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U.S. Leading Economic Index increased 1.2% in August
Posted: September 18, 2020 at 10:00 AM (Friday)

The Conference Board Leading Economic Index® (LEI) for the U.S. increased 1.2 percent in August to 106.5 (2016 = 100), following a 2.0 percent increase in July and a 3.1 percent increase in June.

“While the US LEI increased again in August, the slowing pace of improvement suggests that this summer’s economic rebound may be losing steam heading into the final stretch of 2020,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “Despite the improvement, the LEI remains in recession territory, still 4.7 percent below its February level. Weakening in new orders for capital goods, residential construction, consumers’ outlook, and financial conditions point to increasing downside risks to the economic recovery. Looking ahead to 2021, the LEI suggests that the US economy will start the new year under substantially weakened economic conditions.”

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.6 percent in August to 100.8 (2016 = 100), following a 1.2 percent increase in July and a 3.9 percent increase in June.

The Conference Board Lagging Economic Index® (LAG) for the U.S. decreased 0.6 percent in August to 107.6 (2016 = 100), following a 0.6 percent decrease in July and a 3.5 percent decrease in June.


University of Michigan Consumer Confidence Preliminary September Results rose to 78.9
Posted: September 18, 2020 at 10:00 AM (Friday)

Consumer sentiment improved in early September, reaching the top of the range it has traveled since April. While the recent gain was consistent with an unchanged flat trend, the data indicated that the election has begun to have an impact on expectations about future economic prospects. The Michigan surveys have traditionally asked consumers which candidate they thought would win the election, not whom they favored or how they intended to vote. The data from July to September indicate a virtual tie. This question has been asked since Carter ran against Ford in 1976, and in every presidential election, consumers correctly chose the winner, save one: when Trump ran against Clinton in 2016, two-thirds of consumers expected a Clinton victory. In one other election had the data been as close as now--in the 1980 election that had Reagan over Carter by one percentage point. Note that the September gains were primarily in the outlook for the economy, and it was Democrats that posted gains in economic prospects while optimism about the economy weakened among Republicans. When consumers were directly asked which candidate would be better for the economy and for their personal finances, Trump was chosen over Biden as more likely to benefit the economy and their finances, although most consumers said there was no difference with regard to their own finances. Over the next several months, there are two factors that could cause volatile shifts and steep losses in consumer confidence: how the election is decided and the delays in obtaining vaccinations. While the end of the recession will depend on these non-economic factors, the hardships endured by consumers can only be offset by renewed federal relief payments.


2Q2020 Current Account Deficit Increased
Posted: September 18, 2020 at 08:30 AM (Friday)

The U.S. current account deficit, which reflects the combined balances on trade in goods and services and income flows between U.S. residents and residents of other countries, widened by $59.0 billion, or 52.9 percent, to $170.5 billion in the second quarter of 2020, according to statistics from the U.S. Bureau of Economic Analysis (BEA). The revised first quarter deficit was $111.5 billion.

The second quarter deficit was 3.5 percent of current dollar gross domestic product, up from 2.1 percent in the first quarter.

The $59.0 billion widening of the current account deficit in the second quarter mostly reflected an expanded deficit on goods and reduced surpluses on primary income and on services.

Quarterly U.S. Current Account and Component Balances
Coronavirus (COVID-19) Impact on Second Quarter 2020 International Transactions
All major categories of current account transactions declined in the second quarter of 2020 resulting in part from the impact of COVID-19, as many businesses were operating at limited capacity or ceased operations completely, and the movement of travelers across borders was restricted. In the financial account, the ending of some currency swaps between the U.S. Federal Reserve System and some central banks in Europe and Japan contributed to U.S. withdrawal of deposit assets and U.S. repayment of deposit liabilities. The full economic effects of the COVID-19 pandemic cannot be quantified in the statistics because the impacts are generally embedded in source data and cannot be separately identified. For more information on the impact of COVID-19 on the statistics, see the technical note that accompanies this release.

Current Account Transactions (tables 1-5)

Exports of goods and services to, and income received from, foreign residents decreased $209.3 billion, to $688.0 billion, in the second quarter. Imports of goods and services from, and income paid to, foreign residents decreased $150.2 billion, to $858.5 billion.

Quarterly U.S. Current Account Transactions

Trade in Goods (table 2)

Exports of goods decreased $114.6 billion, to $288.9 billion, mostly reflecting decreases in industrial supplies and materials, mainly petroleum and products; in capital goods, mainly civilian aircraft, engines, and parts; and in automotive vehicles, parts, and engines, mainly parts and engines and passenger cars. Imports of goods decreased $87.1 billion, to $508.2 billion, mostly reflecting decreases in automotive vehicles, parts, and engines, mainly parts and engines and passenger cars, and in industrial supplies and materials, mostly petroleum and products.

Trade in Services (table 3)

Exports of services decreased $46.3 billion, to $155.8 billion, and imports of services decreased $35.4 billion, to $101.3 billion. The decreases in both exports and imports mostly reflected decreases in travel, primarily other personal travel, and in transport, primarily air passenger transport.

Primary Income (table 4)

Receipts of primary income decreased $47.1 billion, to $209.4 billion, mostly reflecting decreases in portfolio investment income, primarily income on equity securities, and in direct investment income, primarily earnings. Payments of primary income decreased $24.3 billion, to $180.2 billion, reflecting decreases in all components, led by other investment income, primarily interest on loans and deposits.

Secondary Income (table 5)

Receipts of secondary income decreased $1.2 billion, to $33.9 billion, mostly reflecting a decrease in private transfers, primarily private sector fines and penalties. Payments of secondary income decreased $3.4 billion, to $68.8 billion, reflecting decreases in private transfers, primarily private sector fines and penalties, and in general government transfers, primarily international cooperation.

Capital Account Transactions (table 1)

Capital transfer payments decreased $1.9 billion, to $1.1 billion, in the second quarter, mostly reflecting a decrease in investment grants.

Financial Account Transactions (tables 1, 6, 7, and 8)

Net financial account transactions were −$82.6 billion in the second quarter, reflecting net U.S. borrowing from foreign residents.

Financial Assets (tables 1, 6, 7, and 8)

Second quarter transactions decreased U.S. residents’ foreign financial assets by $147.6 billion. Transactions decreased portfolio investment assets by $29.8 billion, primarily equity securities, and other investment assets, mostly deposits, by $158.6 billion. Transactions in deposits included a net withdrawal by the U.S. Federal Reserve of $130.8 billion from deposits abroad. Transactions increased direct investment assets, primarily equity, by $35.9 billion, and reserve assets by $5.0 billion.

Liabilities (tables 1, 6, 7, and 8)

Second quarter transactions decreased U.S. liabilities to foreign residents by $4.8 billion. Transactions decreased direct investment liabilities, mainly debt instruments, by $8.5 billion and other investment liabilities, mostly deposits, by $335.2 billion. Foreign banks withdrew $213.0 billion of their deposits in U.S. banks. Transactions increased portfolio investment liabilities, mainly short-term U.S. Treasury securities, by $339.0 billion.

Financial Derivatives (table 1)

Net transactions in financial derivatives were $60.3 billion in the second quarter, reflecting net lending to foreign residents.

Updates to First Quarter 2020 International Transactions Accounts Balances

Billions of dollars, seasonally adjusted
Preliminary estimate Revised estimate
Current account balance -104.2 −111.5
Goods balance −192.3 −191.7
Services balance 73.3 65.3
Primary income balance 52.5 52.0
Secondary income balance −37.6 −37.1
Net financial account transactions −201.1 −143.1

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Weekly Initial Unemployment Claims Decrease 33,000 to 860,000
Posted: September 17, 2020 at 08:30 AM (Thursday)

In the week ending September 12, the advance figure for seasonally adjusted initial claims was 860,000, a decrease of 33,000 from the previous week's revised level. The previous week's level was revised up by 9,000 from 884,000 to 893,000. The 4-week moving average was 912,000, a decrease of 61,000 from the previous week's revised average. The previous week's average was revised up by 2,250 from 970,750 to 973,000.

The advance seasonally adjusted insured unemployment rate was 8.6 percent for the week ending September 5, a decrease of 0.7 percentage point from the previous week's revised rate. The previous week's rate was revised up by 0.1 from 9.2 to 9.3 percent. The advance number for seasonally adjusted insured unemployment during the week ending September 5 was 12,628,000, a decrease of 916,000 from the previous week's revised level. The previous week's level was revised up 159,000 from 13,385,000 to 13,544,000. The 4-week moving average was 13,489,000, a decrease of 532,750 from the previous week's revised average. The previous week's average was revised up by 39,750 from 13,982,000 to 14,021,750.


August Housing Starts Decreased 5.1%, Permits down 0.9%
Posted: September 17, 2020 at 08:30 AM (Thursday)

Building Permits
Privately-owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 1,470,000. This is 0.9 percent (±1.4 percent)* below the revised July rate of 1,483,000 and is 0.1 percent (±1.5 percent)* below the August 2019 rate of 1,471,000. Single-family authorizations in August were at a rate of 1,036,000; this is 6.0 percent (±1.3 percent) above the revised July figure of 977,000. Authorizations of units in buildings with five units or more were at a rate of 381,000 in August.

Housing Starts
Privately-owned housing starts in August were at a seasonally adjusted annual rate of 1,416,000. This is 5.1 percent (±9.6 percent)* below the revised July estimate of 1,492,000, but is 2.8 percent (±10.3 percent)* above the August 2019 rate of 1,377,000. Single-family housing starts in August were at a rate of 1,021,000; this is 4.1 percent (±8.7 percent)* above the revised July figure of 981,000. The August rate for units in buildings with five units or more was 375,000.

Housing Completions
Privately-owned housing completions in August were at a seasonally adjusted annual rate of 1,233,000. This is 7.5 percent (±14.2 percent)* below the revised July estimate of 1,333,000 and is 2.4 percent (±11.9 percent)* below the August 2019 rate of 1,263,000. Single-family housing completions in August were at a rate of 912,000; this is 4.4 percent (±19.1 percent)* below the revised July rate of 954,000. The August rate for units in buildings with five units or more was 312,000.


Philadelphia Fed Outlook reported continued to expand in September
Posted: September 17, 2020 at 08:30 AM (Thursday)

Manufacturing activity in the region continued to expand this month, according to firms responding to the September Manufacturing Business Outlook Survey. The survey's current indicators for general activity, new orders, and shipments remained positive for the fourth consecutive month. The employment index improved in September and remained in positive territory for the third consecutive month. Nearly all of the future indexes increased, suggesting more widespread optimism among firms about growth over the next six months.

Most Current Indicators Remain Positive

The diffusion index for current activity fell 2 points to 15.0 in September, its fourth consecutive positive reading after reaching long-term lows in April and May (see Chart 1). The percentage of firms reporting increases (33 percent) exceeded the percentage reporting decreases (18 percent). The index for new orders increased from 19.0 to 25.5. Nearly 42 percent of the firms reported increases in new orders this month, while 16 percent reported decreases. The current shipments index increased 27 points to 36.6 in September. Over 45 percent of the firms reported higher shipments this month, compared with 26 percent last month.

On balance, the firms reported increases in manufacturing employment for the third consecutive month: The current employment index increased 7 points to 15.7 this month. Employment increases were reported by 31 percent of the firms, while 16 percent reported decreases. The average workweek index was positive for the third consecutive month but fell 4 points to 7.8.

Chart 1

More Firms Report Increases in Prices

The survey’s price indicators remained positive and increased this month (see Chart 2). The prices paid diffusion index increased 10 points to 25.1. Nearly 29 percent of the firms reported increases in input prices, and 4 percent reported decreases; most firms (68 percent) reported no change. The current prices received index, reflecting manufacturers’ own prices, increased 6 points to 18.4. Over 22 percent of the firms reported increases in prices of their own manufactured goods, up from 16 percent in August.

Chart 2

Firms Expect Higher Production During the Fourth Quarter

In this month’s special questions, the firms were asked to estimate their total production growth for the third quarter ending this month along with expected growth for the fourth quarter (see Special Questions). The share of firms reporting increases in third-quarter production (51 percent) was greater than the share reporting decreases (40 percent). The firms have yet to recover production losses experienced during the widespread closures in April and May. The firms indicated that third-quarter production was still 85 percent of pre-pandemic levels. Looking ahead to the fourth quarter, 62 percent of the firms expect an increase in production compared with the third quarter, while 29 percent of the firms expect decreases. For those firms forecasting an increase in production, 11 percent will need to hire additional workers, 20 percent will increase work hours without hiring additional workers, and 22 percent will increase production through higher productivity without hiring additional workers.

Firms Are More Optimistic About Future Growth

The respondents remained optimistic about growth over the next six months. The diffusion index for future general activity increased 18 points to 56.6 in September (see Chart 1). The future new orders index rose 2 points and remained at an elevated reading of 56.9, while the future shipments index edged up 1 point to 47.9 this month. The firms continued to expect increases in employment over the next six months, as the future employment index increased 13 points. Nearly 46 percent of the firms expected higher employment, compared with 38 percent in August. The index for future capital spending increased 8 points to 31.0, with nearly 36 percent of the firms expecting to increase spending over the next six months.

Summary

Responses to the September Manufacturing Business Outlook Survey suggest continued recovery for the region’s manufacturing sector. The indicators for current activity, new orders, shipments, and employment all remained positive. The survey’s future indexes suggest more widespread optimism about manufacturing activity over the next six months.


Treasury International Capital Data for July 2020
Posted: September 16, 2020 at 04:13 PM (Wednesday)

The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for July 2020. The sum total in July of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a net TIC outflow of $88.7 billion. Of this, net foreign private outflows were $55.0 billion, and net foreign official outflows were $33.7 billion.

Foreign residents decreased their holdings of long-term U.S. securities in July; net sales were $26.7 billion. Net sales by private foreign investors were $20.8 billion, while net sales by foreign official institutions were $5.9 billion. U.S. residents decreased their holdings of long-term foreign securities, with net sales of $37.5 billion.

Taking into account transactions in both foreign and U.S. securities, net foreign purchases of long-term securities were $10.8 billion. After including adjustments, such as estimates of unrecorded principal payments to foreigners on U.S. asset-backed securities, overall net foreign sales of long-term securities are estimated to have been $29.0 billion in July.

Foreign residents decreased their holdings of U.S. Treasury bills by $1.4 billion. Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities decreased by $3.9 billion. Banks’ own net dollar-denominated liabilities to foreign residents decreased by $55.9 billion.


FOMC target funds rate maintained at 0.00% - 0.25%
Posted: September 16, 2020 at 02:00 PM (Wednesday)

The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.

The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world. Economic activity and employment have picked up in recent months but remain well below their levels at the beginning of the year. Weaker demand and significantly lower oil prices are holding down consumer price inflation. Overall financial conditions have improved in recent months, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.

The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved. The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. In addition, over coming months the Federal Reserve will increase its holdings of Treasury securities and agency mortgage-backed securities at least at the current pace to sustain smooth market functioning and help foster accommodative financial conditions, thereby supporting the flow of credit to households and businesses.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Patrick Harker; Loretta J. Mester; and Randal K. Quarles.

Voting against the action were Robert S. Kaplan, who expects that it will be appropriate to maintain the current target range until the Committee is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals as articulated in its new policy strategy statement, but prefers that the Committee retain greater policy rate flexibility beyond that point; and Neel Kashkari, who prefers that the Committee to indicate that it expects to maintain the current target range until core inflation has reached 2 percent on a sustained basis.


Business Inventories up 0.1% in July
Posted: September 16, 2020 at 10:00 AM (Wednesday)

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 $1,441.1 billion, up 3.2 percent (±0.2 percent) from June 2020, but was down 1.2 percent (±0.4 percent) from July 2019.

