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Category: Research - Topic: Economics



Business Inventories up 0.1% in December
Posted: February 12, 2016 at 10:00 AM (Friday)

The U.S. Census Bureau announced today that the combined value of distributive trade sales and manufacturers’ shipments for December, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,302.3 billion, down 0.6 percent (±0.3%) from November 2015 and was down 2.7 percent (±0.5%) from December 2014.

Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,813.1 billion, up 0.1 percent (±0.1%)* from November 2015 and were up 1.7 percent (±0.6%) from November 2014.

The total business inventories/sales ratio based on seasonally adjusted data at the end of December was 1.39. The December 2014 ratio was 1.33.


Forecasters Predict Lower Growth over the Next Three Years
Posted: February 12, 2016 at 10:00 AM (Friday)

The economy looks weaker now than it did three months ago, according to 40 forecasters surveyed by the Federal Reserve Bank of Philadelphia. The forecasters predict real GDP will grow at an annual rate of 2.0 percent this quarter and 2.5 percent next quarter. On an annual-average over annual-average basis, real GDP will grow 2.1 percent in 2016, down 0.5 percentage point from the previous estimate. The forecasters predict real GDP will grow 2.4 percent in 2017 and 2.7 percent in 2018, both down 0.1 percentage point from the estimates of three months ago. For 2019, real GDP is estimated to grow at 2.3 percent.

A slightly positive outlook for the labor market accompanies the outlook for weaker output growth. The forecasters predict that the unemployment rate will average 4.8 percent in 2016, before falling to 4.6 percent in 2017, 4.6 percent in 2018, and 4.7 percent in 2019. The projections for 2017 and 2018 are slightly below those of the last survey.

The panelists also predict a small improvement on the employment front. They have revised upward their estimates for job gains in 2016. The forecasters see nonfarm payroll employment growing at a rate of 195,000 jobs per month this quarter, 183,200 jobs per month next quarter, 195,900 jobs per month in the third quarter of 2016, and 152,600 jobs per month in the fourth quarter of 2016. The forecasters’ projections for the annual-average level of nonfarm payroll employment suggest job gains at a monthly rate of 204,300 in 2016 and 165,000 in 2017, as the table below shows. (These annual-average estimates are computed as the year-to-year change in the annual-average level of nonfarm payroll employment, converted to a monthly rate.)


U.S. Import Price Index declined 1.1% in January
Posted: February 12, 2016 at 08:30 AM (Friday)

In January, prices for U.S. imports decreased 1.1 percent for the second consecutive month, the U.S. Bureau of Labor Statistics reported today. In both months, the declines were primarily driven by lower fuel prices. U.S. export prices also fell in January, decreasing 0.8 percent. The decline followed a 1.1-percent drop the previous month.


U.S. Retail Sales for December increase 0.2%, Ex-Auto up 0.1%
Posted: February 12, 2016 at 08:30 AM (Friday)

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for January, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $449.9 billion, an increase of 0.2 percent (±0.5%) from the previous month, and 3.4 percent (±0.7%) above January 2015. Total sales for the November 2015 through January 2016 period were up 2.5 percent (±0.5%) from the same period a year ago. The November 2015 to December 2015 percent change was revised from down 0.1 percent (±0.5%) to up 0.2 percent (±0.3%).

Retail trade sales were up 0.3 percent (±0.5%) from December 2015, and up 3.1 percent (±0.5%) from last year. Sporting goods, hobby, book and music stores were up 9.1 percent (±2.1%) from January 2015 and nonstore retailers were up 8.7 percent (±1.2%) from last year.


BTMU U.S. Business Barometer dropped by 0.2%
Posted: February 11, 2016 at 10:00 AM (Thursday)

For the week ending January 30 2016, the BTMU U.S. Business Barometer dropped by 0.2 percent to 98.0, following a gain of 0.4 percent in the previous week. This week’s loss was primarily driven by poor performances on the production side. In fact, all production indexes except truck production recorded losses. For instance, electric output and coal production slumped by 8.8 and 8.1 percent, respectively. As to the demand side, MBA’s purchase index also contracted, although it was offset by gains in chain store sales, which bounced back by 1.3 percent, after falling by 0.4 percent in the prior week.

On a year-over-year basis, the barometer declined by 0.3 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, increased by 0.1 percent to 98.0. Its year-over-year growth rate was -0.3 percent.


Weekly Initial Unemployment Claims Decrease 16,000 to 269,000
Posted: February 11, 2016 at 08:46 AM (Thursday)

In the week ending February 6, the advance figure for seasonally adjusted initial claims was 269,000, a decrease of 16,000 from the previous week's unrevised level of 285,000. The 4-week moving average was 281,250, a decrease of 3,500 from the previous week's unrevised average of 284,750. There were no special factors impacting this week's initial claims.

The advance seasonally adjusted insured unemployment rate was 1.6 percent for the week ending January 30, a decrease of 0.1 percentage point from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 30 was 2,239,000, a decrease of 21,000 from the previous week's revised level. The previous week's level was revised up 5,000 from 2,255,000 to 2,260,000. The 4-week moving average was 2,248,000, a decrease of 6,250 from the previous week's revised average. The previous week's average was revised up by 1,500 from 2,252,750 to 2,254,250.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: February 10, 2016 at 07:00 AM (Wednesday)

Mortgage applications increased 9.3 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending February 5, 2016.

The Market Composite Index, a measure of mortgage loan application volume, increased 9.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 12 percent compared with the previous week. The Refinance Index increased 16 percent from the previous week. The seasonally adjusted Purchase Index increased 0.2 percent from one week earlier. The unadjusted Purchase Index increased 7 percent compared with the previous week and was 25 percent higher than the same week one year ago.

The refinance share of mortgage activity increased to 61.2 percent of total applications from 59.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.4 percent of total applications.

The FHA share of total applications decreased to 12.3 percent from 12.9 percent the week prior. The VA share of total applications remained unchanged from 11.1 percent the week prior. The USDA share of total applications decreased to 0.6 percent from 0.7 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to its lowest level since April 2015, 3.91 percent, from 3.97 percent, with points unchanged at 0.41 (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 its lowest level since April 2013, 3.76 percent, from 3.84 percent, with points increasing to 0.30 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 its lowest level since May 2015, 3.72 percent, from 3.80 percent, with points decreasing to 0.33 from 0.35 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to its lowest level since April 2015, 3.18 percent, from 3.22 percent, with points increasing to 0.38 from 0.37 (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 its lowest level since October 2015, 2.96 percent, from 3.00 percent, with points decreasing to 0.30 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


Wholesale Inventories down 0.1% in December
Posted: February 9, 2016 at 10:00 AM (Tuesday)

The U.S. Census Bureau announced today that December 2015 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 $440.0 billion, down 0.3 percent (+/-0.9%) from the revised November level and were down 4.5 percent (+/-1.4%) from the December 2014 level. The November preliminary estimate was revised downward $1.3 billion or 0.3 percent. December sales of durable goods were up 0.3 percent (+/-1.1%) from last month, but were down 3.0 percent (+/-2.1%) from a year ago. Sales of motor vehicle and motor vehicle parts and supplies were up 2.5 percent from last month, while sales of electrical and electronic goods were down 1.9 percent. Sales of nondurable goods were down 0.9 percent (+/-1.1%) from November and were down 5.9 percent (+/-1.8%) from last December. Sales of petroleum and petroleum products were down 4.5 percent from last month.

Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $582.0 billion at the end of December, down 0.1 percent (+/-0.4%) from the revised November level, but were up 1.9 percent (+/-1.6%) from the December 2014 level. The November preliminary estimate was revised downward $0.1 billion. December inventories of durable goods were down 0.3 percent (+/-0.5%) from last month, but were up 0.5 percent (+/-1.8%) from a year ago. Inventories of metals and minerals, except petroleum, were down 4.4 percent from last month. Inventories of nondurable goods were up 0.1 percent (+/-0.7%) from November and were up 4.1 percent (+/-2.1%) from last December. Inventories of chemicals and allied products were up 2.3 percent from last month, while inventories of petroleum and petroleum products were down 7.8 percent.

The December inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.32. The December 2014 ratio was 1.24.


Job Openings increased to 5.6 million in December
Posted: February 9, 2016 at 10:00 AM (Tuesday)

The number of job openings increased to 5.6 million on the last business day of December, the U.S. Bureau of Labor Statistics reported today. Hires and separations were little changed at 5.4 million and 5.1 million, respectively. Within separations, the quits rate was 2.1 percent, and the layoffs and discharges rate was 1.1 percent. This release includes estimates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and by four geographic regions.

Job openings rose to 5.6 million in December. The job openings rate was 3.8 percent. The number of job openings increased in December for total private and was little changed for government. Job openings increased in construction (+69,000), nondurable goods manufacturing (+60,000), and durable goods manufacturing (+26,000). In the regions, job openings increased in the West over the month.

The number of job openings (not seasonally adjusted) increased over the 12 months ending in December for total nonfarm and total private, and edged up for government. Job openings rose in several industries over the year with the largest changes in health care and social assistance (+172,000) and finance and insurance (+99,000). The number of job openings increased over the year in the Northeast, Midwest, and West regions.


NFIB Small Business Optimism Index fell 1.3 points to 93.9
Posted: February 9, 2016 at 07:00 AM (Tuesday)

The Index of Small Business Optimism fell 1.3 points from December, falling to 93.9. Neither the tumultuous stock market nor the Federal Reserve’s rate hike left much of a mark on small business owners beyond a frown in the Index represented by a further weakening of expectations for business conditions and expected real sales volumes. Those two Index components accounted for most of the decline.

