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Beige Book: Economic Activity indicates growth split between modest and moderate pace
Posted: October 18, 2017 at 02:00 PM (Wednesday)

Reports from all 12 Federal Reserve Districts indicated that economic activity increased in September through early October, with the pace of growth split between modest and moderate. The Richmond, Atlanta, and Dallas Districts reported major disruptions from Hurricanes Harvey and Irma in some areas and sectors, including transportation, energy, and agriculture. Manufacturing activity and nonfinancial services expanded modestly to moderately in most Districts. Retail spending rose slowly, while vehicle sales and tourism increased in most Districts. Residential construction continued to increase, and growth in commercial construction was up slightly on balance. Low home inventory levels continued to constrain residential sales in many areas, while nonresidential real estate activity increased slightly overall. Loan demand was generally stable to modestly higher. Growth in the energy sector eased slightly. Agricultural conditions were mixed; while some regions were reporting better-than-expected harvests, low commodity prices continued to weigh down farm incomes.

Employment and Wages
Employment growth was modest on balance, with most Districts reporting flat to moderate increases. Labor markets were widely described as tight. Many Districts noted that employers were having difficulty finding qualified workers, particularly in construction, transportation, skilled manufacturing, and some health care and service positions. These shortages were also restraining business growth. Firms in several Districts reported that scarcity of labor, particularly related to construction, would be exacerbated by hurricane recovery efforts. Despite widespread labor tightness, the majority of Districts reported only modest to moderate wage pressures. However, some Districts reported stronger wage pressures in certain sectors, including transportation and construction. Growing use of sign-on bonuses, overtime, and other nonwage efforts to attract and retain workers were also reported.

Prices
Price pressures remained modest since the previous report. Several Districts noted increased manufacturing input costs, but in most cases these weren't passed through to selling prices. Retail prices generally increased slightly. Transportation, energy, and construction materials prices increased more rapidly, with some Districts citing effects from hurricanes.

Highlights by Federal Reserve District

Boston
Economic activity expanded at a modest to moderate pace since August, according to contacts. Respondents in manufacturing, retailing, and software and IT services said revenues continued to increase year over year. Commercial and residential real estate market conditions were mostly unchanged. Looking forward, business contacts remained upbeat about the outlook.

New York
The District's economy has continued to expand at a moderate pace since the last report, while labor markets have been tight. Input prices continued to rise moderately, while selling prices rose more modestly. Housing markets have strengthened somewhat, on balance, but commercial real estate markets have been flat.

Philadelphia
Overall, economic activity continued at a modest pace of growth. Most sectors, including manufacturing and nonfinancial services, continued to grow modestly. Non-auto retail sales showed slight improvement, and auto sales grew modestly after declining in the previous period. On balance, employment changed little, while wages and prices continued to grow modestly.

Cleveland
Business activity increased from that of the previous reporting period, but the overall pace of growth was moderate. After slowing during the summer months, hiring picked up across industries. Input price pressures outpaced selling price pressures. Retail store spending was flat; auto sales rose. Nonresidential construction remains healthy, but there are signs the industry may be slowing.

Richmond
The economy expanded moderately. Manufacturing and port activity picked up, retail sales rose, and tourism remained strong. Commercial real estate leasing and lending activity increased modestly. Labor markets strengthened and wage pressures broadened. Prices rose moderately, partially due to supply chain disruptions from the hurricanes.

Atlanta
Economic conditions improved modestly since the last report. Tightness in the labor market continued with few reports of wage pressures. Input cost pressures were subdued. Non-auto retailers cited steady sales growth. Tourism, energy, and agriculture were impacted by Hurricane Irma. Home sales and prices increased. New orders and production rose. Credit was available to most borrowers.

Chicago
Growth continued at a modest rate. Employment, business spending, and manufacturing increased modestly, while consumer spending increased slightly. Construction and real estate activity was little changed, as were financial sector conditions. Wages and prices rose modestly. Contacts expected the District's corn and soybean harvests to be close to trend.

St. Louis
Economic conditions have continued to improve at a modest pace since our previous report. The District continues to see relatively stronger growth in both manufacturing and banking sectors, although growth in both sectors has decelerated somewhat since the beginning of the year.

Minneapolis
Economic activity grew modestly. Despite employer demand, job growth suffered from a lack of available workers. Tourism saw growth, but consumer spending overall showed some signs of weakness. Home construction rose, while home sales fell due to tight inventories. Commercial construction continued to lag. Manufacturing and mining activity picked up.

Kansas City
Economic activity in the Tenth District continued to expand modestly, and expectations for future growth were positive in most sectors. Retail sales increased modestly, the manufacturing sector expanded moderately, and transportation and wholesale trade firms noted strong sales. However, growth in the energy sector eased, and the agricultural sector continued to soften.

Dallas
Economic activity grew moderately. The impact from Hurricane Harvey varied by location and industry, and most contacts do not expect significant long-term disruption. The manufacturing sector exhibited notable strength with stronger output, increased hiring, and a pickup in price inflation. Auto sales surged in response to the loss of storm-damaged vehicles, and labor market shortages persisted and may become more acute as hurricane recovery continues.

San Francisco
Economic activity continued to expand at a moderate pace. Overall price inflation was flat and remained low, while upward wage pressures strengthened somewhat and conditions in the labor market tightened further. Sales of retail goods picked up, and growth in the consumer and business services sectors remained strong. Conditions in the manufacturing sector improved. Activity in the residential real estate market was strong.


September Housing Starts down 4.7%, Permits down 4.5%
Posted: October 18, 2017 at 08:30 AM (Wednesday)

Building Permits
Privately-owned housing units authorized by building permits in September were at a seasonally adjusted annual rate of 1,215,000. This is 4.5 percent (±1.6 percent) below the revised August rate of 1,272,000 and is 4.3 percent (±1.7 percent) below the September 2016 rate of 1,270,000. Single-family authorizations in September were at a rate of 819,000; this is 2.4 percent (±1.7 percent) above the revised August figure of 800,000. Authorizations of units in buildings with five units or more were at a rate of 360,000 in September.

Housing Starts
Privately-owned housing starts in September were at a seasonally adjusted annual rate of 1,127,000. This is 4.7 percent (±8.1 percent)* below the revised August estimate of 1,183,000, but is 6.1 percent (±8.8 percent)* above the September 2016 rate of 1,062,000. Single-family housing starts in September were at a rate of 829,000; this is 4.6 percent (±8.5 percent)* below the revised August figure of 869,000. The September rate for units in buildings with five units or more was 286,000.

Housing Completions
Privately-owned housing completions in September were at a seasonally adjusted annual rate of 1,109,000. This is 1.1 percent (±12.4 percent)* above the revised August estimate of 1,097,000 and is 10.3 percent (±11.9 percent)* above the September 2016 rate of 1,005,000. Single-family housing completions in September were at a rate of 781,000; this is 4.6 percent (±11.4 percent)* above the revised August rate of 747,000. The September rate for units in buildings with five units or more was 322,000.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: October 18, 2017 at 07:00 AM (Wednesday)

Mortgage applications increased 3.6 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending October 13, 2017. This week's results included an adjustment for the Columbus Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 3.6 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 increased 3 percent from the previous week. The seasonally adjusted Purchase Index increased 4 percent from one week earlier. The unadjusted Purchase Index decreased 6 percent compared with the previous week and was 9 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 48.6 percent of total applications from 49.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.1 percent of total applications.

The FHA share of total applications increased to 10.4 percent from 10.3 percent the week prior. The VA share of total applications decreased to 10.5 percent from 10.6 percent the week prior. The USDA share of total applications increased to 0.8 percent from 0.7 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to 4.14 percent from 4.16 percent, with points remaining unchanged at 0.44 (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 $424,100) increased to 4.13 percent from 4.11 percent, with points increasing to 0.32 from 0.31 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged at 4.00 percent from the week prior, with points increasing to 0.37 from 0.36 (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 increased to 3.45 percent from 3.44 percent, with points increasing to 0.43 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.31 percent from 3.33 percent, with points decreasing to 0.40 from 0.43 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


Builder Confidence Rises 4 points to 68 in October
Posted: October 17, 2017 at 10:00 AM (Tuesday)

Builder confidence in the market for newly-built single-family homes rose four points to a level of 68 in October on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This was the highest reading since May.

“This month’s report shows that home builders are rebounding from the initial shock of the hurricanes,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas. “However, builders need to be mindful of long-term repercussions from the storms, such as intensified material price increases and labor shortages.”

“It is encouraging to see builder confidence return to the high 60s levels we saw in the spring and summer,” said NAHB Chief Economist Robert Dietz. “With a tight inventory of existing homes and promising growth in household formation, we can expect the new home market continue to strengthen at a modest rate in the months ahead.”

All three HMI components posted gains in October. The component gauging current sales conditions rose five points to 75 and the index charting sales expectations in the next six months increased five points to 78. Meanwhile, the component measuring buyer traffic ticked up a single point to 48.

Looking at the three-month moving averages for regional HMI scores, the South rose two points to 68 and the Northeast rose one point to 50. Both the West and Midwest remained unchanged at 77 and 63, respectively.


Industrial Production rose 0.3%
Capacity Utilization increased at 76.0%

Posted: October 17, 2017 at 09:48 AM (Tuesday)

Industrial production rose 0.3 percent in September. The rates of change for July and August were notably revised; the current estimate for July, a decrease of 0.1 percent, was 0.5 percentage point lower than previously reported, while the estimate for August, a decrease of 0.7 percent, was 0.2 percentage point higher than before. The estimates for manufacturing, mining, and utilities were each revised lower in July. The continued effects of Hurricane Harvey and, to a lesser degree, the effects of Hurricane Irma combined to hold down the growth in total production in September by 1/4 percentage point.[1] For the third quarter as a whole, industrial production fell 1.5 percent at an annual rate; excluding the effects of the hurricanes, the index would have risen at least 1/2 percent. Manufacturing output edged up 0.1 percent in September but fell 2.2 percent at an annual rate in the third quarter. The indexes for mining and utilities in September rose 0.4 percent and 1.5 percent, respectively. At 104.6 percent of its 2012 average, total industrial production in September was 1.6 percent above its year-earlier level. Capacity utilization for the industrial sector increased 0.2 percentage point in September to 76.0 percent, a rate that is 3.9 percentage points below its long-run (1972–2016) average.


U.S. Import Price Index increased 0.7% in September
Posted: October 17, 2017 at 08:30 AM (Tuesday)

U.S. import prices increased 0.7 percent in September, the U.S. Bureau of Labor Statistics reported today, after advancing 0.6 percent in August. The price index for U.S. exports rose 0.8 percent in September, after increasing 0.7 percent the previous month.

Hurricane Harvey and Irma: Hurricanes Harvey and Irma had a small impact on the collection of the import and export price index data for September, but no change in the estimation procedures. For more information on the impact, please see https://www.bls.gov/bls/hurricanes-harvey-irma-maria.htm.

All Imports: Import prices rose 0.7 percent in September, the largest monthly rise since an increase of 0.7 percent in June 2016. The last time import prices advanced by more than 0.7 percent was a 1.2-percent increase in May 2016. Higher prices for both fuel and nonfuel imports contributed to the overall rise in import prices for September. Prices for U.S. imports also increased on a 12-month basis, advancing 2.7 percent.

Fuel Imports: Fuel prices increased 3.9 percent in September, after rising 4.4 percent in August. The monthly movements were the first advances since the index rose 0.3 percent in February, and the August rise was the largest advance since the index increased 6.1 percent in January. Prior to August, prices for import fuel fell 8.2 percent between February and July. The September advance was driven by a 4.5-percent rise in petroleum prices which more than offset a 7.8-percent drop in natural gas prices. Between September 2016 and September 2017 the price index for import fuel increased 18.2 percent, led by a 20.1-percent advance in petroleum prices over the same period. Prices for natural gas declined 16.3 percent for the year ended in September.

All Imports Excluding Fuel: The price index for nonfuel imports advanced 0.3 percent in September, following an identical increase in August. The major end-use categories largely increased in September and contributed to the rise in overall import prices. The most significant contributor was a 1.4-percent advance in nonfuel industrial supplies and materials prices, although rising prices for foods, feeds, and beverages, capital goods, and automotive vehicles also contributed to the September advance in nonfuel prices. Prices for nonfuel imports increased 1.3 percent for the year ended in September.