Manufacturers’ and trade inventories for July, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,914.3 billion, up 0.1 percent (±0.1 percent)* from June 2020, but were down 5.9 percent (±0.3 percent) from July 2019.

The total business Inventories/Sales Ratio based on seasonally adjusted data at the end of July was 1.33. The July 2019 ratio was 1.39.


NAHB Builder Confidence increased 5 points to 83 in September
Posted: September 16, 2020 at 10:00 AM (Wednesday)

In a strong signal that housing is leading the economic recovery, builder confidence in the market for newly-built single-family homes increased five points to hit an all-time high of 83 in September, according to the latest NAHB/Wells Fargo Housing Market Index (HMI) released today. The previous highest reading of 78 in the 35-year history of the series was set last month and also matched in December 1998.

“Historic traffic numbers have builders seeing positive market conditions, but many in the industry are worried about rising costs and delays for building materials, especially lumber,” said NAHB Chairman Chuck Fowke. “More domestic lumber production or tariff relief is needed to avoid a slowdown in the market in the coming months.”

“Lumber prices are now up more than 170% since mid-April, adding more than $16,000 to the price of a typical new single-family home,” said NAHB Chief Economist Robert Dietz. “That said, the suburban shift for home building is keeping builders busy, supported on the demand side by low interest rates. In another sign of this growing trend, builders in other parts of the country have reported receiving calls from customers in high-density markets asking about relocating.”

Derived from a monthly survey that NAHB has been conducting for 35 years, the HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All the HMI indices posted their highest readings ever in September. The HMI index gauging current sales conditions rose four points to 88, the component measuring sales expectations in the next six months increased six points to 84 and the measure charting traffic of prospective buyers posted a nine-point gain to 73.

Looking at the three-month moving averages for regional HMI scores, the Northeast increased 11 points to 76, the Midwest increased nine points to 72, the South rose eight points to 79 and the West increased seven points to 85.


U.S. Retail Sales for August Increased 0.6%, Ex-Auto up 0.7%
Posted: September 16, 2020 at 08:30 AM (Wednesday)

Advance estimates of U.S. retail and food services sales for August 2020, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $537.5 billion, an increase of 0.6 percent (± 0.5 percent) from the previous month, and 2.6 percent (± 0.7 percent) above August 2019. Total sales for the June 2020 through August 2020 period were up 2.4 percent (± 0.5 percent) from the same period a year ago. The June 2020 to July 2020 percent change was revised from up 1.2 percent (± 0.5 percent) to up 0.9 percent (± 0.2 percent).

Retail trade sales were up 0.1 percent (± 0.5 percent)* from July 2020, and 5.1 percent (± 0.7 percent) above last year. Nonstore retailers were up 22.4 percent (± 1.4 percent) from August 2019, while clothing and clothing accessories stores were down 20.4 percent (± 1.9 percent) from last year.


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: September 16, 2020 at 07:00 AM (Wednesday)

Mortgage applications decreased 2.5 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending September 11, 2020. This week's results include an adjustment for the Labor Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 13 percent compared with the previous week. The Refinance Index decreased 4 percent from the previous week and was 30 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 12 percent compared with the previous week and was 6 percent higher than the same week one year ago.

"Mortgage rates held steady last week, and the 30-year fixed rate - at 3.07 percent - has now stayed near the 3 percent mark for the past two months. A 5 percent decline in conventional refinances pulled the overall index lower, but activity was still 30 percent higher than last year. With the flurry of refinance activity reported over the past several months, demand may be slowing as remaining borrowers in the market potentially wait for another sizeable drop in rates," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Applications to buy a home also decreased last week, but the underlying trend remains strong. Purchase activity has outpaced year-ago levels for 17 consecutive weeks, with a stronger growth in loans with higher balances pushing MBA's average loan size to a new survey high of $370,200."

The refinance share of mortgage activity decreased to 62.8 percent of total applications from 63.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 2.3 percent of total applications.

The FHA share of total applications decreased to 9.7 percent from 10.2 percent the week prior. The VA share of total applications increased to 12.3 percent from 11.2 percent the week prior. The USDA share of total applications decreased to 0.5 percent from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) remained unchanged at 3.07 percent, with points decreasing to 0.32 from 0.36 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) increased to 3.41 percent from 3.40 percent, with points decreasing to 0.27 from 0.31 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged at 3.16 percent, with points decreasing to 0.35 from 0.42 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.61 percent from 2.62 percent, with points increasing to 0.35 from 0.33 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs increased to 3.20 percent from 2.99 percent, with points remaining unchanged at 0.58 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


Industrial Production increased 0.4%
Capacity Utilization increased to 71.4%

Posted: September 15, 2020 at 09:15 AM (Tuesday)

Industrial production rose 0.4 percent in August for its fourth consecutive monthly increase. However, even after the recent gains, the index in August was 7.3 percent below its pre-pandemic February level. Manufacturing output continued to improve in August, rising 1.0 percent, but the gains for most manufacturing industries have gradually slowed since June. Mining production fell 2.5 percent in August, as Tropical Storm Marco and Hurricane Laura caused sharp but temporary drops in oil and gas extraction and well drilling. The output of utilities moved down 0.4 percent. At 101.4 percent of its 2012 average, the level of total industrial production was 7.7 percent lower in August than it was a year earlier. Capacity utilization for the industrial sector increased 0.3 percentage point in August to 71.4 percent, a rate that is 8.4 percentage points below its long-run (1972–2019) average but 7.3 percentage points above its low in April.


U.S. Import Price Index rose 0.9% in August
Posted: September 15, 2020 at 08:30 AM (Tuesday)

U.S. import prices rose 0.9 percent in August, the U.S. Bureau of Labor Statistics reported today, following advances of 1.2 percent in July and 1.4 percent in June. Higher prices for both fuel and nonfuel imports contributed to the August increase. Prices for U.S. exports also advanced in August, rising 0.5 percent, after increasing 0.9 percent the previous month.

Imports
Prices for U.S. imports advanced 0.9 percent in August, after rising 3.3 percent from April to July. Prior to that, import prices decreased 5.6 percent from January to April. Despite the recent increases, U.S. import prices declined 1.4 percent for the year ended in August.

Fuel Imports: The price index for import fuel rose 3.3 percent in August following increases of 15.1 percent in July, 21.3 percent in June, and 13.9 percent in May. In August, higher prices for both petroleum and natural gas contributed to the advance. Petroleum prices increased 2.9 percent in August, after rising 63.3 percent from April to July. The price index for natural gas advanced 12.2 percent in August following a 9.1-percent drop the previous month. Despite the increases in each of the past 4 months, import fuel prices fell 22.2 percent from August 2019 to August 2020. Prices for petroleum declined 24.1 percent and natural gas prices increased 53.0 percent over the past year.

All Imports Excluding Fuel: Nonfuel import prices rose 0.7 percent in August, after increasing 0.2 percent in July and 0.3 percent in June. The August advance was the largest monthly increase since a 0.8-percent rise in April 2011. In August, the increase was driven by a 3.6-percent advance in nonfuel industrial supplies and materials prices. The price index for nonfuel imports rose 0.8 percent from August 2019 to August 2020.

Nonfuel Industrial Supplies and Materials: The price index for nonfuel industrial supplies and materials rose 3.6 percent in August, the largest 1-month advance since the index was first published in December 2001. The August increase was led by higher prices for unfinished metals and selected building materials.

Finished Goods: Prices for each of the major finished goods categories increased in August. Consumer goods prices rose 0.2 percent, after advancing 0.3 percent in July. The August increase was driven by higher prices for coins, gems, jewelry, and collectibles. Prices for capital goods and automotive vehicles each ticked up 0.1 percent in August.

Foods, Feeds, and Beverages: Foods, feeds, and beverages prices advanced 0.4 percent in August following declines of 0.9 percent in July and 0.4 percent in June. The increase in August was led by rising prices for meat, food oils and oilseeds, and vegetables.

Exports
The price index for U.S. exports increased 0.5 percent in August, after advancing 0.9 percent in July and 1.8 percent in June. In August, rising nonagricultural prices more than offset falling agricultural prices. U.S. export prices declined 2.8 percent over the past 12 months, the smallest over-the-year decrease since February 2020.

Agricultural Exports: Prices for agricultural exports declined 2.2 percent in August following consecutive 1.6-percent increases in July and June. In August, declining prices for vegetables, corn, and dairy products, which fell 11.8 percent, 7.1 percent, and 9.9 percent, respectively, drove the drop in agricultural prices. Export agricultural prices also fell over the past year, decreasing 2.9 percent led by a 16.1-percent drop in corn prices, a 24.4-percent fall in nut prices, and a 5.0-percent decline in meat prices.

All Exports Excluding Agriculture: Nonagricultural export prices advanced 0.8 percent in August, after increasing 0.9 percent in July and 1.7 percent in June. The August rise was primarily led by higher nonagricultural industrial supplies and materials prices; rising prices for consumer goods, capital goods, and nonagricultural foods also contributed to the increase. The price index for nonagricultural exports decreased 2.8 percent for the year ended in August. Lower prices for nonagricultural industrial supplies and materials, consumer goods, nonagricultural foods, and automotive vehicles more than offset higher capital goods prices.

Nonagricultural Industrial Supplies and Materials: The price index for nonagricultural industrial supplies and materials increased 2.3 percent in August following advances of 2.2 percent in July and 6.1 percent in June. The August rise was driven by higher prices for nonferrous metals, chemicals, and fuel.

Finished Goods: Finished goods prices were mostly up in August. Prices for export consumer goods rose 0.3 percent, after increasing 0.2 percent in July. The August advance was the largest 1-month rise since a 0.3-percent increase in July 2019 and was led by a 0.3-percent advance in medicinal, pharmaceutical, and dental materials prices. The price index for export capital goods rose 0.1 percent in August following a 0.3-percent increase the previous month. Automotive vehicles prices were unchanged in August.

Measures of Import and Export Prices by Locality
Imports by Locality of Origin: The price index for imports from China was unchanged in August following a 0.2-percent advance the previous month. Prices for imports from China declined 0.3 percent over the past 12 months. Import prices from Japan were unchanged for the second consecutive month in August. The price index for imports from Japan decreased 0.2 percent for the year ended in August. Prices for imports from Canada increased 3.3 percent in August, after advancing 20.1 percent from April to July. Despite the recent increases, import prices from Canada fell 4.6 percent for the year ended in August. The price indexes for imports from Mexico and the European Union also rose in August, increasing 0.9 percent and 0.4 percent, respectively.

Exports by Locality of Destination: Export prices to China advanced 0.8 percent in August, after rising 1.3 percent the previous month. Prices for exports to China were unchanged over the past year. The price index for exports to Japan increased 0.6 percent for the second consecutive month in August following a 4.4-percent advance in June. Despite the recent increases, export prices to Japan decreased 2.1 percent from August 2019 to August 2020. Prices for exports to Canada rose 0.7 percent in August, after advances of 1.3 percent in July and 1.6 percent in June. The price index for exports to Canada declined 1.9 percent over the past 12 months. Export prices to Mexico and the European Union also increased in August, rising 0.5 percent and 0.2 percent, respectively.

Terms of Trade Indexes: Terms of trade indexes are based on country, region, or grouping and measure the change in the purchasing power of exports relative to imports. The index for U.S. terms of trade with China advanced 0.8 percent in August, after rising 5.2 percent from April to July, the largest 3-month advance since the index was first published in December 2017. The U.S. terms of trade with Japan rose 0.6 percent for the second consecutive month in August following a 4.1-percent increase in June. In contrast, the index for U.S. terms of trade with Canada fell 2.5 percent in August, after declining 14.2 percent from April to July. In August, higher import prices from Canada more than offset increasing export prices to Canada. The U.S. terms of trade with Mexico and the European Union also decreased in August, declining 0.4 percent and 0.2 percent, respectively.

Import and Export Services
Imports: Import air passenger fares ticked up 0.1 percent in August, after falling 4.0 percent in July and rising 7.0 percent in June. In August, rising prices for Asian fares more than offset lower European and Latin American/Caribbean fares. Import air passenger fares declined 8.9 percent over the past 12 months. The price index for import air freight advanced 1.8 percent in August following a 14.0-percent drop in July and a 3.1-percent decrease in June. Import air freight prices rose 55.8 percent from August 2019 to August 2020.

Exports: Export air passenger fares increased 3.1 percent in August, after advancing 5.5 percent in July and 6.4 percent in June. The August rise was led by a 17.5-percent increase in Asian fares, which rose 43.0 percent from April to August. Despite the recent advances, overall export air passenger fares declined 5.8 percent for the year ended in August. Prices for export air freight increased 1.1 percent in August following a 0.1-percent decrease the previous month and a 2.2-percent advance in June. The index for export air freight prices rose 3.3 percent over the past year, the largest 12-month advance since the index increased 3.8 percent for the year ended February 2019.


Empire State Manufacturing Survey Conditions expanded at a solid clip in September 2020
Posted: September 15, 2020 at 08:30 AM (Tuesday)

Business activity expanded at a solid clip in New York State, according to firms responding to the September 2020 Empire State Manufacturing Survey. The headline general business conditions index climbed thirteen points to 17.0. New orders increased modestly, and shipments grew significantly. Unfilled orders continued to decline. Inventories edged slightly lower, and delivery times were somewhat longer. Employment was again little changed this month, though the average workweek picked up. Input prices increased at a faster pace than in August, and selling prices continued to increase modestly. Looking ahead, firms remained optimistic that conditions would improve over the next six months.

Conditions Improve Noticeably
Manufacturing activity in New York State grew significantly in September. The general business conditions index rose thirteen points to 17.0, its third consecutive positive reading. Forty percent of respondents reported that conditions had improved over the month, while 23 percent reported that conditions had worsened. The new orders index climbed nine points to 7.1, pointing to a modest increase in orders, and the shipments index rose seven points to 14.1, indicating a significant increase in shipments. Delivery times increased, while unfilled orders and inventories declined.

Selling Prices Increase for a Second Consecutive Month
The index for number of employees held steady at 2.6, indicating little change in employment levels. The average workweek index rose fourteen points to 6.7, its first positive reading since the pandemic began, signaling an increase in hours worked. The prices paid index rose nine points to 25.2, pointing to a pickup in input price increases. The prices received index edged up to 6.5, its highest level since March, indicating that selling prices increased for a second consecutive month.

Firms Remain Optimistic about Future Conditions
The index for future business conditions moved up six points to 40.3, suggesting that firms remained optimistic about future conditions, and to a greater degree than last month. The indexes for future new orders and future shipments posted similar readings, and firms expect to increase employment in the months ahead. The capital expenditures index rose thirteen points to 18.7, its highest level in several months, a sign that firms, on net, planned to increase capital spending.


Conference Board Help Wanted OnLine Index rose in August to 105.1
Posted: September 11, 2020 at 10:00 AM (Friday)

The Conference Board®-Burning Glass® Help Wanted OnLine™ (HWOL) Index rose in August and now stands at 105.1 (July 2018=100), up from 103.4 in June. The Index rose 10.3 percent from June to July and is up 0.8 percent from a year ago.

The Help Wanted OnLine™ Index is produced in collaboration with Burning Glass Technologies, the global pioneer in real-time labor market data and analysis. This recent collaboration enhances the Help Wanted OnLine™ program by providing additional insights into important labor market trends.


Consumer Price Index increased 0.4% in August, Ex Fd & Engy up 0.4%
Posted: September 11, 2020 at 08:30 AM (Friday)

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in August on a seasonally adjusted basis after rising 0.6 percent in July, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.3 percent before seasonal adjustment.

