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Category: Research - Topic: Economics


New Orders for Durable Goods Increased 0.7%, Ex-Trans Up 0.8%
Posted: July 25, 2014 at 08:30 AM (Friday)

New orders for manufactured durable goods in June increased $1.8 billion or 0.7 percent to $239.9 billion, the U.S. Census Bureau announced today. This increase, up four of the last five months, followed a 1.0 percent May decrease. Excluding transportation, new orders increased 0.8 percent. Excluding defense, new orders increased 0.7 percent. Machinery, up following two consecutive monthly decreases, led the increase, $0.9 billion or 2.4 percent to $37.3 billion.

Shipments of manufactured durable goods in June, up four of the last five months, increased $0.3 billion or 0.1 percent to $238.2 billion. This followed a 0.1 percent May decrease. Transportation equipment, up following two consecutive monthly decreases, drove the increase, $0.5 billion or 0.7 percent to $70.2 billion.

Unfilled orders for manufactured durable goods in June, up fourteen of the last fifteen months, increased $8.7 billion or 0.8 percent to $1,096.8 billion. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 0.7 percent May increase. Transportation equipment, up nine of the last ten months, led the increase, $4.9 billion or 0.7 percent to $681.0 billion.

Inventories of manufactured durable goods in June, up fourteen of the last fifteen months, increased $1.6 billion or 0.4 percent to $399.7 billion. This was at the highest level since the series was first published on a NAICS basis and followed a 1.0 percent May increase. Transportation equipment, also up fourteen of the last fifteen months, led the increase, $0.9 billion or 0.7 percent to $128.8 billion.

Nondefense new orders for capital goods in June increased $1.5 billion or 1.8 percent to $82.3 billion. Shipments increased $0.9 billion or 1.2 percent to $76.6 billion. Unfilled orders increased $5.6 billion or 0.8 percent to $667.2 billion. Inventories increased $0.1 billion or 0.1 percent to $181.8 billion. Defense new orders for capital goods in June increased $0.2 billion or 2.5 percent to $9.7 billion. Shipments decreased $0.1 billion or 0.6 percent to $9.4 billion. Unfilled orders increased $0.3 billion or 0.2 percent to $159.8 billion. Inventories increased $0.5 billion or 2.1 percent to $24.1 billion.

Revised seasonally adjusted May figures for all manufacturing industries were: new orders, $497.0 billion (revised from $497.7 billion); shipments, $496.7 billion (revised from $498.3 billion); unfilled orders, $1,088.1 billion (revised from $1,087.4 billion); and total inventories, $652.0 billion (revised from $651.5 billion).


Kansas City Fed Manufacturing Activity edged higher in July
Posted: July 24, 2014 at 11:00 AM (Thursday)

Growth in Tenth District manufacturing activity edged higher in July, and producers’ optimism for future activity increased. Several firms continued to note difficulties with retaining certain types of workers, particularly machinists and welders. Price indexes were mixed, with most recording little change from the previous month.

The month-over-month composite index was 9 in July, up from 6 in June but slightly lower than 10 in May. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The growth in manufacturing activity occurred mostly at durable goods-producing plants, particularly machinery products, while nondurable goods-producers reported fairly flat activity. Most other month-over-month indexes also increased. The production index climbed from 2 to 11, and the shipments, new orders, and employment indexes also rose considerably. In contrast, the order backlog index fell into negative territory for the first time in four months. Both inventory indexes were basically unchanged.

Year-over-year factory indexes were mixed. The composite year-over-year index moderated somewhat from 15 to 13, and the new orders and order backlog indexes also edged lower. The capital expenditures index fell from 19 to 10, its lowest level in nine months, and the new orders for exports index slipped from -2 to -3. In contrast, the production, shipments, and employment indexes moved slightly higher. The finished goods inventory index decreased from 7 to 0, and the raw materials inventory index also eased.

Future factory indexes increased slightly from last month. The future composite index edged up from 12 to 15, and the future production, shipments, new orders, and order backlog indexes also rose. The future employment index jumped from 14 to 23, its highest level in six months, and the future employee workweek index reached nearly a five-year high. The future capital expenditures index grew for the second straight month, while the future new orders for exports index remained unchanged. Both future inventories indexes fell into negative territory.

Price indexes were mixed after easing last month. The month-over-month raw materials price index edged down from 25 to 19, while the finished goods price index moved slightly higher. The year-over-year finished goods price index rose from 30 to 37, but the raw materials price index was basically unchanged. The future raw materials price index eased from 49 to 46, and the future finished goods price index also edged lower, indicating fewer firms plan to pass recent cost increases through to customers.


New Home Sales in June at annual rate of 406,000
Posted: July 24, 2014 at 10:00 AM (Thursday)

Sales of new single-family houses in June 2014 were at a seasonally adjusted annual rate of 406,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 8.1 percent (±12.3%) below the revised May rate of 442,000 and is 11.5 percent (±14.4%) below the June 2013 estimate of 459,000.

The median sales price of new houses sold in June 2014 was $273,500; the average sales price was $331,400. The seasonally adjusted estimate of new houses for sale at the end of June was 197,000. This represents a supply of 5.8 months at the current sales rate.


DJ-BTMU U.S. Business Barometer dropped by 0.6%
Posted: July 24, 2014 at 10:00 AM (Thursday)

For the week ending July 12 2014, the DJ-BTMU U.S. Business Barometer dropped by 0.6 percent following a solid 0.9 percent gain in the previous week. The decrease in this week’s barometer is explained by weak performances in both consumption and production indexes. MBA’s purchase index dipped by 7.6 percent in line with railroad freight car loadings’ weak trend. As to the production side, auto and truck production plummeted sharply by 19.1 and 14.0 percent, respectively, after strong increases in the prior week.

On a year-over-year basis, the barometer showed a gain of 0.9 percent, which compares to an average -3.3 percent decline over the Great Recession (ended in June 2009 according to the NBER). After flat lining in 2006, and declining from 2007 through 2009, the barometer bounced back in 2010 to rise by 3.4 percent, which was the strongest increase since 1994 (+4.0 percent), but not so impressive when compared to an -8.0 percent drop in 2009. The rate of increase for the 2013 slowed to 0.7 percent following 1.5 percent in 2012.

The smoothed version of the barometer, which attempts to account for weekly volatility, rose by a modest 0.1 percent. Its year-over-year growth rate remained at 1.0 percent.


Weekly Initial Unemployment Claims Decrease 19,000 to 284,000
Posted: July 24, 2014 at 08:30 AM (Thursday)

In the week ending July 19, the advance figure for seasonally adjusted initial claims was 284,000, a decrease of 19,000 from the previous week's revised level. This is the lowest level for initial claims since February 18, 2006 when they were 283,000. The previous week's level was revised up by 1,000 from 302,000 to 303,000. The 4-week moving average was 302,000, a decrease of 7,250 from the previous week's revised average. This is the lowest level for this average since May 19, 2007 when it was 302,000. The previous week's average was revised up by 250 from 309,000 to 309,250.

There were no special factors impacting this week's initial claims. The advance seasonally adjusted insured unemployment rate was 1.9 percent for the week ending July 12, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending July 12 was 2,500,000, a decrease of 8,000 from the previous week's revised level. This is the lowest level for insured unemployment since June 16, 2007 when it was 2,453,000. The previous week's level was revised up 1,000 from 2,507,000 to 2,508,000. The 4-week moving average was 2,542,250, a decrease of 17,000 from the previous week's revised average. This is the lowest level for this average since October 13, 2007 when it was 2,527,500. The previous week's average was revised up by 250 from 2,559,000 to 2,559,250.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: July 23, 2014 at 08:30 AM (Wednesday)

Mortgage applications increased 2.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 18, 2014.

The Market Composite Index, a measure of mortgage loan application volume, increased 2.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3 percent compared with the previous week. The Refinance Index increased 4 percent from the previous week. The seasonally adjusted Purchase Index increased 0.3 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 15 percent lower than the same week one year ago.

The refinance share of mortgage activity increased to 54.4 percent of total applications, the highest level since March 2014, from 53.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 8 percent of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) remained unchanged at 4.33 percent, with points increasing to 0.23 from 0.20 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate remained unchanged from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.21 percent, the lowest level since May 2013, from 4.23 percent, with points decreasing to 0.20 from 0.26 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.03 percent from 4.04 percent, with points increasing to 0.15 from 0.02 (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 3.47 percent from 3.41 percent, with points increasing to 0.28 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 5/1 ARMs increased to 3.21 percent from 3.17 percent, with points decreasing to 0.32 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


Existing-Home Sales climbed 2.6% in June
Posted: July 22, 2014 at 10:00 AM (Tuesday)

Existing-home sales increased in June and reached an annual pace of 5 million sales for the first time since October 2013, while rising inventory continues to push overall supply towards a more balanced market, according to the National Association of Realtors®.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, climbed 2.6 percent to a seasonally adjusted annual rate of 5.04 million in June from an upwardly-revised 4.91 million in May. Sales are at the highest pace since October 2013 (5.13 million), but remain 2.3 percent below the 5.16 million-unit level a year ago.

Housing fundamentals are moving in the right direction. Inventories are at their highest level in over a year and price gains have slowed to much more welcoming levels in many parts of the country. This bodes well for rising home sales in the upcoming months as consumers are provided with more choices. On the contrary, new home construction needs to rise by at least 50 percent for a complete return to a balanced market because supply shortages – particularly in the West – are still putting upward pressure on prices.

Stagnant wage growth is holding back what should be a stronger pace of sales. Hiring has been a bright spot in the economy this year, adding an average of 230,000 jobs each month,” he said. “However, the lack of wage increases is leaving a large pool of potential homebuyers on the sidelines who otherwise would be taking advantage of low interest rates. Income growth below price appreciation will hurt affordability.

Total housing inventory at the end of June rose 2.2 percent to 2.30 million existing homes available for sale, which represents a 5.5-month supply at the current sales pace, unchanged from May. Unsold inventory is 6.5 percent higher than a year ago, when there were 2.16 million existing homes available for sale.

The median existing-home price for all housing types in June was $223,300, which is 4.3 percent above June 2013. This marks the 28th consecutive month of year-over-year price gains.

Distressed homes – foreclosures and short sales – accounted for 11 percent of June sales, down from 15 percent in June 2013. Eight percent of June sales were foreclosures and 3 percent were short sales.

Foreclosures sold for an average discount of 20 percent below market value in June, while short sales were discounted 11 percent.

The percent share of first-time buyers continues to underperform historically, rising slightly to 28 percent in June (27 percent in May), but remain at an overall average of 28 percent over the past year.

NAR President Steve Brown, co-owner of Irongate, Inc., Realtors® in Dayton, Ohio, said Realtors® are reporting that some prospective buyers who have above average credit scores but low down payments are deterred from homeownership by the high cost of FHA mortgage insurance. “Access to affordable credit continues to hamper young, prospective first-time buyers,” added Brown. “NAR recommends that FHA reduce high annual mortgage insurance premiums for all qualified homebuyers and eliminate the insurance requirement for the life of the loan. FHA’s HAWK program is a good start, but it should offer further reductions for participating home buyers.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage dropped for the second consecutive month to 4.16 percent in June from 4.19 percent in May, and is the lowest since last June (4.07 percent).

Properties sold faster for the sixth consecutive month in June; highlighting the fact that inventory is still lagging relative to demand. The median time on market for all homes was 44 days in June, down from 47 days in May; it was 37 days on market in June 2013. Short sales were on the market for a median of 120 days in June, while foreclosures sold in 54 days and non-distressed homes typically took 42 days. Forty-two percent of homes sold in June were on the market for less than a month.

For the third consecutive month – as well as the average of the previous 12 months – all-cash sales in June were 32 percent of transactions, up from 31 percent in June 2013. Individual investors, who account for many cash sales, purchased 16 percent of homes in June, unchanged from May; they were 17 percent in June 2013. Sixty-nine percent of investors paid cash in June.

Single-family home sales rose 2.5 percent to a seasonally adjusted annual rate of 4.43 million in June from 4.32 million in May, but remain 2.9 percent below the 4.56 million pace a year ago. The median existing single-family home price was $224,300 in June, up 4.5 percent from June 2013.

Existing condominium and co-op sales increased 3.4 percent to a seasonally adjusted annual rate of 610,000 units in June from 590,000 in May, and are 1.7 percent above the 600,000 unit pace a year ago. The median existing condo price was $215,700 in June, which is 3.2 percent higher than a year ago.


Richmond Fed's Current Activity Index moved up to a reading of 7
Posted: July 22, 2014 at 10:00 AM (Tuesday)

Fifth District manufacturing activity grew moderately in July, according to the most recent survey by the Federal Reserve Bank of Richmond.* The volume of new orders was flat compared to June, and shipments grew on pace with a month ago. Manufacturing employment picked up, while growth in the average workweek slowed slightly and wages rose more quickly in comparison to last month.

Manufacturers were optimistic about future business conditions. Firms expected faster growth in shipments and new orders in the six months ahead. Additionally, producers looked for backlogs to build more quickly and anticipated faster growth in capacity utilization. Expectations were for shorter vendor lead times.

Survey participants expected faster growth in the number of employees along with solid growth in wages and a pickup in the average workweek. Prices of raw materials and finished goods rose at a somewhat faster pace in July compared to last month. Additionally, manufacturers expected slightly faster growth in prices paid and prices received over the next six months than they anticipated a month ago.

Overall, manufacturing conditions strengthened. The composite index for manufacturing moved up to a reading of 7 following last month's reading of 4. The index for shipments gained one point, ending at 3. New orders grew at the same pace as a month ago, with that index finishing at a reading of 5. Manufacturing employment picked up this month; the July indicator advanced nine points to a reading of 13.

Vendor lead time lengthened, moving the index to 12 from a reading of 2, and the backlog of orders index flattened to 0 from −4. The capacity utilization gauge slipped three points this month to end at 4. Finished goods inventories built up at a faster pace. The index gained four points, ending at 12. Raw materials inventories grew more quickly compared to last month. That gauge moved to 21 from 14


Consumer Price Index increased 0.3% in June, Ex Fd & Engy up 0.1%
Posted: July 22, 2014 at 08:30 AM (Tuesday)

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in June on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.1 percent before seasonal adjustment.

In contrast to the broad-based increase last month, the June seasonally adjusted increase in the all items index was primarily driven by the gasoline index. It rose 3.3 percent and accounted for two-thirds of the all items increase. Other energy indexes were mixed, with the electricity index rising, but the indexes for natural gas and fuel oil declining. The food index decelerated in June, rising only slightly, with the food at home index flat after recent increases.

The index for all items less food and energy also decelerated in June, increasing 0.1 percent after a 0.3 percent increase in May. The indexes for shelter, apparel, medical care, and tobacco all increased in June, and the index for household furnishings and operations rose for the first time in a year. However, the index for new vehicles declined after recent increases, and the index for used cars and trucks also fell.

The all items index increased 2.1 percent over the last 12 months, the same figure as for the 12 months ending May. The index for all items less food and energy rose 1.9 percent over the last 12 months, a slight decline from the 2.0 percent figure last month. The index for energy increased 3.2 percent over the span, and the food index rose 2.3 percent.


Real Average Hourly Earnings were unchanged% in June
Posted: July 22, 2014 at 08:30 AM (Tuesday)

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

Real average weekly earnings was unchanged over the month due to both real average hourly earnings and the average workweek being unchanged.

Real average hourly earnings declined 0.1 percent, seasonally adjusted, from June 2013 to June 2014. The decrease in real average hourly earnings, combined with an unchanged average workweek, resulted in a 0.1 percent decline in real average weekly earnings over this period.


ICSC Chain Store Sales decreased by 0.4% in Jul 19 Wk
Posted: July 22, 2014 at 07:45 AM (Tuesday)

The International Council of Shopping Centers (ICSC) and Goldman Sachs Weekly Chain Store Sales Index decreased slightly by 0.4% for the week ending July 19 - relative to its prior week. On a year-over-year basis, sales increased by 2.8% compared to the same week of the prior year.

"Unseasonably cool weather acted as a drag on consumer demand for summer-clearance items this week as average temperatures for the country were considerably cooler than this same week last year," noted Michael Niemira, ICSC research consultant. "However, the cooler temps will have gotten consumers into the Back-to-School shopping mindset. Looking ahead to July sales, I expect the strong trend to continue, with comp-store sales posting a 3-4% increase," he added.


Chicago Fed National Activity decelerated slightly in June
Posted: July 21, 2014 at 08:30 AM (Monday)

Led by slower growth in production-related indicators, the Chicago Fed National Activity Index (CFNAI) edged down to +0.12 in June from +0.16 in May. Two of the four broad categories of indicators that make up the index made nonpositive contributions to the index in June, but two of the four categories increased from May.

The index’s three-month moving average, CFNAI-MA3, decreased to +0.13 in June from +0.28 in May, marking its fourth consecutive reading above zero. June’s CFNAI-MA3 suggests that growth in national economic activity was somewhat above its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests limited inflationary pressure from economic activity over the coming year.