Exports
All Exports: U.S. export prices rose 0.8 percent in September following a 0.7-percent increase in August. The September advance was the largest monthly rise since an increase of 0.8 percent in June 2016. The last time the index increased by more than 0.8 percent was a 1.1-percent advance in May 2016. Prices for exports rose 2.9 percent over the past year. The September advance was driven by rising prices for nonagricultural commodities; agricultural export prices decreased in September.

Agricultural Exports: The price index for agricultural exports declined 0.7 percent in September, the first monthly decrease since the index fell 1.4 percent in June. Lower prices for meat, wheat, and corn drove the September decline. Despite the monthly decrease, export agricultural prices rose 2.2 percent over the past year, driven by increasing meat, wheat, and vegetable prices over the 12-month period.

All Exports Excluding Agriculture: Nonagricultural export prices increased 1.0 percent in September following an advance of 0.8 percent in August. Rising prices for nonagricultural industrial supplies and materials drove the overall increase in nonagricultural export prices in September, though higher prices for capital goods and automotive vehicles also contributed. The price index for nonagricultural exports advanced 3.0 percent for the year ended in September, led by rising nonagricultural industrial supplies and materials prices.

Import Prices
Imports by Locality of Origin: Import prices from China recorded no change in September, after edging down 0.1 percent in August. Prices for imports from China fell 0.7 percent for the year ended in September, the smallest over-the-year decline since the index fell 0.5 percent between April 2014 and April 2015. Import prices from Japan advanced 0.2 percent in September, the first monthly increase since the index rose 0.2 percent in March. In September, rising petroleum prices contributed to higher import prices from Canada, the European Union, and Mexico. Import prices from Canada rose 0.5 percent, the price index for European Union imports advanced 0.3 percent, and prices for imports from Mexico increased 1.4 percent.

Nonfuel Industrial Supplies and Materials: The price index for nonfuel industrial supplies and materials rose 1.4 percent in September, after increasing 1.0 percent in August. Contributing to the September advance were a 4.4-percent increase in unfinished metals prices and a 1.8-percent rise in prices for finished metals.

Finished Goods: Import prices for the finished goods categories were mixed in September. Prices for capital goods rose 0.1 percent following an identical increase in August. The advance was driven by a 1.6 percent rise in prices for excavating, paving, and construction machinery. The price index for automotive vehicles rose 0.1 percent and the price index for consumer goods fell 0.1 percent.

Foods, Feeds, and Beverages: Import foods, feeds, and beverages prices advanced 1.8 percent in September, the largest increase since a 3.1-percent rise in July 2016. The increase was led by a 12.5-percent rise in fruit prices which more than offset falling fish and shellfish prices.

Transportation Services: Import air passenger fares rose 8.5 percent in September after declining 10.6 percent in August. Higher European and Asian fares contributed to the September advance, which was the largest monthly increase since the index rose 8.9 percent in June 2015. Import air passenger fares decreased 3.7 percent over the past year. The price index for import air freight rose 0.4 percent in September and 19.6 percent over the past 12 months.

Export Prices
Nonagricultural Industrial Supplies and Materials: Nonagricultural industrial supplies and materials export prices increased 3.1 percent in September after a 1.9-percent advance in August. The September increase was led by a 6.6-percent rise in fuel prices, with higher prices for nonferrous metals and chemicals also contributing to the overall advance.

Finished Goods: Export price indexes for both capital goods and automotive vehicles rose 0.1 percent in September. Capital goods prices have not recorded a monthly decline since a 0.1-percent drop in October 2016, and the index advanced 1.2 percent over the past 12-months. The September increase was the second consecutive month in which prices for automotive vehicles advanced 0.1 percent, led by higher prices for passenger cars. The price index for consumer goods recorded no change in September.

Transportation Services: Export air passenger fares declined 8.7 percent in September, driven by a 20.7 percent decline in Asian fares which more than offset a 13.5-percent increase in European fares. Despite the September decline, the index rose 1.2 percent from September 2016 to September 2017. The price index for export air freight rose 0.2 percent in September and 3.1 percent over the past 12 months.


Empire State Manufacturing Survey Conditions continued to expand strongly in October
Posted: October 16, 2017 at 08:30 AM (Monday)

Business activity grew at a robust pace in New York State, according to firms responding to the October 2017 Empire State Manufacturing Survey. The headline general business conditions index climbed six points to 30.2, its highest level in three years. The new orders index came in at 18.0 and the shipments index rose eleven points to 27.5—readings that pointed to ongoing solid gains in orders and shipments. Delivery times were slightly longer, and inventory levels decreased. Labor market indicators reflected a strong increase in employment and little change in hours worked. Both input prices and selling prices rose at a somewhat slower pace than last month. Indexes assessing the six-month outlook suggested that firms remained optimistic about future conditions.

Growth Accelerates
Manufacturing firms in New York State reported that business activity continued to expand strongly in October. The general business conditions index climbed six points to 30.2, its highest level since 2014. Forty-four percent of respondents reported that conditions had improved over the month, while 14 percent reported that conditions had worsened. The new orders index fell seven points, but at 18.0, pointed to solid gains in orders. The shipments index advanced eleven points to 27.5, its highest level in several years. The unfilled orders index moved down seven points to 2.3. The delivery time index fell twelve points to 3.1, a level indicating slightly longer delivery times, and the inventories index fell fourteen points to -7.8, a sign that inventory levels declined modestly.

Employment Levels Increase
The index for number of employees rose five points to 15.6, suggesting that employment expanded more strongly this month, while the average workweek index registered zero, indicating that the average workweek held steady. Prices increased at a somewhat slower pace than last month: the prices paid index fell nine points to 27.3, and the prices received index moved down seven points to 7.0.

Firms Remain Optimistic
Indexes assessing the six-month outlook suggested that firms continued to be optimistic about future conditions. The index for future business conditions climbed six points to 44.8, and the index for future new orders also came in at 44.8. Employment was expected to increase modestly. The capital expenditures index edged down three points to 21.9, and the technology spending index was little changed at 16.4.


Real Average Hourly Earnings decreased 0.1% in September
Posted: October 13, 2017 at 10:41 AM (Friday)

Real average hourly earnings for all employees decreased 0.1 percent from August to September, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from a 0.5 percent increase in average hourly earnings being offset by a 0.5-percent increase in the Consumer Price Index for All Urban Consumers (CPI-U).

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

Real average hourly earnings increased 0.7 percent, seasonally adjusted, from September 2016 to September 2017. The increase in real average hourly earnings combined with no change in the average workweek resulted in a 0.6-percent increase in real average weekly earnings over this period.


Business Inventories up 0.7% in August
Posted: October 13, 2017 at 10:00 AM (Friday)

The combined value of distributive trade sales and manufacturers’ shipments for August, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,369.2 billion, up 0.7 percent (±0.1 percent) from July 2017 and was up 5.5 percent (±0.4 percent) from August 2016.

Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,889.0 billion, up 0.7 percent (±0.1 percent) from July 2017 and were up 3.6 percent (±0.3 percent) from August 2016.

The total business Inventories/Sales Ratio based on seasonally adjusted data at the end of August was 1.38. The August 2016 ratio was 1.40.


University of Michigan Consumer Confidence Preliminary October Results at 101.1
Posted: October 13, 2017 at 10:00 AM (Friday)

Consumer sentiment surged in early October, reaching its highest level since the start of 2004. The October gain was broadly shared, occurring among all age and income subgroups and across all partisan viewpoints. The data indicate a robust outlook for consumer spending that extends the current expansion to at least mid 2018, which would mark the 2nd longest expansion since the mid 1800's. While the early October surge indicates greater optimism about the future course of the economy, it also reflects an unmistakable sense among consumers that economic prospects are now about as good as could be expected. This "as good as it gets" outlook is supported by a moderation in the expected pace of growth in both personal finances and the overall economy, accompanied by a growing sense that, even with this moderation, it would still mean the continuation of good economic times. Although such an outlook is typically recorded in the late phase of an expansion, its occurrence is independent of the ultimate length of an expansion. Indeed, nothing in the latest survey indicates that consumers anticipate an economic downturn anytime soon - which contrarians may consider a clear warning sign of trouble ahead. Nonetheless, consumers anticipate low unemployment, low inflation, small increases in interest rates, and most importantly, modest income gains in the year ahead. It is this acceptance of lackluster growth rates in personal income and in the overall economy that signifies that consumers have accepted, however reluctantly, limits on the pace of improving prospects for living standards.


Consumer Price Index 0.5% in September, Ex Fd & Engy rose 0.1%
Posted: October 13, 2017 at 08:30 AM (Friday)

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.5 percent in September on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.2 percent.

The gasoline index increased 13.1 percent in September and accounted for about three-fourths of the seasonally adjusted all items increase. Other major energy component indexes were mixed, and the food index rose slightly.

The index for all items less food and energy increased 0.1 percent in September. The shelter index continued to increase, and the indexes for motor vehicle insurance, recreation, education, and wireless telephone services also rose. These increases more than offset declines in the indexes for new vehicles, household furnishings and operations, medical care, and used cars and trucks.

The all items index rose 2.2 percent for the 12 months ending September; the 12-month change has been accelerating since it was 1.6 percent in June. The 12-month change in the index for all items less food and energy remained at 1.7 percent for the fifth month in a row. The energy index rose 10.1 percent over the past 12 months, its largest 12-month increase since the period ending March 2017. The food index increased 1.2 percent over the last year.


Weekly Initial Unemployment Claims Decrease 15,000 to 243,000
Posted: October 12, 2017 at 08:30 AM (Thursday)

In the week ending October 7, the advance figure for seasonally adjusted initial claims was 243,000, a decrease of 15,000 from the previous week's revised level. The previous week's level was revised down by 2,000 from 260,000 to 258,000. The 4-week moving average was 257,500, a decrease of 9,500 from the previous week's revised average. The previous week's average was revised down by 1,250 from 268,250 to 267,000. Hurricanes Harvey, Irma, and Maria impacted this week's claims.

The advance seasonally adjusted insured unemployment rate was 1.3 percent for the week ending September 30, a decrease of 0.1 percentage point from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending September 30 was 1,889,000, a decrease of 32,000 from the previous week's revised level. This is the lowest level for insured unemployment since December 29, 1973 when it was 1,805,000. The previous week's level was revised down by 17,000 from 1,938,000 to 1,921,000. The 4-week moving average was 1,925,000, a decrease of 11,500 from the previous week's revised average. The previous week's average was revised down by 10,500 from 1,947,000 to 1,936,500.


Producer Price Index advanced 0.4% in September, ex Fd & Engy up 0.2%
Posted: October 12, 2017 at 08:30 AM (Thursday)

The Producer Price Index for final demand advanced 0.4 percent in September, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices moved up 0.2 percent in August and edged down 0.1 percent in July. On an unadjusted basis, the final demand index increased 2.6 percent for the 12 months ended in September, the largest rise since an advance of 2.8 percent for the 12 months ended February 2012.

Within final demand in September, prices for final demand services rose 0.4 percent, and the index for final demand goods climbed 0.7 percent.

Prices for final demand less foods, energy, and trade services increased 0.2 percent in September, the same as in August. For the 12 months ended in September, the index for final demand less foods, energy, and trade services advanced 2.1 percent.

Final Demand
Final demand services: The index for final demand services increased 0.4 percent in September, the largest rise since moving up 0.5 percent in April. Over 60 percent of the September advance can be traced to a 0.8-percent increase in margins for final demand trade services. (Trade indexes measure changes in margins received by wholesalers and retailers.) The index for final demand transportation and warehousing services jumped 1.0 percent. Prices for final demand services less trade, transportation, and warehousing edged up 0.1 percent.

Product detail: Nearly 30 percent of the increase in prices for final demand services can be attributed to margins for machinery, equipment, parts, and supplies wholesaling, which rose 1.3 percent. The indexes for apparel, footwear, and accessories retailing; health, beauty, and optical goods retailing; truck transportation of freight; deposit services (partial); and food and alcohol wholesaling also advanced. In contrast, prices for residential real estate loans (partial) fell 2.6 percent. The indexes for automobiles and automobile parts retailing and for apparel wholesaling also declined. (See table 4.)