The monthly increase in the seasonally adjusted all items index was broad-based; a sharp rise in the used cars and trucks index was the largest factor, but the indexes for gasoline, shelter, recreation, and household furnishings and operations also contributed. The energy index rose 0.9 percent in August as the gasoline index rose 2.0 percent. The food index rose 0.1 percent in August after falling in July; an increase in the food away from home index more than offset a slight decline in the food at home index.

The index for all items less food and energy rose 0.4 percent in August after increasing 0.6 percent in July. The sharp rise in the index for used cars and trucks accounted for over 40 percent of the increase; the indexes for shelter, recreation, household furnishings and operations, apparel, motor vehicle insurance, and airline fares also rose. The indexes for education and personal care were among the few to decline.

The all items index increased 1.3 percent for the 12 months ending August; this figure has been rising since the period ending May 2020, when the 12-month increase was 0.1 percent. The index for all items less food and energy increased 1.7 percent over the last 12 months. The food index increased 4.1 percent over the last 12 months, with the index for food at home rising 4.6 percent. Despite recent monthly increases, the energy index fell 9.0 percent over the last 12 months.

Food
The food index rose 0.1 percent in August after falling in July. The index for food at home fell slightly in August, decreasing 0.1 percent after falling 1.1 percent the prior month. The August decline was mostly caused by the index for meats, poultry, fish, and eggs, which fell 1.7 percent in August, its second consecutive monthly decline after sharp increases in prior months. The beef index fell 4.4 percent in August after declining 8.2 percent in July. The cereals and bakery products index also declined in August, falling 0.2 percent.

The remaining four major grocery store food group indexes increased in August. The index for dairy and related products rose 1.5 percent in August after declining in June and July. The index for other food at home rose 0.5 percent in August, the index for fruits and vegetables rose 0.2 percent, and the index for nonalcoholic beverages advanced 0.1 percent.

The index for food away from home continued to rise in August, although its 0.3-percent increase was the smallest monthly increase since April. The index for limited service meals advanced 0.4 percent in August after rising 0.6 percent in July. The index for full service meals increased 0.1 percent in August following a 0.4-percent increase in July.

The food at home index increased 4.6 percent over the last 12 months. All six major grocery store food group indexes rose over that span. The index for meats, poultry, fish, and eggs rose 7.1 percent over the last year as the index for beef increased 9.6 percent. Increases in the other groups ranged from 2.7 percent (fruits and vegetables) to 5.7 percent (dairy and related products). The index for food away from home rose 3.5 percent over the last year. The index for limited service meals increased 4.8 percent and the index for full service meals rose 2.8 percent over the last 12 months.

Energy
The energy index rose 0.9 percent in August, its third consecutive increase. The gasoline index continued to rise, increasing 2.0 percent in August after rising 5.6 percent in July. (Before seasonal adjustment, gasoline prices were unchanged in August.) The index for electricity decreased 0.2 percent in August after rising in July. The index for natural gas also declined, falling 0.2 percent in August after a 1.0-percent decrease in July.

The energy index fell 9.0 percent over the past 12 months. The gasoline index decreased 16.8 percent, while the fuel oil index fell 23.6 percent. The index for natural gas declined 0.5 percent and the index for electricity decreased slightly over the year, falling 0.1 percent.

All items less food and energy
The index for all items less food and energy increased 0.4 percent in August after rising 0.6 percent in July. The index for used cars and trucks increased 5.4 percent in August, its largest monthly increase since March 1969. The shelter index increased in August, rising 0.1 percent, with the indexes for rent and owners’ equivalent rent both rising 0.1 percent.

The recreation index increased 0.7 percent in August after falling in June and July. The index for household furnishings and operations increased 0.9 percent, its largest monthly increase since February 1991, as the index for furniture and bedding rose 1.6 percent and the index for appliances increased 2.0 percent. The apparel index rose 0.6 percent in August, its third consecutive monthly increase. The index for motor vehicle insurance rose 0.5 percent, and the index for airline fares increased 1.2 percent over the month.

The index for medical care rose slightly in August, increasing 0.1 percent. The indexes for hospital services and for physicians’ services both rose 0.1 percent, while the index for prescription drugs declined 0.2 percent. The new vehicles index was unchanged in August after rising in July. The education index decreased 0.3 percent in August, the first decline in the history of the index, which dates to 1993. The personal care index also fell 0.3 percent in August after rising the last 2 months.

The index for all items less food and energy rose 1.7 percent over the past 12 months. The shelter index rose 2.3 percent, and the medical care index increased 4.5 percent over the last 12 months. Indexes that declined over the 12-month span include apparel (-5.9 percent), airline fares (-23.2 percent), and motor vehicle insurance (-1.5 percent).

Not seasonally adjusted CPI measures
The Consumer Price Index for All Urban Consumers (CPI-U) increased 1.3 percent over the last 12 months to an index level of 259.918 (1982-84=100). For the month, the index rose 0.3 percent prior to seasonal adjustment.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 1.4 percent over the last 12 months to an index level of 253.597 (1982-84=100). For the month, the index rose 0.4 percent prior to seasonal adjustment.

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) increased 1.0 percent over the last 12 months. For the month, the index increased 0.3 percent on a not seasonally adjusted basis. Please note that the indexes for the past 10 to 12 months are subject to revision.


Real Average Hourly Earnings unch% in August 2020
Posted: September 11, 2020 at 08:30 AM (Friday)

All employees
Real average hourly earnings for all employees were unchanged from July to August, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from an increase of 0.4 percent in average hourly earnings offset by an increase of 0.4 percent in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings increased 0.3 percent over the month due to no change in real average hourly earnings combined with a 0.3-percent increase in the average workweek.

Real average hourly earnings increased 3.3 percent, seasonally adjusted, from August 2019 to August 2020. The change in real average hourly earnings combined with an increase of 0.6 percent in the average workweek resulted in a 3.9-percent increase in real average weekly earnings over this period.

Production and nonsupervisory employees
Real average hourly earnings for production and nonsupervisory employees increased 0.2 percent from July to August, seasonally adjusted. This result stems from a 0.7-percent increase in average hourly earnings combined with an increase of 0.4 percent in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Real average weekly earnings increased 0.3 percent over the month due to the change in real average hourly earnings combined with no change in average weekly hours.

From August 2019 to August 2020, real average hourly earnings increased 3.5 percent, seasonally adjusted. The change in real average hourly earnings combined with a 1.2-percent increase in the average workweek resulted in a 4.7-percent increase in real average weekly earnings over this period.


Wholesale Inventories down 0.3% in July 2020
Posted: September 10, 2020 at 10:00 AM (Thursday)

July 2020 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading day differences but not for price changes, were $479.2 billion, up 4.6 percent (±0.5 percent) from the revised June level, but were down 4.0 percent (±0.9 percent) from the revised July 2019 level. The May 2020 to June 2020 percent change was revised from the preliminary estimate of up 8.8 percent (±0.9 percent) to up 9.0 percent (±0.9 percent).

Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $632.3 billion at the end of July, down 0.3 percent (±0.2 percent) from the revised June level. Total inventories were down 5.6 percent (±0.9 percent) from the revised July 2019 level. The June 2020 to July 2020 percent change was revised from the advance estimate of down 0.1 percent (±0.2 percent)* to down 0.3 percent (±0.2 percent).

The July Inventories/Sales Ratio for merchant wholesalers, except manufacturers’ sales branches and offices,based on seasonally adjusted data, was 1.32. The July 2019 ratio was 1.34.


Producer Price Index rose 0.3% in August, ex Fd & Engy up 0.3%
Posted: September 10, 2020 at 08:30 AM (Thursday)

The Producer Price Index for final demand increased 0.3 percent in August, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.6 percent in July and fell 0.2 percent in June. (See table A). On an unadjusted basis, the final demand index declined 0.2 percent for the 12 months ended in August.

In August, the rise in prices for final demand was led by a 0.5-percent increase in the index for final demand services. Prices for final demand goods also advanced, inching up 0.1 percent.

The index for final demand less foods, energy, and trade services moved up 0.3 percent in August, the same as in both July and June. For the 12 months ended in August, prices for final demand less foods, energy, and trade services increased 0.3 percent.

Final Demand
Final demand services: The index for final demand services rose 0.5 percent in August, the same as in July. In August, two-thirds of the advance can be traced to a 1.2-percent increase in margins for final demand trade services. (Trade indexes measure changes in margins received by wholesalers and retailers.) The indexes for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services also moved up, 0.3 percent and 0.2 percent, respectively.

Product detail: Nearly 20 percent of the August advance in prices for final demand services is attributable to a 1.1-percent increase in margins for machinery, equipment, parts, and supplies wholesaling. The indexes for automobiles and automobile parts retailing; truck transportation of freight; food retailing; portfolio management; and securities brokerage, dealing, investment advice, and related services also rose. In contrast, margins for chemicals and allied products wholesaling declined 4.5 percent. The indexes for airline passenger services and investment banking also fell.

Final demand goods: Prices for final demand goods edged up 0.1 percent in August, the fourth consecutive increase. The August rise can be attributed to a 0.3-percent advance in the index for final demand goods less foods and energy. Conversely, prices for final demand foods fell 0.4 percent, and the index for final demand energy declined 0.1 percent.

Product detail: Among prices for final demand goods in August, the index for plastic resins and materials rose 4.0 percent. Prices for diesel fuel, gas fuels, packaged fluid milk and related products, and nonferrous scrap also moved higher. In contrast, the index for chicken eggs dropped 12.2 percent. Prices for home heating oil, gasoline, and ethanol also decreased.


Weekly Initial Unemployment Claims Increase 3,000 to 884,000
Posted: September 10, 2020 at 08:30 AM (Thursday)

In the week ending September 5, the advance figure for seasonally adjusted initial claims was 884,000, unchanged from the previous week's revised level. The previous week's level was revised up by 3,000 from 881,000 to 884,000. The 4-week moving average was 970,750, a decrease of 21,750 from the previous week's revised average. The previous week's average was revised up by 750 from 991,750 to 992,500.

The advance seasonally adjusted insured unemployment rate was 9.2 percent for the week ending August 29, an increase of 0.1 percentage point from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending August 29 was 13,385,000, an increase of 93,000 from the previous week's revised level. The previous week's level was revised up 38,000 from 13,254,000 to 13,292,000. The 4-week moving average was 13,982,000, a decrease of 523,750 from the previous week's revised average. The previous week's average was revised up by 9,500 from 14,496,250 to 14,505,750.


Job Openings increased to 6.6 million in July
Posted: September 9, 2020 at 10:00 AM (Wednesday)

The number of job openings increased to 6.6 million on the last business day of July, the U.S. Bureau of Labor Statistics reported today. Hires decreased to 5.8 million in July. Total separations was little changed at 5.0 million. Within separations, the quits rate rose to 2.1 percent while the layoffs and discharges rate decreased to 1.2 percent. These changes in the labor market reflected an ongoing resumption of economic activity that had been curtailed due to the coronavirus (COVID-19) pandemic and efforts to contain it. This release includes estimates of the number and rate of job openings, hires, and separations for the total nonfarm sector, by industry, and by four geographic regions.

Job Openings
On the last business day of July, the number and rate of job openings increased to 6.6 million (+617,000) and 4.5 percent, respectively. Job openings rose in a number of industries, with the largest increases in retail trade (+172,000), health care and social assistance (+146,000), and construction (+90,000). The number of job openings increased in the South and Midwest regions.

Hires
In July, the number and rate of hires decreased to 5.8 million (-1,183,000) and 4.1 percent, respectively. Over the year, the hires level was little changed. Hires decreased in a number of industries, with the largest fall in accommodation and food services (-599,000), followed by other services (-143,000), and health care and social assistance (-137,000). Hires increased in federal government (+33,000), largely because of Census hiring. Hires also increased in real estate and rental and leasing (+26,000). The number of hires decreased in all four regions.

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

In July, the number and rate of total separations was little changed at 5.0 million and 3.6 percent, respectively. Total separations increased in retail trade (+112,000) and in state and local government education (+49,000). The number of total separations decreased in durable goods manufacturing (-44,000). Total separations was little changed in all four regions.

In July, the number and rate of quits increased to 2.9 million (+344,000) and 2.1 percent, respectively. Quits increased in retail trade (+152,000), professional and business services (+98,000), and state and local government education (+35,000). The number of quits increased in the Midwest and West regions.

The number and rate of layoffs and discharges decreased to 1.7 million (-274,000) and 1.2 percent, respectively in July. The layoffs and discharges level decreased in durable goods manufacturing (-40,000), transportation, warehousing, and utilities (-40,000), and wholesale trade (-21,000). The number of layoffs and discharges decreased in the Northeast and South regions.

The number of other separations was little changed in July at 337,000. Other separations increased in a few industries, with the largest increases in transportation, warehousing, and utilities (+35,000) and state and local government education (+16,000). Other separations decreased in health care and social assistance (-22,000). Other separations was little changed in all four regions.

Net Change in Employment
Large numbers of hires and separations occur every month throughout the business cycle. Net employment change results from the relationship between hires and separations. When the number of hires exceeds the number of separations, employment rises, even if the hires level is steady or declining. Conversely, when the number of hires is less than the number of separations, employment declines, even if the hires level is steady or rising.

Over the 12 months ending in July, hires totaled 70.2 million and separations totaled 78.5 million, yielding a net employment loss of 8.2 million. These totals include workers who may have been hired and separated more than once during the year.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: September 9, 2020 at 07:00 AM (Wednesday)

Mortgage applications increased 2.9 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending September 4, 2020. This week's results are being compared to the week of Labor Day 2019.

The Market Composite Index, a measure of mortgage loan application volume, increased 2.9 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 3 percent from the previous week and was 60 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index increased 0.2 percent compared with the previous week and was 40 percent higher than the same week one year ago.

"Mortgage rates declined last week, with a noteworthy 5-basis-point decrease in the 15-year fixed rate to a new record low of 2.62 percent. The drop in rates led to a rebound in refinancing activity, driven mainly by borrowers applying for conventional loans," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Purchase applications were 40 percent higher than the same week last year, but the increase is skewed higher by being compared to Labor Day 2019. Nevertheless, there continues to be resiliency in the purchase market. Applications were up almost 3 percent on a weekly basis and the average loan size continued to increase, hitting a survey high at $368,600."

Added Kan, "Highlighting the strong overall demand for buying a home, conventional, VA and FHA purchase applications all increased last week."

The refinance share of mortgage activity increased to 63.1 percent of total applications from 62.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 2.2 percent of total applications.

The FHA share of total applications remained unchanged remained unchanged from 10.2 percent the week prior. The VA share of total applications decreased to 11.2 percent from 11.4 percent the week prior. The USDA share of total applications remained unchanged from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.07 percent from 3.08 percent, with points remaining unchanged at 0.36 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) decreased to 3.40 percent from 3.41 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 30-year fixed-rate mortgages backed by the FHA decreased to 3.16 percent from 3.19 percent, with points increasing to 0.42 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.62 percent from 2.67 percent, with points decreasing to 0.33 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 2.99 percent from 3.08 percent, with points increasing to 0.58 from 0.43 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


Consumer Credit Increased at an annual rate of 3.50% in July
Posted: September 8, 2020 at 03:00 PM (Tuesday)

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


Employment Trends Index increased in August to 49.46
Posted: September 8, 2020 at 10:00 AM (Tuesday)

The Conference Board Employment Trends Index™ (ETI) increased in August, following increases in May, June, and July. The index now stands at 52.55, up from 51.37 (an upward revision) in July. However, the index is down from 109.8 a year ago.