The Bureau of Economic Analysis reported its first estimate of real GDP growth in 2015 Q4 at 0.7 percent, a very weak performance. The Bureau of Labor Statistics reported job creation in January at about 150,000. December’s number was revised down to 262,000, still more than most analysts, including those with independent data sources. So what are all those workers making? It’s not showing up in GDP. The unemployment rate fell to 4.9 percent but the percent of the adult population with a job remained historically low. The State of the Union address tried to put lipstick on the pig that is our recovery and of course shift the blame for the recession to predecessors. There was little there to lift the spirits of Main Street business owners. The litany was old and worn.

The Small Business Optimism Index fell a bit more than one point, not much of a response to stock market turbulence or the Federal Reserve’s move to raise interest rates. The decline in optimism was accounted for by two important Index components, expected business conditions in six months and expected real sales. These expectations are important determinants of decisions to hire, to expand business operations and to order new inventory, all drivers of economic growth. Fed policy provides liquidity and depresses interest rates but provides no encouragement to owners to spend and produce some “inflation”. Indeed, policy pronouncements convey a sense of desperation which is not supportive of positive expectations for the economy.

The labor market continues to show strength, driven by the core growth in the economy that results from the addition of 3 million new people every year (a missing ingredient to the growth stew in Japan and Western Europe). But uncertainty continues to cloud the future. Politicians are promising “free stuff” but that means less freedom to Main Street that will be expected to pay for it. There is talk of “negative interest rates”, a very foreign and confusing concept to Main Street. Global events are not encouraging, indicative of more confusion and violence to come. The Administration offers little promise that serious economic problems will be dealt with while the avalanche of regulations continues. Overall, it is unlikely that anything will occur that will raise the spirits of small business owners and rekindle the “animal spirits” that are needed to spur economic growth.


Employment Trends Index Increased in January to 128.93
Posted: February 8, 2016 at 10:00 AM (Monday)

The Conference Board Employment Trends Index™ (ETI) increased in January. The index now stands at 128.93, up from 128.71 in December (a downward revision). The change represents a 1.9 percent gain in the ETI compared to a year ago.

“The Employment Trends Index rose for the second month in a row, reducing the likelihood of further slowing in employment growth,” said Gad Levanon, Managing Director of Macroeconomic and Labor Market Research at The Conference Board. “However, the temporary help industry component declined sharply in January, and because it is one of the best leading indicators of employment growth, we will monitor it closely in the coming months.”

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


Consumer Credit Increased at an annual rate of 7.25%
Posted: February 5, 2016 at 03:00 PM (Friday)

Consumer credit increased at a seasonally adjusted annual rate of 5-3/4 percent during the fourth quarter. Revolving credit increased at an annual rate of 5-1/4 percent, while nonrevolving credit increased at a seasonally adjusted rate of 6 percent. In December, consumer credit increased at an annual rate of 7-1/4 percent.


January Employment increased by 151,000
Unemployment Rate little changed at 4.9%

Posted: February 5, 2016 at 08:30 AM (Friday)

Total nonfarm payroll employment rose by 151,000 in January, and the unemployment rate was little changed at 4.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in several industries, led by retail trade, food services and drinking places, health care, and manufacturing. Employment declined in private educational services, transportation and warehousing, and mining.

Both the number of unemployed persons, at 7.8 million, and the unemployment rate, at 4.9 percent, changed little in January. Over the past 12 months, the number of unemployed persons and the unemployment rate were down by 1.1 million and 0.8 percentage point, respectively.

Among the major worker groups, the unemployment rates for adult men (4.5 percent) and Whites (4.3 percent) declined in January. The jobless rates for adult women (4.5 percent), teenagers (16.0 percent), Blacks (8.8 percent), Asians (3.7 percent), and Hispanics (5.9 percent) showed little change over the month.

The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged in January, at 2.1 million, and has shown little movement since June. These individuals accounted for 26.9 percent of the unemployed.

After accounting for the annual adjustments to the population controls, the civilian labor force and total employment, as measured by the household survey, were little changed in January. The labor force participation rate, at 62.7 percent, was little changed. The employment-population ratio (59.6 percent) changed little over the month but was up by 0.3 percentage point since October.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed at 6.0 million in January but was down by 796,000 over the year. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find full-time jobs.

In January, 2.1 million persons were marginally attached to the labor force, little different from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 623,000 discouraged workers in January, essentially unchanged from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.5 million persons marginally attached to the labor force in January had not searched for work for reasons such as school attendance or family responsibilities.

Total nonfarm payroll employment increased by 151,000 in January. Employment rose in several industries, led by retail trade, food services and drinking places, health care, and manufacturing. Private educational services and transportation and warehousing lost jobs. Mining employment continued to decline.

The average workweek for all employees on private nonfarm payrolls rose by 0.1 hour to 34.6 hours in January. The manufacturing workweek edged up by 0.1 hour to 40.7 hours, and factory overtime was unchanged at 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.8 hours.

In January, average hourly earnings for all employees on private nonfarm payrolls increased by 12 cents to $25.39. Over the year, average hourly earnings have risen by 2.5 percent. In January, average hourly earnings of private-sector production and nonsupervisory employees rose by 6 cents to $21.33.

The change in total nonfarm payroll employment for November was revised from +252,000 to +280,000, and the change for December was revised from +292,000 to +262,000. With these revisions, employment gains in November and December combined were 2,000 lower than previously reported. Over the past 3 months, job gains have averaged 231,000 per month. Monthly revisions result from additional reports received from businesses since the last published estimates and the recalculation of seasonal factors. The annual benchmark process also contributed to these revisions.


Goods and Services Deficit Increased in December 2015
Posted: February 5, 2016 at 08:30 AM (Friday)

The Nation's international trade deficit in goods and services increased to $43.4 billion in December from $42.2 billion in November (revised), as exports decreased and imports increased.

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $43.4 billion in December, up $1.1 billion from $42.2 billion in November, revised. December exports were $181.5 billion, $0.5 billion less than November exports. December imports were $224.9 billion, up $0.6 billion from November.

The December increase in the goods and services deficit reflected an increase in the goods deficit of $1.3 billion to $62.5 billion and an increase in the services surplus of $0.1 billion to $19.2 billion.

For 2015, the goods and services deficit was $531.5 billion, up $23.2 billion or 4.6 percent from 2014. Exports were $2,230.3 billion, down $112.9 billion or 4.8 percent. Imports were $2,761.8 billion, down $89.7 billion or 3.1 percent.


BTMU U.S. Business Barometer rose by 0.4%
Posted: February 4, 2016 at 10:00 AM (Thursday)

For the week ending January 23 2016, the BTMU U.S. Business Barometer rose by 0.4 percent to 98.2, extending the positive trend for three weeks in a row. This week’s gain was driven by both consumption and production indexes. MBA’s purchase index, for instance, increased by 4.6 percent following a loss of 1.6 percent in the previous week; while railroad freight car loadings surged 0.7 percent. As to the production side, all indexes except coal production, reported gains. For example, electric output and auto production climbed by 6.0 and 2.2 percent, respectively.

On a year-over-year basis, the barometer remained flat, 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 by 0.1 percent to 97.9. Its year-over-year growth rate was -0.5 percent.


New orders for manufactured goods decreased 2.9% in December
Posted: February 4, 2016 at 10:00 AM (Thursday)

New orders for manufactured goods in December, down four of the last five months, decreased $13.5 billion or 2.9 percent to $456.5 billion, the U.S. Census Bureau reported today. This followed a 0.7 percent November decrease.

Shipments, down eight of the last nine months, decreased $6.8 billion or 1.4 percent to $467.0 billion. This followed a 0.1 percent November decrease.

Unfilled orders, down following two consecutive monthly increases, decreased $5.8 billion or 0.5 percent to $1,187.4 billion. This followed a 0.1 percent November increase. The unfilled orders-to-shipments ratio was 7.11, up from 6.94 in November.

Inventories, up following five consecutive monthly decreases, increased $1.0 billion or 0.2 percent to $642.3 billion. This followed a 0.3 percent November decrease. The inventories-to-shipments ratio was 1.38, up from 1.35 in November.


4Q2015 Productivity Growth Decreased 3.0%
Posted: February 4, 2016 at 08:30 AM (Thursday)

Nonfarm business sector labor productivity decreased at a 3.0-percent annual rate during the fourth quarter of 2015, the U.S. Bureau of Labor Statistics reported today, as output increased 0.1 percent and hours worked increased 3.3 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the fourth quarter of 2014 to the fourth quarter of 2015, productivity increased 0.3 percent. Annual average productivity increased 0.6 percent from 2014 to 2015.

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

Unit labor costs in the nonfarm business sector increased 4.5 percent in the fourth quarter of 2015, reflecting a 1.3-percent increase in hourly compensation and a 3.0-percent decrease in productivity. Unit labor costs increased 2.8 percent over the last four quarters.

BLS calculates unit labor costs as the ratio of hourly compensation to labor productivity. Increases in hourly compensation tend to increase unit labor costs, and increases in output per hour tend to reduce them.

Manufacturing sector labor productivity decreased 0.4 percent in the fourth quarter of 2015, as output increased 0.5 percent and hours worked increased 0.9 percent. Productivity decreased 1.0 percent in the durable goods manufacturing sector and increased 0.3 percent in the nondurable goods sector. Over the last four quarters, manufacturing productivity increased 1.5 percent, as output increased 1.1 percent and hours decreased 0.4 percent. Unit labor costs in manufacturing increased 3.6 percent in the fourth quarter of 2015 and increased 1.9 percent from the same quarter a year ago.