Final demand goods: Prices for final demand goods rose 0.7 percent in September, the largest increase since moving up 1.0 percent in January. Over 80 percent of the September advance can be traced to the index for final demand energy, which climbed 3.4 percent. (Higher energy prices were likely the result of reduced refining capacity in the Gulf Coast area due to Hurricane Harvey.) Prices for final demand goods less foods and energy moved up 0.3 percent. The index for final demand foods was unchanged.

Product detail: Two-thirds of the September increase in the final demand goods index can be attributed to prices for gasoline, which jumped 10.9 percent. The indexes for jet fuel, motor vehicles, diesel fuel, fresh and dry vegetables, and chicken eggs also moved higher. Conversely, prices for young chickens fell 4.7 percent. The indexes for electric power and integrated microcircuits also declined.


Job Openings little changed at 6.1 million in August
Posted: October 11, 2017 at 10:00 AM (Wednesday)

The number of job openings was little changed at 6.1 million on the last business day of August, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were also little changed at 5.4 million and 5.2 million, respectively. Within separations, the quits rate and the layoffs and discharges rate were little changed at 2.1 percent and 1.2 percent, respectively. This release includes estimates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and by four geographic regions.

Job Openings
On the last business day of August, there were 6.1 million job openings, little changed from July. The job openings rate was 4.0 percent in August. The number of job openings was little changed for total private and for government. Job openings increased in health care and social assistance (+71,000) and in durable goods manufacturing (+31,000). Job openings decreased in other services (-95,000), educational services (-51,000), and nondurable goods manufacturing (-48,000). The number of job openings increased in the Midwest region.

Hires
The number of hires was little changed at 5.4 million in August. The hires rate was 3.7 percent. The number of hires was little changed for total private and for government. The number of hires was little changed in all industries. Hires decreased in the Northeast region.

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

The number of total separations was little changed at 5.2 million in August. The total separations rate was 3.6 percent. The number of total separations was little changed for total private and for government. Total separations was little changed in all industries. The number of total separations decreased in the South region.

The number of quits was little changed at 3.1 million in August. The quits rate was 2.1 percent. The number of quits was little changed for total private and for government. Quits decreased in information (-14,000) and mining and logging (-6,000). In the regions, the number of quits increased in the West but decreased in the South.

There were 1.7 million layoffs and discharges in August, little changed from July. The layoffs and discharges rate was 1.2 percent in August. The number of layoffs and discharges was little changed for total private and for government. The layoffs and discharges level decreased in state and local government education (-11,000) and federal government (-4,000). The number of layoffs and discharges was little changed in all four regions.

The number of other separations was little changed in August. Other separations was little changed for total private and for government. Other separations was also little changed in all industries and 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 August, hires totaled 63.8 million and separations totaled 61.7 million, yielding a net employment gain of 2.1 million. These totals include workers who may have been hired and separated more than once during the year.


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: October 11, 2017 at 07:00 AM (Wednesday)

Mortgage applications decreased 2.1 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending October 6, 2017.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 2 percent compared with the previous week. The Refinance Index decreased 4 percent from the previous week. The seasonally adjusted Purchase Index decreased 0.1 percent from one week earlier. The unadjusted Purchase Index increased 0.1 percent compared with the previous week and was 7 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 49.0 percent of total applications from 50.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.6 percent of total applications.

The FHA share of total applications increased to 10.3 percent from 10.0 percent the week prior. The VA share of total applications increased to 10.6 percent from 10.0 percent the week prior. The USDA share of total applications decreased to 0.7 percent from 0.8 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) increased to 4.16 percent from 4.12 percent, with points decreasing to 0.44 from 0.45 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) increased to 4.11 percent from 4.09 percent, with points increasing to 0.31 from 0.26 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.00 percent from 3.99 percent, with points decreasing to 0.36 from 0.37 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.44 percent from 3.42 percent, with points decreasing to 0.36 from 0.39 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to 3.33 percent from 3.30 percent, with points remaining unchanged at 0.43 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


NFIB Small Business Optimism Index fell 2.3 points to 103.0 in September
Posted: October 10, 2017 at 07:00 AM (Tuesday)

The Index of Small Business Optimism fell 2.3 points to 103.0 in September, a significant decline from August. Three of the 10 Index components posted a gain, six declined and one was unchanged. Two of our largest states, Florida and Texas, were devastated by hurricanes in the survey period; however, the response rate in those states was unchanged from prior months. The mail got through, but for large parts of the two states, “shopping” was not possible. Tens of thousands of houses were probably lost and a half million cars rendered inoperable. Hurricane recovery spending will provide a significant boost to economic activity in the fourth quarter and into 2018, reducing the odds of a recession next year. The news about tax reform came out too late to have a significant impact on expectations, the October survey will reflect whatever impact that debate will have.

Second quarter GDP growth was revised upward to 3.1 percent, the best growth rate in years. Third quarter growth will be hampered by the hurricanes in our 2nd and 4th largest states. Shopping was difficult without a boat and if your boat made it to your workplace, it may have been flooded or without power. Rebuilding will add to growth in the fourth quarter, but replacing assets that were lost is not an optimal use of funds, even if necessary. It only replaces wealth lost rather than adding new productive assets to our economy. Third quarter estimates of growth from the Atlanta and New York Federal Reserve Banks range from 2.7 percent to 1.5 percent respectively. Another 3 percent growth quarter is not likely for Q3. However, Q4 is shaping up to be better, even before hurricane recovery stimulus.

The Federal Reserve announced the plan to reduce its $4.5 trillion portfolio. Other things equal, the withdrawal of Federal Reserve demand for Treasury bonds to replace those coming due will put an upward pressure on interest rates. However, other factors such as foreign demand for U.S. securities could easily overwhelm this in the early stages of portfolio reductions. The Federal Reserve will raise its benchmark rate in December in an attempt to produce a federal funds rate that is more “normal” and further away from the “zero floor,” just in case the economy falters and the Fed needs to cut rates.

Owner optimism posted a decline but remained historically very high, driven primarily by reduced optimism about sales, business conditions and the environment for expanding a business. However, fundamental Index components were stronger, with gains in hiring plans and inventory investment plans. Capital spending plans were weaker but down from a very high level last month, returning to levels more typical this year. With recent improvement in other economic indicators including the September ISM Non-Manufacturing Index which is at its highest since 2005, and the prospect of recovery spending, the fourth quarter doesn’t look bad at all.


Employment Trends Index declined slightly in September to 132.74
Posted: October 9, 2017 at 10:00 AM (Monday)

The Conference Board Employment Trends Index™ (ETI) declined slightly in September, following a larger drop in August. The index now stands at 132.74, slightly down from 132.78 (a strong downward revision) in August. The change represents a 3.8 percent gain in the ETI compared to a year ago.

“Several components that led to the decline in the Employment Trends Index in August and September were impacted by hurricanes Harvey and Irma,” said Gad Levanon, Chief Economist, North America, at The Conference Board. “The Employment Trends Index is expected to pick up again, signaling further employment growth and more wage pressures in the months ahead.”

September’s small decline in the ETI was mostly the result of a large increase in the Initial Claims for Unemployment Insurance component.


Consumer Credit Increased at an annual rate of 4.25%
Posted: October 6, 2017 at 03:00 PM (Friday)

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


Wholesale Inventories up 0.7% in July
Posted: October 6, 2017 at 10:00 AM (Friday)

August 2017 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $473.4 billion, up 1.7 percent (±0.4 percent) from the revised July level and were up 7.2 percent (±1.1 percent) from the August 2016 level. The June 2017 to July 2017 percent change was revised from the preliminary estimate of down 0.1 percent (±0.2 percent)* to virtually unchanged (±0.2 percent)*.

Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $608.1 billion at the end of August, up 0.9 percent (±0.2 percent) from the revised July level. Total inventories were up 4.5 percent (±0.7 percent) from the revised August 2016 level. The July 2017 to August 2017 percent change was revised from the advance estimate of up 1.0 percent (±0.2 percent) to up 0.9 percent (±0.2 percent).

The August Inventories/Sales Ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.28. The August 2016 ratio was 1.32.


September Employment decreased by 33,000
Unemployment Rate declined to 4.2%

Posted: October 6, 2017 at 08:30 AM (Friday)

The unemployment rate declined to 4.2 percent in September, and total nonfarm payroll employment changed little (-33,000), the U.S. Bureau of Labor Statistics reported today. A sharp employment decline in food services and drinking places and below-trend growth in some other industries likely reflected the impact of Hurricanes Irma and Harvey.

Household Survey Data
The unemployment rate decreased by 0.2 percentage point to 4.2 percent in September, and the number of unemployed persons declined by 331,000 to 6.8 million. Both measures were down over the year.

Among the major worker groups, the unemployment rates for adult men (3.9 percent) and Blacks (7.0 percent) declined in September. The jobless rates for adult women (3.9 percent), teenagers (12.9 percent), Whites (3.7 percent), Asians (3.7 percent), and Hispanics (5.1 percent) showed little change.

The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged in September at 1.7 million and accounted for 25.5 percent of the unemployed.

The employment-population ratio increased by 0.3 percentage point to 60.4 percent in September and has increased by 0.6 percentage point over the past 12 months. The labor force participation rate, at 63.1 percent, changed little over the month and has shown little movement over the year.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed at 5.1 million in September. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find full-time jobs.

In September, 1.6 million persons were marginally attached to the labor force, down by 275,000 from a year earlier. (These data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 421,000 discouraged workers in September, down by 132,000 from a year earlier. Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.1 million persons marginally attached to the labor force in September had not searched for work for reasons such as school attendance or family responsibilities.

Establishment Survey Data
Total nonfarm payroll employment was little changed in September (-33,000), after adding an average of 172,000 jobs per month over the prior 12 months. In September, a steep employment decline in food services and drinking places and below-trend growth in some other industries likely reflected the impact of Hurricanes Irma and Harvey. Employment rose in health care and in transportation and warehousing.

Employment in food services and drinking places dropped sharply in September (-105,000), as many workers were off payrolls due to the recent hurricanes. Over the prior 12 months, food services and drinking places had added an average of 24,000 jobs per month.

In September, health care added 23,000 jobs, in line with its average monthly gain over the prior
12 months (+27,000). The employment increase in ambulatory health care services (+25,000) was partially offset by a decline in nursing care facilities (-9,000). Employment in transportation and warehousing increased by 22,000 in September. Job gains occurred in warehousing and storage (+5,000), couriers and messengers (+4,000), and air transportation (+3,000).

Employment in financial activities changed little in September (+10,000). A job gain in insurance carriers and related activities (+11,000) largely reflected hurricane-recovery efforts. The gain was partly offset by losses in activities related to credit intermediation (-4,000) and in commercial banking (-3,000). Over the year, financial activities has added 149,000 jobs.

In September, employment in professional and business services was little changed (+13,000). Over the prior 12 months, job growth in the industry had averaged 50,000 per month.

Manufacturing employment was essentially unchanged in September (-1,000). From a recent employment trough in November 2016 through August of this year, the industry had added an average of 14,000 jobs per month.

Employment in other major industries, including mining, construction, wholesale trade, retail trade, information, and government, showed little change over the month.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.4 hours in September. In manufacturing, the workweek also was unchanged at 40.7 hours, and overtime held steady at 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.6 hours.

In September, average hourly earnings for all employees on private nonfarm payrolls rose by 12 cents to $26.55. Over the past 12 months, average hourly earnings have increased by 74 cents, or 2.9 percent. In September, average hourly earnings of private-sector production and nonsupervisory employees increased by 9 cents to $22.23.

The change in total nonfarm payroll employment for July was revised down from +189,000 to +138,000, and the change for August was revised up from +156,000 to +169,000. With these revisions, employment gains in July and August combined were 38,000 less than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 91,000 over the past 3 months.


New orders for manufactured goods increased 1.2% in August
Posted: October 5, 2017 at 10:00 AM (Thursday)

New orders for manufactured goods in August, up two of the last three months, increased $5.4 billion or 1.2 percent to $471.7 billion, the U.S. Census Bureau reported today. This followed a 3.3 percent July decrease. Shipments, up eight of the last nine months, increased $2.2 billion or 0.5 percent to $475.9 billion. This followed a 0.2 percent July increase. Unfilled orders, up two of the last three months, increased $0.2 billion or virtually unchanged to $1,132.6 billion. This followed a 0.3 percent July decrease. The unfilled orders to-shipments ratio was 6.77, unchanged from July. Inventories, up nine of the last ten months, increased $2.9 billion or 0.4 percent to $655.6 billion. This followed a 0.4 percent July increase. The inventories-to shipments ratio was 1.38, unchanged from July.