“Despite the rise in new COVID-19 cases at the beginning of the summer, job growth continues to gain momentum: the Employment Trends Index increased for the fourth consecutive month,” said Gad Levanon, Head of The Conference Board Labor Markets Institute. “Over the coming months, job growth will persist as industries impacted by social distancing such as travel, hotels, restaurants, and personal care will continue to recover. However, another wave of infections this fall would limit the expansion of the US labor market.”

August’s increase was fueled by positive contributions from six of the eight components. From the largest positive contributor to the smallest, the components were: Initial Claims for Unemployment Insurance; the Number of Employees Hired by the Temporary-Help Industry; the Ratio of Involuntarily Part-time to All Part-time Workers; Percentage of Firms With Positions Not Able to Fill Right Now; Job Openings; and Industrial Production.

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.


NFIB Small Business Optimism Index increased 1.4 points to 100.2 in August
Posted: September 8, 2020 at 07:00 AM (Tuesday)

The NFIB Optimism Index increased 1.4 points in August to 100.2, a reading slightly above the historical 46-year average. Seven of the 10 Index components improved, two declined, and one was unchanged. The NFIB Uncertainty Index increased two points in August to 90, the second-highest reading since 2017.

“Small businesses are working hard to recover from the state shutdowns and effects of COVID-19,” said NFIB Chief Economist Bill Dunkelberg. “We are seeing areas of improvement in the small business economy, as job openings and plans to hire are increasing, but many small businesses are still struggling and are uncertain about what the future will hold.”

The NFIB Uncertainty Index rose two points in August to 90, the second-highest reading since March 2017. The record reading of 100 was reached in November 2016.

Other key findings include:
Earnings trends over the past three months improved seven points to a net negative 25% reporting higher earnings.
Job openings increased three points to 33% of firms with at least one unfilled position.
The percent of owners thinking it’s a good time to expand increased one point to 12%.
Real sales expectations in the next three months decreased two points to a net 3%.

As reported in NFIB’s monthly jobs report, job creation plans increased three points to a net 21%, an unprecedented recovery from April’s reading of 1%. Construction job growth continues to be strong but owners in the sector are having a particularly hard time finding skilled employees. The manufacturing sector’s employment remained strong but not as strong as seen in previous months. The service sector is the missing link and the key to stronger job growth going forward.

Forty-seven percent of owners reported capital outlays in the last six months, down 2 points from July and 16 points below January’s level. The low levels of investment are contributing to low GDP growth. Twenty-six percent plan capital outlays in the next few months, unchanged from July’s reading.

Of those making expenditures, 34% reported spending on new equipment, 21% acquired vehicles, and 12% improved or expanded facilities. Six percent acquired new buildings or land for expansion and 9% spent money for new fixtures and furniture.

A net negative 15% of all owners reported higher nominal sales in the past three months, up 13 points from July. The net percent of owners expecting higher real sales volumes decreased 2 points to a net 3% of owners.

The net percent of owners reporting inventory increases improved two points to a net negative 9%. It’s hard to reduce inventory for small businesses when there are few or no customers. The net percent of owners viewing current inventory stocks as “too low” increased two points to 3%. The net percent of owners planning to expand inventory holdings increased from July by two points to a net 6%.

The net percent of owners raising average selling prices rose three points to a net 1% seasonally adjusted. Sixteen percent reported lower average selling prices and 16% reported higher average prices.

Price hikes were the most frequent in wholesale (24% higher, 22% lower). Price cuts were the most frequent in retail (11% higher, 24% lower). Seasonally adjusted, a net 16% plan price hikes.

Seasonally adjusted, a net 18% reported raising compensation. The percent of owners raising compensation remains well below the 36% reading in February before COVID-19 policies were implemented. A net 14% plan to do so in the coming months and 9% cited labor costs as their top problem.

Twenty-one percent of owners selected “finding qualified labor” as their top business problem, with 41% in construction where the unavailability of qualified workers is slowing new home production.

The frequency of reports of positive profit trends rose 7 points to a net negative 25% reporting quarter on quarter profit improvement. Among owners reporting weaker profits, 55% blamed weak sales, 8% cited price changes, 4% cited material costs, and 3% cited labor costs. For owners reporting higher profits, 65% credited sales volumes.

Three percent of owners reported that all their borrowing needs were not satisfied. Thirty-one percent reported all credit needs were met and 53% said they were not interested in a loan. A net 1% reported their last loan was harder to get than in previous attempts.

Two percent of owners reported that financing was their top business problem. The net percent of owners reporting paying a higher rate on their most recent loan was negative 5%.

LABOR MARKETS
Firms increased employment by 0.02 workers per firm on average over the past few months. Eight percent (up 1 point) reported increasing employment an average of 4.5 workers per firm and 20 percent (up 2 points) reported reducing employment an average of 2.3 workers per firm (seasonally adjusted). Even though more employees are being added, total non-farm employment will remain about 8 percent below its February peak. A seasonally-adjusted net 21 percent plan to create new jobs in the next three months, up 3 points from July, and 20 percentage points above April, an unprecedented recovery. Construction job growth continues to be strong but owners in the sector are having a particularly hard time finding skilled employees. The employment picture for manufacturing remained strong but not as good as the previous month. The service sector remains the missing link and is the key to stronger job growth going forward. Thirty-three percent (seasonally adjusted) of all owners reported job openings they could not fill in the current period, up 3 points. Thirty-one percent have openings for skilled workers (up 4 points) and 12 percent have openings for unskilled labor (up 1 point). Twenty-six percent of owners reported few qualified applicants for their open positions (up 1 point) and 20 percent reported none (up 1 point).


CAPITAL SPENDING
Forty-seven percent reported capital outlays in the last 6 months, down 2 points from July. Capital expenditures are 16 points below January’s level. These low levels of investment are contributing to low GDP growth and will retard productivity improvements over the next year. Of those making expenditures, 34 percent reported spending on new equipment (up 1 point), 21 percent acquired vehicles (unchanged), and 12 percent improved or expanded facilities (down 1 point). Six percent acquired new buildings or land for expansion (up 1 point), and 9 percent spent money for new fixtures and furniture (down 1 point). Twenty-six percent plan capital outlays in the next few months, unchanged from July. The enemy of investment is uncertainty about sales, regulations, Covid-19, elections, and more. The Uncertainty Index rose 2 more points in August to 90, the second highest reading since March 2017. As uncertainties are resolved, and the future becomes clearer (good or bad), firms will revisit capital spending plans.

COMPENSATION AND EARNINGS
Seasonally adjusted, a net 18 percent reported raising compensation (up 3 points). The percentage of owners raising compensation remains well below the 36 percent reading in February before COVID-19 policies were implemented in March. A net 14 percent plan to do so in the coming months, unchanged from July. Nine percent cited labor costs as their top problem, up 1 point from July. Twenty-one percent of the owners selected “finding qualified labor” as their top business problem. The frequency of reports of positive profit trends rose 7 points to a net negative 25 percent reporting quarter on quarter profit improvement. Among owners reporting weaker profits, 55 percent blamed weak sales, 8 percent cited price changes, 4 percent cited materials costs, and 3 percent cited labor costs. The main factor driving profits is sales, where prospects are not good for the balance of the year in the current environment.

CREDIT MARKETS
Three percent of owners reported that all their borrowing needs were not satisfied (unchanged). Thirty-one percent reported all credit needs met (down 4 points) and 53 percent said they were not interested in a loan (up 2 points). A net 1 percent reported their last loan was harder to get than in previous attempts (down 1 point). Two percent reported that financing was their top business problem (up 1 point). The net percent of owners reporting paying a higher rate on their most recent loan was negative 5 percent, up 4 points from July. Twenty-four percent of all owners reported borrowing on a regular basis (down 2 point). The average rate paid on short maturity loans was up 0.7 points at 4.8 percent.

SALES AND INVENTORIES
A net negative 15 percent of all owners (seasonally adjusted) reported higher nominal sales in the past three months, up 13 points from July. The net percent of owners expecting higher real sales volumes decreased 2 points to a net 3 percent of owners. Owners do not see an economy-wide sales gain that would push the net percent with sales growth into positive territory.

The net percent of owners reporting inventory increases improved 2 points to a net negative 9 percent. It’s hard to reduce inventory when there are few or no customers in the store. Existing inventories are sold off slowly and little new inventory is ordered to meet a demand suppressed by operating restrictions. The net percent of owners viewing current inventory stocks as “too low” increased 2 points to 3 percent. The net percent of owners planning to expand inventory holdings increased from July by 2 points to a net 6 percent.

INFLATION
The net percent of owners raising average selling prices rose 3 points to a net 1 percent, seasonally adjusted. Unadjusted, 16 percent (unchanged) reported lower average selling prices and 16 percent (up 1 point) reported higher average prices. Seasonally adjusted, a net 16 percent plan price hikes (up 3 points). Bottom line, no inflation on Main Street for the Federal Reserve to worry about.

COMMENTARY
The economy fell so far in April that any increase in activity, expressed as a percentage of the prior periods, looks a lot better. For example, motor vehicles and parts production rose almost 500% over the past three months, which got output back to pre-Covidlevels. Production of computers and electronic did almost as well. Although 8% below February levels, overall production increased a solid 10% over the past three months. Consumption of goods increased faster than production, resulting in a huge decline in inventories (negative investment) which reduced the GDP growth rate by 4 percentage points. Small business owners noticed and are leading the way with plans to spend more.

Retail sales were up but the performance was uneven. Sales at restaurants and bars rose, butremain 20% below February levels. The same holds for sales at clothing and accessories stores. Spending at home repair and garden stores surged in May and June but flattened in July. The consumption of goods already exceeds pre-pandemic levels, but services expenditures are lagging, leaving total consumption below February levels.

From this point, the good news is growth percentages will be solid in terms of percentages and in real terms as well. Consumer spending will continue, but with no new federal support, spending will slow. Consumers sentiment is not heavily supportive. Housing is on a roll and will continue its current performance. Service sector indicators indicate slower gains because the rush to “open up” has been blunted by the Covid-19 resurgence. More small businesses opening up larger states will cause these numbers to improve.


August Employment rose by 1,400,000
Unemployment Rate fell to 8.4%

Posted: September 4, 2020 at 08:30 AM (Friday)

Total nonfarm payroll employment rose by 1.4 million in August, and the unemployment rate fell to 8.4 percent, the U.S. Bureau of Labor Statistics reported today. These improvements in the labor market reflect the continued resumption of economic activity that had been curtailed due to the coronavirus (COVID-19) pandemic and efforts to contain it. In August, an increase in government employment largely reflected temporary hiring for the 2020 Census. Notable job gains also occurred in retail trade, in professional and business services, in leisure and hospitality, and in education and health services.

This news release presents statistics from two monthly surveys. The household survey measures labor force status, including unemployment, by demographic characteristics. The establishment survey measures nonfarm employment, hours, and earnings by industry. For more information about the concepts and statistical methodology used in these two surveys, see the Technical Note.

Household Survey Data
In August, the unemployment rate declined by 1.8 percentage points to 8.4 percent, and the number of unemployed persons fell by 2.8 million to 13.6 million. Both measures have declined for 4 consecutive months but are higher than in February, by 4.9 percentage points and 7.8 million, respectively.

Among the major worker groups, the unemployment rates declined in August for adult men (8.0 percent), adult women (8.4 percent), teenagers (16.1 percent), Whites (7.3 percent), Blacks (13.0 percent), and Hispanics (10.5 percent). The jobless rate for Asians (10.7 percent) changed little over the month.

Among the unemployed, the number of persons on temporary layoff decreased by 3.1 million in August to 6.2 million, down considerably from the series high of 18.1 million in April. In August, the number of permanent job losers increased by 534,000 to 3.4 million; this measure has risen by 2.1 million since February. The number of unemployed reentrants to the labor force declined by 263,000 to 2.1 million. (Reentrants are persons who previously worked but were not in the labor force prior to beginning their job search.)

The number of unemployed persons who were jobless less than 5 weeks decreased by 921,000 to 2.3 million in August, and the number of persons jobless 5 to 14 weeks fell by 2.0 million to 3.1 million. The long-term unemployed (those jobless for 27 weeks or more) numbered 1.6 million, little changed over the month.

The labor force participation rate increased by 0.3 percentage point to 61.7 percent in August but is 1.7 percentage points below its February level. Total employment, as measured by the household survey, rose by 3.8 million in August to 147.3 million. The employment-population ratio rose by 1.4 percentage points to 56.5 percent but is 4.6 percentage points lower than in February.

In August, the number of persons who usually work full time rose by 2.8 million to 122.4 million, and the number who usually work part time increased by 991,000 to 25.0 million. Part-time workers accounted for about one-fourth of the over-the-month employment gain.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) declined by 871,000 to 7.6 million in August, reflecting a decrease in the number of people who worked part time due to slack work or business conditions (-1.1 million). The number of involuntary part-time workers is 3.3 million higher than in February. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs. This group includes persons who usually work full time and persons who usually work part time.

In August, the number of persons not in the labor force who currently want a job declined by 747,000 to 7.0 million; this measure is 2.0 million higher than in February. These individuals were not counted as unemployed because they were not actively looking for work during the last 4 weeks or were unavailable to take a job.

Among those not in the labor force who currently want a job, the number of persons marginally attached to the labor force, at 2.1 million, changed little in August. These individuals had not actively looked for work in the 4 weeks preceding the survey but wanted a job, were available for work, and had looked for a job sometime in the prior 12 months. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, decreased by 130,000 in August to 535,000.

Household Survey Supplemental Data
In August, 24.3 percent of employed persons teleworked because of the coronavirus pandemic, down from 26.4 percent in July. These data refer to employed persons who teleworked or worked at home for pay at some point in the last 4 weeks specifically because of the coronavirus pandemic.

In August, 24.2 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic--that is, they did not work at all or worked fewer hours at some point in the last 4 weeks due to the pandemic. This measure is down from 31.3 million in July. Among those who reported in August that they were unable to work because of pandemic-related closures or lost business, 11.6 percent received at least some pay from their employer for the hours not worked.

About 5.2 million persons not in the labor force in August were prevented from looking for work due to the pandemic. This is down from 6.5 million in July. (To be counted as unemployed, by definition, individuals must either be actively looking for work or on temporary layoff.)

These supplemental data come from questions added to the household survey beginning in May to help gauge the effects of the coronavirus pandemic on the labor market. The data are not seasonally adjusted. Tables with estimates from the supplemental questions for all months are available online at www.bls.gov/cps/effects-of-the-coronavirus-covid-19-pandemic.htm.

Establishment Survey Data
Total nonfarm payroll employment rose by 1.4 million in August, following increases of larger magnitude in the prior 3 months. In August, nonfarm employment was below its February level by 11.5 million, or 7.6 percent. Government employment rose in August, largely reflecting temporary hiring for the 2020 Census. Notable job gains also occurred in retail trade, in professional and business services, in leisure and hospitality, and in education and health services. (See table B-1. For more information about how the establishment survey and its measures were affected by the coronavirus pandemic, see the box note at the end of this news release.)

Employment in government increased by 344,000 in August, accounting for one-fourth of the over-the-month gain in total nonfarm employment. A job gain in federal government (+251,000) reflected the hiring of 238,000 temporary 2020 Census workers. Local government employment rose by 95,000 over the month. Overall, government employment is 831,000 below its February level.

Retail trade added 249,000 jobs in August, with almost half the growth occurring in general merchandise stores (+116,000). Notable gains also occurred in motor vehicle and parts dealers (+22,000), electronics and appliance stores (+21,000), and miscellaneous store retailers (+17,000). Employment in retail trade is 655,000 lower than in February.