Table C presents annual average changes for the most recent five years for the nonfarm business sector and the total manufacturing sector. Nonfarm business sector productivity grew 0.6 percent in 2015, as output and hours increased 2.8 percent and 2.2 percent, respectively. The increase in hours was due solely to an increase in employment of 2.3 percent, which was the largest employment gain since a 2.3-percent increase in 1998. Productivity increased at an annual rate of less than 1.0 percent in each of the last five years, reflecting steady growth in both output and hours during these years. The average annual rate of productivity growth from 2007 to 2015--corresponding to the current business cycle--is 1.2 percent, well below the long-term rate from 1947 to 2015 of 2.1 percent.

Unit labor costs in the nonfarm business sector rose 2.4 percent in 2015, reflecting increases of 3.0 percent in hourly compensation and 0.6 percent in productivity. The increases in unit labor costs and hourly compensation are the largest since 2007, when these series rose 2.7 percent and 4.3 percent, respectively. Real hourly compensation, which takes into account changes in consumer prices, increased 2.8 percent in 2015. This is the largest annual increase in real hourly compensation since a 3.9-percent increase in 2000.

In the manufacturing sector, productivity increased 1.3 percent in 2015, which is the same rate of increase as in 2014. The average annual rate of productivity growth from 2007 to 2015 is 2.1 percent, which is below the long-term rate from 1987 to 2015 of 3.4 percent. Unit labor costs increased 1.3 percent in 2015, which is similar to a 1.4-percent increase in 2014. Real hourly compensation in manufacturing increased 2.4 percent in 2015.

Revised measures
In the third quarter of 2015, nonfarm business productivity was revised down 0.1 percentage point, to an increase of 2.1 percent. Unit labor costs in the nonfarm business sector increased 1.9 percent in the third quarter--rather than 1.8 percent as previously reported.

In the manufacturing sector, productivity was revised down 0.1 percentage point, to an increase of 5.0 percent. Manufacturing unit labor costs increased 2.3 percent, the same rate as previously reported.

In the nonfinancial corporate sector, productivity was revised down 1.2 percentage points in the third quarter of 2015, to an increase of 1.7 percent. This downward revision to productivity is due solely to a 1.2 percentage point downward revision to output.


Weekly Initial Unemployment Claims Increase 8,000 to 285,000
Posted: February 4, 2016 at 08:30 AM (Thursday)

In the week ending January 30, the advance figure for seasonally adjusted initial claims was 285,000, an increase of 8,000 from the previous week's revised level. The previous week's level was revised down by 1,000 from 278,000 to 277,000. The 4-week moving average was 284,750, an increase of 2,000 from the previous week's revised average. The previous week's average was revised down by 250 from 283,000 to 282,750. There were no special factors impacting this week's initial claims.

The advance seasonally adjusted insured unemployment rate was 1.7 percent for the week ending January 23, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 23 was 2,255,000, a decrease of 18,000 from the previous week's revised level. The previous week's level was revised up 5,000 from 2,268,000 to 2,273,000. The 4-week moving average was 2,252,750, an increase of 5,250 from the previous week's revised average. The previous week's average was revised up by 1,250 from 2,246,250 to 2,247,500.


Challenger Layoffs rose to 75,114 in January
Posted: February 4, 2016 at 07:30 AM (Thursday)

Heavy downsizing in the retail and energy sectors pushed monthly job cut announcements to their highest level since last summer, according to the latest report on monthly job cuts released Thursday by global outplacement consultancy Challenger, Gray & Christmas, Inc.

In all, US-based employers reported 75,114 planned job cuts to kick off 2016. That is a 218 percent increase from a 15-year low of 23,622 in December. January was 42 percent higher than the same month a year ago, when employers announced 50,041 job cuts.

Last month represents the highest monthly tally since July 2015, when cuts reached 105,696. It was the largest January total since 241,749 job cuts were announced during the first month of 2009.

Despite relatively strong holiday sales to close out 2015, retailers led all other industries in January job cuts, announcing plans to cut 22,246 jobs from their payrolls. That was the highest retail total since January 2009, when retailers announced 53,968 planned layoffs.

Retail cuts were dominated by Walmart, which announced plans to close 269 stores worldwide, which is expected to impact 16,000 workers. Macys is also planning to close stores in 2016, a move that will affect 4,820 employees.

In addition to increased retail job cuts, January also saw the return of heavy job cuts in the energy sector. Overall, these firms announced plans to reduce headcounts by 20,246, up from 1,682 in December.

The January total for the energy sector was higher than month since the decline in oil prices began in late 2014. The previous high was January 2015, when 20,193 jobs in the sector were eliminated.

“The pace of downsizing in the energy sector ebbed in the second half of 2015, but the latest activity, which included more cuts from Halliburton and Schlumberger, is evidence the industry is far from concluding its cost-cutting initiatives. With oil prices expected to stay low for the foreseeable future, the potential for continued layoffs remains elevated,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

Since oil prices began their decline, Halliburton has announced 22,000 job cuts through multiple job-cut announcements. Schlumberger has also reported multiple layoff events since late 2014, with total job cuts exceeding 30,000. Baker Hughes has also announced multiple layoffs, totaling 16,000.

“Retail job cuts came on the heels of a relatively strong holiday sales, which increased by nearly 8.0 percent. However, a growing portion of the sales gains are occurring online. At Macy’s, for example, November and December sales at its brick-and-mortar stores fell by about 5.0 percent, while orders through its online entities were up 25 percent from a year earlier, according to reports,” said Challenger.

“This shift is making it necessary for retailers like Macy’s and Walmart to rethink their strategy; moving away from traditional stores and investing more into Internet sales. Unfortunately, this shift is resulting in widespread job cuts across the industry, even in times of good health,” said Challenger.


ISM Non-Manufacturing Index slower growth rate of 53.5% in January
Posted: February 3, 2016 at 10:00 AM (Wednesday)

Economic activity in the non-manufacturing sector grew in January for the 72nd consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The NMI® registered 53.5 percent in January, 2.3 percentage points lower than the seasonally adjusted December reading of 55.8 percent. This represents continued growth in the non-manufacturing sector at a slower rate. The Non-Manufacturing Business Activity Index decreased to 53.9 percent, which is 5.6 percentage points lower than the seasonally adjusted December reading of 59.5 percent, reflecting growth for the 78th consecutive month at a slower rate. The New Orders Index registered 56.5 percent, 2.4 percentage points lower than the seasonally adjusted reading of 58.9 percent in December. The Employment Index decreased 4.2 percentage points to 52.1 percent from the seasonally adjusted December reading of 56.3 percent and indicates growth for the 23rd consecutive month. The Prices Index decreased 4.6 percentage points from the seasonally adjusted December reading of 51 percent to 46.4 percent, indicating prices decreased in January for the third time in the last five months. According to the NMI®, 10 non-manufacturing industries reported growth in January. The majority of the respondents’ comments are positive about business conditions; however, there is a concern that exists relative to global conditions, stock market volatility, and the effect on commercial and consumer confidence.

INDUSTRY PERFORMANCE
The 10 non-manufacturing industries reporting growth in January — listed in order — are: Finance & Insurance; Real Estate, Rental & Leasing; Utilities; Retail Trade; Information; Construction; Agriculture, Forestry, Fishing & Hunting; Health Care & Social Assistance; Management of Companies & Support Services; and Public Administration. The eight industries reporting contraction in January — listed in order — are: Mining; Educational Services; Wholesale Trade; Other Services; Arts, Entertainment & Recreation; Accommodation & Food Services; Transportation & Warehousing; and Professional, Scientific & Technical Services.


Help Wanted OnLine Labor Demand increased 13,500 to 5,496,500 in January
Posted: February 3, 2016 at 10:00 AM (Wednesday)

Online advertised vacancies increased 13,500 to 5,496,500 in January, according to The Conference Board Help Wanted OnLine® (HWOL) Data Series,released today. The December Supply/Demand rate stands at 1.44 unemployed for each advertised vacancy with a total of 2.4 million more unemployed workers than the number of advertised vacancies. The number of unemployed was around 7.9 million in December.

“January showed a disappointing start for 2016,” said Gad Levanon, Managing Director of Macroeconomic and Labor Market Research at The Conference Board. “Labor demand levels remain very high but growth has continued to be slow since 2013.”

In January, the Professional category saw large gains in Computer/Math (+29.0) and Healthcare (+24.2) with small gains in most other categories. The Services/Production category saw large losses in Sales (−20.5) and Food (−7.7) with a mixture of small gains/losses in the other categories.


ADP National Employment Report increased by 205,000 jobs in January
Posted: February 3, 2016 at 08:15 AM (Wednesday)

Private sector employment increased by 205,000 jobs from December to January according to the January ADP National Employment Report®. Broadly distributed to the public each month, free of charge, the ADP National Employment Report is produced by ADP® 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.

Payrolls for businesses with 49 or fewer employees increased by 79,000 jobs in January, down from December’s upwardly revised 101,000. Employment among companies with 50-499 employees increased by 82,000 jobs, up still further from December’s upwardly revised 77,000. Employment at large companies – those with 500 or more employees – came in at 44,000, half of December’s downwardly revised 88,000. Companies with 500-999 added 15,000 jobs, while companies with over 1,000 employees gained 30,000 jobs.