New Orders
New orders for manufactured durable goods in August, up two of the last three months, increased $4.5 billion or 2.0 percent to $233.5 billion, up from the previously published 1.7 percent increase. This followed a 6.8 percent July decrease. Transportation equipment, also up two of the last three months, led the increase, $3.7 billion or 5.1 percent to $77.5 billion. New orders for manufactured nondurable goods increased $0.9 billion or 0.4 percent to $238.2 billion.

Shipments
Shipments of manufactured durable goods in August, up three of the last four months, increased $1.3 billion
or 0.5 percent to $237.8 billion, up from the previously published 0.3 percent increase. This followed a 0.1
percent July increase. Machinery, up six of the last seven months, led the increase, $0.5 billion or 1.7
percent to $31.6 billion. Shipments of manufactured nondurable goods, up four of the last five months,
increased $0.9 billion or 0.4 percent to $238.2 billion. This followed a 0.3 percent July increase. Petroleum
and coal products, up two consecutive months, drove the increase, $0.9 billion or 2.2 percent to $42.3
billion.

Unfilled Orders
Unfilled orders for manufactured durable goods in August, up two of the last three months, increased $0.2 billion or virtually unchanged to $1,132.6 billion, unchanged from the previously published increase. This followed a 0.3 percent July decrease. Fabricated metal products, up seven of the last eight months, drove the increase, $0.4 billion or 0.6 percent to $79.2 billion.

Inventories
Inventories of manufactured durable goods in August, up thirteen of the last fourteen months, increased $1.5 billion or 0.4 percent to $400.8 billion, up from the previously published 0.3 percent increase. This followed a 0.5 percent July increase. Machinery, up nine of the last ten months, led the increase, $0.6 billion or 0.9 percent to $69.1 billion. Inventories of manufactured nondurable goods, up three consecutive months, increased $1.4 billion or 0.6 percent to $254.8 billion. This followed a 0.3 percent July increase.

Petroleum and coal products, up two consecutive months, led the increase, $1.3 billion or 3.7 percent to $36.4 billion. By stage of fabrication, August materials and supplies increased 0.2 percent in durable goods and increased 0.9 percent in nondurable goods. Work in process increased 0.6 percent in durable goods and increased 1.0 percent in nondurable goods. Finished goods increased 0.2 percent in durable goods and increased 0.1 percent in nondurable goods.


Goods and Services Deficit Decreased in August 2017
Posted: October 5, 2017 at 08:30 AM (Thursday)

The nation's international trade deficit in goods and services decreased to $42.4 billion in August from $43.6 billion in July (revised), as exports increased and imports decreased.

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $42.4 billion in August, down $1.2 billion from $43.6 billion in July, revised. August exports were $195.3 billion, $0.8 billion more than July exports. August imports were $237.7 billion, $0.4 billion less than July imports.

The August decrease in the goods and services deficit reflected a decrease in the goods deficit of $0.9 billion to $64.4 billion and an increase in the services surplus of $0.3 billion to $22.0 billion.

Year-to-date, the goods and services deficit increased $29.1 billion, or 8.8 percent, from the same period in 2016. Exports increased $84.9 billion or 5.8 percent. Imports increased $114.0 billion or 6.4 percent.


Weekly Initial Unemployment Claims Decrease 12,000 to 260,000
Posted: October 5, 2017 at 08:30 AM (Thursday)

In the week ending September 30, the advance figure for seasonally adjusted initial claims was 260,000, a decrease of 12,000 from the previous week's unrevised level of 272,000. The 4-week moving average was 268,250, a decrease of 9,500 from the previous week's unrevised average of 277,750. Hurricanes Harvey, Irma, and Maria impacted this week's claims.

The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending September 23, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending September 23 was 1,938,000, an increase of 2,000 from the previous week's revised level. The previous week's level was revised up 2,000 from 1,934,000 to 1,936,000. The 4-week moving average was 1,947,000, a decrease of 3,250 from the previous week's revised average. The previous week's average was revised up by 500 from 1,949,750 to 1,950,250.


Challenger Layoffs decreased to 32,346 in September
Posted: October 5, 2017 at 07:00 AM (Thursday)

Job cuts announced by U.S.-based employers fell 4.4 percent, from 33,825 in August to 32,346 in September. Last month’s total was 27 percent lower than the 44,324 job cuts announced in the same month last year, according to a report released Thursday by global outplacement and executive coaching firm Challenger, Gray & Christmas, Inc.

September job cuts bring the third quarter total to 94,478, 6.2 percent lower than the 100,799 cuts in the second quarter of this year, and 22.5 percent lower than the 121,858 cuts announced in the third quarter of last year. The quarterly total is the lowest it’s been since the fourth quarter last year, when 91,303 cuts were announced. This quarter marked the lowest third quarter total since 91,784 job cuts were announced in the third quarter of 1996.

So far this year, employers in the U.S. have announced 321,478 job cuts, 26.2 percent lower than the 435,612 cuts recorded through September last year.

“Job cuts have remained low since the second half of last year. As companies grapple with potential deregulation and changes to health care costs in a tight labor market, employers are holding on to their existing workforces while many positions requiring skilled labor go unfilled," said John Challenger, Chief Executive Officer of Challenger, Gray & Christmas, Inc.

Retail leads in announced job cuts, with 71,057 so far this year, 3,461 of which occurred in September. This is a 36.8 percent increase from the previous year, when 51,939 cuts were recorded. While retail leads in announced job cuts, the sector also leads in hiring announcements. Through September, retailers planned to add over 500,000 new jobs, both seasonal and permanent.


ISM Non-Manufacturing Index increased to 59.8% in August
Posted: October 4, 2017 at 10:00 AM (Wednesday)

Economic activity in the non-manufacturing sector grew in September for the 93rd consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The NMI® registered 59.8 percent, which is 4.5 percentage points higher than the August reading of 55.3 percent. This represents continued growth in the non-manufacturing sector at a faster rate. This is the highest reading since August 2005 when the index registered 61.3 percent. The Non-Manufacturing Business Activity Index increased to 61.3 percent, 3.8 percentage points higher than the August reading of 57.5 percent, reflecting growth for the 98th consecutive month, at a faster rate in September. The New Orders Index registered 63 percent, 5.9 percentage points higher than the reading of 57.1 percent in August. The Employment Index increased 0.6 percentage point in September to 56.8 percent from the August reading of 56.2 percent. The Prices Index increased substantially by 8.4 percentage points from the August reading of 57.9 percent to 66.3 percent, indicating prices increased in September for the fourth consecutive month. This is the highest reading since February 2012 when the index registered 67.6 percent. According to the NMI®, 15 non-manufacturing industries reported growth. The non-manufacturing sector has reflected strong growth in the month of September despite the impact on the supply chain from the recent hurricanes. Respondents’ comments indicate a good outlook for business conditions."

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


Help Wanted OnLine Labor Demand increased 2,500 to 4,482,300 in September
Posted: October 4, 2017 at 10:00 AM (Wednesday)

Online advertised vacancies increased 2,500 to 4,482,300 in September, according to The Conference Board Help Wanted OnLine® (HWOL) Data Series,released today. The August Supply/Demand rate stands at 1.59 unemployed for each advertised vacancy, with a total of 2.7 million more unemployed workers than the number of advertised vacancies. The number of unemployed was approximately 7.1 million in August.

The Professional occupational category saw losses in Management (-27.2) and Business and financial (-16.1). The Services/Production occupational category saw gains in Sales (16.9), Office and Administrative Support (13.2), and Transportation (8.7).


ADP National Employment Report increased by 135,000 jobs in September
Posted: October 4, 2017 at 08:15 AM (Wednesday)

Private sector employment increased by 135,000 jobs from August to September according to the September ADP National Employment Report®.

“In September, small businesses experienced a dip in hiring,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “This is in part due to Hurricane’s Harvey and Irma which significantly impacted smaller retailers. “In addition, the continued slow down we have seen in small business hiring could be due to a lack of competitive compensation to attract skilled talent.”

Mark Zandi, chief economist of Moody’s Analytics, said, “Hurricanes Harvey and Irma hurt the job market in September. Looking through the storms the job market remains sturdy and strong.” The August total of jobs added was revised down from 235,000 to 228,000.


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: October 4, 2017 at 07:00 AM (Wednesday)

Mortgage applications decreased 0.4 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending September 29, 2017.

The Market Composite Index, a measure of mortgage loan application volume, decreased 0.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The Refinance Index decreased 2 percent from the previous week. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 5 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 50.1 percent of total applications from 50.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.0 percent of total applications.

The FHA share of total applications increased to 10.0 percent from 9.6 percent the week prior. The VA share of total applications remained unchanged at 10.0 percent from the week prior. The USDA share of total applications increased to 0.8 percent from 0.7 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) increased to 4.12 percent from 4.11 percent, with points increasing to 0.45 from 0.40 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) increased to 4.09 percent from 4.06 percent, with points remaining unchanged at 0.26 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.99 percent from 3.98 percent, with points decreasing to 0.37 from 0.50 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.42 percent from 3.38 percent, with points decreasing to 0.39 from 0.40 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.30 percent from 3.38 percent, with points decreasing to 0.43 from 0.45 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week


Paychex-IHS Small Business Jobs Index down slightly to 99.93 in September
Posted: October 3, 2017 at 08:30 AM (Tuesday)

The Paychex | IHS Markit Small Business Employment Watch shows a slight slowdown in small business job growth in September, while wages continue at a solid pace of growth. The Small Business Jobs Index stands at 99.93, down 0.03 percent from the previous month. The national index has remained relatively flat since June. At $26.03 in September, hourly earnings gained 2.96 percent ($0.75) from a year ago, equal to the pace set in August and slightly below July’s 2.99 percent growth rate.

“From June through September, the national jobs index has settled near 100, matching the moderate small business job growth levels established during the 2004 base year,” said James Diffley, chief regional economist at IHS Markit.

“Despite minor monthly declines following a strong start to the year, small business employment continues to grow at a moderate rate, while wage growth shows sustained strength,” said Martin Mucci, Paychex president and CEO. “What’s particularly noteworthy from September’s data is the sharp decline seen in hours worked in both Miami and Houston, likely a result of the recent hurricanes.”


New York Purchasing Managers Business Activity down to 49.7 in September
Posted: October 3, 2017 at 08:30 AM (Tuesday)

New York City purchasing managers reported current business conditions, employment, and quantity of purchases are in contraction, while the six-month outlook fell but remained in growth territory, according to the survey taken by the Institute for Supply Management-New York.

New York Metro
Current Business Conditions came in at 49.7 in September, down from 56.6 in August and falling below the breakeven point for only the second time in 2017. The Six-Month Outlook decreased to 58.4 in September, stepping back slightly from a one-month increase to 60.5 in August and returning to nearly the same level seen in July. The six-month outlook has been a reliable short-run guide for current business conditions over time.

Company Specific
Employment, a seasonally adjusted index, decreased to 48.3 in September, falling back into contraction territory after the 18-month high of 56.4 in August. Quantity of Purchases fell to an 8-month low of 48.1, down from 51.6 in August. News for the top line and forward guidance continued to make small adjustments in opposite directions for the second month in a row. Current Revenues continued to increase after hitting the lowest point on record in July, coming in at the breakeven point of 50.0 in September. Expected Revenues fell for the second consecutive month, and reached a 20-month low of 52.0 in September. Prices Paid rose to 52.3 in September after breaking even in August, returning to nearly the same level seen in July.


September Manufacturing ISM expanded to 60.8
Posted: October 2, 2017 at 10:00 AM (Monday)

Economic activity in the manufacturing sector expanded in September, and the overall economy grew for the 100th consecutive month, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®.