The CFNAI Diffusion Index, which is also a three-month moving average, decreased to +0.18 in June from +0.33 in May. Forty-four of the 85 individual indicators made positive contributions to the CFNAI in June, while 41 made negative contributions. Forty indicators improved from May to June, while 43 indicators deteriorated and two were unchanged. Of the indicators that improved, 12 made negative contributions.

Employment-related indicators contributed +0.22 to the CFNAI in June, up from +0.14 in May. The unemployment rate decreased to 6.1 percent in June from 6.3 percent in May; and nonfarm payrolls rose by 288,000 in June after increasing by 224,000 in the previous month.

Production-related indicators made a neutral contribution to the CFNAI in June, down from +0.14 in May. Industrial production rose 0.2 percent in June after rising 0.5 percent in May, and manufacturing production increased 0.1 percent in June after increasing 0.4 percent in the previous month. The contribution of the sales, orders, and inventories category to the CFNAI remained at +0.04 in June.

The contribution from the consumption and housing category to the CFNAI edged up to –0.14 in June from –0.16 in May. Consumption indicators, on balance, improved, pushing the category’s contribution higher. However, housing starts decreased to 893,000 annualized units in June from 985,000 in May, and housing permits decreased to 963,000 annualized units in June from 1,005,000 in the previous month.

The CFNAI was constructed using data available as of July 17, 2014. At that time, June data for 50 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index. The May monthly index was revised to +0.16 from an initial estimate of +0.21, and the April monthly index was revised to +0.11 from last month’s estimate of –0.15. Revisions to the monthly index can be attributed to two main factors: revisions in previously published data and differences between the estimates of previously unavailable data and subsequently published data. The revisions to the May and April monthly indexes were due primarily to the former.


U.S. Leading Economic Index increased 0.3%
Posted: July 18, 2014 at 10:00 AM (Friday)

The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.3 percent in June to 102.2 (2004 = 100), following a 0.7 percent increase in May, and a 0.3 percent increase in April.

Broad-based increases in the LEI over the last six months signal an economy that is expanding in the near term and may even somewhat accelerate in the second half. Housing permits, the weakest indicator during this period, reflects some risk to this improving outlook. But favorable financial conditions, generally positive trends in the labor markets and the outlook for new orders in manufacturing have offset the housing market weakness over the past six months.

The CEI shows the pace of economic activity continued to expand moderately through June. Stronger consumer demand driven by sustained job gains and improving confidence remains the main source of improvement for the U.S. economy. In addition to a stronger housing market, more business investment could also provide an upside to the overall economy.

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.2 percent in June to 109.2 (2004 = 100), following a 0.3 percent increase in May, and a 0.2 percent increase in April.

The Conference Board Lagging Economic Index® (LAG) for the U.S. increased 0.5 percent in June to 124.4 (2004 = 100), following a 0.3 percent increase in May, and a 0.4 percent increase in April.


Philadelphia July Outlook Reflect Continued Optimism
Posted: July 17, 2014 at 10:00 AM (Thursday)

Firms responding to the Business Outlook Survey indicated continued expansion in the region’s manufacturing sector in July. The survey’s indicators for general activity, new orders, shipments, and employment were all positive this month and increased from their readings in June. The survey’s indicators of future activity also increased or stayed at high levels, suggesting that firms remain optimistic about continued growth over the next six months.

Activity Index at Highest Level Since 2011

The diffusion index of current general activity increased from a reading of 17.8 in June to 23.9 this month. The index has remained positive for five consecutive months and is at its highest reading since March 2011 (see Chart). The current new orders and shipments indexes increased notably this month, increasing 17 points and 19 points, respectively. Both unfilled orders and delivery times indexes were positive for the second consecutive month, suggesting continued strengthening conditions.

The current indicators for labor market conditions also suggest improved conditions this month. The employment index remained positive, and, although it increased less than 1 point, it has improved for four consecutive months. The percentage of firms reporting increases in employment (24 percent) exceeded the percentage reporting decreases (12 percent). The workweek index was positive for the fifth consecutive month and increased 5 points.

Some Firms Report Higher Prices

About 36 percent of the firms reported higher input prices this month, near the level reported last month. The prices paid index changed little from its reading in June, although it had increased 24 points over the previous two months. The prices received index, which reflects firms’ own final goods prices, increased slightly, from 14.1 to 16.8. The percent of firms reporting higher prices (21 percent) exceeded the percentage reporting lower prices (4 percent), although 72 percent of the firms reported steady prices.

Indicators Reflect Continued Optimism

Most of the survey’s broad indicators of future growth showed improvement again this month. The future general activity index increased 6 points and is at its highest reading since last October (see Chart). The index has increased for three consecutive months. The future indexes for new orders and shipments moved in opposite directions this month, but both remained at very high readings. Firms remained relatively optimistic with respect to employment growth, although the future employment index fell 2 points. Nearly one-third of the firms are expecting growth in their employment levels over the next six months. Only 4 percent of the firms expect employment reductions.

In special questions this month, manufacturing firms were asked about the contribution of growth in export business over the past year (see Special Questions). Among the manufacturing firms that export, exports as a percentage of sales have increased at 39 percent of the firms; however, most of the firms (37 percent) indicated their export share had increased modestly. About 7 percent indicated that exports as a share of sales have decreased. Firms were also asked about the type of products being exported. Intermediate products represented the most cited type of products being exported (40 percent), followed by final business products (25 percent), capital goods (19 percent), and final consumer products (11 percent).

Summary

The July Business Outlook Survey suggests continued broad-based expansion of the region’s manufacturing sector. Firms reported continued increases in overall activity, new orders, shipments, and employment this month. The survey’s future activity indexes remained at high readings, indicating that firms expect continued growth, including employment increases, over the next six months.


DJ-BTMU U.S. Business Barometer rose by a robust 0.9%
Posted: July 17, 2014 at 10:00 AM (Thursday)

For the week ending July 5 2014, the DJ-BTMU U.S. Business Barometer advanced by a robust 0.9 percent from last week, reaching the highest level of 99.4 since the beginning of the Great Recession. This week’s barometer is driven by both consumption and production indexes. Chain store sales and MBA’s purchase index climbed by 1.6 and 3.7 percent, respectively. As to the production side, auto production jumped 28.4 percent to the highest level since January 4 this year.

On a year-over-year basis, the barometer showed a gain of 1.3 percent, which compares to an average -3.3 percent decline over the Great Recession (ended in June 2009 according to the NBER). After flat lining in 2006, and declining from 2007 through 2009, the barometer bounced back in 2010 to rise by 3.4 percent, which was the strongest increase since 1994 (+4.0 percent), but not so impressive when compared to an -8.0 percent drop in 2009. The rate of increase for the 2013 slowed to 0.7 percent following 1.5 percent in 2012.

The smoothed version of the barometer, which attempts to account for weekly volatility, soared by another modest 0.2 percent. Its year-over-year growth rate remained at 1.0 percent.


May Housing Starts down 6.5%, Permits down 6.4%
Posted: July 17, 2014 at 08:30 AM (Thursday)

BUILDING PERMITS
Privately-owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 963,000. This is 4.2 percent (±1.5%) below the revised May rate of 1,005,000, but is 2.7 percent (±1.8%) above the June 2013 estimate of 938,000. Single-family authorizations in June were at a rate of 631,000; this is 2.6 percent (±1.4%) above the revised May figure of 615,000. Authorizations of units in buildings with five units or more were at a rate of 301,000 in June.

HOUSING STARTS
Privately-owned housing starts in June were at a seasonally adjusted annual rate of 893,000. This is 9.3 percent (±10.3%) below the revised May estimate of 985,000, but is 7.5 percent (±14.4%) above the June 2013 rate of 831,000. Single-family housing starts in June were at a rate of 575,000; this is 9.0 percent (±10.1%) below the revised May figure of 632,000. The June rate for units in buildings with five units or more was 305,000.

HOUSING COMPLETIONS
Privately-owned housing completions in June were at a seasonally adjusted annual rate of 789,000. This is 12.0 percent (±8.3%) below the revised May estimate of 897,000, but is 3.4 percent (±11.6%) above the June 2013 rate of 763,000. Single-family housing completions in June were at a rate of 586,000; this is 6.5 percent (±9.4%) below the revised May rate of 627,000. The June rate for units in buildings with five units or more was 198,000.


Weekly Initial Unemployment Claims Decrease 3,000 to 302,000
Posted: July 17, 2014 at 08:30 AM (Thursday)

In the week ending July 12, the advance figure for seasonally adjusted initial claims was 302,000, a decrease of 3,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 304,000 to 305,000. The 4-week moving average was 309,000, a decrease of 3,000 from the previous week's revised average. This is the lowest level for this average since June 2, 2007 when it was 307,500. The previous week's average was revised up by 500 from 311,500 to 312,000.

There were no special factors impacting this week's initial claims. The advance seasonally adjusted insured unemployment rate was 1.9 percent for the week ending July 5, a decrease of 0.1 percentage point from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending July 5 was 2,507,000, a decrease of 79,000 from the previous week's revised level. This is the lowest level for insured unemployment since June 30, 2007 when it was 2,501,000. The previous week's level was revised up 2,000 from 2,584,000 to 2,586,000. The 4-week moving average was 2,559,000, a decrease of 13,000 from the previous week's revised average. This is the lowest level for this average since October 20, 2007 when it was 2,544,500. The previous week's average was revised up by 750 from 2,571,250 to 2,572,000.


Beige Book: Economic Activity Continues to Expand at a Moderate Pace
Posted: July 16, 2014 at 02:00 PM (Wednesday)

All twelve Federal Reserve Districts indicated that economic activity continued to expand since the previous report. The pace of economic growth was characterized as moderate in New York, Chicago, Minneapolis, Dallas, and San Francisco, while the remaining Districts reported modest expansion. Compared to the previous reporting period, Boston and Richmond noted a slightly slower pace of growth. Most Districts were optimistic about the outlook for growth.
Overall consumer spending increased in every District. Retail sales grew modestly in most Districts, with increases that were generally similar to the previous reporting period. Vehicle sales remained stronger than non-auto retail sales, with Philadelphia, Richmond, Atlanta, and San Francisco indicating robust to very strong auto sales. Tourism activity expanded in all reporting Districts, with growth ranging from slight in Philadelphia to very strong in Boston. Hotel contacts described robust activity in the Boston, New York, Atlanta, and Minneapolis Districts, while Philadelphia and Richmond noted activity levels that were in line with seasonal norms.

Activity in the nonfinancial services sector continued to grow across all Districts at a modest to moderate pace. Many Districts reported positive growth for professional and business services, including healthcare consulting, advertising, engineering, accounting, and technology. Overall, transportation activity rose at a moderate pace since the previous survey period. Broad-based demand for trucking and rail services across the Districts increased, and the Richmond District reported strong growth in port container traffic, with increases in both imports and exports. Manufacturing activity expanded in all twelve Districts. Contacts in the metal and auto industries generally reported positive growth, while manufacturers in the Philadelphia, Cleveland, Richmond, and Chicago Districts reported increased demand for their products from the energy sector.

Reports on real estate activity varied across the Districts. Many Districts reported low inventories and increasing home prices, but demand was mixed. Boston, New York, and St. Louis reported home sales were below year-ago levels, while Chicago noted a decrease in home sales since the last survey period. Home sales in other Districts remained steady or increased. Multi-family sales and leasing activity were robust in the New York and Dallas Districts. Residential construction rose for single-family homes in the Cleveland, Chicago, Kansas City, and San Francisco Districts, while New York, Richmond, Atlanta, Chicago, Minneapolis, and San Francisco reported increases for multifamily construction. Commercial construction activity generally strengthened across the Districts, due to higher demand and low vacancy rates.

Loan volumes rose across the nation, with slight to moderate increases reported in most Districts. Credit quality remained stable or improved slightly in most Districts, while San Francisco noted a slight decline. Credit standards were generally unchanged, although Richmond noted an easing of cost terms for well-qualified commercial and industrial borrowers, and Philadelphia and Chicago mentioned that competitive pressures were leading some financial institutions to take on higher credit risks.

Among Districts reporting on agriculture, heavy rains improved soil moisture levels in the Atlanta, Chicago, Minneapolis, Kansas City, and Dallas Districts, while drought conditions persisted in San Francisco. Most fall crops were reported in good or better condition, and expectations of higher production lowered crop prices. Profitability improved for livestock operators in the Atlanta, Minneapolis, and Kansas City Districts due to high cattle and hog prices. Oil production expanded in the Minneapolis, Kansas City, and Dallas Districts, while natural gas and coal production remained relatively steady in reporting Districts.

Labor market conditions improved, as all twelve Districts reported slight to moderate employment growth. Several Districts continued to report some difficulty finding workers for skilled positions. Aside from higher wages to attract talent for these skilled positions, wage pressures remained modest in most Districts. Price pressures were generally contained, with most Districts reporting slight to modest price increases for both inputs and finished goods. Several Districts noted higher prices for meat, dairy products, construction materials, and some metals (namely steel, copper, and nickel).


Builder Confidence rises 4 points in July to 53
Posted: July 16, 2014 at 10:00 AM (Wednesday)

Builder confidence in the market for newly-built single-family homes reached an important milestone in July, rising four points to a reading of 53 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today. Any reading over 50 indicates that more builders view sales conditions as good than poor.

“This is the first time that builder confidence has been above 50 since January and an important sign that it is strengthening as pent-up demand brings more buyers into the marketplace,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Del.

“An improving job market goes hand-in-hand with a rise in builder confidence,” said NAHB Chief Economist David Crowe. “As employment increases and those with jobs feel more secure about their own economic situation, they are more likely to feel comfortable about buying a home.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three HMI components posted gains in July. The index gauging current sales conditions increased four points to 57, while the index measuring expectations for future sales rose six points to 64 and the index gauging traffic of prospective buyers increased three points to 39.

The HMI three-month moving average was up in all four regions, with the Northeast and Midwest posting a one-point and two-point gain to 35 and 48, respectively. The West registered a five-point gain to 52 while the South rose two points to 51.


Industrial Production increased 0.2%
Capacity Utilization unch at 79.1%

Posted: July 16, 2014 at 09:15 AM (Wednesday)

Industrial production increased 0.2 percent in June and advanced at an annual rate of 5.5 percent for the second quarter of 2014. In June, manufacturing output edged up 0.1 percent for its fifth consecutive monthly gain, while the production at mines moved up 0.8 percent and the output of utilities declined 0.3 percent. For the second quarter as a whole, manufacturing production rose at an annual rate of 6.7 percent, while mining output increased at an annual rate of 18.8 percent because of gains in the extraction of oil and gas; by contrast, the output of utilities fell at an annual rate of 21.4 percent following a weather-related increase of 15.6 percent in the first quarter. At 103.9 percent of its 2007 average, total industrial production in June was 4.3 percent above its level of a year earlier. The capacity utilization rate for total industry was unchanged in June at 79.1 percent, a rate that is 1.0 percentage point below its long-run (1972–2013) average.


Treasury International Capital Data for May 2014
Posted: July 16, 2014 at 09:00 AM (Wednesday)

The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for May 2014. The sum total in May of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC inflow of $35.5 billion. Of this, net foreign private inflows were $13.1 billion, and net foreign official inflows were $22.4 billion.

Foreign residents increased their holdings of long-term U.S. securities in May; net purchases were $34.6 billion. Net purchases by private foreign investors were $10.2 billion, while net purchases by foreign official institutions were $24.4 billion. U.S. residents increased their holdings of long-term foreign securities, with net purchases of $15.2 billion.

Taking into account transactions in both foreign and U.S. securities, net foreign purchases of long-term securities were $19.4 billion. After including adjustments, such as estimates of unrecorded principal payments to foreigners on U.S. asset-backed securities, overall net foreign acquisitions of long-term securities are estimated to have been $9.0 billion in May.

Foreign residents decreased their holdings of U.S. Treasury bills by $4.9 billion. Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities increased by $0.5 billion. Banks’ own net dollar-denominated liabilities to foreign residents increased by $25.9 billion.


Producer Price Index rose 0.4% in June, ex Fd & Engy up 0.1%
Posted: July 16, 2014 at 08:30 AM (Wednesday)

The Producer Price Index for final demand rose 0.4 percent in June, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This increase followed a 0.2-percent decline in May and a 0.6-percent advance in April. On an unadjusted basis, the index for final demand moved up 1.9 percent for the 12 months ended in June.

In June, the 0.4-percent increase in final demand prices can be traced to a 0.5-percent advance in the index for final demand goods and a 0.3-percent rise in prices for final demand services.

Within intermediate demand, prices for processed goods advanced 0.4 percent, the index for unprocessed goods fell 0.9 percent, and prices for services moved up 0.6 percent.


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: July 16, 2014 at 07:00 AM (Wednesday)

Mortgage applications decreased 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 July 11, 2014. The previous week’s results included an adjustment for the July 4th holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 3.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 20 percent compared with the previous week. The Refinance Index decreased 0.1 percent from the previous week. The seasonally adjusted Purchase Index decreased 8 percent from one week earlier to the lowest level since February 2014. The unadjusted Purchase Index increased 16 percent compared with the previous week and was 17 percent lower than the same week one year ago.