Goods-producing employment rose by 13,000 jobs in January, well off from December’s upwardly revised 30,000. The construction industry added 21,000 jobs, which was roughly in line with the average monthly jobs gained during 2015. Meanwhile, manufacturing neither added nor lost jobs.

Service-providing employment rose by 192,000 jobs in January, down from an upwardly revised 237,000 in December. The ADP National Employment Report indicates that professional/business services contributed 44,000 jobs, down from 69,000 in December. Trade/transportation/utilities grew by 35,000, up slightly from a downwardly revised 33,000 the previous month. The 19,000 new jobs added in financial activities were the most in that sector since March 2006.

"One of the main reasons for lower overall employment gains in January was the drop off in jobs added at the largest companies compared to December. These businesses are more sensitive to current economic conditions than small and mid-sized companies,” said Ahu Yildirmaz, VP and head of the ADP Research Institute. “Over the past year, businesses with less than 500 employees have created nearly 80 percent of new jobs.”

Mark Zandi, chief economist of Moody’s Analytics, said, “Job growth remains strong despite the turmoil in the global economy and financial markets. Manufacturers and energy companies are reducing payrolls, but job gains across all other industries remain robust. The U.S. economy remains on track to return to full employment by mid-year.”


Purchase Apps down, Refi's up in Latest MBA Weekly Survey
Posted: February 3, 2016 at 07:00 AM (Wednesday)

Mortgage applications decreased 2.6 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending January 29, 2016. The previous week's results included an adjustment for the Martin Luther King holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 11 percent compared with the previous week. The Refinance Index increased 0.3 percent from the previous week to its highest level since October 2015. The seasonally adjusted Purchase Index decreased 7 percent from one week earlier. The unadjusted Purchase Index increased 11 percent compared with the previous week and was 17 percent higher than the same week one year ago.

The refinance share of mortgage activity increased to 59.2 percent of total applications from 59.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.9 percent of total applications.

The FHA share of total applications increased to 12.9 percent from 12.7 percent the week prior. The VA share of total applications remained unchanged from 11.1 percent the week prior. The USDA share of total applications remained unchanged from 0.7 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to its lowest level since October 2015, 3.97 percent, from 4.02 percent, with points increasing to 0.41 from 0.40 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. This is the fourth straight weekly decrease for this rate. 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 its lowest level since April 2015, 3.84 percent, from 3.89 percent, with points increasing to 0.26 from 0.25 (including the origination fee) for 80 percent LTV loans. This is the fourth straight weekly decrease for this rate. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.80 percent from 3.83 percent, with points decreasing to 0.35 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 3.22 percent from 3.28 percent, with points remaining unchanged at 0.37 (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 3.00 percent from 3.09 percent, with points remaining unchanged at 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


Paychex-IHS Small Business Jobs Index rebounded to 100.65 in December
Posted: February 2, 2016 at 08:30 AM (Tuesday)

At 100.65, the Paychex | IHS Small Business Jobs Index rebounded 0.28 percent from the previous month to begin 2016. The January index indicates an increase in the rate of small business hiring, matching the highest level since May of 2015, and offsetting the growth rate declines of 2015. The Mountain region remains the top-performing regional index with the best year-over-year growth rate. Washington surpassed Texas to take the lead among states. Despite a drop in January, Dallas maintained its top ranking among metropolitan areas for the sixteenth consecutive month. Other Services (except Public Administration)*, as defined by the Bureau of Labor Statistics, ranked as the top industry sector, followed by Construction.

"Following little movement during the last several months of 2015, the national index surged 0.28 percent in January" said James Diffley, chief regional economist at IHS. "This marks the strongest one-month gain in two years."

"With the one-month gain, small businesses continue to hire, and at a faster pace, to begin 2016," said Martin Mucci, president and CEO of Paychex. "Hopefully, this will be the start of a positive employment trend for the new year."


New York Purchasing Managers Business Activity Downshifted to 54.6 in January
Posted: February 2, 2016 at 08:30 AM (Tuesday)

New York City business activity expanded at the slowest pace in four months amid more intense global financial market turbulence, according to the survey taken by the Institute for Supply Management-New York (ISM-NY).

New York Metro Both current and future indices fell to four-month lows. Current Business Conditions came in at 54.6 in January. The Six-Month Outlook printed at 63.3 in January.

Company Specific
Job growth returned for the first time in five months, but weakness in purchase volume persisted for the fifth consecutive month. Employment rose to 56.9 in January. Quantity of Purchases declined to 46.4 in January.

There was a weaker tone for the top line and a stall in forward guidance. Current Revenues fell to 45.8 in January, the first contraction in three years and weakest reading in four years. Expected Revenues were stuck in neutral, at 50.0, for a second straight month in January.

Cost pressures picked up. Prices Paid increased to 60.7 in January. This marked the second time in the last three months the index was above the 60 threshold, a streak last seen in early 2015.


Construction Spending increased 0.1% in December
Posted: February 1, 2016 at 10:00 AM (Monday)

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during December 2015 was estimated at a seasonally adjusted annual rate of $1,116.6 billion, 0.1 percent (±1.2%)* above the revised November estimate of $1,116.0 billion. The December figure is 8.2 percent (±1.8%) above the December 2014 estimate of $1,031.6 billion. The value of construction in 2015 was $1,097.3 billion, 10.5 percent (±1.2%) above the $993.4 billion spent in 2014.

PRIVATE CONSTRUCTION
Spending on private construction was at a seasonally adjusted annual rate of $824.0 billion, 0.6 percent (±0.8%)* below the revised November estimate of $828.8 billion. Residential construction was at a seasonally adjusted annual rate of $429.6 billion in December, 0.9 percent (±1.3%)* above the revised November estimate of $425.8 billion. Nonresidential construction was at a seasonally adjusted annual rate of $394.4 billion in December, 2.1 percent (±0.8%) below the revised November estimate of $403.0 billion.
The value of private construction in 2015 was $806.1 billion, 12.3 percent (±1.5%) above the $717.7 billion spent in 2014. Residential construction in 2015 was $416.8 billion, 12.6 percent (±2.1%) above the 2014 figure of $370.0 billion and nonresidential construction was $389.3 billion, 12.0 percent (±1.5%) above the $347.7 billion in 2014.

PUBLIC CONSTRUCTION
In December, the estimated seasonally adjusted annual rate of public construction spending was $292.5 billion, 1.9 percent (±2.0%)* above the revised November estimate of $287.1 billion. Educational construction was at a seasonally adjusted annual rate of $69.4 billion, 0.5 percent (±3.9%)* below the revised November estimate of $69.8 billion. Highway construction was at a seasonally adjusted annual rate of $95.4 billion, 9.4 percent (±4.4%) above the revised November estimate of $87.2 billion.
The value of public construction in 2015 was $291.2 billion, 5.6 percent (±1.6%) above the $275.7 billion spent in 2014. Educational construction in 2015 was $67.3 billion, 6.8 percent (±3.5%) above the 2014 figure of $63.0 billion and highway construction was $89.6 billion, 6.7 percent (±3.9%) above the $84.0 billion in 2014.


January Manufacturing ISM contracted at 48.2
Posted: February 1, 2016 at 10:00 AM (Monday)

Economic activity in the manufacturing sector contracted in January for the fourth consecutive month, while the overall economy grew for the 80th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The January PMI® registered 48.2 percent, an increase of 0.2 percentage point from the seasonally adjusted December reading of 48 percent. The New Orders Index registered 51.5 percent, an increase of 2.7 percentage points from the seasonally adjusted reading of 48.8 percent in December. The Production Index registered 50.2 percent, 0.3 percentage point higher than the seasonally adjusted December reading of 49.9 percent. The Employment Index registered 45.9 percent, 2.1 percentage points below the seasonally adjusted December reading of 48 percent. Inventories of raw materials registered 43.5 percent, the same reading as in December. The Prices Index registered 33.5 percent, the same reading as in December, indicating lower raw materials prices for the 15th consecutive month. Comments from the panel indicate a mix ranging from strong to soft orders, as eight of our 18 industries report an increase in orders, and seven industries report a decrease in orders."

Of the 18 manufacturing industries, eight are reporting growth in January in the following order: Textile Mills; Wood Products; Miscellaneous Manufacturing; Printing & Related Support Activities; Furniture & Related Products; Computer & Electronic Products; Machinery; and Electrical Equipment, Appliances & Components. The 10 industries reporting contraction in January — listed in order — are: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Petroleum & Coal Products; Paper Products; Transportation Equipment; Plastics & Rubber Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Primary Metals; and Chemical Products.


Personal Income increased 0.3%, Spending decreased 0.1%
Posted: February 1, 2016 at 08:30 AM (Monday)

Personal income increased $42.5 billion, or 0.3 percent, and disposable personal income (DPI) increased $37.8 billion, or 0.3 percent, in December, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) decreased $0.7 billion, or less than 0.1 percent. In November, personal income increased $44.3 billion, or 0.3 percent, DPI increased $33.4 billion, or 0.2 percent, and PCE increased $59.4 billion, or 0.5 percent, based on revised estimates.

Real DPI increased 0.4 percent in December, compared with an increase of 0.2 percent in November. Real PCE increased 0.1 percent, compared with an increase of 0.4 percent.