The September PMI® registered 60.8 percent, an increase of 2 percentage points from the August reading of 58.8 percent. The New Orders Index registered 64.6 percent, an increase of 4.3 percentage points from the August reading of 60.3 percent. The Production Index registered 62.2 percent, a 1.2 percentage point increase compared to the August reading of 61 percent. The Employment Index registered 60.3 percent, an increase of 0.4 percentage point from the August reading of 59.9 percent. The Supplier Deliveries Index registered 64.4 percent, a 7.3 percentage point increase from the August reading of 57.1 percent. The Inventories Index registered 52.5 percent, a decrease of 3 percentage points from the August reading of 55.5 percent. The Prices Index registered 71.5 percent in September, a 9.5 percentage point increase from the August level of 62, indicating higher raw materials prices for the 19th consecutive month. Comments from the panel reflect expanding business conditions, with new orders, production, employment, order backlogs and export orders all growing in September; as well as, supplier deliveries slowing (improving) and inventories growing at a slower rate during the period. The Customers’ Inventories Index remains at low levels.

Of the 18 manufacturing industries, 17 reported growth in September, in the following order: Textile Mills; Machinery; Nonmetallic Mineral Products; Transportation Equipment; Plastics & Rubber Products; Paper Products; Wood Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Chemical Products; Fabricated Metal Products; Miscellaneous Manufacturing; Petroleum & Coal Products; Apparel, Leather & Allied Products; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; and Primary Metals. One industry, Furniture & Related Products, reported contraction in September compared to August.


Construction Spending increased 0.5% in August
Posted: October 2, 2017 at 10:00 AM (Monday)

Construction spending during August 2017 was estimated at a seasonally adjusted annual rate of $1,218.3 billion, 0.5 percent (±1.3 percent)* above the revised July estimate of $1,212.3 billion. The August figure is 2.5 percent (±1.8 percent) above the August 2016 estimate of $1,189.1 billion. During the first 8 months of this year, construction spending amounted to $806.2 billion, 4.7 percent (±1.3 percent) above the $769.9 billion for the same period in 2016.

Private Construction
Spending on private construction was at a seasonally adjusted annual rate of $954.8 billion, 0.4 percent (±1.2 percent)* above the revised July estimate of $950.5 billion. Residential construction was at a seasonally adjusted annual rate of $520.9 billion in August, 0.4 percent (±1.3 percent)* above the revised July estimate of $518.6 billion. Nonresidential construction was at a seasonally adjusted annual rate of $433.9 billion in August, 0.5 percent (± 1.2 percent)* above the revised July estimate of $432.0 billion.

Public Construction
In August, the estimated seasonally adjusted annual rate of public construction spending was $263.5 billion, 0.7 percent (±2.3 percent)* above the revised July estimate of $261.7 billion. Educational construction was at a seasonally adjusted annual rate of $67.3 billion, 3.5 percent (±3.9 percent)* above the revised July estimate of $65.0 billion. Highway construction was at a seasonally adjusted annual rate of $81.9 billion, 1.3 percent (±5.1 percent)* below the revised July estimate of $83.0 billion.


University of Michigan Consumer Confidence slightly lower in September to 95.1
Posted: September 29, 2017 at 10:00 AM (Friday)

Consumer sentiment slipped in September due to the expected impact of the hurricanes on the economy and on gas prices. Importantly, the impact was quite small and has already begun to fade, according to the University of Michigan Surveys of Consumers.

In the past year, there has been a long list of issues that could have derailed consumer confidence, including the unprecedented partisan divide, North Korea, Charlottesville, as well as the hurricanes, said U-M economist Richard Curtin, director of the surveys.

Confidence has nonetheless remained very favorable, moving sideward in a very narrow positive range. In the first nine months of 2017, the Sentiment Index averaged 96.2, just ahead of the 91.9 and 92.9 recorded in the prior two years, making 2017 the highest recorded since 2000.

"Recent trends have demonstrated a degree of resilience among consumers that has helped to stabilize economic confidence," Curtin said. "The last time consumers showed this degree of resilience was in the last four years of the record 1990s expansion.

"Needless to say, resilience is an ineffable quality whose appearance or disappearance is difficult to predict in advance. While consumer resilience has lowered precautionary saving motives and increased willingness to spend and incur debt, those changes will still be constrained by slower income growth and consumers who are still more risk averse. Overall, consumer spending is expected to increase by 2.6 percent in 2017 and in the first half of 2018."

Favorable Personal Finances
For the fourth consecutive month, half of all consumers reported in the September survey that their finances had improved. When asked to explain how their finances had improved, nearly one in four households mentioned net income increases, four times higher than last year's 6 percent. Income gains were particularly strong among those under age 45, reported by 43 percent of those in this age group.

Just one in 12 households in the September 2017 survey anticipated that their financial situation would worsen in the year ahead. Six in 10 households anticipated their incomes would increase during the year ahead, with one in three anticipating gains of 5 percent or more.

Rising Home Prices Drive Wedge Between Buying and Selling Homes
Two-thirds of all homeowners reported that their home had recently increased in value, the highest proportion in 10 years. Rising home prices meant that the fewest consumers in five years judged home-buying conditions favorably in September, while those same price increases meant that selling conditions were viewed more favorably in the past three months than at any other time since 2005. Importantly, home price increases should increasingly add to the supply of homes for sale in the year ahead, which has recently been a constraint on increasing in home sales.

Consumer Sentiment Index
The Consumer Sentiment Index was 95.1 in the September 2017 survey, between last month's 96.8 and last year's 91.2. The Current Conditions Index was 111.7 in the September survey, just above August's 110.9 and well above last September's 104.2. The Expectations Index fell to 84.4 in September, between last month's 87.7 and last year's 82.7.

Consumer sentiment remained largely unchanged from the slightly lower level recorded at mid-month. The resilience of consumers has again been demonstrated as concerns about the impact of the hurricanes on the national economy have quickly faded. Given that the survey was able to reach most households in Florida and Texas in late September, it should be no surprise that small declines were recorded in the current financial situation of households. In the past year, there has been a long list of issues that could have derailed the overall level of consumer confidence, including the unprecedented partisan divide, North Korea, Charlottesville, and the hurricanes. Confidence has nonetheless remained very favorable, moving sideward in a very narrow positive range. In the first nine months of 2017, the Sentiment Index averaged 96.2, just ahead of averages of 91.9 and 92.9 recorded in the prior two years, making 2017 the highest recorded since 2000. To be sure, the recent Sentiment levels are still well below the average of 105.3 recorded from 1997 to 2000, which has also been reflected in slower overall growth rates in consumer spending. Needless to say, resilience is an ineffable quality whose appearance or disappearance is difficult to predict in advance. While consumer resilience has lowered precautionary saving motives and increased willingness to spend and incur debt, those changes will still be constrained by slower income growth and consumers who are still more risk averse. Overall, consumer expenditures are expected to increase by 2.6% in 2017 and in the 1st half of 2018.


Chicago Purchasing Managers Index rose to 65.2 in September
Posted: September 29, 2017 at 09:45 AM (Friday)

The MNI Chicago Business Barometer rose to 65.2 in September, up from 58.9 in August, hitting the highest level in three months and the second highest level in more than three years.

Optimism among firms about business conditions was bolstered in September after August’s flat showing, with each of the Barometer’s sub-components strengthening. A marked rise in Order Backlogs, up to a 29-year high, was among the month’s highlights. September’s survey result left the Q3 calendar average of the Barometer at 61.0, virtually unchanged from Q2’s three-year high of 61.1.

The sharp rise in sentiment was the result of widespread gains, though particularly concentrated in demand, backlogs and employment. Together, these account for 60% of the headline Barometer. The increases in Production and Supplier Deliveries, accounting for the remaining 40%, were slightly more modest in comparison.

Four of the five Barometer components rose to levels just shy of the highs set in June, with only Order Backlogs surpassing it, hitting a level not seen since July 1988. Output and New Orders rose for the second consecutive month in September while the recent barrage of storms was reported to have weighed on delivery times.

The adverse weather conditions also led some companies to stockpile goods as a precautionary measure. The Inventories indicator rose by 8.4 points to the highest level since March.

After three consecutive monthly falls, the Employment indicator returned to above-50 territory in September. Despite the rise, companies continued to cite difficulty in finding skilled workers while there was evidence of firms hiring temporary staff and staff working overtime hours.

This month’s special question asked firms about their perceptions of supplier delivery times in the final quarter of the year amid the storms in the Texas/Louisiana region. At 58.6%, the majority of firms said they expected delivery times to remain unchanged, with 38% believing delivery times would lengthen by some degree and some reporting that they were already experiencing disruption across container/trucking routes. The remaining 3.5% forecasted delivery times to shorten over Q4.

Inflationary pressures at the factory gate rose markedly in September to a level not seen since July 2011. Elevated commodity prices alongside the more immediate hurricane induced materials shortages appear to be behind the increase.

“The strong outturn in September means that on a quarterly basis business activity was broadly unchanged from an already impressive Q2. Looking forward, firms are on record expecting a busy Q4 despite disruptions caused by the recent storms, with just a handful expecting delivery times to lengthen between October through December,” said Jamie Satchi, Economist at MNI Indicators.


Personal Income increased 0.2%, Spending increased 0.1%
Posted: September 29, 2017 at 08:30 AM (Friday)

Personal income increased $28.6 billion (0.2 percent) in August according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $14.9 billion (0.1 percent) and personal consumption expenditures (PCE) increased $18.0 billion (0.1 percent).

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

The increase in personal income in August primarily reflected an increase in government social benefits to persons and compensation of employees.

Real PCE spending in August decreased $8.4 billion due to a decrease of $20.2 billion in spending for goods that was partially offset by a $9.2 billion increase in spending for services. Within goods, spending on new motor vehicles was the leading contributor to the decrease. Within services, healthcare spending was a leading contributor to the increase. Detailed information on monthly real PCE spending can be found on Table 2.3.6U.

Personal outlays increased $16.8 billion in August (table 3). Personal saving was $522.9 billion in August and the personal saving rate, personal saving as a percentage of disposable personal income, was 3.6 percent.


Kansas City Fed Manufacturing Activity expand solidly in September
Posted: September 28, 2017 at 11:00 AM (Thursday)

Tenth District manufacturing activity continued to expand solidly in September, and expectations for future activity also remained positive. Most price indexes increased modestly, with the exception of future selling prices which eased slightly.

The month-over-month composite index was 17 in September, up from 16 in August and 10 in July. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Factory activity increased solidly at both durable and non-durable goods plants, particularly for chemicals, plastics, and machinery products. Month-over-month indexes were somewhat mixed. The production index remained unchanged, while the shipments, employment, and new orders for exports indexes increased mildly. In contrast, the new orders index fell from 25 to 10, and the order backlog index also decreased. The finished goods inventory index fell from 2 to -6, while the raw materials inventory index was mostly unchanged.

Year-over-year factory indexes increased versus the previous month. The composite index jumped from 23 to 35, and the production, shipments, new orders, and order backlog indexes also rose considerably. The employment index increased from 22 to 30, and the capital expenditures index also edged higher. The raw materials inventory index slipped from 18 to 16, and the finished goods inventory index eased from 6 to 2.

Expectations for future factory activity were mostly stable at high levels. The future composite index inched higher from 23 to 26, and the future order backlog and new orders for exports indexes also increased slightly. The future production, shipments, and employment indexes were unchanged, while the future new orders index dropped from 39 to 27. The future capital expenditures index eased from 18 to 13 after rising last month. The future raw materials inventory index jumped from -2 to 19, and the future finished goods inventory index also moved into positive territory.

Most price indexes increased in September. The month-over-month finished goods price index edged up from 8 to 13, and the raw materials price index also inched higher. The year-over-year finished goods price index rose from 29 to 38, and the year-over-year raw materials price index also increased modestly. The future raw materials price index was unchanged, while the future finished goods price index eased from 34 to 29.


2Q2017 GDP final estimate increased 3.1%
Posted: September 28, 2017 at 08:30 AM (Thursday)

Real gross domestic product (GDP) increased at an annual rate of 3.1 percent in the second quarter of 2017, according to the "third" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 1.2 percent.

The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 3.0 percent. With this third estimate for the second quarter, private inventory investment increased more than previously estimated, but the general picture of economic growth remains the same.

Real gross domestic income (GDI) increased 2.9 percent in the second quarter, compared with an increase of 2.7 percent in the first. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 3.0 percent in the second quarter, compared with an increase of 2.0 percent in the first quarter.