The refinance share of mortgage activity increased to 54 percent of total applications from 52 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 8 percent of total applications. The average loan size for purchase applications was $268,500, the lowest amount since February 2014.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.33 percent from 4.32 percent, with points increasing to 0.20 from 0.16 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.23 percent from 4.24 percent, with points increasing to 0.26 from 0.16 (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 4.04 percent from 4.02 percent, with points increasing to 0.02 from -0.03 (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 3.41 percent from 3.40 percent, with points increasing to 0.23 from 0.22 (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 3.17 percent from 3.24 percent, with points increasing to 0.34 from 0.31 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


Business Inventories up 0.5% in May
Posted: July 15, 2014 at 10:00 AM (Tuesday)

The U.S. Census Bureau announced today that the combined value of distributive trade sales and manufacturers’ shipments for May, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,343.3 billion, up 0.4 percent (±0.2%) from April 2014 and were up 4.6 percent (±0.5%) from May 2013.

Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,737.4 billion, up 0.5 percent (±0.1%) from April 2014 and up 5.6 percent (±0.4%) from May 2013.

The total business inventories/sales ratio based on seasonally adjusted data at the end of May was 1.29. The May 2013 ratio was 1.28.


U.S. Import Price Index ticked up 0.1% in June
Posted: July 15, 2014 at 08:30 AM (Tuesday)

U.S. import prices advanced 0.1 percent in June following a 0.3-percent rise in May, the U.S. Bureau of Labor Statistics reported today. Higher fuel prices drove the monthly increases for both June and May. Prices for U.S. exports decreased 0.4 percent in June, after ticking up 0.1 percent the previous month.


U.S. Retail Sales for June increase 0.2%, Ex-Auto up 0.4%
Posted: July 15, 2014 at 08:30 AM (Tuesday)

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for June, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $439.9 billion, an increase of 0.2 percent (±0.5) from the previous month, and 4.3 percent (±0.9) above June 2013. Total sales for the April through June 2014 period were up 4.5 percent (±0.7) from the same period a year ago. The April to May 2014 percent change was revised from +0.3 percent (±0.5) to +0.5 percent (±0.2).

Retail trade sales were up 0.3 percent (±0.5) from May 2014, and 4.1 percent (±0.9) above last year. Nonstore retailers were up 8.1 percent (±2.3) from June 2013 and health and personal care stores were up 7.9 percent (±1.9) from last year.


Empire State Manufacturing Survey Conditions improvement continues
Posted: July 15, 2014 at 08:30 AM (Tuesday)

The July 2014 Empire State Manufacturing Survey indicates that business conditions improved significantly for a third consecutive month for New York manufacturers. The headline general business conditions index climbed six points to 25.6, its highest level in more than four years. The new orders index was little changed at 18.8, while the shipments index rose nine points to 23.6; both indexes were at multiyear highs. The unfilled orders index fell six points to -6.8. The indexes for both prices paid and prices received were higher this month, indicating a pickup in the pace of price increases. Labor market conditions continued to improve, with indexes pointing to a solid increase in employment levels and a slight increase in hours worked. Although many of the indexes for the six-month outlook were significantly lower, conditions overall were expected to continue improving in the months ahead.

General Business Conditions Index Reaches Four-Year High

Business conditions improved significantly for a third consecutive month for New York manufacturers, according to the July 2014 survey. The general business conditions index advanced six points to 25.6, a four-year high. Forty-one percent of respondents reported that conditions had improved over the month, while 15 percent reported that conditions had worsened. The new orders index held at 18.8, and the shipments index rose nine points to 23.6; both of these indexes were at their highest levels since early 2010. The unfilled orders index dropped six points to -6.8, suggesting that fewer orders remained unfilled. The delivery time index fell two points to -1.1, and the inventories index fell 13 points to -3.4, pointing to a small decline in inventory levels.

A Solid Increase in Employment

Both price indexes climbed this month, and suggested that the pace of price increases had accelerated. The prices paid index rose eight points to 25.0, and the prices received index inched up three points to 6.8. Labor market conditions continued to improve. The index for number of employees climbed six points to 17.0, a level which indicated a solid increase in employment levels. The average workweek index retreated seven points to 2.3, and pointed to a slight increase in hours worked.

Level of Optimism Falls

Despite the steep gains in many of the survey’s indexes for current conditions, optimism about future conditions, while still fairly strong, diminished. The index for future general business conditions fell eleven points to 28.5. The future new orders index dropped nineteen points to 25.6, and the future shipments index tumbled twenty-one points to 24.6. The index for expected number of employees fell three points to 17.1, and the future average workweek index turned slightly negative. The capital expenditures index fell three points to 9.1, and the technology spending index rose seven points to 10.2.


ICSC Chain Store Sales rose 0.1% in Jul 12 Wk
Posted: July 15, 2014 at 07:45 AM (Tuesday)

The International Council of Shopping Centers (ICSC) and Goldman Sachs Weekly Chain Store Sales Index rose by 0.1% for the week ending July 12 - relative to its prior week - marking its fifth consecutive sequential weekly gain. On a year-over-year basis, sales momentum accelerated to a strong +4.5% compared to the same week of the prior year.

"Business for the past week was up sharply for most segments," noted Michael Niemira, ICSC research consultant. "Dollar stores, wholesale clubs, and electronics retailers in particular saw stellar strength over the week, but very impressive strength was also seen for drug, department, apparel, discounters, and furniture stores relative to the same week of the prior year. Looking ahead, July sales should see growth of around 3-4%," he added.


Wholesale Inventories up 0.5% in May
Posted: July 10, 2014 at 10:00 AM (Thursday)

The U.S. Census Bureau announced today that May 2014 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 $453.2 billion, up 0.7 percent (+/-0.5) from the revised April level and were up 6.6 percent (+/-1.4%) from the May 2013 level. The April preliminary estimate was virtually unchanged. May sales of durable goods were up 0.2 percent (+/-0.7%)* from last month and were up 5.9 percent (+/-1.2%) from a year ago. Sales of metals and minerals, except petroleum, were up 3.2 percent from last month, while sales of computer and computer peripheral equipment and software were down 1.6 percent. Sales of nondurable goods were up 1.1 percent (+/-0.5%) from April and were up 7.2 percent (+/-2.6%) from last May. Sales of farm product raw materials were up 6.6 percent from last month and sales of apparel, piece goods, and notions were up 2.0 percent.

Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $532.7 billion at the end of May, up 0.5 percent (+/-0.4%) from the revised April level and were up 7.9 percent (+/-0.9%) from the May 2013 level. The April preliminary estimate was revised downward $0.5 billion or 0.1 percent. May inventories of durable goods were up 1.0 percent (+/-0.4%) from last month and were up 8.5 percent (+/-1.2%) from a year ago. Inventories of metals and minerals, except petroleum, were up 2.1 percent from last month and inventories of motor vehicle and motor vehicle parts and supplies were up 1.9 percent. Inventories of nondurable goods were down 0.3 percent (+/-0.5%)* from April, but were up 6.9 percent (+/-1.1%) from last May. Inventories of farm product raw materials were down 3.2 percent from last month, while inventories of petroleum and petroleum products were up 2.0 percent.

The May inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.18. The May 2013 ratio was 1.16.


DJ-BTMU U.S. Business Barometer rose by 0.2%
Posted: July 10, 2014 at 10:00 AM (Thursday)

For the week ending June 28 2014, the DJ-BTMU U.S. Business Barometer rose by 0.2 percent from last week, in spite of weakening trend in most production indexes. The increase in this week’s barometer is entirely driven by chain store sales, which soared by a solid 1.0 percent, showing another positive gain for third consecutive week. As to the production side, electric output plummeted by 2.8 percent after a 5.9 percent gain in the prior week.

On a year-over-year basis, the barometer showed a gain of 0.8 percent, which compares to an average -3.3 percent decline over the Great Recession (ended in June 2009 according to the NBER). After flat lining in 2006, and declining from 2007 through 2009, the barometer bounced back in 2010 to rise by 3.4 percent, which was the strongest increase since 1994 (+4.0 percent), but not so impressive when compared to an -8.0 percent drop in 2009. The rate of increase for the 2013 slowed to 0.7 percent following 1.5 percent in 2012.

The smoothed version of the barometer, which attempts to account for weekly volatility, increased slightly by 0.1 percent for two weeks in a row. Its year-over-year growth rate remained at 0.7 percent.


Weekly Initial Unemployment Claims Decrease 11,000 to 304,000
Posted: July 10, 2014 at 08:30 AM (Thursday)

In the week ending July 5, the advance figure for seasonally adjusted initial claims was 304,000, a decrease of 11,000 from the previous week's unrevised level of 315,000. The 4-week moving average was 311,500, a decrease of 3,500 from the previous week's unrevised average of 315,000.

There were no special factors impacting this week's initial claims. The advance seasonally adjusted insured unemployment rate was 2.0 percent for the week ending June 28, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted in sured unemployment during the week ending June 28 was 2,584,000, an increase of 10,000 from the previous week's revised level. The previous week's level was revised down by 5,000 from 2,579,000 to 2,574,000. The 4-week moving average was 2,571,250, a decrease of 7,750 from the previous week's revised average. This is the lowest level for this average since October 27, 2007 when it was 2,561,750. The previous week's average was revised down by 1,250 from 2,580,250 to 2,579,000.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: July 9, 2014 at 07:00 AM (Wednesday)

Mortgage applications increased 1.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 4, 2014. This week’s results included an adjustment for the July 4th holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 1.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 19 percent compared with the previous week. The Refinance Index increased 0.4 percent from the previous week. The seasonally adjusted Purchase Index increased 4 percent from one week earlier. The unadjusted Purchase Index decreased 17 percent compared with the previous week and was 10 percent lower than the same week one year ago.

The refinance share of mortgage activity decreased to 52 percent of total applications from 53 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 8 percent of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.32 percent from 4.28 percent, with points increasing to 0.16 from 0.14 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.24 percent from 4.26 percent, with points increasing to 0.16 from 0.06 (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 4.02 percent from 3.99 percent, with points increasing to -0.03 from -0.33 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.40 percent from 3.42 percent, with points increasing to 0.22 from 0.16 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 5/1 ARMs increased to 3.24 percent from 3.21 percent, with points decreasing to 0.31 from 0.33 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


Consumer Credit Increased at an annual rate of 7.50%
Posted: July 8, 2014 at 03:00 PM (Tuesday)

In May, consumer credit increased at a seasonally adjusted annual rate of 7-1/2 percent. Revolving credit increased at an annual rate of 2-1/2 percent, while nonrevolving credit increased at an annual rate of 9-1/4 percent.


Job Openings were 4.6 million in May
Posted: July 8, 2014 at 10:00 AM (Tuesday)

There were 4.6 million job openings on the last business day of May, little changed from 4.5 million in April, the U.S. Bureau of Labor Statistics reported today. The hires rate (3.4 percent) and separations rate (3.2 percent) were essentially unchanged in May. Within separations, the quits rate (1.8 percent) was unchanged and the layoffs and discharges rate (1.1 percent) was little changed. 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.

There were 4.6 million job openings in May, little changed from 4.5 million in April. The number of job openings was also little changed for total private and government. The job openings level increased for nondurable manufacturing and for health care and social assistance in May, while it decreased for retail trade and for arts, entertainment, and recreation. The number of job openings was little changed in all four regions in May.

Over the 12 months ending in May, the number of job openings (not seasonally adjusted) rose for total nonfarm, total private, and government. Over the year, the job openings level increased in nearly half of the industries and in all four regions.


ICSC Chain Store Sales rose by a solid 1.7% in Jul 5 Wk
Posted: July 8, 2014 at 07:45 AM (Tuesday)

The International Council of Shopping Centers (ICSC) and Goldman Sachs Weekly Chain Store Sales Index rose by a solid 1.7% for the Independence Day Holiday week ending July 5 - relative to its prior week. On a year-over-year basis, sales increased by a healthy 3.3% compared to the same week of the prior year.

"Consumers were undeterred by somewhat unfavorable weather, as business was up sharply at apparel-specialty stores and wholesale clubs, while drug, department, electronics, office, and furniture stores saw solid gains," noted Michael Niemira, ICSC research consultant. "The month certainly ended on a high note, and while ICSC's June expectations remain the same, there is some bias towards a slightly stronger increase for the month," he added.

For June, ICSC Research expects sales will continue to post solid figures, increasing by 3.5% over the previous year. Fiscal month sales will be reported on July 10.


NFIB Small Business Optimism Index fell 1.6 points to 95.0
Posted: July 8, 2014 at 07:30 AM (Tuesday)

“Foiled again!” The Optimism Index can’t seem to muster a run longer than 3 months. After a promising first half run, the Index fell 1.6 points to 95.0, ending another false start for the Index’s “road to recovery”. The Index did manage to stay above 95, which seemed to be a ceiling on the Index since the recovery started. The good news is that the job components improved again, reaching levels seen only in strong private sector economic times. The bad news is that capital outlays and planned spending faded along with expectations for improving business conditions.

According to the NFIB June survey, June was the best employment month in recent years. BLS agreed, although the headline jobs report was better than the details. Part-time workers rose 1.12 million while full-time employment fell by 523,000. Thus, we swapped two part-time workers for each full-time job lost, not an efficient way to structure the workforce but that reflects the incentive structure created by Washington. Aggregate hours worked were little changed from 2007. The hours worked index was 100.8 for June vs 100 in 2007. After 6 ½ years of “recovery”, the same number of workers are now employed as at the peak in January, 2008, the population of eligible labor force participants is 14 million higher and more of the existing jobs are part-time jobs.

The only two index components that increased in June were labor market indicators: the percent of owners with job openings and the percent planning to create new jobs in the coming months. Reports of actual net job creation per firm were positive for the ninth month in a row. But consumer and business owner optimism remain low, spending growth is weak and sales expectations weak. There are more jobs but not much more output.

The number of allegedly “contrived scandals” in Washington grows, none are being resolved and many are growing in severity. The latest Reuters/University of Michigan poll shows 10 percent of consumers characterizing government policy as “good” and over 50 percent say “poor”. Other than “economic conditions”, the “political climate” is the most frequently cited reason for not expanding businesses. This is the major impediment to a stronger recovery. Owners are experiencing far too much uncertainty and no sign that the powers that be will get any of it resolved.

Economic growth for the rest of the year will continue to be sub-par. Even if the second half is as strong as some predict, the average for the year will be about 2.5 percent. Inflation will pick up, even “core” inflation, although energy and food prices will probably see more lift than other prices. The unemployment rate will fall more due to people leaving the labor force than to jobs being created, fewer hands making GDP. With the election only months away, not much will change in the coming months in Washington or in the economy.


Employment Trends Index increased in June to 119.62
Posted: July 7, 2014 at 10:00 AM (Monday)

The Conference Board Employment Trends Index™ (ETI) increased in June. The index now stands at 119.62, up from 119.03 (an upward revision) in May. This represents a 6.3 percent gain in the ETI compared to a year ago.

The rapid increase in the Employment Trends Index in recent months suggests that strong job growth is likely to continue through the summer. While the strong labor market signals an improvement in economic growth, the key factor is that the average productivity of workers will need to rise as well.

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


ISM Non-Manufacturing Index grew at 56.0%
Posted: July 3, 2014 at 10:00 AM (Thursday)

Economic activity in the non-manufacturing sector grew in June for the 53rd consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The NMI® registered 56 percent in June, 0.3 percentage point lower than the May reading of 56.3 percent. This represents continued growth at a slightly slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index decreased to 57.5 percent, which is 4.6 percentage points lower than the May reading of 62.1 percent, reflecting growth for the 59th consecutive month at a slower rate. The New Orders Index registered 61.2 percent, 0.7 percentage point higher than the reading of 60.5 percent registered in May. The Employment Index increased 2 percentage points to 54.4 percent from the May reading of 52.4 percent and indicates growth for the fourth consecutive month and at a faster rate. The Prices Index decreased 0.2 percentage point from the May reading of 61.4 percent to 61.2 percent, indicating prices increased at a slightly slower rate in June when compared to May. According to the NMI®, 14 non-manufacturing industries reported growth in June. Respondents' comments vary by industry and company; however, the majority indicate that steady economic growth is continuing.

INDUSTRY PERFORMANCE

The 14 non-manufacturing industries reporting growth in June — listed in order — are: Construction; Real Estate, Rental & Leasing; Utilities; Management of Companies & Support Services; Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Information; Public Administration; Retail Trade; Transportation & Warehousing; Professional, Scientific & Technical Services; Wholesale Trade; Finance & Insurance; and Other Services. The four industries reporting contraction in June are: Educational Services; Mining; Accommodation & Food Services; and Health Care & Social Assistance.