In August, employment in professional and business services increased by 197,000. More than half of the gain occurred in temporary help services (+107,000). Architectural and engineering services (+14,000), business support services (+13,000), and computer systems design and related services (+13,000) also added jobs over the month. Employment in professional and business services is 1.5 million below its February level.

Employment in leisure and hospitality increased by 174,000 in August, with about three-fourths of the gain occurring in food services and drinking places (+134,000). Despite job gains totaling 3.6 million over the last 4 months, employment in food services and drinking places is down by 2.5 million since February.

In August, employment in education and health services increased by 147,000 but is 1.5 million below February's level. Health care employment increased by 75,000 over the month, with gains in offices of physicians (+27,000), offices of dentists (+22,000), hospitals (+14,000), and home health care services (+12,000). Elsewhere in health care, job losses continued in nursing and residential care facilities (-14,000). Employment in private education rose by 57,000 over the month.

Employment in transportation and warehousing rose by 78,000 in August, with gains in warehousing and storage (+34,000), transit and ground passenger transportation (+11,000), and truck transportation (+10,000). Employment in transportation and warehousing is down by 381,000 since February.

The other services industry added 74,000 jobs in August, reflecting gains in membership associations and organizations (+31,000), repair and maintenance (+29,000), and personal and laundry services (+14,000). Employment in other services is 531,000 lower than in February.

Financial activities added 36,000 jobs in August, with most of the growth in real estate and rental and leasing (+23,000). Employment in financial activities is down by 191,000 since February.

In August, manufacturing employment rose by 29,000, with gains concentrated in the nondurable goods component (+27,000). Despite gains in recent months, employment in manufacturing is 720,000 below February's level.

Employment in wholesale trade increased by 14,000 in August, reflecting an increase of 9,000 in the nondurable goods component. Wholesale trade employment has declined by 328,000 since February.

In August, employment changed little in mining, construction, and information.

In August, average hourly earnings for all employees on private nonfarm payrolls rose by 11 cents to $29.47. Average hourly earnings of private-sector production and nonsupervisory employees increased by 18 cents to $24.81, following a decrease of 10 cents in the prior month. The large employment fluctuations over the past several months--especially in industries with lower-paid workers--complicate the analysis of recent trends in average hourly earnings.

The average workweek for all employees on private nonfarm payrolls increased by 0.1 hour to 34.6 hours in August. In manufacturing, the workweek rose by 0.3 hour to 40.0 hours, and overtime increased by 0.1 hour to 3.0 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 34.0 hours.

The change in total nonfarm payroll employment for June was revised down by 10,000, from +4,791,000 to +4,781,000, and the change for July was revised down by 29,000, from +1,763,000 to +1,734,000. With these revisions, employment in June and July combined was 39,000 less than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.)


ISM Non-Manufacturing Index slipped to 56.9% in August
Posted: September 3, 2020 at 10:00 AM (Thursday)

Economic activity in the services sector grew in August for the third month in a row, say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®.

The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “The Services PMI™ (formerly the Non-Manufacturing NMI®) registered 56.9 percent, 1.2 percentage points lower than the July reading of 58.1 percent. This reading represents growth in the services sector for the third straight month and the 125th time in the last 127 months, with the exception of April’s and May’s contraction.

“The Supplier Deliveries Index registered 60.5 percent, up 5.3 percentage points from July’s reading of 55.2 percent. Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases. The higher readings for supplier deliveries in the four months prior to July were primarily a product of supply problems related to the coronavirus (COVID-19) pandemic. Supplier deliveries are now more closely correlating to current supply and demand.

“The Prices Index figure of 64.2 percent is 6.6 percentage points higher than the July reading of 57.6 percent, indicating that prices increased in August at a faster rate. According to the Services PMI™, 15 services industries reported growth. The composite index indicated growth for the third consecutive month after contraction in April and May. The sector’s previous period of contraction was in November and December 2009, with Services PMI™ readings of 49.5 percent and 49.7 percent, respectively. Respondents’ comments are mostly optimistic and industry specific about business conditions and the economy as businesses are starting to reopen. Industries that have not reopened remain concerned about the ongoing uncertainty. There is a challenge with capacity and logistics due to the pandemic and the impact on deliveries and order fulfillment,” says Nieves.

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

WHAT RESPONDENTS ARE SAYING:
- “Our business activity is now thriving again, after modifications to our operations. While supply disruptions remain common, very critical items are more stable than in previous months. Tariff threats have caused more concern than in previous months due to actions in aluminum, and the rapid rise in lumber costs for construction expansions.” (Accommodation & Food Services)
- “Overall, we are seeing improvement in the level of activity in the short term. Backlog of orders is inconsistent.” (Construction)
- “Continuing pandemic uncertainties are challenging abilities to prepare for fall semester activities, resumption of in-person instruction and the research enterprise. Recent decision to provide all undergraduate instruction online has shifted priorities significantly, including reduced need for testing and increased need for remote teaching infrastructure.” (Educational Services)
- “Revenue challenges for our customers still remain a primary challenge.” (Finance & Insurance)
- “Continuing to build our ancillary clinic volume as well as elective surgical cases since ceasing these services from mid-March through May 1.” (Health Care & Social Assistance)
- Clear signs of gearing up manufacturing and distribution for an extraordinary e-commerce Christmas. Brick-and-mortar likely closed to crowds. Also, hearing the other shoe is about to drop, probably in first quarter of 2021, on U.S.-China trade. “Get out of China now” is resonating.” (Information)
- “We are significantly down from the pre-COVID-19 level. While month-over-month business activity is picking up, the pace is very slow and very slight.” (Wholesale Trade)
- “Increase in service- and work-order requests are signs of economic improvement as companies reopen and begin to ramp up employment activity.” (Professional, Scientific & Technical Services)
- “The coronavirus continues to be a challenge for the business as we pivot and adapt to these new conditions. Sales have been affected in the retail space with less foot traffic in our brick-and-mortar stores, while e-commerce sales have increased significantly. We are starting to see sales level out in this new environment from the pandemic.” (Retail Trade)
- “Business recovery continues as the country reopens.” (Real Estate, Rental & Leasing)


Weekly Initial Unemployment Claims Decrease 130,000 to 881,000
Posted: September 3, 2020 at 08:30 AM (Thursday)

In the week ending August 29, the advance figure for seasonally adjusted initial claims was 881,000, a decrease of 130,000 from the previous week's revised level. The previous week's level was revised up by 5,000 from 1,006,000 to 1,011,000. The 4-week moving average was 991,750, a decrease of 77,500 from the previous week's revised average. The previous week's average was revised up by 1,250 from 1,068,000 to 1,069,250.

The advance seasonally adjusted insured unemployment rate was 9.1 percent for the week ending August 22, a decrease of 0.8 percentage point from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending August 22 was 13,254,000, a decrease of 1,238,000 from the previous week's revised level. The previous week's level was revised down by 43,000 from 14,535,000 to 14,492,000. The 4-week moving average was 14,496,250, a decrease of 709,000 from the previous week's revised average. The previous week's average was revised down by 10,500 from 15,215,750 to 15,205,250.


2Q2020 Productivity Growth increased 10.1%
Posted: September 3, 2020 at 08:30 AM (Thursday)

Nonfarm business sector labor productivity increased 10.1 percent in the second quarter of 2020, the U.S. Bureau of Labor Statistics reported today, as output decreased 37.1 percent and hours worked decreased 42.9 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates, and show what the percent change would be if the quarterly rate continued for four quarters.)

The 10.1-percent increase in nonfarm business sector labor productivity in the second quarter of 2020 is the largest quarterly increase since the first quarter of 1971, when output per hour increased 12.3 percent. The declines in both output and hours worked in the second quarter of 2020 were the largest in these series, which begin with data for first-quarter 1947. From the second quarter of 2019 to the second quarter of 2020, productivity increased 2.8 percent, reflecting an 11.2-percent decrease in output and a 13.6-percent decrease in hours worked.

Unit labor costs in the nonfarm business sector increased at an annual rate of 9.0 percent in the second quarter of 2020, as a 20.0-percent increase in hourly compensation outpaced the 10.1-percent increase in productivity. Unit labor costs increased 9.6 percent in the first quarter of 2020, and 4.9 percent over the last four quarters. BLS calculates unit labor costs as the ratio of hourly compensation to labor productivity. Increases in hourly compensation tend to increase unit labor costs, and increases in labor productivity tend to reduce unit labor costs.

The 20.0-percent increase in hourly compensation in the second quarter of 2020 was the largest increase in the series which begins in 1947. Also, the labor share--defined as the percentage of current-dollar output that accrues to workers in the form of compensation--increased to 59.8 percent in the second quarter of 2020, the highest level since the fourth quarter of 2008 (60.1 percent).

Manufacturing sector labor productivity decreased at a 14.6 percent annual rate in the second quarter of 2020, as output fell 47.0 percent and hours worked dropped 38.0 percent. These were the largest quarterly declines in each of these series, which begin with data for 1987. Total manufacturing sector productivity declined 3.7 percent over the last four quarters, as output decreased 15.7 percent and hours worked decreased 12.4 percent. For the second quarter of 2020, durable manufacturing saw a 26.9-percent decrease in productivity, reflecting a 57.9-percent decrease in output and a 42.4-percent decrease in hours worked. Nondurable manufacturing saw a 5.1-percent decrease in productivity, as output decreased 33.5 percent and hours worked decreased 30.0 percent.

Unit labor costs in the total manufacturing sector increased 29.1 percent in the second quarter of 2020, and increased 8.9 percent from the same quarter a year ago. The increase in unit labor costs in the second quarter of 2020 was the largest increase in the series for total manufacturing, as were unit labor cost increases in the durable manufacturing and nondurable manufacturing sectors.

The concepts, sources, and methods used for the manufacturing output series differ from those used in the business and nonfarm business output series; these output measures are not directly comparable. See the Technical Notes for a more detailed explanation.

Nonfinancial corporate sector labor productivity increased at a 3.1-percent annual rate in the second quarter of 2020 as output fell 39.3 percent and hours worked fell 41.1 percent. Both the output and the hours worked declines were the largest in these series, which begin in 1947. Since the second quarter of 2019, labor productivity in the nonfinancial corporate sector has increased 0.9 percent.

Revised measures
The measures released today are based on more recent source data than were available for the preliminary report. Table B1 presents previous and revised productivity and related measures for the nonfarm business, business, and manufacturing sectors.

In the second quarter of 2020, nonfarm business sector productivity increased 10.1 percent--a 2.8-percentage point upward revision from the preliminary estimate of 7.3 percent--mainly due to a 1.8-percentage point upward revision to output. Unit labor costs increased 9.0 percent, a smaller increase than previously reported (12.2 percent). This downward revision is largely due to the 2.8-percentage point upward revision to productivity; the remaining revision comes from hourly compensation being revised down 0.4 percentage point, from a 20.4-percent increase to a 20.0-percent increase.

Manufacturing sector productivity for the second quarter of 2020 was revised up to a decrease of 14.6 percent from a previously-reported decrease of 15.5 percent. Durable manufacturing productivity was also revised up, to a decline of 26.9 percent; nondurable manufacturing productivity was revised down slightly, to a decline of 5.1 percent. Total manufacturing unit labor costs increased 29.1 percent in the second quarter of 2020, rather than increasing 31.1 percent as previously reported.

Table B2 shows previous and revised labor productivity and related measures for the nonfarm business, business, manufacturing and nonfinancial corporate sectors for the first quarter of 2020.

In the first quarter of 2020, nonfarm business productivity was not revised. Unit labor costs were revised down slightly to an increase of 9.6 percent. Manufacturing sector productivity was revised up 0.1-percentage point to an increase of 1.7 percent. Unit labor costs were revised down to an increase of 4.2 percent. In the nonfinancial corporate sector, first-quarter 2020 productivity was revised down 0.1-percentage point, to an increase of 0.2 percent. Unit profits were revised up 0.1-percentage point, to a decline of 44.1 percent.


Goods and Services Deficit Decreased in July 2020
Posted: September 3, 2020 at 08:30 AM (Thursday)

The nation's international trade deficit in goods and services increased to $63.6 billion in July from $53.5 billion in June (revised), as imports increased more than exports. The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $63.6 billion in July, up $10.1 billion from $53.5 billion in June, revised.

July exports were $168.1 billion, $12.6 billion more than June exports. July imports were $231.7 billion, $22.7 billion more than June imports. The July increase in the goods and services deficit reflected an increase in the goods deficit of $9.3 billion to $80.9 billion and a decrease in the services surplus of $0.8 billion to $17.4 billion. Year-to-date, the goods and services deficit increased $6.4 billion, or 1.8 percent, from the same period in 2019. Exports decreased $257.8 billion or 17.5 percent. Imports decreased $251.3 billion or 13.8 percent.

The average goods and services deficit increased $3.3 billion to $58.3 billion for the three months ending in July.
- Average exports increased $6.9 billion to $155.1 billion in July.
- Average imports increased $10.2 billion to $213.4 billion in July.

Year-over-year, the average goods and services deficit increased $6.9 billion from the three months ending in July 2019.
- Average exports decreased $55.7 billion from July 2019.
- Average imports decreased $48.8 billion from July 2019.


Challenger Layoffs announced 115,762 Job Cuts in August 2020
Posted: September 3, 2020 at 07:30 AM (Thursday)

Job cuts announced by U.S.-based employers in August totaled 115,762, 116% higher than the August 2019 total of 53,480, according to a monthly report released Thursday by global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc.

August’s total is 56% lower than the 262,649 job cuts announced in July. It is the highest total in August since 2002, when 118,067 job cuts were announced. So far this year, employers have announced 1,963,458 cuts, 231% higher than the 592,556 cuts tracked in January-August of 2019. Announced job cuts in 2020 have surpassed the previous record annual total of 1,956,876 recorded in 2001.

“The leading sector for job cuts last month was Transportation, as airlines begin to make staffing decisions in the wake of decreased travel and uncertain federal intervention. An increasing number of companies that initially had temporary job cuts or furloughs are now making them permanent,” said Andrew Challenger, Senior Vice President of Challenger, Gray & Christmas, Inc.

Transportation companies announced 26,545 cuts in August. Although this was 59% lower than the 65,093 cuts announced in July, it is 647% higher than the 3,554 cuts announced in August 2019. So far this year, the sector has cut 131,571 jobs, a 482% increase over the 22,593 cuts announced in January-August 2019.

Entertainment/Leisure companies, including bars, restaurants, hotels, and amusement parks, posted the second-highest number in August, with 17,271 job cuts, bringing the year-to-date total in that industry to 799,051, the highest of the 30 industries tracked by Challenger. That is 8,128% higher than the 9,711 cuts reported in January-August 2019. Retail companies posted the second-highest total of job cuts through August at 168,403, 194% higher than the 57,226 cuts through August 2019.

Market conditions caused 44,651 of the announced cuts in August, followed by 29,982 cuts due to demand downturn, and 22,532 cuts due to cost-cutting. COVID-19 is the reason cited for 1,083,394 cuts so far this year.

Related

Companies announced 160,411 hiring plans in August. Entertainment/Leisure led with 45,575 hires, followed by Construction, which plans to add 31,052 jobs.

“The employment landscape is dealing with a host of burdens that reach beyond job cuts. COVID-19 and the recession continue to cause volatile conditions in many industries,” said Challenger.

“Both companies and workers are grappling with increasing uncertainty due to stalled economic relief, the approaching election, and child care and education concerns. This is undoubtedly impacting talent management concerns,” said Challenger.

“Many employees hesitate to return to the job force out of fear of exposure to COVID. Parents are trying to determine if they can safely send their children back to school or daycare, or if they need to facilitate remote learning. In some cases, working parents do not have a choice,” he added.