University of Michigan Consumer Confidence rose in January to 92.0
Posted: January 29, 2016 at 10:00 AM (Friday)

Consumer confidence remained largely unchanged, as the January reading was just 0.6% below last month’s level. The small downward revisions were due to stock market declines that were reflected in the erosion of household wealth as well as weakened prospects for the national economy. The interviews conducted from last Friday until early this week provide no evidence that the East Coast blizzard influenced the data. To be sure, the overall level of confidence is below last January’s peak, but thus far the decline amounts to just 6.2%, a drop that does not indicate an impending recession but rather a somewhat slower pace of economic growth in 2016. Overall, the data point toward gains of 2.7% in real consumption expenditures during 2016.

Personal Finances
The fewest consumers in a year reported that their finances had recently improved, and consumers expected the smallest gains in their nominal incomes since the summer of 2014. Despite the falloff in nominal income expectations, inflation-adjusted income expectations remained unchanged at very favorable levels. More than ever, favorable financial prospects have become dependent on a very low inflation rate. This is a dramatic change from a half century ago when inflation was the scourge, not the benefactor, of improved financial prospects.

Weaker Growth Dims Job Prospects
Stock price declines and a weakened global economy were spontaneously mentioned by one-third of all households with incomes in the top third, the highest level since the Asian Tiger crisis in 1997-98. While consumers still viewed prospects for the economy favorably, they expected a slowing in the pace of growth. The primary concern of consumers is that the growth slowdown will lead to a slightly higher jobless rate by the end of 2016.

Consumer Sentiment Index
The Sentiment Index was 92.0 in the January 2016 survey, just below December’s 92.6 and substantially below last January’s 98.1. The Current Conditions Index was 106.4 in January 2016, down from last month’s 108.1 and last year’s 109.3. The Expectations Index was 82.7 in January and December, but well below last year’s 91.0. The small falloff from last year indicates slower growth, not a recession.

Consumers anticipate the slowdown in the pace of growth will be accompanied by smaller wage gains and slight increases rather than declines in unemployment by the end of 2016. Importantly, it has been very low inflation rates that have maintained inflation-adjusted income expectations at the highest levels since 2007. The Fed’s success at pushing the inflation rate higher may well outdistance the pace of wage gains, offsetting a critical strength in consumers’ financial expectations. Consumers will actively demonstrate their resistance by moderating their purchases in the face of price hikes, acting to erase the Fed’s rationale for higher rates.


Chicago Purchasing Managers Index increased 12.7 points to 55.6 in January
Posted: January 29, 2016 at 09:45 AM (Friday)

The Chicago Business Barometer bounced back sharply in January, increasing 12.7 points to 55.6 from 42.9 in December, the highest pace of growth in a year.

The latest increase followed extreme weakness in the fourth quarter, with the Barometer averaging 47.7, the weakest quarterly growth since Q3 2009. The three month trend remained depressed at 48.7, up only slightly from 47.7 in December.

Four out of the five components of the Barometer increased on the month, led by a 20.2 point surge in New Orders to 58.8, the highest since January 2015. Additionally, Production, the second largest component of the Barometer posted a double digit gain pushing it back well above the 50 neutral level.

Order Backlogs rose sharply but remained below 50 for the 12th consecutive month. Employment, which has not suffered as sharp of a downturn as orders and output increased more moderately and remained in contraction where it has been since October 2015. Supplier Deliveries was the only component to fall, declining 4.5 points to 49.2 in January.

In spite of the strength in New Orders and Production, companies continued to run down stocks with the Inventories component falling to the lowest since January 2015.

Continued weakness in commodity prices and the impact of the strong dollar meant that the long-term disinflationary trend continued, with downward pressure on prices intensifying in January. Prices Paid declined slightly on the month and remains well below the breakeven 50 level.

Chief Economist of MNI Indicators Philip Uglow said, “While the surge in activity in January marks a positive start to the year, it follows significant weakness in the previous two months, with the latest rise not sufficient to offset the previous falls in output and orders. Previously, surges of such magnitude have not been maintained so we would expect to see some easing in February. Still, even if activity does moderate somewhat next month, the latest increase supports the view that GDP will bounce back in Q1 following the expected slowdown in Q4.”


4Q2015 GDP advance estimate increased 0.7%
Posted: January 29, 2016 at 08:30 AM (Friday)

Real gross domestic product -- the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes -- increased at an annual rate of 0.7 percent in the fourth quarter of 2015, according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 2.0 percent.

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

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

Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- increased 1.1 percent in the fourth quarter, compared with an increase of 2.2 percent in the third.

During 2015 (that is, measured from the fourth quarter of 2014 to the fourth quarter of 2015), real GDP increased 1.8 percent, compared with an increase of 2.5 percent during 2014. The price index for gross domestic purchases increased 0.3 percent during 2015, compared with an increase of 1.2 percent during 2014.


Employment Cost Index up 0.6% in 4Q2015
Posted: January 29, 2016 at 08:30 AM (Friday)

Compensation costs for civilian workers increased 0.6 percent, seasonally adjusted, for the 3-month period ending in December 2015, the U.S. Bureau of Labor Statistics reported today. Wages and salaries (which make up about 70 percent of compensation costs) increased 0.6 percent, and benefits (which make up the remaining 30 percent of compensation) increased 0.7 percent.


Kansas City Fed Manufacturing Activity fell again in January
Posted: January 28, 2016 at 11:00 AM (Thursday)

Tenth District manufacturing activity fell again in January, while producers’ expectations for future activity remained solid. Most price indexes declined modestly.

The month-over-month composite index was -9 in January, unchanged from -9 in December but down from -1 in November. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Activity improved somewhat at nondurable goods factories, while durable goods saw further weakening, particularly for machinery and computer and electronic equipment. Most month-over-month indexes were mixed. The production and shipments indexes remained slightly negative, while the employment and new orders for exports indexes improved. Conversely, the new orders and order backlog indexes both fell to their lowest levels in six years. The raw materials inventory increased from -15 to -2, and the finished goods inventory index also rose but remained in negative territory.

Year-over-year factory indexes were mixed in January. The composite year-over-year index inched up from -15 to -13, and the production, shipments, and new orders indexes also moved higher but remained well below zero. The employment index was largely unchanged at -15. The order backlog index fell to a six year low, and the capital expenditures index declined again. Both inventory indexes eased slightly.

Most future factory indexes were somewhat lower, but on net positive overall. The future composite index was basically unchanged at 5, while the shipments, employment, and new orders for exports indexes increased somewhat. The future production and new orders indexes decreased slightly. The future order backlog index dropped back into negative territory after increasing last month, and the future capital expenditures index also declined modestly. The future raw materials inventory index moved slightly up, while the future finished goods inventory index edged down again.

Most price indexes fell modestly in January. The month-over-month finished goods price index decreased from -7 to -15, while the raw materials price index was basically unchanged. The year-over-year finished goods price index edged down from 1 to -4, and the raw materials price index also eased further. The future finished goods price index fell from 0 to -6, and the future raw materials price index declined moderately.


Pending Home Sales Index was mostly unchanged in December
Posted: January 28, 2016 at 10:00 AM (Thursday)

Pending home sales were mostly unchanged in December, but inched forward slightly, fueled by a large increase in the Northeast that outpaced declines in the other three major regions, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, crawled 0.1 percent to 106.8 in December from a downwardly revised 106.7 in November and is now 4.2 percent above December 2014 (102.5). The index has increased year-over-year for 16 consecutive months.

Lawrence Yun, NAR chief economist, says contract activity closed out the year on stable footing but lost some momentum, except for in the Northeast. "Warmer than average weather and more favorable inventory conditions compared to other parts of the country encouraged more households in the Northeast to make the decision to buy last month," he said. "Overall, while sustained job creation is spurring more activity compared to a year ago, the ability to find available homes in affordable price ranges is difficult for buyers in many job creating areas. With homebuilding still grossly inadequate, steady price appreciation and tight supply conditions aren't going away any time soon."

According to Yun, although healthy labor market conditions will persuade more households to buy, it's possible overall demand could be somewhat curtailed in coming months. The stock market's sizeable losses since the start of the year and the effect slowing manufacturing activity is having in some areas — especially in the energy sector — could cause some to hold off on buying.

"The silver lining from the market turmoil in recent weeks is the fact that mortgage rates have slightly declined," says Yun. "Buyers looking to close on a home before the spring buying season begins may be rewarded with a mortgage rate at or below 4 percent."

Existing-homes sales this year are forecast to be around 5.34 million, an increase of 1.5 percent from 2015. The national median existing-home price for all of this year is expected to increase between 4 and 5 percent. In 2015, existing-home sales increased 6.5 percent and prices rose 6.8 percent.

Rents — which have far outpaced wages in recent years — are expected to slightly slow to 3.3 percent growth in 2016 from 3.6 percent a year ago. Multifamily housing starts are expected to reach 420,000 units this year, the highest level since 1987.

The PHSI in the Northeast increased 6.1 percent to 97.8 in December, and is now 15.3 percent above a year ago. In the Midwest the index decreased 1.1 percent to 103.6 in December, but is still 3.6 percent above December 2014.

Pending home sales in the South declined 0.5 percent to an index of 119.3 in December but are 1.0 percent higher than last December. The index in the West decreased 2.1 percent in December to 97.5, but remains 3.4 percent above a year ago.


December New Orders for Durable Goods decreased 5.1%, Ex-Trans down 1.2%
Posted: January 28, 2016 at 08:30 AM (Thursday)

New orders for manufactured durable goods in December decreased $12.0 billion or 5.1 percent to $225.4 billion, the U.S. Census Bureau announced today. This decrease, down four of the last five months, followed a 0.5 percent November decrease. Excluding transportation, new orders decreased 1.2 percent. Excluding defense, new orders decreased 2.9 percent. Transportation equipment, also down four of the last five months, led the decrease, $10.1 billion or 12.4 percent to $71.3 billion.

