figure in ten years.

The Consumer Sentiment Index was 89.8 in the August 2016 survey, barely below July’s 90.0 and slightly below last August’s 91.9. The Sentiment Index remained largely unchanged in August from one month ago due to offsetting shifts: the Expectations Index rose to 78.7 from 77.8 last month, while the Current Conditions Index declined to 107.0 in August from 109.0 in July.

Consumers have become increasingly dependent on ultra low inflation and interest rates. While wage gains have recently improved, it is still low inflation that has been a key ingredient in preventing declines in the living standards. Consumers do not anticipate an increase in inflation anytime over the next five years, and have increasingly discounted any significant increase in interest rates during the year ahead. Small increases in inflation or interest rates would not be surprising to consumers, but the expectation of policies aimed toward cumulative increases in inflation or interest rates could cause a more substantial and negative reaction.


2Q2016 GDP preliminary estimate increased 1.1%
Posted: August 26, 2016 at 08:30 AM (Friday)

Real gross domestic product increased at an annual rate of 1.1 percent in the second quarter of 2016, according to the "second" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.8 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 1.2 percent. With this second estimate for the second quarter, the general picture of economic growth remains the same; revisions to the components of GDP are small .

Real gross domestic income (GDI) increased 0.2 percent in the second quarter, compared with an increase of 0.8 percent in the first (revised). The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 0.6 percent in the second quarter, compared with an increase of 0.8 percent in the first.

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

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

Current-dollar GDP increased 3.4 percent, or $154.9 billion, in the second quarter to a level of $18,436.5 billion (table 1 and table 3). In the first quarter, current dollar GDP increased 1.3 percent, or $58.9 billion.

The price index for gross domestic purchases increased 2.1 percent in the second quarter, compared with an increase of 0.2 percent in the first. The PCE price index increased 2.0 percent, compared with an increase of 0.3 percent. Excluding food and energy prices, the PCE price index increased 1.8 percent, compared with an increase of 2.1 percent.

Updates to GDP
The downward revision to the percent change in real GDP primarily reflected downward revisions to state and local government spending and to private inventory investment and an upward revision to imports. These were partly offset by upward revisions to nonresidential fixed investment and to PCE.


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Founded in 1920, the National Bureau of Economic Research is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works.

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