Beige Book: Economic Activity increased, but still remained well below pre-pandemic
Posted: September 2, 2020 at 02:00 PM (Wednesday)

Economic activity increased among most Districts, but gains were generally modest and activity remained well below levels prior to the COVID-19 pandemic. Manufacturing rose in most Districts, which coincided with increased activity at ports and among transportation and distribution firms. Consumer spending continued to pick up, sparked by strong vehicle sales and some improvements in tourism and retail sectors. But many Districts noted a slowing pace of growth in these areas, and total spending was still far below pre-pandemic levels. Commercial construction was down widely, and commercial real estate remained in contraction. Conversely, residential construction was a bright spot, showing growth and resilience in many Districts. Residential real estate sales were also notably higher, with prices continuing to rise along with demand and a shortage of inventory. In the banking sector, overall loan demand increased slightly, led by solid residential mortgage activity. Agricultural conditions continued to suffer from low prices, and energy activity was subdued at low levels, with little expectation of near-term improvement for either sector. While the overall outlook among contacts was modestly optimistic, a few Districts noted some pessimism. Continued uncertainty and volatility related to the pandemic, and its negative effect on consumer and business activity, was a theme echoed across the country.

Employment and Wages
Employment increased overall among Districts, with gains in manufacturing cited most often. However, some Districts also reported slowing job growth and increased hiring volatility, particularly in service industries, with rising instances of furloughed workers being laid off permanently as demand remained soft. Firms continued to experience difficulty finding necessary labor, a matter compounded by day care availability, as well as uncertainty over the coming school year and jobless benefits. Wages were flat to slightly higher in most Districts, with greater pressure cited among lower-paying positions. Some firms also rescinded previous pay cuts. Others, however, have looked to roll back hazard pay for high-exposure jobs, though some have chosen not to do so for staff morale and recruitment purposes.

Prices
Price pressures increased since the last report but remained modest. While input prices generally rose faster than selling prices, they were moderate overall. Notable exceptions included inputs experiencing demand surges or supply-chain disruptions, such as structural lumber, for which prices spiked. Several Districts also reported that costs for personal protective equipment and inputs to it remained elevated. Freight transportation rates rose in several Districts due to a resurgence in demand. In contrast, contacts in multiple Districts cited weak demand or lack of pricing power as a factor behind slower growth in retail or other selling prices.

Highlights by Federal Reserve District
Boston
Business contacts continued to cite the disruptive effects of the pandemic on all aspects of their activity, even as recovery began or continued in some sectors. Employees of some firms were called back, while others remained on furlough or have permanently lost jobs. The strength of the region's housing markets in July provided some support for contacts' optimism that the pandemic merely delayed the usual spring rebound.

New York
Growth in the regional economy has stalled in recent weeks, with activity still well below pre-pandemic levels. Retail activity and the single-family housing market have continued to improve. The labor market remains weak, and hiring activity has slowed. Selling prices and wages have been mostly steady, on balance.

Philadelphia
Business activity was flat during the current Beige Book period and remained far below levels attained prior to the onset of COVID-19. Firms continued to face hiring difficulties, and wages trended higher for low-wage jobs. Prices also trended slightly higher amid ongoing price spikes. Uncertainty is extremely high as contacts await layoffs, evictions, foreclosures, and bankruptcies while the coronavirus persists and the stimulus ends.

Cleveland
The region's economy grew modestly and at a pace similar to that of the previous reporting period. However, activity remained below pre-pandemic levels across most sectors. Staff levels changed very little and wages were mostly steady. Price pressures increased somewhat as input costs increased. Contacts expected moderate improvement in customer demand, although expectations have been scaled back.

Richmond
The Fifth District economy continued to improve in recent weeks, but activity remained considerably below pre-pandemic levels in most segments. A few notable areas of strength were auto sales, existing home sales, and trucking shipments. Employment continued to increase, but the pace of hiring slowed compared with our prior report. Price growth picked up but remained modest overall.

Atlanta
Economic conditions were mixed. Labor markets improved modestly, and nonlabor costs were subdued. Certain retail segments were strong, while others reported softness. Tourism activity remained soft. Residential real estate conditions improved, and commercial real estate activity was mixed. Manufacturing activity increased. Banking conditions rebounded slightly.

Chicago
Economic activity increased strongly, but the pace of growth slowed, and activity remained below pre-pandemic levels. Employment and manufacturing increased strongly, consumer spending and construction and real estate increased moderately, and business spending increased slightly. Wages increased slightly, and prices rose modestly. Financial conditions improved modestly. The pandemic continued to weigh on agriculture.

St. Louis
Economic activity has increased modestly but was highly variable across sectors. Auto dealers reported strong sales, and restaurants reported some improvement. Tourism and hospitality contacts reported that higher COVID-19 cases over the past month have reduced demand. The outlook among contacts remains pessimistic, on net, but has improved slightly since our previous report.

Minneapolis
Ninth District economic activity rose modestly. Job postings rose, but many firms expressed concern about future demand. Some segments of consumer spending and tourism saw improvements, while many services firms reported decline. Despite an overall pullback in new construction projects, residential building showed signs of resilience. Crop conditions were strong but faced low prices, and oil production fell significantly.

Kansas City
Economic activity strengthened moderately but remained below pre-pandemic levels in many sectors. Consumer spending increased moderately, with gains in retail, auto, restaurant, and tourism sales. Residential home sales and prices also rose moderately, but commercial real estate conditions worsened. Manufacturing activity expanded moderately, while conditions in the energy and agriculture sectors remained weak.

Dallas
Increasing COVID-19 infections in the Eleventh District have disrupted the budding economic recovery in some sectors. While manufacturing activity continued to expand, service sector activity declined overall in July but resumed its nascent recovery in August. Energy activity remained depressed. Sharply rising home sales were a bright spot. Outlooks were increasingly uncertain, as surging COVID-19 cases disrupted business sentiment.

San Francisco
Economic activity in the Twelfth District expanded slightly. Employment levels increased marginally. Price inflation remained generally unchanged. Sales of retail goods rose slightly, while conditions in the consumer and business services sectors remained precarious. Activity in the manufacturing sector increased modestly, and the agriculture sector remained weak. Residential construction activity picked up briskly, while activity in the commercial market increased a bit. Lending activity ticked up further.


New orders for manufactured goods increased 11.4% in July 2020
Posted: September 2, 2020 at 10:00 AM (Wednesday)

Summary
New orders for manufactured goods in July, up three consecutive months, increased $27.8 billion or 6.4 percent to $466.1 billion, the U.S. Census Bureau reported today. This followed a 6.4 percent June increase. Shipments, also up three consecutive months, increased $21.3 billion or 4.6 percent to $479.5 billion. This followed a 10.0 percent June increase. Unfilled orders, down four of the last five months, decreased $8.3 billion or 0.8 percent to $1,084.3 billion. This followed a 1.4 percent June decrease. The unfilled orders-to-shipments ratio was 6.70, down from 7.01 in June. Inventories, down following two consecutive monthly increases, decreased $3.1 billion or 0.5 percent to $687.2 billion. This followed a 0.5 percent June increase. The inventories-to-shipments ratio was 1.43, down from 1.51 in June.

New Orders
New orders for manufactured durable goods in July, up three consecutive months, increased $23.7 billion or 11.4 percent to $231.1 billion, up from the previously published 11.2 percent increase. This followed a 7.7 percent June increase. Transportation equipment, also up three consecutive months, led the increase, $19.6 billion or 35.7 percent to $74.7 billion. New orders for manufactured nondurable goods increased $4.2 billion or 1.8 percent to $235.0 billion.

Shipments
Shipments of manufactured durable goods in July, up three consecutive months, increased $17.1 billion or 7.5 percent to $244.6 billion, up from the previously published 7.3 percent increase. This followed a 15.2 percent June increase. Transportation equipment, also up three consecutive months, led the increase, $12.7 billion or 17.9 percent to $83.2 billion. Shipments of manufactured nondurable goods, up three consecutive months, increased $4.2 billion or 1.8 percent to $235.0 billion. This followed a 5.3 percent June increase. Petroleum and coal products, also up three consecutive months, led the increase, $2.3 billion or 6.5 percent to $38.3 billion.

Unfilled Orders
Unfilled orders for manufactured durable goods in July, down four of the last five months, decreased $8.3 billion or 0.8 percent to $1,084.3 billion, unchanged from the previously published decrease. This followed a 1.4 percent June decrease. Transportation equipment, down five consecutive months, drove the decrease, $8.5 billion or 1.1 percent to $735.0 billion.

Inventories
Inventories of manufactured durable goods in July, down two consecutive months, decreased $2.7 billion or 0.6 percent to $421.8 billion, down from the previously published 0.5 percent decrease. This followed a 0.1 percent June decrease. Fabricated metal products, also down two consecutive months, led the decrease, $0.9 billion or 1.6 percent to $51.7 billion. Inventories of manufactured nondurable goods, down following two consecutive monthly increases, decreased $0.5 billion or 0.2 percent to $265.4 billion. This followed a 1.4 percent June increase. Chemical products, down two of the last three months, led the decrease, $0.2 billion or 0.2 percent to $96.4 billion. By stage of fabrication, July materials and supplies decreased 0.8 percent in durable goods and increased 0.2 percent in nondurable goods. Work in process decreased 0.3 percent in durable goods and 0.4 percent in nondurable goods. Finished goods decreased 0.8 percent in durable goods and 0.3 percent in nondurable goods.


ADP National Employment Report Increased by 428,000 jobs in August
Posted: September 2, 2020 at 08:15 AM (Wednesday)

Private sector employment increased by 428,000 jobs from July to August according to the August ADP National Employment Report®.

“The August job postings demonstrate a slow recovery,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Job gains are minimal, and businesses across all sizes and sectors have yet to come close to their pre-COVID-19 employment levels.”


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: September 2, 2020 at 07:00 AM (Wednesday)

Mortgage applications decreased 2.0 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending August 28, 2020.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3 percent compared with the previous week. The Refinance Index decreased 3 percent from the previous week and was 40 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 0.2 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 28 percent higher than the same week one year ago.

"Both conventional and government refinancing activity decreased last week, despite 30-year fixed and 15-year fixed mortgage rates declining to near historical lows. Mortgage rates have remained below 3.5 percent for five months now, and it's possible that refinance demand may be slowing and will not significantly increase again without another notable drop in rates," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Purchase applications were essentially unchanged over the week and were 28 percent higher than a year ago - the 15th straight week of year-over-year increases. Lenders are reporting that the strong demand for homebuying is coming from delayed activity from the spring, as well as households seeking more space in less densely populated areas."

The refinance share of mortgage activity decreased to 62.5 percent of total applications from 62.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 2.6 percent of total applications.

The FHA share of total applications decreased to 10.2 percent from 10.5 percent the week prior. The VA share of total applications decreased to 11.4 percent from 11.8 percent the week prior. The USDA share of total applications remained unchanged from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.08 percent from 3.11 percent, with points decreasing to 0.36 from 0.38 (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 $510,400) remained unchanged at 3.41 percent, with points increasing to 0.38 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 3.19 percent from 3.16 percent, with points increasing to 0.34 from 0.29 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.67 percent from 2.70 percent, with points decreasing to 0.36 from 0.39 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.08 percent from 3.14 percent, with points increasing to 0.43 from 0.42 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


Construction Spending Increased 0.1% in July 2020
Posted: September 1, 2020 at 10:00 AM (Tuesday)

Total Construction
Construction spending during July 2020 was estimated at a seasonally adjusted annual rate of $1,364.6 billion, 0.1 percent (±1.2 percent)* above the revised June estimate of $1,362.8 billion. The July figure is 0.1 percent (±1.6 percent)* below the July 2019 estimate of $1,366.0 billion. During the first seven months of this year, construction spending amounted to $792.6 billion, 4.0 percent (±1.2 percent) above the $761.9 billion for the same period in 2019.

Private Construction
Spending on private construction was at a seasonally adjusted annual rate of $1,013.5 billion, 0.6 percent (±0.5 percent) above the revised June estimate of $1,007.2 billion. Residential construction was at a seasonally adjusted annual rate of $546.6 billion in July, 2.1 percent (±1.3 percent) above the revised June estimate of $535.6 billion. Nonresidential construction was at a seasonally adjusted annual rate of $466.9 billion in July, 1.0 percent (±0.5 percent) below the revised June estimate of $471.6 billion.

Public Construction
In July, the estimated seasonally adjusted annual rate of public construction spending was $351.1 billion, 1.3 percent (±2.0 percent)* below the revised June estimate of $355.6 billion. Educational construction was at a seasonally adjusted annual rate of $82.2 billion, 3.0 percent (±1.8 percent) below the revised June estimate of $84.7 billion. Highway construction was at a seasonally adjusted annual rate of $99.0 billion, 3.1 percent (±5.9 percent)* below the revised June estimate of $102.1 billion.


ISM Manufacturing Index Increased to 56.0% in August
Posted: September 1, 2020 at 10:00 AM (Tuesday)

Economic activity in the manufacturing sector grew in August, with the overall economy notching a fourth consecutive month of growth, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee: “The August PMI® registered 56 percent, up 1.8 percentage points from the July reading of 54.2 percent. This figure indicates expansion in the overall economy for the fourth month in a row after a contraction in April, which ended a period of 131 consecutive months of growth. The New Orders Index registered 67.6 percent, an increase of 6.1 percentage points from the July reading of 61.5 percent. The Production Index registered 63.3 percent, up 1.2 percentage points compared to the July reading of 62.1 percent. The Backlog of Orders Index registered 54.6 percent, an increase of 2.8 percentage points compared to the July reading of 51.8 percent. The Employment Index registered 46.4 percent, an increase of 2.1 percentage points from the July reading of 44.3 percent. The Supplier Deliveries Index registered 58.2 percent, up 2.4 percentage points from the July figure of 55.8 percent.

“The Inventories Index registered 44.4 percent, 2.6 percentage points lower than the July reading of 47 percent. The Prices Index registered 59.5 percent, up 6.3 percentage points compared to the July reading of 53.2 percent. The New Export Orders Index registered 53.3 percent, an increase of 2.9 percentage points compared to the July reading of 50.4 percent. The Imports Index registered 55.6 percent, a 2.5-percentage point increase from the July reading of 53.1 percent.

“After the coronavirus (COVID-19) brought manufacturing activity to historic lows, the sector continued its recovery in August, the first full month of operations after supply chains restarted and adjustments were made for employees to return to work. Survey Committee members reported that their companies and suppliers operated in reconfigured factories, with limited labor application due to safety restrictions. Panel sentiment was generally optimistic (1.4 positive comments for every cautious comment), though to a lesser degree compared to July. Demand expanded, with the (1) New Orders Index growing at very strong levels, supported by the New Export Orders Index expanding modestly; (2) Customers’ Inventories Index at its lowest figure since June 2010, a level considered a positive for future production, and (3) Backlog of Orders Index indicating growth for the second consecutive month. Consumption (measured by the Production and Employment indexes) contributed positively (a combined 3.3-percentage point increase) to the PMI® calculation, with industries continuing to expand output compared to July. Inputs — expressed as supplier deliveries, inventories and imports — were flat during the survey period, due to supplier delivery issues returning and import levels expanding moderately. Inventory levels contracted again due to strong production output and supplier delivery difficulties. Inputs likely were the biggest impediment to production growth and contributed negatively (a combined 0.2-percentage point decrease) to the PMI® calculation. (The Supplier Deliveries and Inventories indexes directly factor into the PMI®; the Imports Index does not.) Prices continued to expand and at higher rates, reflecting a shift to seller pricing power — a positive for new-order growth.