Shipments of manufactured durable goods in December, down two of the last three months, decreased $5.4 billion, or 2.2 percent, to $235.8 billion. This followed a 0.6 percent November increase. Transportation equipment, also down two of the last three months, led the decrease, $5.4 billion or 6.7 percent to $75.1 billion.

Unfilled orders for manufactured durable goods in December, down following two consecutive monthly increases, decreased $5.6 billion or 0.5 percent to $1,187.6 billion. This followed a 0.1 percent November increase. Transportation equipment, also down following two consecutive monthly increases, led the decrease, $3.8 billion or 0.5 percent to $795.2 billion.

Inventories of manufactured durable goods in December, up following five consecutive monthly decreases, increased $2.1 billion, or 0.5 percent, to $397.9 billion. This followed a 0.2 percent November decrease. Transportation, up following three consecutive monthly decreases, led the increase, $1.8 billion or 1.4percent to $131.8 billion.

Nondefense new orders for capital goods in December decreased $11.3 billion or 15.0 percent to $64.4 billion. Shipments decreased $5.3 billion or 6.6 percent to $74.7 billion. Unfilled orders decreased $10.3 billion or 1.4 percent to $742.8 billion. Inventories increased $1.2 billion or 0.7 percent to $175.9 billion. Defense new orders for capital goods in December decreased $4.9 billion or 34.4 percent to $9.3 billion. Shipments increased $0.4 billion or 3.6 percent to $10.2 billion. Unfilled orders decreased $0.9 billion or 0.6 percent to $150.5 billion. Inventories decreased less than $0.1 billion or 0.1 percent to $21.3 billion.

Revised seasonally adjusted November figures for all manufacturing industries were: new orders, $471.0 billion (revised from $472.2 billion); shipments, $474.7 billion (revised from $475.3 billion); unfilled orders, $1,193.2 billion (revised from $1,193.9 billion); and total inventories, $641.9 billion (revised from $641.3 billion).


Weekly Initial Unemployment Claims Decrease 16,000 to 278,000
Posted: January 28, 2016 at 08:30 AM (Thursday)

In the week ending January 23, the advance figure for seasonally adjusted initial claims was 278,000, a decrease of 16,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 293,000 to 294,000. The 4-week moving average was 283,000, a decrease of 2,250 from the previous week's revised average. The previous week's average was revised up by 250 from 285,000 to 285,250. There were no special factors impacting this week's initial claims.

The advance seasonally adjusted insured unemployment rate was 1.7 percent for the week ending January 16, 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 January 16 was 2,268,000, an increase of 49,000 from the previous week's revised level. The previous week's level was revised up 11,000 from 2,208,000 to 2,219,000. The 4-week moving average was 2,246,250, an increase of 15,750 from the previous week's revised average. The previous week's average was revised up by 2,750 from 2,227,750 to 2,230,500.


FOMC target funds rate reaffirmed at 1/4 - 1/2%
Posted: January 27, 2016 at 02:00 PM (Wednesday)

Information received since the Federal Open Market Committee met in December suggests that labor market conditions improved further even as economic growth slowed late last year. Household spending and business fixed investment have been increasing at moderate rates in recent months, and the housing sector has improved further; however, net exports have been soft and inventory investment slowed. A range of recent labor market indicators, including strong job gains, points to some additional decline in underutilization of labor resources. Inflation has continued to run below the Committee's 2 percent longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation declined further; survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will continue to strengthen. Inflation is expected to remain low in the near term, in part because of the further declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of declines in energy and import prices dissipate and the labor market strengthens further. The Committee is closely monitoring global economic and financial developments and is assessing their implications for the labor market and inflation, and for the balance of risks to the outlook.

Given the economic outlook, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.

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

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

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; James Bullard; Stanley Fischer; Esther L. George; Loretta J. Mester; Jerome H. Powell; Eric Rosengren; and Daniel K. Tarullo.


New Home Sales in December at annual rate of 544,000
Posted: January 27, 2016 at 10:00 AM (Wednesday)

Sales of new single-family houses in December 2015 were at a seasonally adjusted annual rate of 544,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 10.8 percent (±17.1%)* above the revised November rate of 491,000 and is 9.9 percent (±25.0%)* above the December 2014 estimate of 495,000.

The median sales price of new houses sold in December 2015 was $288,900; the average sales price was $346,400. The seasonally adjusted estimate of new houses for sale at the end of December was 237,000. This represents a supply of 5.2 months at the current sales rate.

An estimated 501,000 new homes were sold in 2015. This is 14.5 percent (±4.5%) above the 2014 figure of 437,000.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: January 27, 2016 at 07:00 AM (Wednesday)

Mortgage applications increased 8.8 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending January 22, 2016. This week's results include an adjustment to account for the Martin Luther King holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 8.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 0.3 percent compared with the previous week. The Refinance Index increased 11 percent from the previous week. The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index increased 0.4 percent compared with the previous week and was 22 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 59.0 percent of total applications from 59.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.9 percent of total applications.

The FHA share of total applications decreased to 12.7 percent from 13.7 percent the week prior. The VA share of total applications increased to 11.1 percent from 10.8 percent the week prior. The USDA share of total applications remained unchanged from 0.7 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to its lowest level since October 2015, 4.02 percent, from 4.06 percent, with points decreasing to 0.40 from 0.41 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 3.89 percent from 3.93 percent, with points decreasing to 0.25 from 0.31 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.83 percent from 3.86 percent, with points increasing to 0.38 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.28 percent from 3.29 percent, with points decreasing to 0.37 from 0.39 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.09 percent from 3.20 percent, with points increasing to 0.34 from 0.18 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


Consumer Confidence improved moderately in January to 98.1
Posted: January 26, 2016 at 10:00 AM (Tuesday)

The Conference Board Consumer Confidence Index®, which had increased in December, improved moderately in January. The Index now stands at 98.1 (1985=100), up from 96.3 in December. The Present Situation Index was unchanged at 116.4, while the Expectations Index increased from 83.0 to 85.9 in January.

“Consumer confidence improved slightly in January, following an increase in December,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current conditions held steady, while their expectations for the next six months improved moderately. For now, consumers do not foresee the volatility in financial markets as having a negative impact on the economy.”

Consumers’ appraisal of current conditions was relatively flat in January. The percentage saying business conditions are “good” was virtually unchanged at 27.2 percent, while those saying business conditions are “bad” declined slightly from 18.9 percent to 18.5 percent. Consumers’ assessment of the labor market was modestly more positive. The proportion claiming jobs are “plentiful” decreased from 24.2 percent to 22.8 percent, while those claiming jobs are “hard to get” declined to 23.4 percent from 24.5 percent.

Consumers’ optimism about the short-term outlook improved somewhat in January. The percentage of consumers expecting business conditions to improve over the next six months rose from 14.5 percent to 16.2 percent, while those expecting business conditions to worsen edged down from 10.8 percent to 10.3 percent.

Consumers’ outlook for the labor market was also slightly more optimistic. Those anticipating more jobs in the months ahead increased from 12.4 percent to 13.2 percent, while those anticipating fewer jobs decreased slightly from 16.8 percent to 16.5 percent. The proportion of consumers expecting their incomes to increase improved from 16.3 percent to 18.1 percent. However, the proportion expecting a reduction in income increased from 9.5 percent to 10.8 percent.


Philadelphia Nonmanufacturing Activity has slowed considerably
Posted: January 26, 2016 at 10:00 AM (Tuesday)

Firms responding to January's Nonmanufacturing Business Outlook Survey reported that while regional nonmanufacturing growth remained positive, the pace has slowed considerably. The survey's index for current general activity for the region fell far below its historical average, and the survey's indicators for current activity at the firm level and for sales, new orders, and employment weakened as well. The indicators for average workweek and wages rose, however. The diffusion indexes for future general activity declined but continue to be positive.

Seasonal Adjustments Introduced
Throughout this report, the assessment of nonmanufacturing activity in the region is based on seasonally adjusted indicators and indexes.* This is the first month that the survey is reported in seasonally adjusted terms. The adjustments are designed to better highlight cyclical movements in the respondents' answers to the survey questions by identifying and removing regular and transient seasonal patterns.

Nonmanufacturing Activity Declines
The diffusion index for current general activity for the firm fell 3 points, to 21.4, in January, as the proportion of firms reporting a decrease in regional activity rose from 18 percent in December to 21 percent in January (see Chart 1 above). The diffusion index for current activity for the region fell by a much larger amount, from 26.7 in December to 5.1 in January. The proportion of firms reporting a decrease in current general activity in the region rose from 12 percent in December to 20 percent in January. Nonetheless, most of the respondents report no change. Both indexes are below their historical averages of 29.7 at the firm level and 24.0 at the regional level.

Orders and Sales Weaken
In January, the new orders index fell 6 points, to 14.5, and the unfilled orders index fell 2 points, to 1.7. The sales/revenues index fell 12 points, to 14.0. The change in the sales index was largely driven by an increase in the share of firms reporting a decrease in sales, but the January share of decreasing sales, 26 percent, is close to historical norms.