DJ-BTMU U.S. Business Barometer jumped 0.4%
Posted: July 3, 2014 at 10:00 AM (Thursday)

For the week ending June 21 2014, the DJ-BTMU U.S. Business Barometer jumped 0.4 percent from last week, reaching the highest level of 98.3 since April 26 2014. The increase in this week’s barometer is driven by strong performances in both consumption and production indexes. The biggest factor was chain store sales, which climbed by 2.0 percent, more than offsetting decreases in MBA’s purchase index and railroad freight car loadings. As to the production side, all indexes except coal production showed positive gains.

On a year-over-year basis, the barometer showed a gain of 1.0 percent, which compares to an average -3.3 percent decline over the Great Recession (ended in June 2009 according to the NBER). After flat lining in 2006, and declining from 2007 through 2009, the barometer bounced back in 2010 to rise by 3.4 percent, which was the strongest increase since 1994 (+4.0 percent), but not so impressive when compared to an -8.0 percent drop in 2009. The rate of increase for the 2013 slowed to 0.7 percent following 1.5 percent in 2012.

The smoothed version of the barometer, which attempts to account for weekly volatility, increased slightly by 0.1 percent. Its year-over-year growth rate remained at 0.7 percent.


June Employment increased by 281,000
Unemployment Rate remained at 6.1%

Posted: July 3, 2014 at 08:30 AM (Thursday)

Total nonfarm payroll employment increased by 288,000 in June, and the unemployment rate declined to 6.1 percent, the U.S. Bureau of Labor Statistics reported today. Job gains were widespread, led by employment growth in professional and business services, retail trade, food services and drinking places, and health care.

In June, the unemployment rate declined by 0.2 percentage point to 6.1 percent. The number of unemployed persons decreased by 325,000 to 9.5 million. Over the year, the unemployment rate and the number of unemployed persons have declined by 1.4 percentage points and 2.3 million, respectively.

Among the major worker groups, the unemployment rates for adult women (5.3 percent) and blacks (10.7 percent) declined in June, and the rate increased for teenagers (21.0 percent). The rates for adult men (5.7 percent), whites (5.3 percent), and Hispanics (7.8 percent) showed little change. The jobless rate for Asians was 5.1 percent (not seasonally adjusted), little changed from a year earlier.

The number of long-term unemployed (those jobless for 27 weeks or more) declined by 293,000 in June to 3.1 million; these individuals accounted for 32.8 percent of the unemployed. Over the past 12 months, the number of long-term unemployed has decreased by 1.2 million.

In June, the civilian labor force participation rate was 62.8 percent for the third consecutive month. The employment-population ratio, at 59.0 percent, showed little change over the month but is up by 0.3 percentage point over the year.

Total nonfarm payroll employment rose by 288,000 in June. Over the past 3 months, job growth has averaged 272,000 per month. In June, employment growth was widespread, led by gains in professional and business services, retail trade, food services and drinking places, and health care.

In June, average hourly earnings for all employees on private nonfarm payrolls rose by 6 cents to $24.45, following a 6-cent increase in May. Over the past 12 months, average hourly earnings have risen by 2.0 percent. In June, average hourly earnings of private-sector production and nonsupervisory employees increased by 4 cents to $20.58.

The change in total nonfarm payroll employment for April was revised from +282,000 to +304,000, and the change for May was revised from +217,000 to +224,000. With these revisions, employment gains in April and May were 29,000 higher than previously reported.


Goods and Services Deficit Decreased in May 2014
Posted: July 3, 2014 at 08:30 AM (Thursday)

The Nation’s international trade deficit in goods and services decreased to $44.4 billion in May from $47.0 billion in April (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 total May exports of $195.5 billion and imports of $239.8 billion resulted in a goods and services deficit of $44.4 billion, down from $47.0 billion in April, revised. May exports were $2.0 billion more than April exports of $193.5 billion. May imports were $0.7 billion less than April imports of $240.5 billion.

In May, the goods deficit decreased $2.4 billion from April to $63.3 billion, and the services surplus increased $0.3 billion from April to $18.9 billion. Exports of goods increased $1.6 billion to $136.7 billion, and imports of goods decreased $0.7 billion to $200.0 billion. Exports of services increased $0.3 billion to $58.8 billion, and imports of services were virtually unchanged at $39.9 billion.

The goods and services deficit decreased $0.4 billion from May 2013 to May 2014. Exports were up $8.3 billion, or 4.4 percent, and imports were up $7.8 billion, or 3.4 percent.


Weekly Initial Unemployment Claims Increase 2,000 to 315,000
Posted: July 3, 2014 at 08:30 AM (Thursday)

In the week ending June 28, the advance figure for seasonally adjusted initial claims was 315,000, an increase of 2,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 312,000 to 313,000. The 4-week moving average was 315,000, an increase of 500 from the previous week's revised average. The previous week's average was revised up by 250 from 314,250 to 314,500.

There were no special factors impacting this week's initial claims. The advance seasonally adjusted insured unemployment rate was 2.0 percent for the week ending June 21, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending June 21 was 2,579,000, an increase of 11,000 from the previous week's revised level. The previous week's level was revised down by 3,000 from 2,571,000 to 2,568,000. The 4-week moving average was 2,580,250, a decrease of 6,000 from the previous week's revised average. This is the lowest level for this average since October 27, 2007 when it was 2,561,750. The previous week's average was revised down by 750 from 2,587,000 to 2,586,250


Challenger Layoffs plunged 41% in June
Posted: July 3, 2014 at 07:30 AM (Thursday)

After climbing to a 15-month high in May, planned job cuts announced by U.S.-based employers in June plunged 41 percent to 31,434, the lowest one-month total so far this year. Through the first half of 2014, the pace of job cutting is down 5.0 percent from a year ago, according to the report released Thursday by global outplacement consultancy Challenger, Gray & Christmas, Inc.

June job cuts were 20 percent lower than the same month a year ago, when employers announced 39,372 job cuts. Job cuts during the month dropped sharply from May, when planned layoffs reached 52,961, which was the largest monthly total since February 2013, when 55,356 job cuts were announced.

In the quarter ending June 30, a total of 124,693 were announced, which is 3.0 percent more than the 121,341 job cuts announced in the first quarter of 2014. Second-quarter job cuts were up 9.5 percent from the same period last year, when just 113,891 planned layoffs were announced.

At the midpoint of 2014, planned job cuts total 246,034, which is 5.0 percent fewer than the 258,932 job cuts announced in the first six months of 2013. The year-to-date figure is the second-lowest first-half total since the end of the recession behind 2011, when 245,806 job cuts were announced from January through June.

New Jersey-based employers were hit particularly hard by June layoff activity, accounting for three of the top four job-cut announcements during the month. The closures of two Atlantic City casinos and a Westhampton-based transportation firm resulted in nearly 7,000 job cuts.

The casino closures were the primary reason the entertainment and leisure industry was the top job-cutting sector of the month. In all, these firms announced layoffs totaling 6,005 in June. For the year, employers in the sector have announced 13,700 job cuts, which is up 50 percent from 9,145 at the same point in 2013.

The heaviest downsizing through the first half of the year occurred in the computer industry, where employers announced plans to cut 30,002 workers from their payrolls. Retailers have also seen heavy job cuts, having announced 26,863 planned layoffs through June.

The holidays were not kind to several retailers who answered with heavy layoffs in the first quarter. We saw large-scale job-cut announcements from Macy’s, Best Buy, J.C. Penney, and Sears to start out the year. Meanwhile, one of the largest job cuts of the year so far resulted from the bankruptcy of Coldwater Creek, which resulted in 5,500 layoffs.

The same arctic weather that sapped momentum out of the entire economy in the first quarter undoubtedly contributed to retailers’ misfortune during the same stretch. The situation appears to have improved along with the weather, as layoffs by retailers declined by more than half in the second quarter.

It is also important to understand that not all of these job cuts are related to the economy. Retailers, in particular, are vulnerable to constantly changing trends in fashion, technology, and consumer demand. Retail, in general, continues to grow. But it is an increasingly competitive space where we could see more failures than successes.

The same could be said for the tech sector. Obviously, this is an area with a huge potential for growth. After all, we are more and more reliant on computers, software and other technology every day. However, change in this industry occurs rapidly, and some of the larger, less nimble companies are sometimes forced to alter their course and that can be painful. This was exemplified by large layoff announcements in the first half of this year by Hewlett-Packard and Intel.


Help Wanted OnLine Labor Demand Rose 155,900 in June
Posted: July 2, 2014 at 10:00 AM (Wednesday)

Labor demand fluctuated in the first six months of 2014 but remained basically flat. Since last June, labor demand is down for professional workers but up for service/production workers.

Online advertised vacancies were up 155,900 to 5,060,100 in June, according to The Conference Board Help Wanted OnLine® (HWOL) Data Series, released today. The May Supply/Demand rate stands at 2 unemployed for each vacancy, with a total of 4.9 million more unemployed workers than the number of advertised vacancies. The number of unemployed was 9.8 million in May.

The June increase of 155,900 is positive news. However, the net effect is that labor demand was basically flat for the first six months of 2014. There is churn in the labor market as people change jobs. Most of the gains since last June were in the lower-paying service jobs, not the higher-paying professional jobs.

Since June 2013, advertised vacancies for professional jobs dropped by almost 80,000 while service/production jobs gained a total of 170,000 vacancies. Since last June, employer demand has been down for the higher-paying professional jobs (where the average pay ranges from $34/hour to $53/hour). Professional occupations like managers (-8,300), business and finance workers (-11,200), and even computer workers (down 51,000) all dropped. In contrast, lower-paying jobs (where the pay ranges from just over $10/hour to $20/hour) gained. Transportation workers (+73,000), office support (+42,100), production workers (+19,300), and construction (+19,300) all rose.


New York Purchasing Managers Business Activity jumped to 60.5
Posted: July 2, 2014 at 08:30 AM (Wednesday)

New York City business activity expanded at the fastest pace in five months, according to the survey taken by the Institute for Supply Management-New York (ISM-NY).

Current Business Conditions were 60.5 in June, the highest level since January.

Future optimism maintained an elevated stance. The Six-Month Outlook came in at 68.0 in June.

Job growth was modestly better than last month’s neutral reading. Employment was 51.0 in June.

Purchase volume continued to expand, albeit at a slower pace than last month. Quantity of Purchases eased to 56.3 in June.

Prices Paid expanded solidly, at 58.7 in June.

The top line and forward guidance both registered improvement. Current Revenues were 66.7 in June, and Expected Revenues were 72.7 in June.

Potential Business Opportunities/Impediments: Both parts of labor compensation – cost of benefits and cost of labor – topped the table for impediments. The strongest opportunities came from domestic demand and foreign demand, a sign of consistency with the improvement in Current Business Conditions.


ADP National Employment Report increased by 281,000 in June
Posted: July 2, 2014 at 08:15 AM (Wednesday)

Private sector employment increased by 281,000 jobs from May to June according to the June ADP National Employment Report®. Broadly distributed to the public each month, free of charge, the ADP National Employment Report is produced by ADP®, a leading global provider of Human Capital Management (HCM) solutions, in collaboration with Moody’s Analytics. The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis.

Goods-producing employment rose by 51,000 jobs in June, up from 31,000 jobs gained in May. The construction industry added 36,000 jobs over the month, more than double the May number. Meanwhile, manufacturing added 12,000 jobs in June, up slightly from last month.

Service-providing employment rose by 230,000 jobs in June, up from 148,000 in May. The ADP National Employment Report indicates that professional/ business services contributed 77,000 jobs in June, up from 46,000 in May. Expansion in trade/transportation/utilities grew by 50,000, up from May’s 36,000. The 11,000 new jobs added in financial activities was about double last month’s number.

The June jobs number is a welcome boost. The number of construction jobs added was particularly encouraging, representing the highest total in that industry since February of 2006.

The job market is steadily improving. Job gains are broad based across all industries and company sizes. Judging from the job market, the economic recovery remains fully intact and is gaining momentum.

Payroll growth for businesses with 49 or fewer employees increased by 117,000 jobs in June. That’s up from 82,000 in May and represents the highest number since February 2012. Job growth rebounded over the month for medium-sized and large firms. Employment among medium-sized companies with 50-499 employees rose by 115,000, up from 62,000 in May. Employment at large companies – those with 500 or more employees – increased by 49,000, up from 36,000 the previous month. Companies with 500-999 employees added 16,000 jobs after shedding 3,000 in May.


Purchase Apps down, Refi's up in Latest MBA Weekly Survey
Posted: July 2, 2014 at 07:00 AM (Wednesday)

Mortgage applications decreased 0.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 27, 2014.

The Market Composite Index, a measure of mortgage loan application volume, decreased 0.2 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 increased 0.1 percent from the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 16 percent lower than the same week one year ago.

The refinance share of mortgage activity increased to 53 percent of total applications from 52 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 8 percent of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.28 percent from 4.33 percent, with points decreasing to 0.14 from 0.18 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.26 percent from 4.28 percent, with points decreasing to 0.06 from 0.12 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.99 percent from 4.03 percent, with points increasing to -0.33 from -0.38 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.42 percent from 3.47 percent, with points decreasing to 0.16 from 0.19 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.21 percent from 3.23 percent, with points increasing to 0.33 from 0.27 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.


Construction Spending increased 0.1% in May
Posted: July 1, 2014 at 10:00 AM (Tuesday)

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during May 2014 was estimated at a seasonally adjusted annual rate of $956.1 billion, 0.1 percent (±1.6%) above the revised April estimate of $955.1 billion. The May figure is 6.6 percent (±2.1%) above the May 2013 estimate of $896.6 billion. During the first 5 months of this year, construction spending amounted to $358.1 billion, 8.2 percent (±1.5%) above the $331.1 billion for the same period in 2013.

PRIVATE CONSTRUCTION
Spending on private construction was at a seasonally adjusted annual rate of $682.8 billion, 0.3 percent (±1.2%) below the revised April estimate of $684.6 billion. Residential construction was at a seasonally adjusted annual rate of $354.8 billion in May, 1.5 percent (±1.3%) below the revised April estimate of $360.1 billion. Nonresidential construction was at a seasonally adjusted annual rate of $328.0 billion in May, 1.1 percent (±1.2%) above the revised April estimate of $324.5 billion.

PUBLIC CONSTRUCTION
In May, the estimated seasonally adjusted annual rate of public construction spending was $273.3 billion, 1.0 percent (±3.0%) above the revised April estimate of $270.5 billion. Educational construction was at a seasonally adjusted annual rate of $62.0 billion, 0.6 percent (±5.1%) below the revised April estimate of $62.4 billion. Highway construction was at a seasonally adjusted annual rate of $82.7 billion, 0.7 percent (±8.1%) above the revised April estimate of $82.2 billion.


June Manufacturing ISM expanded at 55.3
Posted: July 1, 2014 at 10:00 AM (Tuesday)

Economic activity in the manufacturing sector expanded in June for the 13th consecutive month, and the overall economy grew for the 61st consecutive month, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®.

The June PMI® registered 55.3 percent, a decrease of 0.1 percentage point from May's reading of 55.4 percent, indicating expansion in manufacturing for the 13th consecutive month. The New Orders Index registered 58.9 percent, an increase of 2 percentage points from the 56.9 percent reading in May, indicating growth in new orders for the 13th consecutive month. The Production Index registered 60 percent, 1 percentage point below the May reading of 61 percent. Employment grew for the 12th consecutive month, registering 52.8 percent, the same level of growth as reported in May. Inventories of raw materials remained at 53 percent, the same reading as reported in both May and April. The price of raw materials grew at a slower rate in June, registering 58 percent, down 2 percentage points from May.

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


Paychex-IHS Small Business Jobs Index dipped to 101.07 in June
Posted: July 1, 2014 at 08:30 AM (Tuesday)

The Paychex | IHS Small Business Jobs Index grew 0.23 percent in the 12 months leading up to June. Although the national index decreased for a second straight month to 101.07, it remains near its record high. Washington again leads the index among the states, while Arizona continues to show strong improvement in small business employment growth. Dallas ranked as June's top performing metro area, surpassing San Francisco, Seattle, and Houston.

Though the pace of gains remains moderate, the Paychex | IHS Small Business Jobs Index shows that payroll conditions have clearly improved this year for the country's small businesses.

With the first six months of the year behind us, we continue to see a positive trend in small business employment growth. Even though the growth rate has slowed slightly over the past two months, the consistent growth in key regions, states, and metro areas is an encouraging sign.

Although the Paychex | IHS Small Business Jobs Index nudged down again in June, to its lowest level since January, the index remained over 101 for the sixth consecutive month. The 101.13 average for the first half of 2014 compares favorably to the 100.71 average for the last six months of 2013.


ICSC Chain Store Sales rose by a solid 1.0% in Jun 28 Wk
Posted: July 1, 2014 at 07:45 AM (Tuesday)

The International Council of Shopping Centers (ICSC) and Goldman Sachs Weekly Chain Store Sales Index rose by a solid 1.0% in the latest week (ending June 28) over the previous week. On a year-over-year basis sales increased even more rapidly posting a 4.6% increase - the strongest y-o-y pace since December 31, 2011.