“Demand and consumption continued to drive expansion growth, with inputs representing near- and moderate-term supply chain difficulties. Among the six biggest manufacturing industries, Food, Beverage & Tobacco Products remains the best-performing sector, with Chemical Products; Computer & Electronic Products; and Fabricated Metal Products growing strongly. Transportation Equipment also expanded, but at a low rate. Petroleum & Coal Products sunk into contraction territory.

“Impacted by the current economic environment, many panelists’ companies are holding off on capital investments for the rest of 2020. In addition, (1) commercial aerospace equipment companies, (2) office furniture and commercial office building subsuppliers and (3) companies operating in the oil and gas markets — as well as their supporting supply bases — are and will continue to be impacted due to low demand. These companies represent approximately 20 percent of manufacturing output. This situation will likely continue at least through the end of the year,” says Fiore.

Of the 18 manufacturing industries, 15 reported growth in August, in the following order: Wood Products; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Textile Mills; Chemical Products; Computer & Electronic Products; Primary Metals; Fabricated Metal Products; Machinery; Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Paper Products; and Transportation Equipment. The three industries reporting contraction in August are: Printing & Related Support Activities; Petroleum & Coal Products; and Furniture & Related Products.

WHAT RESPONDENTS ARE SAYING

“Watching COVID-19 situations in Mexico, Brazil, Philippines [and] Hong Kong. High rates of COVID-19 surging. Currently, lines of supply no longer impacted by COVID-19 related events.” (Computer & Electronic Products)
“Business is very good. Production cannot keep up with demand. Some upstream supply chains are starting to have issues with raw material and/or transportation availability.” (Chemical Products)
“Airline industry continues to be under great pressure.” (Transportation Equipment)
“Current sales to domestic markets are substantially stronger than forecasted. We expected a recession, but it did not turn out that way. Retail and trade customer markets are very strong and driving shortages in raw material suppliers, increasing supplier orders.” (Fabricated Metal Products)
“Homebuilder business continues to be robust, with month-over-month gains continuing since May. Business remains favorable and will only be held back by supply issues across the entire industry.” (Wood Products)
“We are seeing solid month-over-month order improvement in all manufacturing sectors such as electrical, auto and industrial goods. Looking to add a few factory operators.” (Plastics & Rubber Products)
“Rolling production forecasts are increasing each week compared to prior forecast.” (Primary Metals)
“[Production ramp-up] has been a struggle. We have started and stopped lines numerous times at all 18 of our manufacturing plants due to COVID-19 issues. Surprisingly, our direct suppliers have done an excellent job on shipping ingredients and packaging on time.” (Food, Beverage & Tobacco Products)
“Strong demand from existing and new customers for our products, stable-to-decreasing input costs for our operations, and record numbers of new business opportunities from prospective customers’ reshoring measures. All trends continuing from the first quarter of fiscal year 2017.” (Electrical Equipment, Appliances & Components)
“Capital equipment new orders have slowed again. Quoting is active. Many customers waiting for the fourth quarter to make any commitments.” (Machinery)
“We are starting to see parts of our business rebound in August, while other parts remained weak. Some of our export business has come back for the first time since the start of COVID-19; however, domestic portfolios remain mixed.” (Paper Products)


Paychex-IHS Small Business Jobs Index moderated to 94.39 in August
Posted: September 1, 2020 at 08:30 AM (Tuesday)

The latest Paychex | IHS Markit Small Business Employment Watch shows that despite hiring remaining flat since its drop-off in April, employees of small business are seeing the benefits of solid wage growth. Hourly earnings growth was steady at 3.28 percent in August and weekly earnings continue to improve as the number of hours worked increases. The national jobs index stood at 94.39, moderating 0.21 percent from the previous month.

“The national index stalled this summer, with the month of August again, as it has since April, closing below 95,” said James Diffley, chief regional economist at IHS Markit.

“As the jobs index has remained near April levels, PPP loans appear to have provided stability and prevented further declines,” said Martin Mucci, Paychex president and CEO. “While employment levels remain challenging, wages continue to show positive momentum.”

The report also includes regional, state, metro, and industry level analysis, showing:

- Amid a regional COVID-19 surge, the West and South reported the largest declines in employment growth, -0.38 percent and -0.31 percent, respectively.
- Weekly earnings and hours worked growth is strongest in the Northeast.
- New York posts the best weekly hours worked growth among states.
- Despite a significant downturn in August (-0.69 percent), Florida continues to lead states in employment growth with an index of 96.50.
- At 4.23 percent, hourly earnings growth in the Construction sector has improved every month in 2020.

Growth in Hours Worked Contributing to Wage Gains for Employees of Small Businesses
Weekly earnings and hours worked growth strongest in the Northeast as COVID-19 conditions improve in states such as New York, New Jersey, and Pennsylvania


Texas Fed Manufacturing Activity expanded in August
Posted: August 31, 2020 at 10:00 AM (Monday)

Texas factory activity expanded in August for the third month in a row following a record contraction in the spring after the onset of the COVID-19 pandemic, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, came in at 13.1, down slightly from July but still indicative of moderate growth.

Other measures of manufacturing activity also point to expansion this month. The new orders index advanced three points to 9.8, and the growth rate of orders index surged more than 10 points to 11.8. The shipments index rose from 17.3 to 23.3, while the capacity utilization index inched down but remained positive at 10.9.

Perceptions of broader business conditions improved in August. The general business activity index turned positive after five months in negative territory, coming in at 8.0. The company outlook index registered a third consecutive positive reading, shooting up 11 points to 16.6, its highest reading in nearly two years. The index measuring uncertainty regarding companies’ outlooks remained positive but retreated to 8.2.

Labor market measures indicated solid growth in employment and workweek length. The employment index pushed up from 3.1 to 10.6, suggesting more robust hiring. Twenty-three percent of firms noted net hiring, while 13 percent noted net layoffs. The hours worked index pushed up five points to 10.5.

Input and labor costs continued to increase, while selling prices remained fairly flat in August. The raw materials prices index rose 10 points to 19.4, and the wages and benefits index rose six points to 15.2. The finished goods prices index remained near zero, suggesting no change in selling prices from July.

Expectations regarding future activity were more positive in August. The future production index pushed up to an above-average reading of 43.0, and the future general business activity index jumped 10 points to 20.4. Other measures of future manufacturing activity advanced further into positive territory.


Chicago Purchasing Managers Index eased 0.7 points to 51.2 in August
Posted: August 31, 2020 at 09:45 AM (Monday)

The Chicago Business BarometerTM, produced with MNI, slipped to 51.2 in August. This was the second straight reading above the 50-mark after having sat below it for a full year, as firms stated that business activity picked up further in August.

Among the five main indicators, Order Backlogs was the only category to show a monthly decline, while Supplier Deliveries recorded the largest gain.

Production improved further in August, increasing 1.4 points to the highest level since June 2019. Companies noted that previously pushed out orders led to an increase in production. Demand improved as well in August, with New Orders edging up to a one-year high. Anecdotal evidence suggests that the industrial and agricultural sector were hit the hardest and recovered only slowly, while the medical sector is faring very well.

The backlog of work cooled 1 point in August following a strong increase in the previous month. The indicator has been in contraction since August 2019.

Inventories fell 9 points in August, hitting the lowest level since March, indicating that companies continue to run down their stocks.

Employment ticked up 0.9 points but remains in contraction for a fourteenth straight month. Firms again noted staff reductions due to the Covid-19 crisis.

Supplier Deliveries rose 4.2 points after having eased for three consecutive months. Supplier Deliveries surged due to the pandemic, with delivery times peaking in April and only falling slowly since.

Prices paid at the factory gate decreased by 1.9 points in August after three consecutive months of gains.

This month’s special question asked: “When do you expect to get back to normal capacity?” The majority, at 55.6% forecast operating at full capacity in 2021 or later, while 26.7% are back at normal capacity already. Only 8.9% of respondents forecast to utilize their full capacity in Q3 2020 and Q4 2020, respectively.


University of Michigan Consumer Confidence rose in August to 74.1
Posted: August 28, 2020 at 10:00 AM (Friday)

Consumer sentiment has remained trendless in the same depressed range it has traveled in the past five months, according to the University of Michigan Surveys of Consumers.

The August figure posted an insignificant gain of just +0.4 Index points above the April to July average, said U-M economist Richard Curtin, director of the surveys. The small August gain reflected fewer concerns about the year-ahead outlook for the economy, although those prospects still remained half as favorable as six months ago.

While consumers anticipate that the economy will continue to improve, those gains will significantly slow by year-end without some additional spending programs to diminish the hardships faced by unemployed workers and essential and small businesses, as well as support for state and local governments, Curtin said.

“Although an effective COVID-19 vaccine may be approved by year-end, when most consumers can expect to be vaccinated is another issue that has thus far received little public attention,” he said. “Priority lists are inevitable, and the difference between the first and last position is likely to be at least several months or even longer.

“A consensus on equitable treatment across the population is unlikely, which could prolong and enlarge discontent, and act to slow the pace of economic growth. While it is not advantageous for presidential campaigns to discuss this issue, it could form the last component of the negative impact of the coronavirus on the economy.”

Personal financial expectations improve
Consumers’ assessments of their current finances remain depressed, as the proportion who reported improved finances stayed in the tight range of 38% or 39% for the past five months, well below the all-time peak of 58% in February. Net income gains were reported by just 9% in August, down from 32% six months ago.

Despite these negative views of current finances, consumers expect some improvement in the year ahead, as they anticipate a 1.6% gain in their household income, up sharply from the April low of 0.4%. Household income gains expected among those under 45 rose to 3.3% in August 2020, up from a low of 2.1% three months ago.

Home sales rise
Historic lows in mortgage interest rates have propelled home sales forward, Curtin said. Consumers have become more convinced that interest rates on consumer loans will remain no higher than at present—a view held by two-thirds in August.

The decline in mortgage rates also lessened the negative impact of job and income uncertainty on consumers, which had caused them to postpone home purchases, Curtin said. Another positive factor was that home values were expected to increase annually by 2.8% over the next five years. There was only one other survey in the past 13 years that recorded a higher expected long-term rate of gain in home values.

Consumer Sentiment Index
The Consumer Sentiment Index was 74.1 in the August survey, between July’s 72.5 and June’s 78.1, remaining well below February’s pre-pandemic peak of 101.0. The Expectations Index was 68.5 in August, between last month’s 65.9 and June’s 72.3. The Current Conditions Index was 82.9 in August, barely above July’s 82.8, but below June’s 87.1.

Consumer sentiment has remained trendless in the same depressed range it has traveled during the past five months. The August figure posted an insignificant gain of just +0.4 Index points above the April to July average. The small August gain reflected fewer concerns about the year-ahead outlook for the economy, although those prospects still remained half as favorable as six months ago. The pandemic has created distinctive consumer reactions to the economy (see the chart). Since the April shutdown of the economy, a sizable number of consumers thought conditions could hardly get any worse. The natural response was that economic conditions would improve given the absence of any negative economic causes for the recession. For example, while nine-in-ten consumers viewed the current state of the economy negatively in August, half of all consumers anticipated the economy would improve in the year ahead. Although half anticipates an improved economy, when asked to judge the performance of the economy, 62% judged that the overall conditions in the economy could be best described as unfavorable. Although strong gains in consumer spending from the 2nd quarter lows can be anticipated, those gains will significantly slow by year-end without some additional fiscal spending programs to diminish the hardships faced by unemployed workers, small businesses, as well as support for state and local governments.


Personal Income increased 0.4%, Spending increased 1.9% in July 2020
Posted: August 28, 2020 at 08:30 AM (Friday)

Personal income increased $70.5 billion (0.4 percent) in July according to estimates released today by the Bureau of Economic Analysis (tables 3 and 5). Disposable personal income (DPI) increased $39.9 billion (0.2 percent) and personal consumption expenditures (PCE) increased $267.6 billion (1.9 percent).

Real DPI decreased 0.1 percent in July and Real PCE increased 1.6 percent (tables 5 and 7). The PCE price index increased 0.3 percent. Excluding food and energy, the PCE price index increased 0.3 percent.

Coronavirus (COVID-19) Impact on July 2020 Personal Income and Outlays
The July estimate for personal income and outlays was impacted by the response to the spread of COVID-19. Federal economic recovery payments continued but were at a lower level than in June, and government “stay-at-home” orders lifted in some areas of the country. The full economic effects of the COVID-19 pandemic cannot be quantified in the personal income and outlays estimate because the impacts are generally embedded in source data and cannot be separately identified. For more information, see see Effects of Selected Federal Pandemic Response Programs on Personal Income.

The increase in personal income in July was more than accounted for by compensation of employees as portions of the economy continued to reopen (table 3). Proprietors’ income and rental income of persons also contributed to the increase.

Partially offsetting these increases were decreases in government social benefits and income on assets. Unemployment insurance benefits, based primarily on unemployment claims data from the Department of Labor’s Employment and Training Administration, decreased in July. For more information, see “How will federal government responses to the COVID-19 pandemic affect unemployment insurance benefits?”.

  2020
Mar. Apr. May. Jun. Jul.
Percent change from preceding month
Personal income:  
     Current dollars -1.8 12.2  -4.2  -1.0  0.4 
Disposable personal income:  
     Current dollars -1.7  14.8  -4.8  -1.3  0.2 
     Chained (2012) dollars -1.4  15.4  -4.9  -1.8  -0.1 
Personal consumption expenditures (PCE):  
     Current dollars -6.7  -12.9  8.6  6.2  1.9 
     Chained (2012) dollars -6.5  -12.4  8.4  5.7  1.6 
Price indexes:  
     PCE -0.3 -0.5  0.1  0.5 0.3
     PCE, excluding food and energy -0.1 -0.4  0.2  0.3 0.3
Price indexes: Percent change from month one year ago
     PCE 1.3 0.5  0.5 0.9 1.0 
     PCE, excluding food and energy 1.7 0.9  1.0  1.1 1.3 

The $200.6 billion increase in real PCE in July reflected an increase of $82.1 billion in spending for goods and a $121.2 billion increase in spending for services (table 7). Within goods, the leading contributor to the increase was spending for new motor vehicles, based primarily on unit sales from Ward’s Automotive Sales Report. Within services, the leading contributors to the increase were spending for health care as well as food services and accommodations. Within health care, both hospital and outpatient services increased, based on volume data for hospital services and outpatient visits as well as credit card data. Spending for food services and accommodations was based on Census Monthly Retail Trade Survey data and Smith Travel Research data. Detailed information on monthly real PCE spending can be found on Table 2.3.6U.

Personal outlays increased $270.6 billion in July (table 3). Personal saving was $3.19 trillion in July and the personal saving rate—personal saving as a percentage of disposable personal income—was 17.8 percent (table 1).

Updates to Personal Income and Outlays

Estimates have been updated for January through June. For January through March, estimates for wages and salaries, personal taxes, and contributions for government social insurance reflect the incorporation of the most recently available first-quarter wage and salary data from the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages (QCEW) program. Revised and previously published changes from the preceding month for current-dollar personal income, and for current-dollar and chained (2012) dollar DPI and PCE, are shown below.

  Change from preceding month
May  June 
Previous Revised Previous Revised Previous Revised Previous Revised
(Billions of dollars) (Percent) (Billions of dollars) (Percent)
Personal income:  
     Current dollars -934.8  -877.9  -4.4  -4.2  -222.8  -205.1 -1.1 -1.0
Disposable personal income:  
     Current dollars -969.6  -917.0  -5.1  -4.8  -255.3 -238.3 -1.4 -1.3
     Chained (2012) dollars -899.5  -854.0  -5.2  -4.9  -290.7 -293.5 -1.8 -1.8
Personal consumption expenditures:  
     Current dollars 1,024.7  1,037.5  8.5  8.6  737.7  809.1  5.6  6.2 
     Chained (2012) dollars 916.7  927.1  8.4  8.4  623.0  673.5  5.2  5.7 

Next release: October 1, 2020 at 8:30 A.M. EDT
Personal Income and Outlays: August 2020


Pending Home Sales Index rose 5.9% in July
Posted: August 27, 2020 at 10:00 AM (Thursday)

Pending home sales in July achieved another month of positive contract activity, marking three consecutive months of growth, according to the National Association of Realtors®. Each of the four major regions saw gains in both month-over-month and year-over-year pending home sales transactions.