Full-Time Employment Softens Slightly
Responses to the survey indicate slightly weaker conditions for full-time employment in January, as the index for full-time employment fell 4 points, to 12.8, slightly below its historical average of 14.7. The average workweek index rose 9 points, to 19.2, however. The index for wages and benefits rose as well, from 28.2 in December to 32.6 in January. The share of firms reporting an increase in wages and benefits climbed 5 points to 35 percent in January.

Little Change in Prices Paid and Received
The prices paid index fell 3 points, to 16.8 (see Chart 2 below). The prices received index rose 1 point, to 16.7. The share of firms reporting no change in prices paid was 58 percent, while the share of firms reporting no change in prices received was 59 percent. These no-change shares are slightly above historical averages, and the prices paid index has been relatively steady for the past three months.

Capital Spending Mixed
The index for physical plant spending rose 7 points, to 18.8. The index for capital spending on equipment and software fell 6 points, however, to 17.7. For both questions regarding capital spending, the share of respondents reporting a decrease in spending is relatively low but not as low as the share that reported a decrease in December.

Optimism About the Future Declines
While respondents to the survey remain optimistic about future activity over the next six months, they report a lower degree of optimism. At the regional level, the future activity diffusion index fell 30 points, to 11.2, its lowest reading since October 2011. Thirty-six percent of the respondents foresee higher activity in the region over the next six months, down from 50 percent in the December report. At the individual firm level, the future activity diffusion index fell 28 points, to 23.5. The share of firms foreseeing higher activity fell from 59 percent in December to 53 percent in January.
Summary

Results from the January Nonmanufacturing Business Outlook Survey suggest continued expansion in the region among nonmanufacturing firms but at a slower pace. The future activity indexes at both the company and regional levels show a general decline in optimism about growth over the next six months.


Richmond Fed's Current Activity Index lost 4 points to a reading of 2
Posted: January 26, 2016 at 10:00 AM (Tuesday)

Fifth District manufacturing activity grew mildly in January, according to the most recent survey by the Federal Reserve Bank of Richmond. The volume of new orders grew modestly this month, although shipments decreased. Hiring increased at a slightly slower pace compared to last month, although average wages continued to increase at a moderate pace in January, and the average workweek lengthened. Raw materials prices rose at a somewhat slower pace, while prices of finished goods rose at a faster pace than in December.

Manufacturers were more optimistic about future business conditions than they were a month ago. Survey participants expected faster growth in shipments and in new orders. Additionally, producers looked for increased capacity utilization and anticipated rising backlogs. Expectations were for longer vendor lead times.

Survey participants planned more hiring, along with robust growth in wages and a pickup in the average workweek during the next six months. Firms looked for faster growth in prices paid and prices received over the next six months, although their outlook was below December's expectations.

Overall, manufacturing activity grew mildly in January, but the growth was slower compared to a month earlier. The composite index lost four points, softening to a nearly flat reading of 2. New orders grew modestly in January, although the index slipped four points from a month earlier to end at 4. In addition, the index for shipments decreased to a reading of −6. Hiring moderated this month. At an index of 9, the indicator finished three points lower compared to last month.

Backlogs of new orders grew modestly in January, the index gained four points to end at 4, however capacity utilization slowed to a flat reading of 0. Vendor lead time lengthened only slightly this month with the index adding one point to end at 4. Finished goods inventories and raw materials inventories rose at a moderate pace, the indicators finished at 24 and 21 respectively, little changed from the month ago readings of 27 and 23.


S&P/Case-Shiller Home Price Indices gained 0.1% in November
Posted: January 26, 2016 at 09:00 AM (Tuesday)

S&P Dow Jones Indices today released the latest results for the S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices. Data released today for November 2015 show that home prices continued their rise across the country over the last 12 months.

Year-over-Year
The S&P/Case-Shiller U.S. National Home Price Index, covering all nine U.S. census divisions, recorded a slightly higher year-over-year gain with a 5.3% annual increase in November 2015 versus a 5.1% increase in October 2015. The 10-City Composite increased 5.3% in the year to November compared to 5.0% previously. The 20-City Composite’s year-over-year gain was 5.8% versus 5.5% reported in October.

Portland, San Francisco and Denver continue to report the highest year over year gains among the 20 cities with another month of double digit annual price increases. Portland led the way with an 11.1% year-over-year price increase, followed by San Francisco with 11.0% and Denver with a 10.9% increase. Fourteen cities reported greater price increases in the year ending November 2015 versus the year ending October 2015. Phoenix had the longest streak of year-over-year increases, reporting a gain of 5.9% in November 2015, and the twelfth consecutive increase in annual price gains. Detroit posted a 6.3% year-over-year price, up from 5.1%, the largest annual increase this month.

Month-over-Month
Before seasonal adjustment, the National Index posted a gain of 0.1% month-over-month in November. The 10-City Composite was unchanged and the 20-City Composite reported gains of 0.1% month-over-month in November. After seasonal adjustment, the National Index, along with the 10-City and 20-City Composites, all increased 0.9% month-over-month in November. Fourteen of 20 cities reported increases in November before seasonal adjustment; after seasonal adjustment, all 20 cities increased for the month.

Analysis
“Home prices extended their gains, supported by continued low mortgage rates, tight supplies and an improving labor market,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Sales of existing homes were up 6.5% in 2015 vs. 2014, and the number of homes on the market averaged about a 4.8 months’ supply during the year; both numbers suggest a seller’s market. The consumer portion of the economy is doing well; like housing, automobile sales were quite strong last year. Other parts of the economy are not faring as well. Businesses in the oil and energy sectors are suffering from the 75% drop in oil prices in the last 18 months. Moreover, the strong U.S. dollar is slowing exports. Housing is not large enough to offset all of these weak spots.

“Home prices continue to recover from the collapse that began before the recession of 2007-2009 and continued until 2012. Three cities – Dallas, Denver and Portland OR – have reached new all-time highs; San Francisco is even with its earlier peak and Charlotte NC is less than one percent below its previous peak. The S&P/Case-Shiller National Home Price Index is about 4.8% below the peak it set in July 2006, and 29.2% above the bottom it touched in January 2012. By comparison, the S&P 500 as of Friday, January 22nd is up 46% from January 2012 – better than the S&P/Case-Shiller National Home Price series and about the same as Los Angeles. The chart shows how far the 20 cities have rebounded from the National Index bottom.

The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 5.3% annual gain in November 2015. The 10-City and 20-City Composites reported year-over-year increases of 5.3% and 5.8%.

As of November 2015, average home prices for the MSAs within the 10-City and 20-City Composites are back to their winter 2007 levels. Measured from their June/July 2006 peaks, the peak-to-current decline for both Composites is approximately 11-13%. Since the March 2012 lows, the 10-City and 20-City Composites have recovered 34.9% and 36.4%.


Texas Manufacturing Activity Falls Sharply
Posted: January 25, 2016 at 10:30 AM (Monday)

This month‘s survey data include annual seasonal factor revisions. In January of each year, the Federal Reserve Bank of Dallas revises the historical data for the Texas Manufacturing Outlook Survey after calculating new seasonal adjustment factors. Annual seasonal revisions result in slight changes in the seasonally adjusted series. Read more information on seasonal adjustment.

Texas factory activity fell sharply in January, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index—a key measure of state manufacturing conditions—dropped 23 points, from 12.7 to -10.2, suggesting output declined this month after growing throughout fourth quarter 2015.

Other indexes of current manufacturing activity also indicated contraction in January. The survey’s demand measures—the new orders index and the growth rate of orders index—led the falloff in production with negative readings last month, and these indexes pushed further negative in January. The new orders index edged down to -9.2, and the growth rate of orders index fell to -17.5, its lowest level in a year. The capacity utilization index fell 15 points from 8.1 to -7, and the shipments index also posted a double-digit decline into negative territory, coming in at -11.

Perceptions of broader business conditions weakened markedly in January. The general business activity and company outlook indexes fell to their lowest readings since April 2009, when Texas was in recession. The general business activity index fell 13 points to -34.6, and the company outlook index slipped to -19.5.

Labor market indicators reflected a decline in January after exhibiting strength in November and December 2015. The employment index dropped from 10.9 to -4.2, with 17 percent of firms noting net hiring and 21 percent noting net layoffs. The hours worked index plummeted 23 points to -9.2, suggesting a sharp pullback in employee hours.

The survey’s price measures remained negative in January, but wages continued to rise. The raw materials prices index has been negative for seven months and held fairly steady at -8.6. The finished goods prices index has been below zero for more than a year and moved up from -15.5 to -9.6 this month. Meanwhile, the wages and benefits index stayed strongly positive but dipped from 20.2 to 16.5, suggesting a smaller rise in compensation.

Expectations regarding future business conditions weakened notably in January. The index of future general business activity fell 22 points to -24, and the index of future company outlook fell to -1.3, its first negative reading in nearly seven years. Indexes for future manufacturing activity generally declined but remained solidly positive.

Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase. When the share of firms reporting an increase exceeds the share reporting a decrease, the index will be greater than zero, suggesting the indicator has increased over the prior month. If the share of firms reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting the indicator has decreased over the prior month. An index will be zero when the number of firms reporting an increase is equal to the number of firms reporting a decrease. Data have been seasonally adjusted as necessary.


U.S. Leading Economic Index declined 0.2% in December
Posted: January 22, 2016 at 10:00 AM (Friday)

The Conference Board Leading Economic Index® (LEI) for the U.S. declined 0.2 percent in December to 123.7 (2010 = 100), following a 0.5 percent increase in both November and October.