"Business was up sharply for most segments, especially at department stores, apparel stores, discounters and wholesale clubs," noted Michael Niemira, ICSC research consultant. "Gasoline prices - which impact consumer discretionary purchasing power - stayed flat, providing consumers the ability to spend their money elsewhere," he added.

June 2014 expectations: It seems that after a winter that saw very adverse weather conditions in much of the country, the consumer unleashed some pent up demand in April and May. For June, ICSC Research expects sales will continue to post solid figures, increasing by 3.5% over the previous year. Fiscal month sales will be reported on July 10.


Texas Manufacturing Activity Picks Up Pace
Posted: June 30, 2014 at 10:30 AM (Monday)

Texas factory activity increased again in June, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 11 to 15.5, indicating output grew at a faster pace than in May.

Other measures of current manufacturing activity also reflected growth in June. The new orders index rose from 3.8 to 6.5 but remained below the levels seen earlier in the year. The capacity utilization index held steady at 9.2. The shipments index came in at 10.3, similar to its May level, with nearly a third of manufacturers noting an increase in volumes.

Perceptions of broader business conditions were more optimistic this month. The general business activity index rose from 8 to 11.4. The majority of respondents noted no change from May levels, although some 20 percent noted an increase in activity. The company outlook index rose 4 points to 8.4 after falling sharply last month.

Labor market indicators reflected stronger employment growth and longer workweeks. The June employment index rebounded to 13.1 after dipping to 2.9 in May. Twenty-one percent of firms reported net hiring compared with 8 percent reporting net layoffs. The hours worked index edged up from 2.8 to 4.7, indicating a slightly stronger rise in hours worked than last month.

Upward pressure on prices and wages was seen in June. The raw materials price index posted a second strong positive reading this month and inched up to 27.3. The finished goods price index rose slightly as well but remained in single digits, at 7.4. Looking ahead, 39 percent of respondents anticipate further increases in raw materials prices over the next six months, while 30 percent expect higher finished goods prices. The wages and benefits index edged down for the second month in a row, coming in at 18.8, but still suggested a rise in compensation costs.

Expectations regarding future business conditions were more optimistic in June. The index of future general business activity rose 7 points to 18.7, while the index of future company outlook rose 14 points to 33.8, reaching its highest level since 2011. Indexes for future manufacturing activity also pushed further into positive territory.


Pending Home Sales Index increased 6.1% in May
Posted: June 30, 2014 at 10:00 AM (Monday)

Pending home sales rose sharply in May, with lower mortgage rates and increased inventory accelerating the market, according to the National Association of Realtors®. All four regions of the country saw increases in pending sales, with the Northeast and West experiencing the largest gains.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 6.1 percent to 103.9 in May from 97.9 in April, but still remains 5.2 percent below May 2013 (109.6). May’s 6.1 percent increase was the largest month-over-month gain since April 2010 (9.6 percent), when first-time home buyers rushed to sign purchase contracts before a popular tax credit program ended.

Lawrence Yun, NAR chief economist, expects improving home sales in the second half of the year. “Sales should exceed an annual pace of five million homes in some of the upcoming months behind favorable mortgage rates, more inventory and improved job creation,” he said. “However, second-half sales growth won’t be enough to compensate for the sluggish first quarter and will likely fall below last year’s total.”

Despite the positive gains in signed contracts last month, Yun cautions that affordability and access to credit is still an area of concern for first-time home buyers, who accounted for only 27 percent of existing-home sales1 in May and typically carry student loan debt and lower credit scores.

“The flourishing stock market the last few years has propelled sales in the higher price brackets, while sales for homes under $250,000 are 10 percent behind last year’s pace. Meanwhile, apartment rents are expected to rise 8 percent cumulatively over the next two years because of tight availability,” said Yun. “Solid income growth and a slight easing in underwriting standards are needed to encourage first-time buyer participation, especially as renting becomes less affordable.”

The PHSI in the Northeast jumped 8.8 percent to 86.3 in May, and is now 0.2 percent above a year ago. In the Midwest the index rose 6.3 percent to 105.4 in May, but is still 6.6 percent below May 2013.

Pending home sales in the South advanced 4.4 percent to an index of 117.0 in May, and is 2.9 percent below a year ago. The index in the West rose 7.6 percent in May to 95.4, but remains 11.1 percent below May 2013.

Yun expects existing-homes sales to be down 2.8 percent this year to 4.95 million, compared to 5.1 million sales of existing homes in 2013. The national median existing-home price is projected to grow between 5 and 6 percent this year and in the range of 4 to 5 percent in 2015.


Chicago Purchasing Managers Index Down 2.9 points to 62.6 in June
Posted: June 30, 2014 at 10:00 AM (Monday)

Chicago Business Barometer Down 2.9 points to 62.6 in June Barometer Points to GDP Rebound in Q2 New Orders Expand at Slower Rate while Production Surges Above 70 The Chicago Business Barometer eased to 62.6 in June, from a seven month high of 65.5 in May, but was still up sharply on the quarter and consistent with a bounceback in Q2 GDP.

The Chicago Business Barometer eased to 62.6 in June, from a seven month high of 65.5 in May, but was still up sharply on the quarter and consistent with a bounceback in Q2 GDP.

The Barometer was up considerably from 52.0 a year ago, marking the fourteenth consecutive monthly expansion, and the third month in a row above 60. The bounceback in Q2 to a solid average of 63.7 from 58.4 in Q1, was the highest level for three years and points to a rebound in GDP growth in the second quarter following the sharp fall in Q1.

The Barometer’s strength during Q2 was underpinned by strong rises in both New Orders and Production. In June, a fall in New Orders from a seven month high in May led the Barometer’s decline, although it remained well above the 50 mark, confirming continued strong demand. Order Backlogs also weighed negatively on business activity and declined from May’s three year high. While both components contributed negatively to the Barometer in June, they remained well above their 10 year averages.

Production rose firmly above 70 in June, close to April’s level, and ended at an average of 68.3 in the three months to June, nearly eight points above Q1. Increased output led to a gain in the Employment Indicator to a four month high. A lengthening in Supplier Deliveries also supported the Barometer in June, but weighed negatively on business.

Latest GDP data showed that a drawdown in stocks hit growth in Q1. Our Inventories Indicator, though, posted a third consecutive monthly increase to the highest since November, as firms rebuilt stocks. Some respondents said they built inventories ahead of a possible strike by longshoremen at ports.

Commenting on the MNI Chicago Report, Philip Uglow, Chief Economist at MNI Indicators said, “The Business Barometer shows activity slowing a little between May and June, but it remains at a high level supported by the strength in Production and New Orders.”

“The downward revision to GDP in the first quarter was far larger than expected, and while the data now look a little historic, and the Chicago Report points to a bounceback in Q2, it does mean growth will be slower over the first half of the year than first thought. The Q3 data cycle, not least our own Barometer, will be critical in terms of determining the timing of the first hike in rates,” he added.


University of Michigan Consumer Confidence up in June to 82.5
Posted: June 27, 2014 at 10:00 AM (Friday)

The small June gain in consumer confidence was not as meaningful as the fact that the Sentiment Index has remained largely unchanged at its current level for the past six months. This was remarkable given the sizeable 1st quarter drop in GDP. Consumers believe the 1st quarter decline in economic activity was due to the harsh winter weather, and that the economy has already returned to positive economic growth. The dismissal of the economy’s poor performance was made possible by healthy job growth. Indeed, the June survey recorded the largest proportion of households that reported making financial gains in nearly seven years.

Personal Finances
More consumers reported that their financial situation had improved in the June survey than anytime since 2007. The proportion of households that reported improved finances over the past year was 40% in June, up from 35% one month and one year ago. Consumers, however, were a bit less optimistic about their future financial prospects. Just one-in-four households expected their finances to improve in the year ahead in the June survey. The biggest concerns were focused on expected wage growth, which most households expected would not exceed the inflation rate, meaning that nearly half of all households anticipated declining living standards.

Home Selling
Since most home buyers must sell their current home, home selling conditions are critical. In the June 2014 survey, half of all homeowners reported home selling conditions were favorable for the first time in eight years, with the largest proportion since the May 2006 survey reporting home prices had improved making the sale more attractive. Moreover, the smallest proportion reported that they would lose money if they sold their home.

Consumer Sentiment Index
The Sentiment Index was 82.5 in the June 2014 survey, between the 81.9 in May and last June’s 84.1. During the first half of 2014, the Sentiment Index remained remarkably stable. The largest June gains were recorded in the Current Conditions Index (96.6, up from May’s 94.5). The June Index of Consumer Expectations was barely below May level (73.5, down from 73.7), but was below last June’s 77.8.

Consumers did not expect such a negative GDP report, but it will not cause them to revise their expectations of future economic growth. Given that they ignored the dismal 1st quarter results, they are also likely to ignore the announcement of more favorable 2nd quarter GDP results in the months ahead. Unlike the usual seasonal adjustments that require established patterns, consumers had no trouble adjusting their expectations for a unique one-time event. This adjusted base must be considered when assessing the implications of consumers’ expectations that the economy will remain largely unchanged in the year ahead.


Kansas City Fed Manufacturing Activity slowed somewhat in June
Posted: June 26, 2014 at 11:00 AM (Thursday)

Growth in Tenth District manufacturing activity slowed somewhat in June, while producers’ expectations for future factory activity showed little change and remained at solid levels. Firms noted some difficulty finding skilled workers, especially for welders, engineers, and machinists. Most price indexes decreased moderately after increasing for several months.

The month-over-month composite index was 6 in June, down from 10 in May and 7 in April (Tables 1 & 2, Chart). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Manufacturing activity fell slightly at most non-durable goods-producing plants, while production increased for the majority of durable products, except for machinery which slowed considerably. Most other month-over-month indexes were mixed. The production index dropped from 14 to 2, and the new orders, employment, and new orders for exports indexes also declined. In contrast, the order backlog index rose from 0 to 9, its highest level in seven months. The raw materials inventory index eased from 11 to 8, and the finished goods inventory index also edged down.

Year-over-year factory indexes were mixed. The composite year-over-year index was unchanged, while the production, shipments, and employment indexes edged lower. The new orders for exports index moved into negative territory, while the new orders, order backlog, and capital expenditures indexes recorded positive gains. The finished goods inventory index rose from -1 to 7, but the raw materials inventory index fell slightly.

Future factory indexes recorded little change from the previous month. The future composite index moved from 13 to 12, and the future production, shipments, and employment indexes also inched lower. The future new orders index posted its lowest level in ten months, while future order backlog index was unchanged. In contrast, the future capital expenditures and new orders for exports indexes edged higher. Both future inventories indexes were basically unchanged.

All price indexes eased after increasing for two straight months. The month-over-month raw materials price index edged down from 28 to 25, and the finished goods price index dropped from 14 to 2. The year-over-year raw materials index decreased from 65 to 54, and the finished goods price index also fell. The future raw materials price index eased from 53 to 49, while the future finished goods price index also edged lower, indicating fewer firms plan to pass recent cost increases through to customers.


DJ-BTMU U.S. Business Barometer unch%
Posted: June 26, 2014 at 10:00 AM (Thursday)

For the week ending June 14 2014, the DJ-BTMU U.S. Business Barometer remained at the same level, 97.9, from the prior week as positive and negative performances of both consumption and production indexes cancelled out each other. Chain store sales picked up by 0.4 percent after a 2.7 percent loss in the previous week; notwithstanding it was counterbalanced by a sharp decline in MBA’s purchase index. As to the production side, electric output plummeted by 4.5 percent after a 2.9 percent gain in the last week, cancelling out this week’s increases in auto and truck production.

On a year-over-year basis, the barometer showed a gain of 0.8 percent, which compares to an average -3.3 percent decline over the Great Recession (ended in June 2009 according to the NBER). After flat lining in 2006, and declining from 2007 through 2009, the barometer bounced back in 2010 to rise by 3.4 percent, which was the strongest increase since 1994 (+4.0 percent), but not so impressive when compared to an -8.0 percent drop in 2009. The rate of increase for the 2013 slowed to 0.7 percent following 1.5 percent in 2012.

The smoothed version of the barometer, which attempts to account for weekly volatility, remained at 97.9 for five weeks in a row. Its year-over-year growth rate was 0.6 percent.


Weekly Initial Unemployment Claims Decrease 2,000 to 312,000
Posted: June 26, 2014 at 08:30 AM (Thursday)

In the week ending June 21, the advance figure for seasonally adjusted initial claims was 312,000, a decrease of 2,000 from the previous week's revised level. The previous week's level was revised up by 2,000 from 312,000 to 314,000. The 4-week moving average was 314,250, an increase of 2,000 from the previous week's revised average. The previous week's average was revised up by 500 from 311,750 to 312,250.

There were no special factors impacting this week's initial claims. The advance seasonally adjusted insured unemployment rate was 2.0 percent for the week ending June 14, an increase of 0.1 percentage point from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending June 14 was 2,571,000, an increase of 12,000 from the previous week's revised level. The previous week's level was revised down by 2,000 from 2,561,000 to 2,559,000. The 4-week moving average was 2,587,000, a decrease of 13,000 from the previous week's revised average. This is the lowest level for this average since November 3, 2007 when it was 2,585,750. The previous week's average was revised down by 500 from 2,600,500 to 2,600,000.


Personal Income increased 0.4%, Spending increased 0.2%
Posted: June 26, 2014 at 08:30 AM (Thursday)

Personal income increased $58.8 billion, or 0.4 percent, and disposable personal income (DPI) increased $55.6 billion, or 0.4 percent, in May, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $18.3 billion, or 0.2 percent. In April, personal income increased $49.9 billion, or 0.3 percent, DPI increased $50.8 billion, or 0.4 percent, and PCE increased $2.3 billion, or less than 0.1 percent, based on revised estimates.

Real DPI increased 0.2 percent in May, the same increase as in April. Real PCE decreased 0.1 percent in May, compared with a decrease of 0.2 percent in April.


1Q2014 GDP final estimate decreased 2.9%
Posted: June 25, 2014 at 08:30 AM (Wednesday)

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 2.9 percent in the first quarter of 2014 according to the "third" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2013, real GDP increased 2.6 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, real GDP was estimated to have decreased 1.0 percent. With the third estimate for the first quarter, the increase in personal consumption expenditures (PCE) was smaller than previously estimated, and the decline in exports was larger than previously estimated (for more information, see "Revisions" on page 3).

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


New Orders for Durable Goods Decreased 1.0%, Ex-Trans Down 0.1%
Posted: June 25, 2014 at 08:30 AM (Wednesday)

New orders for manufactured durable goods in May decreased $2.4 billion or 1.0 percent to $238.0 billion, the U.S. Census Bureau announced today. This decrease, down following three consecutive monthly increases, followed a 0.8 percent April increase. Excluding transportation, new orders decreased 0.1 percent. Excluding defense, new orders increased 0.6 percent. Transportation equipment, also down following three consecutive monthly increases, led the decrease, $2.3 billion or 3.0 percent to $74.4 billion.

Shipments of manufactured durable goods in May, up four consecutive months, increased $0.6 billion or 0.3 percent to $238.6 billion. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a slight April increase. Primary metals, up three consecutive months, led the increase, $0.4 billion or 1.6 percent to $27.0 billion.

Unfilled orders for manufactured durable goods in May, up thirteen of the last fourteen months, increased $6.6 billion or 0.6 percent to $1,087.4 billion. This was at the highest level since the series was first published on a NAICS basis and followed a 0.9 percent April increase. Transportation equipment, up eight of the last nine months, led the increase, $4.6 billion or 0.7 percent to $675.8 billion.

Inventories of manufactured durable goods in May, up thirteen of the last fourteen months, increased $3.8 billion or 1.0 percent to $397.8 billion. This was at the highest level since the series was first published on a NAICS basis and followed a 0.3 percent April increase. Transportation equipment, also up thirteen of the last fourteen months, led the increase, $1.4 billion or 1.1 percent to $127.8 billion.

Nondefense new orders for capital goods in May decreased $0.4 billion or 0.5 percent to $82.1 billion. Shipments decreased $0.5 billion or 0.7 percent to $75.9 billion. Unfilled orders increased $6.2 billion or 0.9 percent to $662.7 billion. Inventories increased $2.5 billion or 1.4 percent to $181.7 billion. Defense new orders for capital goods in May decreased $4.0 billion or 31.4 percent to $8.8 billion. Shipments decreased $0.2 billion or 2.3 percent to $9.4 billion. Unfilled orders decreased $0.6 billion or 0.4 percent to $158.9 billion. Inventories increased slightly or 0.1 percent to $23.6 billion.

Revised seasonally adjusted April figures for all manufacturing industries were: new orders, $500.3 billion (revised from $499.8 billion); shipments, $497.9 billion (revised from $497.6 billion); unfilled orders, $1,080.8 billion (revised from $1,080.6 billion); and total inventories $646.1 billion (revised from $645.8 billion).