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

The acceleration in real GDP in the second quarter reflected an upturn in private inventory investment, an acceleration in PCE, a deceleration in imports, and an upturn in federal government spending that were partly offset by a downturn in residential fixed investment, a deceleration in exports, and a downturn in state and local government spending.

Current-dollar GDP increased 4.1 percent, or $192.3 billion, in the second quarter to a level of $19,250.0 billion. In the first quarter, current-dollar GDP increased 3.3 percent, or $152.2 billion.

The price index for gross domestic purchases increased 0.9 percent in the second quarter, compared with an increase of 2.6 percent in the first quarter (table 4). The PCE price index increased 0.3 percent, compared with an increase of 2.2 percent. Excluding food and energy prices, the PCE price index increased 0.9 percent, compared with an increase of 1.8 percent.

Updates to GDP
The revision to the percent change in real GDP primarily reflected an upward revision to private inventory investment.

Corporate Profits
Profits from current production (corporate profits with inventory valuation adjustment and capital consumption adjustment) increased $14.4 billion in the second quarter, in contrast to a decrease of $46.2 billion in the first quarter.

Profits of domestic financial corporations decreased $33.8 billion in the second quarter, compared with a decrease of $40.7 billion in the first. Profits of domestic nonfinancial corporations increased $59.1 billion, compared with an increase of $3.8 billion. Rest-of-the-world profits decreased $10.8 billion, compared with a decrease of $9.3 billion. In the second quarter, receipts increased $5.5 billion, and payments increased $16.3 billion.


Weekly Initial Unemployment Claims Increase 12,000 to 272,000
Posted: September 28, 2017 at 08:30 AM (Thursday)

In the week ending September 23, the advance figure for seasonally adjusted initial claims was 272,000, an increase of 12,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 259,000 to 260,000. The 4-week moving average was 277,750, an increase of 9,000 from the previous week's unrevised average of 268,750. This is the highest level for this average since February 6, 2016 when it was 277,750. Hurricanes Harvey and Irma impacted this week's claims.

The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending September 16, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending September 16 was 1,934,000, a decrease of 45,000 from the previous week's revised level. The previous week's level was revised down by 1,000 from 1,980,000 to 1,979,000. The 4-week moving average was 1,949,750, a decrease of 2,750 from the previous week's revised average. The previous week's average was revised down by 500 from 1,953,000 to 1,952,500.


Pending Home Sales Index retreated 2.6% in August
Posted: September 27, 2017 at 10:00 AM (Wednesday)

Pending home sales sank in August for the fifth time in six months, and slower activity in the areas hit hard by Hurricanes Harvey and Irma will likely pull existing sales for the year below the pace set in 2016, according to the National Association of Realtors®.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, retreated 2.6 percent to 106.3 in August from 109.1 in July. The index is now at its lowest reading since January 2016 (106.1), is 2.6 percent below a year ago, and has fallen on an annual basis in four of the past five months.

Lawrence Yun, NAR chief economist, says this summer’s terribly low supply levels have officially drained all of the housing market’s momentum over the past year. “August was another month of declining contract activity because of the one-two punch of limited listings and home prices rising far above incomes,” he said. “Demand continues to overwhelm supply in most of the country, and as a result, many would-be buyers from earlier in the year are still in the market for a home, while others have perhaps decided to temporarily postpone their search.”

With little relief expected from the housing shortages that continue to plague several areas, Yun believes the housing market has essentially stalled. Further complicating any sales improvement in the months ahead is the fact that Hurricane Harvey’s damage to the Houston region contributed to the South’s decline in contract signings in August, and will likely continue to do so in the months ahead. Furthermore, the temporary pause in activity in Florida this month in the wake of Hurricane Irma will slow overall sales even more in the South.

Yun now forecasts existing-home sales to close out the year at around 5.44 million, which comes in slightly below (0.2 percent) the pace set in 2016 (5.45 million). The national median existing-home price this year is expected to increase around 6 percent. In 2016, existing sales increased 3.8 percent and prices rose 5.1 percent.

“The supply and affordability headwinds would have likely held sales growth just a tad above last year, but coupled with the temporary effects from Hurricanes Harvey and Irma, sales in 2017 now appear will fall slightly below last year,” said Yun. “The good news is that nearly all of the missed closings for the remainder of the year will likely show up in 2018, with existing sales forecast to rise 6.9 percent.”

The PHSI in the Northeast fell 4.4 percent to 93.4 in August, and is now 4.1 percent below a year ago. In the Midwest the index decreased 1.5 percent to 101.8 in August, and is now 3.2 percent lower than August 2016.

Pending home sales in the South retreated 3.5 percent to an index of 118.8 in August and are now 1.7 percent below last August. The index in the West declined 1.0 percent in August to 101.3, and is 2.4 percent below a year ago.


August New Orders for Durable Goods increased 1.7%, Ex-Trans up 0.2%
Posted: September 27, 2017 at 08:30 AM (Wednesday)

New Orders
New orders for manufactured durable goods in August increased $3.9 billion or 1.7 percent to $232.8 billion, the U.S. Census Bureau announced today. This increase, up two of the last three months, followed a 6.8 percent July decrease. Excluding transportation, new orders increased 0.2 percent. Excluding defense, new orders increased 2.2 percent. Transportation equipment, also up two of the last three months, led the increase, $3.6 billion or 4.9 percent to $77.4 billion.

Shipments
Shipments of manufactured durable goods in August, up three of the last four months, increased $0.7 billion or 0.3 percent to $237.2 billion. This followed a 0.1 percent July increase. Machinery, up nine of the last ten months, led the increase, $0.3 billion or 1.1 percent to $31.4 billion.

Unfilled Orders
Unfilled orders for manufactured durable goods in August, up two of the last three months, increased $0.1 billion or virtually unchanged to $1,132.3 billion. This followed a 0.3 percent July decrease. Fabricated metal products, up seven of the last eight months, drove the increase, $0.5 billion or 0.6 percent to $79.3 billion.


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: September 27, 2017 at 07:00 AM (Wednesday)

Mortgage applications decreased 0.5 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending September 22, 2017.

The Market Composite Index, a measure of mortgage loan application volume, decreased 0.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The Refinance Index decreased 4 percent from the previous week. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 4 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 50.8 percent of total applications from 52.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.5 percent of total applications.

The FHA share of total applications decreased to 9.6 percent from 9.9 percent the week prior. The VA share of total applications decreased to 10.0 percent from 10.1 percent the week prior. The USDA share of total applications remained unchanged from the week prior at 0.7 percent.


The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) increased to 4.11 percent from 4.04 percent, with points remaining constant at 0.40 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) increased to 4.06 percent from 3.99 percent, with points increasing to 0.26 from 0.23 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.98 percent from 3.97 percent, with points increasing to 0.50 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.38 percent from 3.35 percent, with points decreasing to 0.40 from 0.44 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to 3.38 percent from 3.30 percent, with points increasing to 0.45 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


New Home Sales in August at annual rate of 560,000
Posted: September 26, 2017 at 10:00 AM (Tuesday)

Sales of new single-family houses in August 2017 were at a seasonally adjusted annual rate of 560,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 3.4 percent (±13.0 percent)* below the revised July rate of 580,000 and is 1.2 percent (±18.5 percent)* below the August 2016 estimate of 567,000.

Sales Price
The median sales price of new houses sold in August 2017 was $300,200. The average sales price was $368,100.

For Sale Inventory and Months’ Supply
The seasonally-adjusted estimate of new houses for sale at the end of August was 284,000. This represents a supply of 6.1 months at the current sales rate.


Richmond Fed's Current Activity Index rose from 14 to 19
Posted: September 26, 2017 at 10:00 AM (Tuesday)

Reports on Fifth District manufacturing activity improved in September, according to the latest survey by the Federal Reserve Bank of Richmond.

The composite manufacturing index rose from 14 to 19, supported by a sizable increase in the index for shipments — which, at a reading of 22, is the highest it has been since December 2010 — and a smaller rise in the index for new orders. The third component of the composite index, the employment index, fell slightly. Although the wages index also declined very slightly, there was a notable increase in the average workweek indicator.

Manufacturing expectations were stable across most measures this month, and continued to indicate overall optimism. The only notable changes in expectations were in the index for expected average workweek, which rose from 16 to 25, and the index for expected capital expenditures, which fell from 30 to 18.


S&P CoreLogic Case-Shiller Home Price Indices gained 0.7% in July
Posted: September 26, 2017 at 09:00 AM (Tuesday)

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

YEAR-OVER-YEAR
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.9% annual gain in July, up from 5.8% the previous month. The 10-City Composite annual increase came in at 5.2%, up from 4.9% the previous month. The 20-City Composite posted a 5.8% year-over-year gain, up from 5.6% the previous month.

Seattle, Portland, and Las Vegas reported the highest year-over-year gains among the 20 cities. In July, Seattle led the way with a 13.5% year-over-year price increase, followed by Portland with a 7.6% increase, and Las Vegas with a 7.4% increase. Twelve cities reported greater price increases in the year ending July 2017 versus the year ending June 2017.

The below charts compare year-over-year returns for Seattle and Portland with different ranges of housing prices (tiers). Upon tier level analysis from 2011 to present, both Seattle and Portland’s year-over-year returns show housing prices in the highest tier to be the most stable while housing prices in the low tier are the most volatile.

MONTH-OVER-MONTH
Before seasonal adjustment, the National Index posted a month-over-month gain of 0.7% in July. The 10-City and 20-City Composites reported increases of 0.8% and 0.7% respectively in July. After seasonal adjustment, the National Index recorded a 0.5% month-over-month increase. The 10-City Composite posted a 0.4% month-over-month increase. The 20-City Composite posted a 0.3% month-over-month increase. All 20 cities reported increases in July before seasonal adjustment; after seasonal adjustment, 17 cities saw prices rise.

ANALYSIS
“Home prices over the past year rose at a 5.9% annual rate,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Consumers, through home buying and other spending, are the driving force in the current economic expansion. While the gains in home prices in recent months have been in the Pacific Northwest, the leadership continues to shift among regions and cities across the country. Dallas and Denver are also experiencing rapid price growth. Las Vegas, one of the hardest hit cities in the housing collapse, saw the third fastest increase in the year through July 2017.

“While home prices continue to rise, other housing indicators may be leveling off. Sales of both new and existing homes have slipped since last March. The Builders Sentiment Index published by the National Association of Home Builders also leveled off after March. Automobiles are the second largest consumer purchase most people make after houses. Auto sales peaked last November and have been flat to slightly lower since. The housing market will face two contradicting challenges during the rest of 2017 and into 2018. First, rebuilding following hurricanes across Texas, Florida and other parts of the south will lead to further supply pressures. Second, the Fed’s recent move to shrink its balance sheet could push mortgage rates upward.”

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, which covers all nine U.S. census divisions, recorded a 5.9% annual gain in July 2017. The 10-City and 20-City Composites reported year-over-year increases of 5.2% and 5.8% respectively. As of July 2017, average home prices for the MSAs within the 10-City and 20-City Composites are back to their winter 2007 levels.


Philadelphia NonManufacturing Activity Indicators continued to expand in September
Posted: September 26, 2017 at 08:30 AM (Tuesday)

Respondents to the September Nonmanufacturing Business Outlook Survey reported that business activity continued to expand in the region. Although the index for firm-level general activity fell somewhat, it remains in positive territory, and the survey’s indicators for new orders, sales/revenues, and full-time employment increased. Fewer firms reported increases in input prices this month compared with last month. Expectations for growth over the next six months strengthened at the firm level for the second consecutive month.

Growth Remains Positive
Firms continued to report growth in overall business activity, although the diffusion index for general activity at the firm level declined 5 points to 25.7 (see Chart 1). This indicator has tended to fluctuate around its historical average of 28.3 in recent months. In September, 46 percent of the firms reported an increase in activity at their firms, while 20 percent reported a decrease. The diffusion index for regional activity rose 1 point to 33.2 and remained above its historical average of 23.4.

The sales/revenues index increased 5 points to 29.3 in September. The share of firms reporting an increase in sales (46 percent) exceeded the share reporting a decrease (16 percent). The new orders index increased from 19.4 last month to 26.7 this month. The share of firms reporting an increase in new orders (39 percent) continued to exceed the share reporting a decrease (13 percent).