The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, rose 5.9% to 122.1 in July. Year-over-year, contract signings rose 15.5%. An index of 100 is equal to the level of contract activity in 2001.

“We are witnessing a true V-shaped sales recovery as homebuyers continue their strong return to the housing market,” said Lawrence Yun, NAR’s chief economist. “Home sellers are seeing their homes go under contract in record time, with nine new contracts for every 10 new listings.”

Prospective buyers missed most of the spring buying season due to pandemic-induced lockdown measures. With nearly all states at least partially reopened, the market is experiencing robust activity from the pent-up demand. According to Yun, there are no indications that contract activity will wane in the immediate future, particularly in the suburbs.

Yun forecasts existing-home sales to ramp up to 5.8 million in the second half. That expected rebound would bring the full-year level of existing-home sales to 5.4 million, a 1.1% gain compared to 2019. Yun projects existing-home sales to reach 5.86 million in 2021, supported by an economy that he expects to expand by 4% and a low-interest-rate environment, with the 30-year mortgage rate average of 3.2%.

“Anecdotally, Realtors® are telling me there is no shortage of clients or home seekers, but that scarce inventory remains a problem,” Yun said. “If 20% more homes were on the market, we would have 20% more sales, because demand is that high.” He added that he expects housing starts to average at 1.35 million in 2020 and to pick up in 2021, to 1.43 million.
July Pending Home Sales Regional Breakdown

All four regional indices recorded increases in contract activity on a month-over-month basis in July.

The Northeast PHSI grew 25.2% to 112.3 in July, a 20.6% jump from a year ago. In the Midwest, the index rose 3.3% to 114.6 last month, up 15.4% from July 2019.

Pending home sales in the South increased 0.9% to an index of 142.0 in July, up 14.9% from July 2019. The index in the West rose 6.8% in July to 106.4, up 13.2% from a year ago.


Kansas City Fed Manufacturing Activity Continued to Grow Slightly in August
Posted: August 27, 2020 at 10:00 AM (Thursday)

Tenth District manufacturing activity continued to grow slightly after decreasing sharply in the spring, but still remained well below year-ago levels. Expectations for future activity continued to improve slightly. District firms continued to expect prices for both finished goods and raw materials to expand in the next six months.

Factory Activity Continued to Grow Slightly in July
The month-over-month composite index was 3 in July, up slightly from 1 in June and up considerably from -19 in May (Tables 1 & 2). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The improvement in activity was still driven by non-durable goods plants. However, activity in most durable goods factories also improved except for continued decreases in fabricated metals and computer and electronics plants. Most month-over-month indexes were positive. Production, shipments, new orders, and supplier delivery time indexes remained positive, and indexes for order backlog and employment recovered to positive levels. Only new orders for exports and inventories indexes remained negative. Most year-over-year factory indexes increased but remained negative in July. The future composite index continued to rise in July, increasing slightly from 9 to 14.

Special Questions
This month contacts were asked special questions about changes in business costs and their need for physical infrastructure since managing the effects of COVID-19. 67% of contacts reported that their need for physical infrastructure had not changed in the past 6 months, and 69% anticipated that that need would not change in the medium term (1-2 years). Additionally, 66% of contacts said they had utilized a work from home policy in the last 6 months, but very few said that any portion of their workforce will now permanently work from home. In terms of business costs, 42% of firms reported that their costs have increased in the past 6 months, 26% reported no change, and 21% reported decreases.

Selected Manufacturing Comments
“We’ve already adjusted to the effects of the pandemic on our market/business and don’t see any future effects on our business if the government support were to diminish, unless there were unforeseen negative effects.”

“Business recovery is extremely slow. Running out of improvement projects. Will have to cut staff significantly unless business activity rebounds soon, or additional government employment incentives are implemented.”

“April/May were awful from a revenue point of view. The PPP plan functioned exactly as it was intended to for our small business. We were able to maintain our staff and pay them normally during a significant downturn in revenue. We are, however, having difficulty hiring now due to Federal unemployment combined with State unemployment incentivizing those currently unemployed to not work.”

“PPP funding allowed working hours and head count to remain the same for the last 12 weeks.”

“PPP saved us initially. It has all been utilized and a second round would be welcomed. If that doesn’t occur, further cuts will be made.”

“We are busy with supplying government contracts but we don’t expect them to go to the end of the year. A lot depends on the restaurant industry and if the schools open in the fall and have a school lunch program working. A lot of unknowns yet through the rest of the year.”

“Trying to compete with businesses who do not follow CDC guidelines is difficult.”

“If demand decreases more, we will need additional cash (bank debt) to support business.”

“Ending [PPP] programs would not harm us except to the extent that the broader economy slows. We believe more people will become available and interested in employment opportunities if the government assistance programs end.”


2Q2020 GDP preliminary estimate decreased 31.7%
Posted: August 27, 2020 at 08:30 AM (Thursday)

Real gross domestic product (GDP) decreased at an annual rate of 31.7 percent in the second quarter of 2020 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 5.0 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 decrease in real GDP was 32.9 percent. With the second estimate, private inventory investment and personal consumption expenditures (PCE) decreased less than previously estimated (see "Updates to GDP" on page 2).

Real GDP: Percent change from preceding quarter
Coronavirus (COVID-19) Impact on the Second-Quarter 2020 GDP Estimate
The decline in second quarter GDP reflected the response to COVID-19, as “stay-at-home” orders issued in March and April were partially lifted in some areas of the country in May and June, and government pandemic assistance payments were distributed to households and businesses. This led to rapid shifts in activity, as businesses and schools continued remote work and consumers and businesses canceled, restricted, or redirected their spending. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the second quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified. For more information, see the Technical Note.

The decrease in real GDP reflected decreases in PCE, exports, nonresidential fixed investment, private inventory investment, residential fixed investment, and state and local government spending that were partly offset by an increase in federal government spending. Imports, which are a subtraction in the calculation of GDP, decreased (table 2).

The decrease in PCE reflected decreases in services (led by health care) and goods (led by clothing and footwear). The decrease in exports primarily reflected a decrease in goods (led by capital goods). The decrease in nonresidential fixed investment primarily reflected a decrease in equipment (led by transportation equipment). The decrease in private inventory investment primarily reflected a decrease in retail (led by motor vehicle dealers). The decrease in residential investment primarily reflected a decrease in new single-family housing.

Real gross domestic income (GDI) decreased 33.1 percent in the second quarter, compared with a decrease of 2.5 percent in the first quarter. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, decreased 32.4 percent in the second quarter, compared with a decrease of 3.7 percent in the first quarter (table 1).

Current-dollar GDP decreased 33.3 percent, or $2.07 trillion, in the second quarter to a level of $19.49 trillion. In the first quarter, GDP decreased 3.4 percent, or $186.3 billion (table 1 and table 3).

The price index for gross domestic purchases decreased 1.5 percent in the second quarter, in contrast to an increase of 1.4 percent in the first quarter (table 4). The PCE price index decreased 1.8 percent, in contrast to an increase of 1.3 percent. Excluding food and energy prices, the PCE price index decreased 1.0 percent, in contrast to an increase of 1.6 percent.

More information on the source data that underlie the estimates is available in the "Key Source Data and Assumptions" file on BEA’s website.

Updates to GDP

In the second estimate, real GDP decreased 31.7 percent in the second quarter, an upward revision of 1.2 percentage points from the previous estimate issued last month. The revision primarily reflected upward revisions to private inventory investment and PCE. For more information, see the Technical Note. For information on updates to GDP, see the "Additional Information" section that follows.

Advance Estimate Second Estimate
(Percent change from preceding quarter)
Real GDP -32.9 -31.7
Current-dollar GDP -34.3 -33.3
Real GDI -33.1
Average of Real GDP and Real GDI -32.4
Gross domestic purchases price index -1.5 -1.5
PCE price index -1.9 -1.8
PCE price index excluding food and energy -1.1 -1.0

Updates to First-Quarter Wages and Salaries

In addition to presenting updated estimates for the second quarter, today's release presents revised estimates of first-quarter wages and salaries, personal taxes, and contributions for government social insurance, based on updated data from the BLS Quarterly Census of Employment and Wages program. Wages and salaries are now estimated to have increased $103.6 billion in the first quarter of 2020, a downward revision of $3.4 billion. Real GDI decreased 2.5 percent in the first quarter, unrevised from the previously published estimate.

Corporate Profits

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) decreased $226.9 billion in the second quarter, compared with a decrease of $276.2 billion in the first quarter (table 10).

Profits of domestic financial corporations increased $39.5 billion in the second quarter, in contrast to a decrease of $42.2 billion in the first quarter. Profits of domestic nonfinancial corporations decreased $170.1 billion, compared with a decrease of $190.5 billion. Rest-of-the-world profits decreased $96.2 billion, compared with a decrease of $43.5 billion. In the second quarter, receipts decreased $139.7 billion, and payments decreased $43.4 billion.

Bringing Together National, Industry, and State GDP Statistics
BEA is speeding up the release of its industry and state GDP statistics to coordinate more closely with the quarterly estimates of national GDP. Starting on September 30, industry GDP statistics will be issued on the same day – and in the same news release – as the third estimate of national GDP. State-by-state GDP statistics will follow in a separate news release within two days. These three major dimensions of GDP will be synchronized to cover the same quarter, giving users a fuller and more timely view of the U.S. economy.

* * *


Weekly Initial Unemployment Claims Decrease 98,000 to 1,006,000
Posted: August 27, 2020 at 08:30 AM (Thursday)

In the week ending August 22, the advance figure for seasonally adjusted initial claims was 1,006,000, a decrease of 98,000 from the previous week's revised level. The previous week's level was revised down by 2,000 from 1,106,000 to 1,104,000. The 4-week moving average was 1,068,000, a decrease of 107,250 from the previous week's revised average. The previous week's average was revised down by 500 from 1,175,750 to 1,175,250.

The advance seasonally adjusted insured unemployment rate was 9.9 percent for the week ending August 15, a decrease of 0.2 percentage point from the previous week's revised rate. The previous week's rate was revised down by 0.1 from 10.2 to 10.1 percent. The advance number for seasonally adjusted insured unemployment during the week ending August 15 was 14,535,000, a decrease of 223,000 from the previous week's revised level. The previous week's level was revised down by 86,000 from 14,844,000 to 14,758,000. The 4-week moving average was 15,215,750, a decrease of 604,000 from the previous week's revised average. The previous week's average was revised down by 21,500 from 15,841,250 to 15,819,750.


July New Orders for Durable Goods Increased 11.2%, Ex-Trans up 2.4%
Posted: August 26, 2020 at 08:30 AM (Wednesday)

New Orders
New orders for manufactured durable goods in July increased $23.2 billion or 11.2 percent to $230.7 billion, the U.S. Census Bureau announced today. This increase, up three consecutive months, followed a 7.7 percent June increase. Excluding transportation, new orders increased 2.4 percent. Excluding defense, new orders increased 9.9 percent. Transportation equipment, also up three consecutive months, led the increase, $19.6 billion or 35.6 percent to $74.7 billion.

Shipments
Shipments of manufactured durable goods in July, up three consecutive months, increased $16.6 billion or 7.3 percent to $244.0 billion. This followed a 15.2 percent June increase. Transportation equipment, also up three consecutive months, led the increase, $12.6 billion or 17.8 percent to $83.2 billion.

Unfilled Orders
Unfilled orders for manufactured durable goods in July, down four of the last five months, decreased $8.2 billion or 0.8 percent to $1,084.4 billion. This followed a 1.4 percent June decrease. Transportation equipment, down five consecutive months, drove the decrease, $8.4 billion or 1.1 percent to $735.2 billion.

Inventories
Inventories of manufactured durable goods in July, down two consecutive months, decreased $1.9 billion or 0.5 percent to $422.6 billion. This followed a 0.1 percent June decrease. Machinery, down six of the last seven months, led the decrease, $0.7 billion or 1.0 percent to $69.7 billion.

Capital Goods
Nondefense new orders for capital goods in July increased $5.4 billion or 10.2 percent to $58.0 billion. Shipments increased $1.3 billion or 2.0 percent to $67.6 billion. Unfilled orders decreased $9.5 billion or 1.6 percent to $600.8 billion. Inventories increased $0.6 billion or 0.3 percent to $193.3 billion. Defense new orders for capital goods in July increased $3.2 billion or 30.0 percent to $14.0 billion. Shipments increased $0.1 billion or 1.2 percent to $12.3 billion. Unfilled orders increased $1.7 billion or 1.0 percent to $180.0 billion. Inventories increased less than $0.1 billion or 0.1 percent to $21.2 billion.

Revised June Data
Revised seasonally adjusted June figures for all manufacturing industries were: new orders, $438.1 billion (revised from $437.2 billion); shipments, $458.1 billion (revised from $457.3 billion); unfilled orders, $1,092.7 billion (revised from $1,092.5 billion) and total inventories, $690.4 billion (revised from $690.9 billion).


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: August 26, 2020 at 07:00 AM (Wednesday)

Mortgage applications decreased 6.5 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending August 21, 2020.

The Market Composite Index, a measure of mortgage loan application volume, decreased 6.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 7 percent compared with the previous week. The Refinance Index decreased 10 percent from the previous week and was 34 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 0.4 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 33 percent higher than the same week one year ago.

"Mortgage rates were mixed last week, but the rates for 30-year fixed mortgages and 15-year fixed mortgages declined. Despite the lower rates, conventional refinance applications fell 11 percent and government refinance applications fell 6 percent, which pushed the total refinance index to its lowest weekly level since July," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "The home purchase market remains a bright spot for the overall economy. Purchase applications were essentially unchanged but were 33 percent higher than a year ago - the 14th straight week of year-over-year gains. Mortgage rates at record lows and households looking for more space are driving this summer's surge in demand."

The refinance share of mortgage activity decreased to 62.6 percent of total applications from 64.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 2.6 percent of total applications.

The FHA share of total applications increased to 10.5 percent from 10.3 percent the week prior. The VA share of total applications increased to 11.8 percent from 11.2 percent the week prior. The USDA share of total applications remained unchanged from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.11 percent from 3.13 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 decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) remained unchanged at 3.41 percent, with points remaining unchanged at 0.35 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained
unchanged from 3.16 percent, with points increasing to 0.29 from 0.27 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.70 percent from 2.73 percent, with points increasing to 0.39 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs increased to 3.14 percent from 2.95 percent, with points increasing to 0.42 from 0.41 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


New Home Sales in July 2020 at annual rate of 901,000
Posted: August 25, 2020 at 10:00 AM (Tuesday)

New Home Sales
Sales of new single-family houses in July 2020 were at a seasonally adjusted annual rate of 901,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 13.9 percent (±20.0 percent)* above the revised June rate of 791,000 and is 36.3 percent (±27.4 percent) above the July 2019 estimate of 661,000.

Sales Price
The median sales price of new houses sold in July 2020 was $330,600. The average sales price was $391,300.

For Sale Inventory and Months’ Supply
The seasonally-adjusted estimate of new houses for sale at the end of July was 299,000. This represents a supply of 4.0 months at the current sales rate.



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