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: June 25, 2014 at 07:00 AM (Wednesday)

Mortgage applications decreased 1.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 20, 2014.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.0 percent on a seasonally adjusted basis from one week earlier to the lowest level since April 2014. On an unadjusted basis, the Index decreased 2 percent compared with the previous week. The Refinance Index decreased 1 percent from the previous week to the lowest level since May 2014. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier to the lowest level since May 2014. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 18 percent lower than the same week one year ago.

The refinance share of mortgage activity remained unchanged at 52 percent of total applications from the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 8 percent of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.33 percent from 4.36 percent, with points decreasing to 0.18 from 0.24 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.28 percent from 4.32 percent, with points increasing to 0.12 from 0.09 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.03 percent from 4.07 percent, with points increasing to -0.38 from -0.39 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.47 percent from 3.50 percent, with points increasing to 0.19 from 0.16 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs increased to 3.23 percent from 3.20 percent, with points remaining unchanged from 0.27 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


New Home Sales in May at annual rate of 504,000
Posted: June 24, 2014 at 10:00 AM (Tuesday)

Sales of new single-family houses in May 2014 were at a seasonally adjusted annual rate of 504,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 18.6 percent (±17.3%) above the revised April rate of 425,000 and is 16.9 percent (±19.6%) above the May 2013 estimate of 431,000.

The median sales price of new houses sold in May 2014 was $282,000; the average sales price was $319,200. The seasonally adjusted estimate of new houses for sale at the end of May was 189,000. This represents a supply of 4.5 months at the current sales rate.


Consumer Confidence improved again in June to 85.2
Posted: June 24, 2014 at 10:00 AM (Tuesday)

The Conference Board Consumer Confidence Index®, which had increased in May, improved again in June. The Index now stands at 85.2 (1985=100), up from 82.2 in May. The Present Situation Index increased to 85.1 from 80.3, while the Expectations Index rose to 85.2 from 83.5 in May.

Says Lynn Franco, Director of Economic Indicators at The Conference Board: “Consumer confidence continues to advance and the index is now at its highest level since January 2008 (87.3). June’s increase was driven primarily by improving current conditions, particularly consumers’ assessment of business conditions. Expectations regarding the short-term outlook for the economy and jobs were moderately more favorable, while income expectations were a bit mixed. Still, the momentum going forward remains quite positive.”

Consumers’ appraisal of current conditions improved in June. Those claiming business conditions are “good” increased to 23.0 percent from 21.1 percent, while those stating business conditions are “bad” decreased to 22.8 percent from 24.6 percent. Consumers’ assessment of the job market was also more favorable. Those stating jobs are “plentiful” edged up to 14.7 percent from 14.2 percent, while those claiming jobs are “hard to get” declined to 31.8 percent from 32.2 percent.

Consumers’ expectations were generally more positive in June. The percentage of consumers expecting business conditions to improve over the next six months increased to 18.8 percent from 17.7 percent. However, those expecting business conditions to worsen increased to 11.4 percent from 10.7 percent.

Consumers were more positive about the outlook for the labor market. Those anticipating more jobs in the months ahead increased to 16.3 percent from 15.2 percent, while those anticipating fewer jobs edged down to 18.7 percent from 18.9 percent. Fewer consumers expect their incomes to grow, 15.9 percent versus 18.0 percent, but those expecting a drop in their incomes also declined, to 12.1 percent from 14.5 percent.


Richmond Fed's Current Activity Index softened slightly to a reading of 3
Posted: June 24, 2014 at 10:00 AM (Tuesday)

Fifth District manufacturing activity grew mildly in June, according to the most recent survey by the Federal Reserve Bank of Richmond. The volume of new orders rose slightly, while shipments softened. Manufacturing employment weakened compared to last month, while average wage growth eased and the average workweek lengthened.

Manufacturers looked for better business conditions in the next six months. Producers anticipated a higher volume of new orders and shipments. Additionally, firms anticipated greater backlogs of new orders and predicted capacity utilization would increase. Expectations were for longer vendor lead times in the six months ahead.

Survey participants also planned more hiring, along with strong growth in wages and a pickup in the average workweek in the next six months.

Prices of raw materials and finished goods rose at a slower pace in June compared to last month. However, firms expected faster growth in prices paid and prices received over the next six months than they anticipated a month ago.

Overall, manufacturing conditions softened slightly. The composite index for manufacturing moved to a reading of 3 following last month's reading of 7. The index for shipments fell eight points, ending at 2, while the index for new orders gained one point, finishing at a reading of 4. Manufacturing hiring slowed this month. At an index of 3, the June indicator dropped seven points from last month's reading of 10.

Vendor lead time flattened, moving the index to 1, and the indicator for the backlog of orders decreased to -3 from 1. The capacity utilization gauge climbed ten points this month, ending at 8. Finished goods inventories grew at a slower pace. The index fell ten points, ending at 4. Raw materials inventories built up more quickly. That gauge moved to 14 from 9.


S&P/Case-Shiller Home Price Indices gained 1.0%
Posted: June 24, 2014 at 09:00 AM (Tuesday)

Data through April 2014, released today by S&P Dow Jones Indices for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, show that the 10-City and 20-City Composites posted annual gains of 10.8%. This is a significantly lower rate when compared to last month. Nineteen of the 20 cities saw lower annual gains in April than in March. California (Los Angeles, San Diego and San Francisco) saw their returns worsen by approximately three percentage points. Boston was the only city to see its annual rate improve.

The 10-City and 20-City Composites increased 1.0% and 1.1% in April. Seven cities – Cleveland, Las Vegas, Los Angeles, Miami, Phoenix, San Diego and San Francisco – reported lower returns than in March. Boston rose 2.9%, its largest monthly gain in over its 27 years of history. San Francisco rose 2.3%, its sixth consecutive price increase.

April 2014, the 10-City and 20-City Composites posted year-over-year increases of 10.8%. Although home prices rose in April, the annual gains weakened. Overall, prices are rising month-to-month but at a slower rate. Last year some Sunbelt cities were seeing year-over-year numbers close to 30%, now all are below 20%: Las Vegas (18.8%), Los Angeles (14.0%), Phoenix (9.8%), San Diego (15.3%) and San Francisco (18.2%). Other cities around the nation are also experiencing slower price increases.

While the annual numbers worsened, the monthly figures were seasonally strong. Five cities – Atlanta, Boston, Chicago, San Francisco and Seattle – reported monthly gains of 2% or more. Dallas and Denver gained 1.6% and continue to set new peaks. Boston and Charlotte are less than 10% away from their peaks.

Near term economic factors favor further gains in housing: mortgage rates are lower than a year ago, the Fed is expected to keep interest rates steady until mid-2015 and the labor market is improving. However, housing is not back to normal: prices are being supported by cash sales, low inventories and declining foreclosure and REO sales. First time home buyers are not back in force and qualifying for a mortgage remains challenging. The question is whether housing will bounce back before the Fed begins to tighten sometime next year.

As of April 2014, average home prices across the United States are back to their summer 2004 levels. Measured from their June/July 2006 peaks, the peak-to-current decline for both Composites is approximately 18-19%. The recovery from the March 2012 lows is 25-26% for the 10-City and 20-City Composites.

All cities continue to post positive year-over-year returns. Boston was the only city to show improvement in its annual rate – it went from 8.3% in March to 9.0% in April. After posting 13 months of annual gains of over 20%, San Francisco saw its rate dip below 20%.

In April, all cities saw prices increase with twelve cities reporting higher returns than last month. Boston gained the most with an increase of 2.9%, its highest month-over-month gain. San Francisco and Seattle trailed at +2.3%. At the bottom of the list, New York gained only 0.1%. Dallas and Denver continue to set new peaks while Detroit remains the only city below its January 2000 value.


ICSC Chain Store Sales jumped by 2.0% in Jun 21 Wk
Posted: June 24, 2014 at 07:45 AM (Tuesday)

The arrival of summer gave way to a rise in weekly sales for the second consecutive week, according to the International Council of Shopping Centers (ICSC) and Goldman Sachs Weekly Chain Store Sales Index (ICSC-GS). Overall, according to the index, weekly chain store sales jumped by a solid 2.0% for the week ending June 21, 2014. On a year-over-year basis sales also rose sharply and posted a 4.1% gain - the strongest year-over-year pace in more than a year. The previous high occurred for the week ending June 1, 2013, which was up 4.3% from its comparable week of the prior year.

"Business was up sharply relative to the same week of the prior year for most segments according to the ICSC-GS consumer tracking survey. This was especially seen in department stores, discounters, dollar stores and wholesale clubs as they all posted hefty year-over-year gains," said Michael Niemira, ICSC vice president of research and chief economist. "June tends to be second highest sales volume month of the year, accounting about 10% of annual sales, so the recent strength is encouraging," Niemira added.

Looking ahead, ICSC Research forecasts that June monthly comp-store sales will increase by 3.5% on a year-over-year basis


Existing-Home Sales rose 4.9 in May
Posted: June 23, 2014 at 10:00 AM (Monday)

Existing-home sales rose strongly in May and inventory gains continued to help moderate price growth, according to the National Association of Realtors®. All four regions of the country experienced sales gains compared to a month earlier.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 4.9 percent to a seasonally adjusted annual rate of 4.89 million in May from an upwardly-revised 4.66 million in April, but remain 5.0 percent below the 5.15 million-unit level in May 2013. The 4.9 percent month-over-month gain in May was the highest monthly rise since August 2011 (5.5 percent).

Current sales activity is rebounding after the lackluster first quarter. Home buyers are benefiting from slower price growth due to the much-needed, rising inventory levels seen since the beginning of the year. Moreover, sales were helped by the improving job market and the temporary but slight decline in mortgage rates.

Total housing inventory at the end of May climbed 2.2 percent to 2.28 million existing homes available for sale, which represents a 5.6-month supply at the current sales pace, down slightly from 5.7 months in April. Unsold inventory is 6.0 percent higher than a year ago, when there were 2.15 million existing homes available for sale.

The median existing-home price for all housing types in May was $213,400, which is 5.1 percent above May 2013. Rising inventory bodes well for slower price growth and greater affordability, but the amount of homes for sale is still modestly below a balanced market. Therefore, new home construction is still needed to keep prices and housing supply healthy in the long run.

Earlier this month, NAR reported new home construction activity is currently insufficient in most of the U.S., and some states could face persistent housing shortages and affordability issues unless housing starts increase to match up with local job creation.

Distressed homes – foreclosures and short sales – accounted for 11 percent of May sales, down from 18 percent in May 2013. Eight percent of May sales were foreclosures and three percent were short sales. Foreclosures sold for an average discount of 18 percent below market value in May, while short sales were discounted 11 percent.

The percent share of first-time buyers continued to underperform, representing less than one- third of all buyers at 27 percent in May, down from 29 percent in April; they were 29 percent in April 2013.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage dropped to 4.19 percent in May from 4.34 percent in April, and is the lowest since June 2013 (4.07 percent).

NAR President Steve Brown, co-owner of Irongate, Inc., Realtors® in Dayton, Ohio, said housing fundamentals are showing slight improvement in markets across the country. “Many potential buyers were left on the sidelines beginning last summer as affordability declined amidst rising home prices and interest rates,” he said. “The temporary pause in rising interest rates and more homes for sale is good news – especially for first-time home buyers – who likely have a better chance in upcoming months to make a competitive offer that’s in return accepted by the seller.”

The median time on market for all homes was 47 days in May, down from 48 days in April; it was 41 days on market in May 2013. Short sales were on the market for a median of 125 days in May, while foreclosures typically sold in 57 days and non-distressed homes took 44 days. Forty-one percent of homes sold in May were on the market for less than a month.

All-cash sales comprised 32 percent of transactions in May, unchanged from last month and down from 33 percent in May 2013. Individual investors, who account for many cash sales, purchased 16 percent of homes in May, down from 18 percent in April; they were 18 percent in May 2013. Sixty-eight percent of investors paid cash in May.

Single-family home sales rose 5.7 percent to a seasonally adjusted annual rate of 4.30 million in May from 4.07 million in April, but remain 5.7 percent below the 4.56 million pace a year ago. The median existing single-family home price was $213,600 in May, up 4.9 percent from May 2013.

Existing condominium and co-op sales remained unchanged in May from April (as well as May 2013) at an annual rate of 590,000 units. The median existing condo price was $212,300 in May, which is 6.6 percent higher than a year ago.


Chicago Fed National Activity picked up in May
Posted: June 23, 2014 at 08:30 AM (Monday)

Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) increased to +0.21 in May from –0.15 in April. Three of the four broad categories of indicators that make up the index made positive contributions to the index in May, and three of the four categories increased from April.

The index’s three-month moving average, CFNAI-MA3, decreased to +0.18 in May from +0.31 in April, marking its third consecutive reading above zero. May’s CFNAI-MA3 suggests that growth in national economic activity was somewhat above its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests limited inflationary pressure from economic activity over the coming year.

The CFNAI Diffusion Index, which is also a three-month moving average, increased to +0.23 in May from +0.20 in April. Fifty-two of the 85 individual indicators made positive contributions to the CFNAI in May, while 33 made negative contributions. Fifty-five indicators improved from April to May, while 29 indicators deteriorated and one was unchanged. Of the indicators that improved, 17 made negative contributions.

Production-related indicators contributed +0.20 to the CFNAI in May, up from –0.23 in April. Manufacturing production increased 0.6 percent in May after decreasing 0.1 percent in April, and manufacturing capacity utilization rose to 77.0 percent in May from 76.7 percent in the previous month.

Employment-related indicators contributed +0.10 to the CFNAI in May, down from +0.26 in April. The unemployment rate remained at 6.3 percent in May after declining by 0.4 percentage points in April; and nonfarm payrolls increased by 217,000 in May after rising by 282,000 in the previous month. The sales, orders, and inventories category contributed +0.04 to the CFNAI in May, up from –0.03 in April.

The contribution from the consumption and housing category to the CFNAI moved up to –0.12 in May from –0.15 in April. Consumption indicators, on balance, improved, pushing the category’s contribution higher. However, housing starts decreased to 1,001,000 annualized units in May from 1,071,000 in April, and housing permits decreased to 991,000 annualized units in May from 1,059,000 in the previous month.

The CFNAI was constructed using data available as of June 19, 2014. At that time, May data for 51 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index. The April monthly index was revised to –0.15 from an initial estimate of –0.32. 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 April monthly index was due primarily to the former.


U.S. Leading Economic Index increased 0.5%
Posted: June 19, 2014 at 10:00 AM (Thursday)

The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.5 percent in May to 101.7 (2004 = 100), following a 0.3 percent increase in April, and a 1.0 percent increase in March.

May’s increase in the LEI, the fourth consecutive one, was broad based. Housing permits held the index back slightly but the LEI still points to an expanding economy and its pace may even pick up in the second half of the year.

Recent data suggest the economy is finally moving up from a 2 percent growth trend to a more robust expansion. The CEI shows the pace of economic activity continued to gain traction in May, while the trend in the LEI remains positive. Going forward, the biggest challenge is to sustain the rise in income growth which will drive consumption.

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.3 percent in May to 109.0 (2004 = 100), following a 0.2 percent increase in April, and a 0.4 percent increase in March.

The Conference Board Lagging Economic Index® (LAG) for the U.S. increased 0.4 percent in May to 123.8 (2004 = 100), following a 0.3 percent increase in April, and a 0.6 percent increase in March.


Philadelphia June Outlook Reflect Continued Growth
Posted: June 19, 2014 at 10:00 AM (Thursday)

Manufacturing firms responding to the June Business Outlook Survey indicated that regional manufacturing activity expanded this month. The survey's indicators for general activity, new orders, and shipments were positive for the fourth consecutive month and improved from their readings in May. Current employment was also higher among the reporting firms this month. The survey's indicators of future activity improved notably, suggesting that firms are more optimistic about continued growth over the next six months.

Indicators Reflect Continued Growth
The diffusion index of current general activity increased from a reading of 15.4 in May to 17.8 this month. The index has remained positive for four consecutive months and is at its highest reading since last September (see Chart). The current new orders and shipments indexes also moved higher this month, increasing 6 points and 1 point, respectively.

Indicators also suggest improved labor market conditions this month. The employment index remained positive for the 12th consecutive month and increased 4 points. The percentage of firms reporting increases in employment (22 percent) remained higher than the percentage reporting decreases (11 percent). The workweek index was also positive for the fourth consecutive month and increased 4 points.

Firms Report Higher Input Prices
The surveyed respondents indicated that price increases for purchased inputs were more widespread this month. The prices paid index increased 12 points and has now increased 24 points over the past two months. Over 36 percent of the firms reported higher input prices this month compared with 25 percent last month. The prices received index, reflecting firms' own final goods prices, however, declined from 17.0 to 14.1. The percent of firms reporting higher prices (22 percent) exceeded the percentage reporting lower prices (8 percent), but 71 percent of the firms reported steady prices.
Forecast Indicators Show Notable Improvement

Most of the survey's broad indicators of future growth showed notable improvement this month. The future general activity index increased 15 points and is at its highest reading since October (see Chart). The future indexes for new orders and shipments also showed improvement, increasing 21 points and 9 points, respectively. In addition, firms were more optimistic with respect to employment growth: The future employment index rose 7 points. The percentage of firms expecting growth in their employment edged higher, from 31 percent in May to 35 percent this month.