Full-Time Employment Is Steady
The full-time employment index held relatively steady at 3.8 and remains below its historical average of 14.2. In September, 56 percent of the firms reported no change in full-time employment, and the share of firms reporting an increase (21 percent) only modestly exceeded the share reporting a decrease (18 percent). The part-time employment index fell 3 points to 5.7. More than 67 percent of the firms reported no change in part-time employment this month. The average workweek index rose 1 point to 23.8, while the wage and benefit costs index fell 2 points to 34.0.

Price Increases Are Modest
Firms reported relatively moderate increases in input prices and in prices for their own goods and services. The prices paid index fell 8 points to 14.9 in September (see Chart 2). Most of the firms (60 percent) reported no change in input prices. The prices received index increased 2 points to 8.4. The share of firms that reported no change in prices received was 58 percent. Both the prices paid and prices received indexes were below their historical averages of 20.0 and 11.7, respectively.

Capital Expenditures Growth Weakens
The indicators for spending on equipment and software and physical plant decreased but remained positive. The index for equipment and software spending fell 15 points to 20.3. Nonetheless, the share of firms reporting an increase in equipment and software spending (28 percent) exceeded the share reporting a decrease (8 percent). The index for plant spending fell 3 points to 20.3.

Firms Are Optimistic About Future Growth
The respondents to this month’s survey remained optimistic about future activity over the next six months. The diffusion index for future activity at the firm level rose 4 points to 49.3, which is in line with its historical average of 49.5. Fifty-nine percent of the respondents expect increases in activity at their firms over the next six months, while 10 percent expect decreases. The diffusion index for future activity at the regional level decreased from 44.1 in August to 41.0 in September. More than 48 percent of the firms expect an increase in regional activity, while 7 percent expect a decrease. However, the share of firms that expect an increase has fallen over the course of the year, down from a high of 74 percent in January.

Summary
Respondents to the September Nonmanufacturing Business Outlook Survey reported that business expansion continued in the region’s nonmanufacturing sector. The indicator for general current activity at the firm level fell slightly but remained positive, while the indicators for new orders and sales/revenues rose. The employment indicators were relatively steady. Expectations for growth over the next six months remained optimistic.


Texas Fed Manufacturing Activity Holds Steady in September
Posted: September 25, 2017 at 10:30 AM (Monday)

Texas factory activity continued to increase in September, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, edged down to 19.5 from 20.3 in August, indicating output grew at about the same pace as last month.

Other measures of current manufacturing activity also indicated continued growth. The new orders index increased and the growth rate of orders index ticked down but stayed positive, coming in at 18.6 and 9.7, respectively. The capacity utilization index edged up four points to 15.8, while the shipments index jumped nine points to 27.4.

Perceptions of broader business conditions improved in September. The general business activity index increased to 21.3, its highest reading in seven months. The company outlook index posted its 13th consecutive positive reading, jumping nine points to 25.6.

Labor market measures suggested faster employment growth and longer workweeks this month. The employment index came in at 16.3, its highest level since April 2014. Twenty-eight percent of firms noted net hiring, compared with 11 percent noting net layoffs. The hours worked index rose four points to 18.4.

Upward pressure on prices increased, while wage pressures held steady in September. The raw materials prices index pushed up eight points to 34.5, its highest reading since July 2011. The finished goods prices index climbed seven points to 17.5, its highest level in seven months. The wages and benefits index was essentially unchanged at 26.4.

Expectations regarding future business conditions continued to improve. The indexes of future general business activity and future company outlook remained elevated at 34.5 and 39.9, respectively. Other indexes for future manufacturing activity showed mixed movements but remained solidly in positive territory.


Chicago Fed National Activity points to slower economic growth in August
Posted: September 25, 2017 at 08:30 AM (Monday)

The CFNAI Diffusion Index, which is also a three-month moving average, was unchanged at –0.01 in August. Thirty-five of the 85 individual indicators made positive contributions to theCFNAI in August, while 50 made negative contributions. Forty-five indicators improved from July to August, while 40 indicators deteriorated. Of the indicators that improved, 14 made negative contributions.

The contribution from production-related indicators to the CFNAI decreased to –0.36 in August from +0.03 in July. Total industrial production declined 0.9 percent in August after moving up 0.4 percent in July.

Personal consumption and housing-related indicators also made a negative contribution to the CFNAI in August—unchanged from July at –0.06. Housing starts decreased slightly to 1,180,000 annualized units in August from 1,190,000 in July.

Employment-related indicators contributed +0.05 to the CFNAI in August, down from +0.09 in July. Nonfarm payrolls increased by 156,000 in August after increasing by 189,000 in the previous month.

The sales, orders, and inventories category also made a positive contribution to the CFNAI in August, increasing to +0.06 from –0.04 in July. The Institute for Supply Management’s Manufacturing Purchasing Managers’ Inventories Index rose to 55.5 in August from 50.0 in July.

The CFNAI was constructed using data available as of September 21, 2017. At that time, August data for 51 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index. The July monthly index value was revised to +0.03 from an initial estimate of –0.01, and the June monthly index value was unchanged from last month’s estimate of +0.16. Revisions to the monthly index can be attributed to two main factors: revisions in previously published data and differences between the estimates of previously unavailable data and subsequently published data. The revision to the July monthly index value was primarily due to the former.


Weekly Initial Unemployment Claims Decrease 23,000 to 259,000
Posted: September 21, 2017 at 08:30 AM (Thursday)

In the week ending September 16, the advance figure for seasonally adjusted initial claims was 259,000, a decrease of 23,000 from the previous week's revised level. The previous week's level was revised down by 2,000 from 284,000 to 282,000. The 4-week moving average was 268,750, an increase of 6,000 from the previous week's revised average. This is the highest level for this average since June 4, 2016 when it was 269,500. The previous week's average was revised down by 500 from 263,250 to 262,750.
Hurricanes Harvey and Irma impacted this week's claims.

The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending September 9, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending September 9 was 1,980,000, an increase of 44,000 from the previous week's revised level. The previous week's level was revised down by 8,000 from 1,944,000 to 1,936,000. The 4-week moving average was 1,953,000, an increase of 6,500 from the previous week's revised average. The previous week's average was revised down by 2,000 from 1,948,500 to 1,946,500.


Philadelphia Fed Outlook Reported Activity growth broadens in September
Posted: September 21, 2017 at 08:30 AM (Thursday)

Manufacturing firms reported an improvement in regional manufacturing conditions in September. The survey’s current indicators for general activity, new orders, and shipments increased this month and suggest a broadening of growth. Price pressures also picked up, according to the reporting firms. The survey’s future indicators suggest that manufacturers have generally grown more optimistic over the past three months.

Most Current Indicators Improved This Month
The index for current manufacturing activity in the region increased 5 points to a reading of 23.8 and has remained positive for 14 consecutive months (see Chart 1). Nearly 39 percent of the firms indicated increases in activity this month; 15 percent reported a decrease in activity. The new orders and shipments indexes also registered an improvement, increasing 9 points and 8 points, respectively. Both the unfilled orders and delivery times indexes were positive for the 11th consecutive month, suggesting longer delivery times and an increase in unfilled orders.

Firms reported, on balance, an increase in manufacturing employment this month. The percentage of firms reporting an increase in employment (18 percent) exceeded the percentage reporting a decrease (12 percent). The current employment index fell 4 points but has remained positive for 10 consecutive months.

Survey Price Measures Rise This Month
Price increases were more widespread this month. On the cost side, nearly 38 percent of the firms reported increases in the prices paid for inputs this month, up from 24 percent in August. The prices paid index increased 13 points to its highest reading since March (see Chart 2). With respect to prices received for firms’ own manufactured goods, nearly 25 percent of the firms reported higher prices, up from 16 percent in August. The prices received index increased 9 points to its highest reading since January.

Six-Month Indexes Show Continued Improvement
The diffusion index for future general activity increased from 42.3 in August to 55.2 this month. The index has now increased for three consecutive months and is at its highest reading since March (see Chart 1). The indexes for future new orders and shipments also showed improvement, increasing 8 points and 12 points, respectively. Firms remained optimistic about increases in employment over the next six months, although the future employment diffusion index fell 3 points. Thirty-six percent of the firms expect increases in employment; only 6 percent expect decreases. The future capital spending index remained at a relatively high reading, with nearly 44 percent of the firms expecting capital spending increases over the next six months.

Most Firms Expect Increased Production for Rest of the Year
In this month’s special questions, firms were asked to estimate their total production growth for the third quarter ending this month along with expected growth for the fourth quarter. The share of firms reporting increases in third-quarter production (66 percent) was greater than the share reporting decreases (23 percent). Looking ahead to the fourth quarter, 55 percent of the firms expect acceleration in the rate of production, while 24 percent of the firms expect deceleration. For those firms expecting an increase in production, 31 percent of the firms expect to hire additional workers. The remaining firms indicated that they would increase the work hours of current workers (36 percent) or increase the productivity of current workers (25 percent) rather than increasing the number of workers.

Summary
Responses to the September Manufacturing Business Outlook Survey suggest continued growth for the region’s manufacturing sector. The indexes for general activity, new orders, and shipments increased this month, and employment remained positive. Firms also reported renewed price pressures this month. Firms forecast an acceleration of production growth for the upcoming fourth quarter, and firms’ overall forecast for the next six months showed further improvement.


FOMC target funds rate remain at 1.00% - 1.25%, announced balance sheet normalization program
Posted: September 20, 2017 at 02:00 PM (Wednesday)

Information received since the Federal Open Market Committee met in July indicates that the labor market has continued to strengthen and that economic activity has been rising moderately so far this year. Job gains have remained solid in recent months, and the unemployment rate has stayed low. Household spending has been expanding at a moderate rate, and growth in business fixed investment has picked up in recent quarters. On a 12-month basis, overall inflation and the measure excluding food and energy prices have declined this year and are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Hurricanes Harvey, Irma, and Maria have devastated many communities, inflicting severe hardship. Storm-related disruptions and rebuilding will affect economic activity in the near term, but past experience suggests that the storms are unlikely to materially alter the course of the national economy over the medium term. Consequently, the Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further. Higher prices for gasoline and some other items in the aftermath of the hurricanes will likely boost inflation temporarily; apart from that effect, inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee's 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.

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

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

In October, the Committee will initiate the balance sheet normalization program described in the June 2017 Addendum to the Committee's Policy Normalization Principles and Plans.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Patrick Harker; Robert S. Kaplan; Neel Kashkari; and Jerome H. Powell.


Existing-Home Sales stumbled 1.7% in August
Posted: September 20, 2017 at 10:00 AM (Wednesday)

Existing-home sales stumbled in August for the fourth time in five months as strained supply levels continue to subdue overall activity, according to the National Association of Realtors®. Sales gains in the Northeast and Midwest were outpaced by declines in the South and West.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, retreated 1.7 percent to a seasonally adjusted annual rate of 5.35 million in August from 5.44 million in July. Last month's sales pace is 0.2 percent above last August, and is the lowest since then.

Lawrence Yun, NAR chief economist, says the slump in existing sales stretched into August despite what remains a solid level of demand for buying a home. "Steady employment gains, slowly rising incomes and lower mortgage rates generated sustained buyer interest all summer long, but unfortunately, not more home sales," he said. "What's ailing the housing market and continues to weigh on overall sales is the inadequate levels of available inventory and the upward pressure it's putting on prices in several parts of the country. Sales have been unable to break out because there are simply not enough homes for sale."

Added Yun, "Some of the South region's decline in closings can be attributed to the devastation Hurricane Harvey caused to the greater Houston area. Sales will be impacted the rest of the year in Houston, as well as in the most severely affected areas in Florida from Hurricane Irma. However, nearly all of the lost activity will likely show up in 2018."

The median existing-home price for all housing types in August was $253,500, up 5.6 percent from August 2016 ($240,000). August's price increase marks the 66th straight month of year-over-year gains.

Total housing inventory at the end of August declined 2.1 percent to 1.88 million existing homes available for sale, and is now 6.5 percent lower than a year ago (2.01 million) and has fallen year-over-year for 27 consecutive months. Unsold inventory is at a 4.2-month supply at the current sales pace, which is down from 4.5 months a year ago.

Properties typically stayed on the market for 30 days in August, which is unchanged from July and down from 36 days a year ago. Fifty-one percent of homes sold in August were on the market for less than a month.

Inventory data from realtor.com® reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in August were San Jose-Sunnyvale-Santa Clara, Calif., 29 days; Seattle-Tacoma-Bellevue, Wash., 30 days; Vallejo-Fairfield, Calif., 31 days; and San Francisco-Oakland-Hayward, Calif., and Salt Lake City, Utah, both at 32 days.

"Market conditions continue to be stressful and challenging for both prospective first-time buyers and homeowners looking to trade up," said Yun. "The ongoing rise in home prices is straining the budgets of some of these would-be buyers, and what is available for sale is moving off the market quickly because supply remains minimal in the lower- and mid-price ranges."

First-time buyers were 31 percent of sales in August, which is down from 33 percent in July and is the lowest share since last August (also 31 percent). NAR's 2016 Profile of Home Buyers and Sellers - released in late 2016 - revealed that the annual share of first-time buyers was 35 percent.

According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage fell to 3.88 percent in August from 3.97 percent in July and is the lowest since November 2016 (3.77 percent). The average commitment rate for all of 2016 was 3.65 percent.

All-cash sales were 20 percent of transactions in August, up from 19 percent in July but down from 22 percent a year ago. Individual investors, who account for many cash sales, purchased 15 percent of homes in August, up from 13 percent in July and 12 percent a year ago.

Distressed sales - foreclosures and short sales - were 4 percent of sales in August, down from 5 percent both in July and a year ago. Three percent of August sales were foreclosures and 1 percent were short sales.

According to President William E. Brown, a Realtor® from Alamo, California, the housing market continues to recover from the depths of the financial crisis. However, the significant household wealth many homeowners have accumulated in recent years through rising home values could be at risk if any of the proposed tax provisions follow through with attempts to marginalize the mortgage interest deduction and eliminate state and local tax deductions.

"Consumers are smart and know that any attempt to cap or limit the deductibility of mortgage interest is essentially a tax on homeownership and the middle class," said Brown. A study commissioned by NAR (link is external) found that under some tax reform proposals, many homeowners with adjusted gross incomes between $50,000 and $200,000 would see an average tax increase of $815, along with home values shrinking by an average of more than 10 percent. An even steeper decline would be seen in areas with higher property and state income taxes. Congress must keep homeowners in mind as it looks towards tax reform this year."
Single-family and Condo/Co-op Sales

Single-family home sales decreased 2.1 percent to a seasonally adjusted annual rate of 4.74 million in August from 4.84 million in July, but are still 0.4 percent above the 4.72 million pace a year ago. The median existing single-family home price was $255,500 in August, up 5.6 percent from August 2016.



Existing condominium and co-op sales climbed 1.7 percent to a seasonally adjusted annual rate of 610,000 units in August, but are still 1.6 percent below a year ago. The median existing condo price was $237,600 in August, which is 5.4 percent above a year ago.

August existing-home sales in the Northeast jumped 10.8 percent to an annual rate of 720,000, and are now 1.4 percent above a year ago. The median price in the Northeast was $289,500, which is 5.6 percent above August 2016.

In the Midwest, existing-home sales rose 2.4 percent to an annual rate of 1.28 million in August, and are now 0.8 percent above a year ago. The median price in the Midwest was $200,500, up 5.0 percent from a year ago.

Existing-home sales in the South decreased 5.7 percent to an annual rate of 2.15 million in August, and are now 0.9 percent lower than a year ago. The median price in the South was $220,400, up 5.4 percent from a year ago.

Existing-home sales in the West fell 4.8 percent to an annual rate of 1.20 million in August, but are still 0.8 percent above a year ago. The median price in the West was $374,700, up 7.7 percent from August 2016.


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: September 20, 2017 at 07:00 AM (Wednesday)

Mortgage applications decreased 9.7 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending September 15, 2017. Last week's results included an adjustment for the Labor Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 9.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 12 percent compared with the previous week. The Refinance Index decreased 9 percent from the previous week. The seasonally adjusted Purchase Index decreased 11 percent from one week earlier. The unadjusted Purchase Index increased 10 percent compared with the previous week and was 2 percent higher than the same week one year ago.

The refinance share of mortgage activity increased to 52.1 percent of total applications from 51.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.8 percent of total applications.

The FHA share of total applications remained unchanged at 9.9 percent from the week prior. The VA share of total applications decreased to 10.1 percent from 10.3 percent the week prior. The USDA share of total applications remained unchanged at 0.7 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) increased to 4.04 percent from 4.03 percent, with points remaining unchanged at 0.40 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) decreased to 3.99 percent from 4.00 percent, with points decreasing to 0.23 from 0.24 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.97 percent from 3.94 percent, with points remaining unchanged at 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.35 percent from 3.30 percent, with points increasing to 0.44 from 0.39 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to 3.30 percent from 3.17 percent, with points decreasing to 0.34 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


2Q2017 Current Account Deficit Increased
Posted: September 19, 2017 at 08:30 AM (Tuesday)

The U.S. current-account deficit increased to $123.1 billion (preliminary) in the second quarter of 2017 from $113.5 billion (revised) in the first quarter of 2017, according to statistics released by the Bureau of Economic Analysis (BEA). The deficit increased to 2.6 percent of current-dollar gross domestic product (GDP) from 2.4 percent in the first quarter.

The $9.6 billion increase in the current-account deficit reflected a $7.5 billion increase in the deficit on secondary income, a $2.9 billion decrease in the surplus on primary income, and a $0.8 billion increase in the deficit on goods. These changes were partly offset by a $1.6 billion increase in the surplus on services.


U.S. Import Price Index increased 0.6% in August
Posted: September 19, 2017 at 08:30 AM (Tuesday)

U.S. import prices increased 0.6 percent in August, the U.S. Bureau of Labor Statistics reported today, following declines in the previous 3 months. The price index for U.S. exports also advanced 0.6 percent in August, after increasing 0.5 percent in July.

Hurricane Harvey: Hurricane Harvey did not impact the collection of the import and export price index data for August because the reference period for the data is the first week of the month.


August Housing Starts down 0.8%, Permits up 5.7%
Posted: September 19, 2017 at 08:30 AM (Tuesday)

Building Permits
Privately-owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 1,300,000. This is 5.7 percent (±2.0 percent) above the revised July rate of 1,230,000 and is 8.3 percent (±1.6 percent) above the August 2016 rate of 1,200,000. Single-family authorizations in August were at a rate of 800,000; this is 1.5 percent (±1.3 percent) below the revised July figure of 812,000. Authorizations of units in buildings with five units or more were at a rate of 464,000 in August.

Housing Starts
Privately-owned housing starts in August were at a seasonally adjusted annual rate of 1,180,000. This is 0.8 percent (±9.6 percent)* below the revised July estimate of 1,190,000, but is 1.4 percent (±8.9 percent)* above the August 2016 rate of 1,164,000. Single-family housing starts in August were at a rate of 851,000; this is 1.6 percent (±9.0 percent)* above the revised July figure of 838,000. The August rate for units in buildings with five units or more was 323,000.

Housing Completions
Privately-owned housing completions in August were at a seasonally adjusted annual rate of 1,075,000. This is 10.2 percent (±12.3 percent)* below the revised July estimate of 1,197,000, but is 3.4 percent (±13.0 percent)* above the August 2016 rate of 1,040,000. Single-family housing completions in August were at a rate of 724,000; this is 13.3 percent (±14.7 percent)* below the revised July rate of 835,000. The August rate for units in buildings with five units or more was 348,000.


Treasury International Capital Data for July 2017
Posted: September 18, 2017 at 04:00 PM (Monday)

The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for July 2017. The sum total in July of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC outflow of $7.3 billion. Of this, net foreign private inflows were $6.0 billion, and net foreign official outflows were $13.3 billion.

Foreign residents increased their holdings of long-term U.S. securities in July; net purchases were $5.1 billion. Net purchases by private foreign investors were $21.0 billion, while net sales by foreign official institutions were $16.0 billion. U.S. residents increased their holdings of long-term foreign securities, with net purchases of $3.8 billion.

Taking into account transactions in both foreign and U.S. securities, net foreign purchases of long-term securities were $1.3 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 $43.1 billion in July.

Foreign residents increased their holdings of U.S. Treasury bills by $3.1 billion. Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities increased by $7.4 billion. Banks' own net dollar-denominated liabilities to foreign residents increased by $28.4 billion.


Builder Confidence fell 3 points to 64 in September
Posted: September 18, 2017 at 10:00 AM (Monday)

Builder confidence in the market for newly-built single-family homes fell three points to a level of 64 in September from a downwardly revised August reading of 67 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

“The recent hurricanes have intensified our members’ concerns about the availability of labor and the cost of building materials,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas. “Once the rebuilding process is underway, I expect builder confidence will return to the high levels we saw this spring.”

“Despite this month’s drop, builder confidence is still on very firm ground,” said NAHB Chief Economist Robert Dietz. “With ongoing job creation, economic growth and rising consumer confidence, we should see the housing market continue to recover at a gradual, steady pace throughout the rest of the year.”

All three HMI components posted losses in September but remain at healthy levels. The component gauging current sales conditions fell four points to 70 and the index charting sales expectations in the next six months dropped four points to 74. Meanwhile, the component measuring buyer traffic slipped a single point to 47.

Looking at the three-month moving averages for regional HMI scores, the West increased three points to 77 and the Northeast rose one point to 49. The South dropped a single point to 66 and the Midwest fell three points to 63.


Business Inventories up 0.2% in July
Posted: September 15, 2017 at 10:00 AM (Friday)

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 $1,358.8 billion, up 0.2 percent (±0.1 percent) from June 2017 and was up 4.9 percent (±0.4 percent) from July 2016.

Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,873.9 billion, up 0.2 percent (±0.1 percent) from June 2017 and were up 3.0 percent (±0.3 percent) from July 2016.

The total business Inventories/Sales Ratio based on seasonally adjusted data at the end of July was 1.38. The July 2016 ratio was 1.40.


University of Michigan Consumer Confidence Preliminary September Results at 95.3
Posted: September 15, 2017 at 10:00 AM (Friday)

Consumer confidence edged downward in early September due to concerns over the outlook for the national economy. Consumers' assessments of current economic conditions improved, however, with the Current Conditions Index reaching the highest level since November of 2000. The two hurricanes had a greater impact on expected economic conditions. Across all interviews in early September, 9% spontaneously mentioned concerns that Harvey, Irma, or both, would have a negative impact on the overall economy. Among those who mentioned the hurricanes, the Sentiment Index was 80.2, while among those who did not spontaneously mention either hurricane, the Sentiment Index remained unchanged from last month at 96.8. Given the widespread devastation in Texas and Florida, it is not surprising to find these very negative initial reactions, nor would it be surprising if these negative assessments last longer than following most past hurricanes. While consumers anticipated slight increases in gas prices and a slightly higher overall inflation rate, those concerns were neutralized by the best assessments of their financial situation in more than a decade. Renewed gains in incomes as well as rising home and equity values have acted to counterbalance the negative impacts from the hurricanes. Given the current resilience of consumers, recent events are unlikely to derail confidence.


Industrial Production declined 0.9%
Capacity Utilization decreased at 76.1%

Posted: September 15, 2017 at 09:15 AM (Friday)

Industrial production declined 0.9 percent in August following six consecutive monthly gains. Hurricane Harvey, which hit the Gulf Coast of Texas in late August, is estimated to have reduced the rate of change in total output by roughly 3/4 percentage point. The index for manufacturing decreased 0.3 percent; storm-related effects appear to have reduced the rate of change in factory output in August about 3/4 percentage point. The manufacturing industries with the largest estimated storm-related effects were petroleum refining, organic chemicals, and plastics materials and resins.

The output of mining fell 0.8 percent in August, as Hurricane Harvey temporarily curtailed drilling, servicing, and extraction activity for oil and natural gas. The output of utilities dropped 5.5 percent, as unseasonably mild temperatures, particularly on the East Coast, reduced the demand for air conditioning.

At 104.7 percent of its 2012 average, total industrial production in August was 1.5 percent above its year-earlier level. Capacity utilization for the industrial sector decreased 0.8 percentage point in August to 76.1 percent, a rate that is 3.8 percentage points below its long-run (1972–2016) average.


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