In special questions this month, firms were asked to provide estimates of production growth for the second half of the year compared with the first half (see Special Questions). Nearly 74 percent of the firms forecast positive growth in the second half of the year. Only 13 percent of the firms forecast declines in the second half. About 56 percent of the firms indicated that production growth would represent an acceleration compared with the growth in the first half of the year. Only 17 percent indicated that growth would represent a deceleration. Firms were also asked how production increases would be accomplished in terms of increases in labor inputs. Twenty-nine percent of the firms indicated that they would hire additional workers; 28 percent said the increases would be accomplished by increasing the productivity of their existing workforce without hiring; and 12 percent indicated that they would increase the hours of existing staff without hiring additional workers.

Summary
The June Business Outlook Survey suggests continued expansion of the region's manufacturing sector. Firms reported continued increases in overall activity, new orders, shipments, and employment this month. An increased share of firms reported higher input prices this month. The survey's future activity indexes showed a notable improvement, indicating that firms expect continued growth and employment increases over the next six months.


DJ-BTMU U.S. Business Barometer decreased by 0.1%
Posted: June 19, 2014 at 10:00 AM (Thursday)

For the week ending June 7 2014, the DJ-BTMU U.S. Business Barometer decreased slightly by 0.1 percent to 97.9. The decrease in this week’s barometer is mainly driven by weak performances in consumption indexes, especially chain store sales, which declined by 2.7 percent after a 2.8 percent gain in the prior week. As to the production side, truck production and electric output climbed by 6.1 and 2.9 percent, respectively, although it was partially offset by a sharp drop in auto production.

On a year-over-year basis, the barometer showed a gain of 0.7 percent, which compares to an average -3.3 percent decline over the Great Recession (ended in June 2009 according to the NBER). After flat lining in 2006, and declining from 2007 through 2009, the barometer bounced back in 2010 to rise by 3.4 percent, which was the strongest increase since 1994 (+4.0 percent), but not so impressive when compared to an -8.0 percent drop in 2009. The rate of increase for the 2013 slowed to 0.7 percent following 1.5 percent in 2012.

The smoothed version of the barometer, which attempts to account for weekly volatility, remained at 97.9 for four weeks in a row. Its year-over-year growth rate was 0.7 percent.


Weekly Initial Unemployment Claims Decrease 6,000 to 312,000
Posted: June 19, 2014 at 08:30 AM (Thursday)

In the week ending June 14, the advance figure for seasonally adjusted initial claims was 312,000, a decrease of 6,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 317,000 to 318,000. The 4-week moving average was 311,750, a decrease of 3,750 from the previous week's revised average. The previous week's average was revised up by 250 from 315,250 to 315,500.

There were no special factors impacting this week's initial claims. The advance seasonally adjusted insured unemployment rate was 1.9 percent for the week ending June 7, a decrease of 0.1 percentage point from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending June 7 was 2,561,000, a decrease of 54,000 from the previous week's revised level. This is the lowest level for insured unemployment since October 13, 2007 when it was 2,541,000. The previous week's level was revised up 1,000 from 2,614,000 to 2,615,000. The 4-week moving average was 2,600,500, a decrease of 21,750 from the previous week's revised average. This is the lowest level for this average since November 3, 2007 when it was 2,585,750. The previous week's average was revised up by 250 from 2,622,000 to 2,622,250.


FOMC target funds rate still 0 - 1/4%, QE now $35 bil
Posted: June 18, 2014 at 02:00 PM (Wednesday)

Information received since the Federal Open Market Committee met in April indicates that growth in economic activity has rebounded in recent months. Labor market indicators generally showed further improvement. The unemployment rate, though lower, remains elevated. Household spending appears to be rising moderately and business fixed investment resumed its advance, while the recovery in the housing sector remained slow. Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. Inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace and labor market conditions will continue to improve gradually, moving toward those the Committee judges consistent with its dual mandate. The Committee sees the risks to the outlook for the economy and the labor market as nearly balanced. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, and it is monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term.

The Committee currently judges that there is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions. In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions since the inception of the current asset purchase program, the Committee decided to make a further measured reduction in the pace of its asset purchases. Beginning in July, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $15 billion per month rather than $20 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $20 billion per month rather than $25 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee's sizable and still-increasing holdings of longer-term securities should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee's dual mandate.

The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. If incoming information broadly supports the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings. However, asset purchases are not on a preset course, and the Committee's decisions about their pace will remain contingent on the Committee's outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate. In determining how long to maintain the current 0 to 1/4 percent target range for the federal funds rate, the Committee will assess progress--both realized and expected--toward 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 developments. The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.

When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Stanley Fischer; Richard W. Fisher; Narayana Kocherlakota; Loretta J. Mester; Charles I. Plosser; Jerome H. Powell; and Daniel K. Tarullo.


1Q2014 Current Account Deficit Increased
Posted: June 18, 2014 at 08:48 AM (Wednesday)

The U.S. current-account deficit—a net measure of transactions between the United States and the rest of the world in goods, services, primary income (investment income and compensation), and secondary income (current transfers)—increased to $111.2 billion (preliminary) in the first quarter of 2014 from $87.3 billion (revised) in the fourth quarter of 2013. The deficit increased to 2.6 percent of current-dollar gross domestic product (GDP) from 2.0 percent in the fourth quarter. The increase in the current-account deficit largely reflected an increase in the deficit on goods and a decrease in the surplus on primary income. In addition, the deficit on secondary income increased and the surplus on services decreased.


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: June 18, 2014 at 07:00 AM (Wednesday)

Mortgage applications decreased 9.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 13, 2014.

The Market Composite Index, a measure of mortgage loan application volume, decreased 9.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 10 percent compared with the previous week. The Refinance Index decreased 13 percent from the previous week. The seasonally adjusted Purchase Index decreased 5 percent from one week earlier. The unadjusted Purchase Index decreased 6 percent compared with the previous week and was 15 percent lower than the same week one year ago.

“Interest rates increased relative to the previous week, as incoming economic data continues to suggest a pickup in the pace of growth,” said Mike Fratantoni, MBA’s Chief Economist. “Although the average rate for the week was up only a few basis points, the increase was matched by a large drop in refinance volume, and purchase application volume also declined. Some lenders continue to report that they have pre-approved borrowers who have been unable to find a property given the tight inventory in certain markets.”

The refinance share of mortgage activity decreased to 52 percent of total applications from 54 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 8 percent of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.36 percent from 4.34 percent, with points increasing to 0.24 from 0.16 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.32 percent from 4.27 percent, with points decreasing to 0.09 from 0.12 (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 4.07 percent from 4.06 percent, with points decreasing to -0.39 from -0.03 (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 3.50 percent from 3.43 percent, with points decreasing to 0.16 from 0.22 (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 3.20 percent from 3.18 percent, with points decreasing to 0.27 from 0.35 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.


Consumer Price Index increased 0.4% in May, Ex Fd & Engy up 0.3%
Posted: June 17, 2014 at 08:30 AM (Tuesday)

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in May on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.1 percent before seasonal adjustment.

The seasonally adjusted increase in the all items index, which was the largest since February 2013, was broad-based. The indexes for shelter, electricity, food, airline fares, and gasoline were among those that contributed. The food index posted its largest increase since August 2011, with the index for food at home rising 0.7 percent. The increases in the electricity and gasoline indexes led to a 0.9 percent rise in the energy index.

The index for all items less food and energy rose 0.3 percent in May, its largest increase since August 2011. Along with the indexes for shelter and airline fares, the medical care, apparel, and new vehicle indexes all increased in May. The indexes for household furnishings and operations and for used cars and trucks declined.

The all items index increased 2.1 percent over the last 12 months; this compares to a 2.0 percent increase for the 12 months ending April, and is the largest 12-month increase since October 2012. The index for all items less food and energy has increased 2.0 percent over the last 12 months. The food index has advanced 2.5 percent over the span, its largest 12-month increase since June 2012.


May Housing Starts down 6.5%, Permits down 6.4%
Posted: June 17, 2014 at 08:30 AM (Tuesday)

BUILDING PERMITS
Privately-owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 991,000. This is 6.4 percent (±0.8%) below the revised April rate of 1,059,000 and is 1.9 percent (±1.4%) below the May 2013 estimate of 1,010,000. Single-family authorizations in May were at a rate of 619,000; this is 3.7 percent (±1.2%) above the revised April figure of 597,000. Authorizations of units in buildings with five units or more were at a rate of 347,000 in May.

HOUSING STARTS
Privately-owned housing starts in May were at a seasonally adjusted annual rate of 1,001,000. This is 6.5 percent (±10.2%)* below the revised April estimate of 1,071,000, but is 9.4 percent (±11.0%)* above the May 2013 rate of 915,000. Single-family housing starts in May were at a rate of 625,000; this is 5.9 percent (±12.7%)* below the revised April figure of 664,000. The May rate for units in buildings with five units or more was 366,000.

HOUSING COMPLETIONS
Privately-owned housing completions in May were at a seasonally adjusted annual rate of 897,000. This is 6.8 percent (±12.7%)* above the revised April estimate of 840,000 and is 24.8 percent (±17.1%) above the May 2013 rate of 719,000. Single-family housing completions in May were at a rate of 618,000; this is 2.1 percent (±11.4%)* above the revised April rate of 605,000. The May rate for units in buildings with five units or more was 269,000.


Real Average Hourly Earnings fell 0.2% in May
Posted: June 17, 2014 at 08:30 AM (Tuesday)

Real average hourly earnings for all employees fell 0.2 percent from April to May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from a 0.2 percent increase in the average hourly earnings being more than offset by a 0.4 percent increase in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings fell 0.1 percent over the month due to the decrease in real average hourly earnings and the average workweek remaining unchanged.

Real average hourly earnings fell 0.1 percent, seasonally adjusted, from May 2013 to May 2014. This decrease in real average hourly earnings, combined with an unchanged average workweek, resulted in a 0.1 percent decrease in real average weekly earnings over this period.


ICSC Chain Store Sales rose 0.4% in Jun 14 Wk
Posted: June 17, 2014 at 07:45 AM (Tuesday)

After last week's slip retailers saw their weekly retail sales gain some positive momentum as consumers picked up their pace of shopping. As a result, for the week ending June 14 weekly sales rose by 0.4% according to the International Council of Shopping Centers (ICSC) and Goldman Sachs Weekly Chain Store Sales Index. In addition to the positive weekly sales increase, on a year-over-year basis, sales continued to strengthen and rose by 3.1%.

"The good news is that despite some unfavorable seasonal weather, consumers were still out shopping during this past week," said Michael Niemira, ICSC vice president of research and chief economist. "Business was up sharply relative to the same week of the prior year for wholesale clubs, and up appreciably for apparel, dollar, furniture, discounter, office and department stores, according to the ICSC-GS consumer tracking survey," Niemira added.

Looking ahead, ICSC Research forecasts that June monthly comp-store sales will increase by 3.5% on a year-over-year basis.


Builder Confidence rises 4 points in June to 49
Posted: June 16, 2014 at 10:00 AM (Monday)

Builder confidence in the market for newly built, single-family homes rose four points in to reach a level of 49 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today. It remains one point shy of the threshold for what is considered good building conditions.

“After several months of little fluctuation, a four-point uptick in builder sentiment is a welcome sign and shows some renewed confidence in the industry,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Del. “However, builders are facing strong headwinds, including the limited availability of labor.”

“Consumers are still hesitant, and are waiting for clear signals of full-fledged economic recovery before making a home purchase,” said NAHB Chief Economist David Crowe. “Builders are reacting accordingly, and are moving cautiously in adding inventory.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three index components posted gains in June. Most notably, the component gauging current sales conditions increased six points to 54. The component gauging sales expectations in the next six months rose three points to 59 and the component measuring buyer traffic increased by three to 36.

Looking at the three-month moving averages for regional HMI scores, the South and Northeast each edged up one point to 49 and 34, respectively, while the West held steady at 47. The Midwest fell a single point to 46.


Industrial Production rose 0.6%
Capacity Utilization increased to 79.1%

Posted: June 16, 2014 at 09:15 AM (Monday)

Industrial production rose 0.6 percent in May after having declined 0.3 percent in April. The decrease in April was previously reported to have been 0.6 percent. Manufacturing output increased 0.6 percent in May after having moved down 0.1 percent in the previous month. In May, the output of mines gained 1.3 percent and the production of utilities decreased 0.8 percent. At 103.7 percent of its 2007 average, total industrial production in May was 4.3 percent above its level of a year earlier. The capacity utilization rate for total industry increased 0.2 percentage point in May to 79.1 percent, a rate that is 1.0 percentage point below its long-run (1972–2013) average.


Treasury International Capital Data for April 2014
Posted: June 16, 2014 at 09:00 AM (Monday)

The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for April 2014. The sum total in April of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC inflow of $136.8 billion. Of this, net foreign private inflows were $119.7 billion, and net foreign official inflows were $17.2 billion.

Foreign residents decreased their holdings of long-term U.S. securities in April; net sales were $14.0 billion. Net sales by private foreign investors were $31.9 billion, while net purchases by foreign official institutions were $18.0 billion. U.S. residents increased their holdings of long-term foreign securities, with net purchases of $10.2 billion.

Taking into account transactions in both foreign and U.S. securities, the net sales of long-term securities were $24.2 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 $34.5 billion in April.

Foreign residents decreased their holdings of U.S. Treasury bills by $41.6 billion. Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities decreased by $17.1 billion. Banks’ own net dollar-denominated liabilities to foreign residents increased by $188.5 billion.


Empire State Manufacturing Survey Conditions improved significantly
Posted: June 16, 2014 at 08:30 AM (Monday)

The June 2014 Empire State Manufacturing Survey indicates that business conditions improved significantly for a second consecutive month for New York manufacturers. The headline general business conditions index was 19.3, a reading nearly identical to last month’s multiyear high. The new orders index climbed eight points to 18.4, its highest level in four years, and the shipments index inched down to 14.2. The unfilled orders index held steady at a level close to zero. The indexes for both prices paid and prices received were slightly lower, indicating a slowing in the pace of price increases. Labor market conditions continued to improve, with indexes pointing to a modest increase in employment levels and hours worked. Indexes for the six-month outlook remained highly optimistic, with the future new orders and shipments indexes recording notable gains.

Business Activity Expands at a Solid Clip
Business conditions improved significantly for a second consecutive month for New York manufacturers, according to the June 2014 survey. After climbing to a multiyear high last month, the general business conditions index held steady at 19.3. Forty percent of respondents reported that conditions had improved over the month, while 21 percent reported that conditions had worsened. The new orders index advanced eight points to 18.4, its highest level in four years. The shipments index fell three points but, at 14.2, still pointed to a significant expansion in shipments over the month. The unfilled orders index remained at -1.1, indicating that the level of unfilled orders was largely stable. The delivery time index rose two points to 1.1. The inventories index rose seven points to 9.7, indicating that inventory levels were somewhat higher in June.

Price Increases Slow for a Second Month
For a second consecutive month, both price indexes inched lower, suggesting that price increases were somewhat slower over the month. The prices paid index fell three points to 17.2, and the prices received index fell two points to 4.3. After surging last month, the index for number of employees fell back to 10.8, suggesting that employment levels continued to climb, though at a more modest pace than last month. The average workweek index moved up seven points to 9.7, pointing to an increase in hours worked.

Six-Month Outlook Remains Optimistic
As in May, indexes for the six-month outlook conveyed a strong degree of optimism about future business conditions. The index for future general business conditions fell four points, but remained high at 39.8. The future new orders index climbed to 44.5, and the index for expected shipments rose eleven points to 45.2. Indexes for expected prices were somewhat higher, with the future prices paid index rising five points to 36.6 and the index for future prices received climbing two points to 16.1. The index for expected number of employees rose to 20.4, and the future average workweek index rose to zero. The capital expenditures index fell for a second consecutive month, dropping to 11.8—a sign that while capital spending plans were generally positive, spending growth was expected to slow. The technology spending index was little changed at 3.2, suggesting only a slight increase in technology spending.


Producer Price Index fell 0.2% in May, ex Fd & Engy unch%
Posted: June 13, 2014 at 08:30 AM (Friday)

The Producer Price Index for final demand fell 0.2 percent in May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This decline followed increases of 0.6 percent in April and 0.5 percent in March. On an unadjusted basis, the index for final demand advanced 2.0 percent for the 12 months ended in May.

In May, the 0.2-percent decrease in final demand prices can be traced to the indexes for final demand services and final demand goods, both of which also declined 0.2 percent.

Within intermediate demand, prices for processed goods edged down 0.1 percent, the index for unprocessed goods was unchanged, and prices for services fell 0.4 percent.


Business Inventories up 0.6% in April
Posted: June 12, 2014 at 10:00 AM (Thursday)

Sales. The U.S. Census Bureau announced today that the combined value of distributive trade sales and manufacturers’ shipments for April, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,337.4 billion, up 0.7 percent (±0.2%) from March 2014 and were up 5.4 percent (±0.6%) from April 2013.

Inventories. Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,728.3 billion, up 0.6 percent (±0.1%) from March 2014 and up 5.0 percent (±0.5%) from April 2013.

Inventories/Sales Ratio. The total business inventories/sales ratio based on seasonally adjusted data at the end of April was 1.29. The April 2013 ratio was 1.30.


DJ-BTMU U.S. Business Barometer picked up by 0.3%
Posted: June 12, 2014 at 10:00 AM (Thursday)

For the week ending May 31 2014, the DJ-BTMU U.S. Business Barometer picked up by 0.3 percent after four consecutive weeks’ drop. This week’s barometer is mainly driven by strong performances in consumption indexes. Chain store sales bounced back by 2.9 percent after a 1.2 percent drop in the previous week, more than offsetting declines in MBA’s purchase index and railroad freight carloadings. As to the production side, auto production remained strong with an 8.2 percent gain in this week, although it was entirely offset by a sharp decline in truck production.

On a year-over-year basis, the barometer showed a gain of 0.7 percent, which compares to an average -3.3 percent decline over the Great Recession (ended in June 2009 according to the NBER). After flat lining in 2006, and declining from 2007 through 2009, the barometer bounced back in 2010 to rise by 3.4 percent, which was the strongest increase since 1994 (+4.0 percent), but not so impressive when compared to an -8.0 percent drop in 2009. The rate of increase for the 2013 slowed to 0.7 percent following 1.5 percent in 2012.

The smoothed version of the barometer, which attempts to account for weekly volatility, remained at 97.9 for three weeks in a row. Its year-over-year growth rate was 0.6 percent.


U.S. Import Price Index ticked up 0.1% in May
Posted: June 12, 2014 at 08:30 AM (Thursday)

U.S. import prices ticked up 0.1 percent in May, after a 0.5-percent downturn in April, the U.S. Bureau of Labor Statistics reported today. Higher fuel prices drove the increase in May, after declining fuel prices led the decrease the previous month. The price index for U.S. exports also rose 0.1 percent in May following a 1.0-percent decrease in April.


Weekly Initial Unemployment Claims Increase 4,000 to 317,000
Posted: June 12, 2014 at 08:30 AM (Thursday)

In the week ending June 7, the advance figure for seasonally adjusted initial claims was 317,000, an increase of 4,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 312,000 to 313,000. The 4-week moving average was 315,250, an increase of 4,750 from the previous week's revised average. The previous week's average was revised up by 250 from 310,250 to 310,500.

There were no special factors impacting this week's initial claims. The advance seasonally adjusted insured unemployment rate was 2.0 percent for the week ending May 31, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending May 31 was 2,614,000, an increase of 11,000 from the previous week's unrevised level of 2,603,000. The 4-week moving average was 2,622,000, a decrease of 13,000 from the previous week's unrevised average of 2,635,000. This is the lowest level for this average since November 24, 2007 when it was 2,616,750.


U.S. Retail Sales for May increase 0.3%, Ex-Auto up 0.1%
Posted: June 12, 2014 at 08:30 AM (Thursday)

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for May, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $437.6 billion, an increase of 0.3 percent (±0.5) from the previous month, and 4.3 percent (±0.9) above May 2013. Total sales for the March 2014 through May 2014 period were up 4.3 percent (±0.7) from the same period a year ago. The March 2014 to April 2014 percent change was revised from +0.1 percent (±0.5) to +0.5 percent (±0.2).

Retail trade sales were up 0.4 percent (±0.5) from April 2014, and 4.3 percent (±0.9) above last year. Auto and other motor vehicle dealers were up 11.1 percent (±3.2) from May 2013 and nonstore retailers were up 7.4 percent (±2.3) from last year.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: June 11, 2014 at 07:00 AM (Wednesday)

Mortgage applications increased 10.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 6, 2014. The previous week’s results included an adjustment for the Memorial Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 10.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 22 percent compared with the previous week. The Refinance Index increased 11 percent from the previous week. The seasonally adjusted Purchase Index increased 9 percent from one week earlier. The unadjusted Purchase Index increased 19 percent compared with the previous week and was 13 percent lower than the same week one year ago.

The refinance share of mortgage activity increased to 54 percent of total applications from 53 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 8 percent of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.34 percent from 4.26 percent, with points increasing to 0.16 from 0.13 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.27 percent from 4.22 percent, with points increasing to 0.12 from 0.11 (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 4.06 percent from 3.99 percent, with points increasing to -0.03 from -0.46 (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 3.43 percent from 3.39 percent, with points increasing to 0.22 from 0.07 (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 3.18 percent from 3.11 percent, with points increasing to 0.35 from 0.05 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


Wholesale Inventories up 1.1% in April
Posted: June 10, 2014 at 10:00 AM (Tuesday)

The U.S. Census Bureau announced today that April 2014 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 $450.2 billion, up 1.3 percent (+/-0.5) from the revised March level and were up 7.8 percent (+/-1.8%) from the April 2013 level. The March preliminary estimate was revised upward $0.9 billion or 0.2 percent. April sales of durable goods were up 1.7 percent (+/-0.7%) from last month and were up 6.0 percent (+/-1.2%) from a year ago. Sales of motor vehicle and motor vehicle parts and supplies were up 2.9 percent from last month and sales of professional and commercial equipment and supplies were up 2.4 percent. Sales of nondurable goods were up 1.0 percent (+/-0.5%) from March and were up 9.4 percent (+/-2.8%) from last April. Sales of drugs and druggists' sundries were up 3.0 percent from last month and sales of grocery and related products were up 1.2 percent.

Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $530.6 billion at the end of April, up 1.1 percent (+/-0.2%) from the revised March level and were up 6.7 percent (+/-0.9%) from the April 2013 level. The March preliminary estimate was revised downward $0.1 billion. April inventories of durable goods were up 0.9 percent (+/-0.4%) from last month and were up 6.6 percent (+/-1.4%) from a year ago. Inventories of electrical and electronic goods were up 2.8 percent from last month and inventories of metals and minerals, except petroleum were up 2.5 percent. Inventories of nondurable goods were up 1.4 percent (+/-0.5%) from March and were up 6.8 percent (+/-1.4%) from last April. Inventories of drugs and druggists' sundries were up 2.6 percent from last month and inventories of paper and paper products were up 2.3 percent.

The April inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.18. The April 2013 ratio was 1.19.


Job Openings were 4.5 million in April
Posted: June 10, 2014 at 10:00 AM (Tuesday)

There were 4.5 million job openings on the last business day of April, up from 4.2 million in March, the U.S. Bureau of Labor Statistics reported today. The hires rate (3.4 percent) and separations rate (3.3 percent) were unchanged in April. Within separations, the quits rate (1.8 percent) and the layoffs and discharges rate (1.2 percent) were unchanged in April. 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 rose to 4.5 million in April, up from 4.2 million in March. The number of job openings rose for total private and was little changed for government. In retail trade and in arts, entertainment, and recreation, the number of job openings increased in April. The number of openings also increased in the Midwest region in April.

Over the 12 months ending in April, the number of job openings (not seasonally adjusted) rose for total nonfarm and total private, but was little changed for government. Over the year, the job openings level increased in several industries and decreased only in federal government. The number of job openings increased over the year in three of the four regions: Midwest, Northeast, and West.


ICSC Chain Store Sales declined 2.8% in Jun 7 Wk
Posted: June 10, 2014 at 07:45 AM (Tuesday)

After a week-over-week surge in sales two weeks ago, the ICSC-Goldman Sachs (ICSC-GS) chain store sales pace reversed that spike with a 2.8% decline in the latest week ending June 7. However, more importantly, the year-over-year pace remained robust at the start of the five-week June fiscal month. Indeed, if the five-week period holds where the month began, then that would yield the strongest year-over-year gain in the ICSC-GS index on a fiscal-month average basis since January 2013. According to the ICSC-GS consumer tracking survey, business at most retail segments was up relative to the same week of the prior year. There was outstanding sector strength this past week in wholesale clubs, furniture stores, dollar stores and noteworthy gains among the drug, discount, electronics, office and apparel store segments.

According to Weather Trends International (WTI), the U.S. average national temperature was 2.4F warmer than last year and 2.7F warmer than its long-term normal average for the week ending on Saturday. WTI (wxtrends.com) observed that there was "a taste of summer" in the country's weather patterns over the past week with the third warmest start to that comparable week in more than 23 years, which should have helped lift summer-merchandise demand. Coincidentally, gasoline prices followed a similar two-week pattern to the weekly sales volatility, going up one week and reversing the rise in the subsequent week.

According to the U.S. Energy Information Administration, the nationwide average price of a gallon of regular-grade unleaded gasoline at the pump declined marginally (-1.6 cents per gallon) on June 9 compared with the price per gallon in the previous week and up less than one percent from the same week of the prior year.


NFIB Small Business Optimism Index gained 1.4 points to 96.6
Posted: June 10, 2014 at 07:30 AM (Tuesday)

The Index of Small Business Optimism posted another gain in May, the third month in a row. The improvement is certainly good news even though the current reading of 96.6 (up 1.4 points) is still “below average” and far from what is considered to be an expansion level. The four components most closely related to GDP and employment growth (job openings, job creation plans, inventory and capital spending plans) collectively fell 1 point in May. So the entire gain in optimism was driven by soft components (sales expectations and business conditions). If these translate into more spending and hiring, growth will get a boost. However, this “optimism” has not translated into more debt financed spending.

The Index continued to improve, to the highest level since September 2007. That’s the good news. Three gains in a row – could be the start of a trend, although we have had quite a few of these along the way that didn’t pan out. Not so good is that virtually all of the gain came in expectations for sales and for business conditions, the real spending/hiring components collectively lost 1 point. Still, expectations lead actual decisions, and the gains were large. And the employment measures held ground, so something is going somewhat well. Sales and profit trends are the best seen in years and that is an important motivator for hiring, which strengthened, and capital spending, which unfortunately remained uninspired by the expectations gains. Price hikes are becoming less “tame” but not a real inflation threat yet, and owners, although feeling better about sales prospects and business conditions, are still not willing to borrow and spend. Loan demand remains historically weak and few complain about credit availability or cost.

The “bifurcation” continues, with the S&P 500 hitting new record highs while the output of the firms being valued (GDP) fell 1 percent at an annual rate in the first quarter and the second quarter seems off to a weak start. Profit performance was not great (down 34 percent at an annual rate, down 4 percent year over year) but this did not deter investors who were further enticed to buy equities by a bond market rally. Although the Federal Reserve has declared that we are wealthier than at any time in history, it doesn’t feel that way. All that wealth isn’t producing much consumer spending. Consumption is estimated to rise 2 cents for every dollar increase in stock market wealth and 10 cents for every dollar in housing wealth, thought to be more permanent, at least until the housing bubble burst. And it is hard to believe that after the housing bubble and the worst recession since the Depression, that we could be so wealthy so quickly. Perhaps the values we are attaching to the assets we all own are not realistic (viz. the Fed’s distortion of a very important price, interest rates).

Chairman Yellen has promised to keep rates low and provide substantial accommodation. Although it is not clear that buying a trillion dollars of bonds really helps the real economy much, just big banks and traders. So, the stock and bond markets get continued artificial support and consumers lose “normal” interest income - and the Fed’s portfolio grows.


Employment Trends Index increased in May to 118.58
Posted: June 9, 2014 at 10:00 AM (Monday)

The Conference Board Employment Trends Index™ (ETI) increased in May. The index now stands at 118.58, up from 117.32 (a downward revision) in April. This represents a 5.4 percent gain in the ETI compared to a year ago.

The Employment Trends Index continues to signal solid job growth with an improvement in each of its eight components in the first five months of 2014. The need for employers to rapidly expand their payroll in light of strengthening economic activity is a major factor in the rapid decline in the unemployment rate.

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


Consumer Credit Increased at an annual rate of 10.25%
Posted: June 6, 2014 at 03:00 PM (Friday)

In April, consumer credit increased at a seasonally adjusted annual rate of 10-1/4 percent. Revolving credit increased at an annual rate of 12-1/4 percent, while nonrevolving credit increased at an annual rate of 9-1/2 percent.


May Employment increased by 217,000
Unemployment Rate remained at 6.3%

Posted: June 6, 2014 at 08:30 AM (Friday)

Total nonfarm payroll employment rose by 217,000 in May, and the unemployment rate was unchanged at 6.3 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services, health care and social assistance, food services and drinking places, and transportation and warehousing.

The unemployment rate held at 6.3 percent in May, following a decline of 0.4 percentage point in April. The number of unemployed persons was unchanged in May at 9.8 million. Over the year, the unemployment rate and the number of unemployed persons declined by 1.2 percentage points and 1.9 million, respectively.

Among the major worker groups, the unemployment rates for adult men (5.9 percent), adult women (5.7 percent), teenagers (19.2 percent), whites (5.4 percent), blacks (11.5 percent), and Hispanics (7.7 percent) showed little or no change in May. The jobless rate for Asians was 5.3 percent (not seasonally adjusted), little changed from a year earlier.

Among the unemployed, the number of job losers and persons who completed temporary jobs declined by 218,000 in May. The number of unemployed reentrants increased by 237,000 over the month, partially offsetting a large decrease in April. (Reentrants are persons who previously worked but were not in the labor force prior to beginning their current job search.)

The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 3.4 million in May. These individuals accounted for 34.6 percent of the unemployed. Over the past 12 months, the number of long-term unemployed has declined by 979,000.

The civilian labor force participation rate was unchanged in May, at 62.8 percent. The participation rate has shown no clear trend since this past October but is down by 0.6 percentage point over the year. The employment-population ratio, at 58.9 percent, was also unchanged in May and has changed little over the year.

Total nonfarm payroll employment increased by 217,000 in May, with gains in professional and business services, health care and social assistance, food services and drinking places, and transportation and warehousing. Over the prior 12 months, nonfarm payroll employment growth had averaged 197,000 per month.

In May, average hourly earnings for all employees on private nonfarm payrolls rose by 5 cents to $24.38. Over the past 12 months, average hourly earnings have risen by 2.1 percent. In May, average hourly earnings of private-sector production and nonsupervisory employees increased by 3 cents to $20.54.

After revision, the change in total nonfarm employment for March remained +203,000, and the change for April was revised from +288,000 to +282,000. With these revisions, employment gains in March and April were 6,000 lower than previously reported.


DJ-BTMU U.S. Business Barometer decreased by 0.1%
Posted: June 5, 2014 at 10:00 AM (Thursday)

For the week ending May 24 2014, the DJ-BTMU U.S. Business Barometer decreased slightly by 0.1 percent from last week, reaching the lowest level of 97.7 since March 22 2014. The decrease in this week’s barometer is due to weak performances in both production and consumption indexes. Chain store sales and MBA’s purchase index in the consumption side fell by 1.2 and 1.1 percent, respectively. As to the production side, electric output and lumber production dropped by 2.8 and 1.2 percent, respectively, more than offsetting increases in auto and truck production.

On a year-over-year basis, the barometer showed a gain of 0.5 percent, which compares to an average -3.3 percent decline over the Great Recession (ended in June 2009 according to the NBER). After flat lining in 2006, and declining from 2007 through 2009, the barometer bounced back in 2010 to rise by 3.4 percent, which was the strongest increase since 1994 (+4.0 percent), but not so impressive when compared to an -8.0 percent drop in 2009. The rate of increase for the 2013 slowed to 0.7 percent following 1.5 percent in 2012.

The smoothed version of the barometer, which attempts to account for weekly volatility, decreased by 0.1 percent for four weeks in a row. Its year-over-year growth rate was 0.4 percent.


Weekly Initial Unemployment Claims Increase 8,000 to 312,000
Posted: June 5, 2014 at 08:30 AM (Thursday)

In the week ending May 31, the advance figure for seasonally adjusted initial claims was 312,000, an increase of 8,000 from the previous week's revised level. The previous week's level was revised up by 4,000 from 300,000 to 304,000. The 4-week moving average was 310,250, a decrease of 2,250 from the previous week's revised average. This is the lowest level for this average since June 2, 2007 when it was 307,500. The previous week's average was revised up by 1,000 from 311,500 to 312,500.

There were no special factors impacting this week's initial claims. The advance seasonally adjusted insured unemployment rate was 2.0 percent for the week ending May 24, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending May 24 was 2,603,000, a decrease of 20,000 from the previous week's revised level. This is the lowest level for insured unemployment since October 27, 2007 when it was 2,587,000. The previous week's level was revised down by 8,000 from 2,631,000 to 2,623,000. The 4-week moving average was 2,635,000, a decrease of 18,250 from the previous week's revised average. This is the lowest level for this average since December 1, 2007 when it was 2,622,250. The previous week's average was revised down by 2,000 from 2,655,250 to 2,653,250.

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