“The U.S. LEI fell slightly in December, led by a drop in housing permits and weak new orders in manufacturing,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “However, the index continues to suggest moderate growth in the near-term despite the economy losing some momentum at the end of 2015. While the LEI’s growth rate has been on the decline, it’s too early to interpret this as a substantial rise in the risk of recession.”

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.1 percent in December to 113.0 (2010 = 100), following a 0.1 percent increase in November, and a 0.2 percent increase in October.

The Conference Board Lagging Economic Index® (LAG) for the U.S. increased 0.2 percent in December to 119.9 (2010 = 100), following a 0.3 percent increase in November, and a 0.2 percent increase in October.


Existing-Home Sales ascended 14.7% in December
Posted: January 22, 2016 at 10:00 AM (Friday)

Existing-home sales snapped back solidly in December as more buyers reached the market before the end of the year, and the delayed closings resulting from the rollout of the Know Before You Owe initiative pushed a portion of November's would-be transactions into last month's figure, according to the National Association of Realtors®. Led by the South and West, all four major regions saw large increases in December.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, ascended 14.7 percent to a seasonally adjusted annual rate of 5.46 million in December from 4.76 million in November. After last month's turnaround (the largest monthly increase ever recorded), sales are now 7.7 percent above a year ago.

Lawrence Yun, NAR chief economist, says December's robust bounce back caps off the best year of existing sales (5.26 million) since 2006 (6.48 million). "While the carryover of November's delayed transactions into December contributed greatly to the sharp increase, the overall pace taken together indicates sales these last two months maintained the healthy level of activity seen in most of 2015," he said. "Additionally, the prospect of higher mortgage rates in coming months and warm November and December weather allowed more homes to close before the end of the year."

The median existing-home price for all housing types in December was $224,100, up 7.6 percent from December 2014 ($208,200). Last month's price increase marks the 46th consecutive month of year-over-year gains.

Total housing inventory at the end of December dropped 12.3 percent to 1.79 million existing homes available for sale, and is now 3.8 percent lower than a year ago (1.86 million). Unsold inventory is at a 3.9-month supply at the current sales pace, down from 5.1 months in November and the lowest since January 2005 (3.6 months).

"Although some growth is expected, the housing market will struggle in 2016 to replicate last year's 7 percent increase in sales," adds Yun. "In addition to insufficient supply levels, the overall pace of sales this year will be constricted by tepid economic expansion, rising mortgage rates and decreasing demand for buying in oil-producing metro areas."

The percent share of first-time buyers was at 32 percent in December (matching the highest share since August), up from 30 percent in November and 29 percent a year ago. First-time buyers in all of 2015 represented an average of 30 percent, up from 29 percent in both 2014 and 2013. A separate NAR survey released in late 2015 revealed that the annual share of first-time buyers was at its lowest level in nearly three decades.

"First-time buyers were for the most part held back once again in 2015 by rising rents and home prices, competition from vacation and investment buyers and supply shortages," says Yun. "While these headwinds show little signs of abating, the cumulative effect of strong job growth in recent years and young renters' overwhelming interest to own a home should lead to a modest uptick in first-time buyer activity in 2016."

All-cash sales were 24 percent of transactions in December (27 percent in November) and are down from 26 percent a year ago. Individual investors, who account for many cash sales, purchased 15 percent of homes in December, down from both from 16 percent in November and 17 percent a year ago. Sixty-four percent of investors paid cash in December.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage stayed below 4 percent for the fifth consecutive month but increased in December to 3.96 from 3.94 percent in November. The average commitment rate for all of 2015 was 3.85 percent.

Properties typically stayed on the market for 58 days in December, an increase from 54 days in November but below the 66 days in December 2014. Short sales were on the market the longest at a median of 86 days in December, while foreclosures sold in 68 days and non-distressed homes took 57 days. Thirty-two percent of homes sold in December were on the market for less than a month.

"December's rebound in sales is reason for cautious optimism that the work to prepare for Know Before You Owe is paying off," says NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Florida. "However, our data is still showing longer closing timeframes, which is a reminder that the near-term challenges we anticipated are still prevalent. NAR advised members to extend the time horizon on their purchase contracts to address this concern, and we'll continue to work with our industry partners to ensure 2016 is a success for consumers, homeowners and Realtors® alike."

Distressed sales – foreclosures and short sales – declined to 8 percent in December, down from 9 percent in November and 11 percent a year ago. Six percent of December sales were foreclosures and 2 percent were short sales. Foreclosures sold for an average discount of 16 percent below market value in December (15 percent in November), while short sales were discounted 15 percent (unchanged from November).

Single-family home sales jumped 16.1 percent to a seasonally adjusted annual rate of 4.82 million in December from 4.15 million in November, and are now 7.1 percent higher than the 4.50 million pace a year ago. The median existing single-family home price was $226,000 in December, up 8.0 percent from December 2014.

Existing condominium and co-op sales increased 4.9 percent to a seasonally adjusted annual rate of 640,000 units in December from 610,000 in November, and are now 12.3 percent above December 2014 (570,000 units). The median existing condo price was $209,900 in December, which is 4.9 percent above a year ago.

December existing-home sales in the Northeast increased 8.7 percent to an annual rate of 750,000, and are now 11.9 percent above a year ago. The median price in the Northeast was $255,700, which is 5.3 percent above December 2014.

In the Midwest, existing-home sales jumped 10.9 percent to an annual rate of 1.22 million in December, and are now 9.9 percent above December 2014. The median price in the Midwest was $171,000, up 7.5 percent from a year ago.

Existing-home sales in the South leaped 14.6 percent to an annual rate of 2.27 million in December, and are now 4.6 percent above December 2014. The median price in the South was $196,100, up 6.8 percent from a year ago.

Existing-home sales in the West catapulted 23.2 percent to an annual rate of 1.22 million in December, and are now 8.9 percent higher than a year ago. The median price in the West was $321,100, which is 8.2 percent above December 2014.


Chicago Fed National Activity below average in December
Posted: January 22, 2016 at 08:30 AM (Friday)

The index’s three-month moving average, CFNAI-MA3, decreased to –0.24 in December from –0.19 in November. December’s CFNAI-MA3 suggests that growth in national economic activity was somewhat below its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.

The CFNAI Diffusion Index, which is also a three-month moving average, ticked up to –0.12 in December from –0.13 in November. Thirty-five of the 85 individual indicators made positive contributions to the CFNAI in December, while 50 made negative contributions. Fifty-one indicators improved from November to December, while 32 indicators deteriorated and two were unchanged. Of the indicators that improved, 26 made negative contributions.

The contribution from production-related indicators to the CFNAI increased to –0.26 in December from –0.40 in November. Industrial production decreased by 0.4 percent in December after declining by 0.9 percent in November. Moreover, manufacturing production decreased by 0.1 percent in December after decreasing by the same percentage in the previous month. The sales, orders, and inventories category made a contribution of –0.02 to the CFNAI in December, up slightly from –0.03 in November.

The contribution from employment-related indicators to the CFNAI was unchanged at +0.12 in December. Nonfarm payrolls rose by 292,000 in December after increasing by 252,000 in November, and the unemployment rate remained at 5.0 percent in December.

The contribution of the personal consumption and housing category to the CFNAI edged down to –0.07 in December from –0.05in November. Housing starts decreased to 1,149,000 annualized units in December from 1,179,000 in November. In addition, housing permits moved down to 1,232,000 annualized units in December from 1,282,000 in the previous month.

The CFNAI was constructed using data available as of January 20, 2016. At that time, December data for 49 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index. The November monthly index value was revised to –0.36 from an initial estimate of –0.30. Revisions to the monthly index value can be attributed to two main factors: revisions in previously published data and differences between the estimates of previously unavailable data and subsequently published data. The revision to the November monthly index value was due primarily to the former.


Philadelphia December Outlook Suggest Weak Activity
Posted: January 21, 2016 at 10:00 AM (Thursday)

Manufacturing conditions in the region contracted modestly this month, according to firms responding to the January Manufacturing Business Outlook Survey. The indicator for general activity remained negative this month; however, it rebounded from a lower reading in December. Other indicators offered mixed signals: Shipments increased this month, but new orders and employment declined modestly. The survey’s price indexes suggest continued downward pressure on manufacturing prices. With respect to the manufacturers’ forecasts, nearly all the survey’s future indicators showed continued weakening this month while remaining positive.

Most Current Indicators Suggest Weak Activity
The diffusion index for current activity increased from a revised reading of -10.2 in December to -3.5 and has now been negative for five consecutive months (see Chart 1 above).* The index for current new orders remained negative but increased 10 points, to -1.4. Firms reported an increase in shipments to begin the new year: The shipments index increased 12 points, its first positive reading in four months. Firms reported continued declines in inventories: The inventories index remained negative and decreased 10 points. Firms’ backlog of unfilled orders also declined this month, and delivery times were shorter, according to the responding firms.

The survey’s labor market indicators suggest weaker employment. The employment index decreased 4 points, from 2.2 to -1.9. Nearly 69 percent of the firms reported no change in employment this month, and the percentage reporting decreases (16 percent) was slightly larger than the percentage reporting increases (14 percent).

Firms Still Report Downward Price Pressures
Most firms (76 percent) reported no changes in the prices for their own manufactured products this month. The percentage of firms reporting lower prices (13 percent) was slightly greater than the percentage reporting higher prices (10 percent). Although the current prices received index increased from -8.5 to -2.8, the index has recorded seven consecutive negative readings (see Chart 2 below). Firms reported, on balance, declines in the prices paid for inputs. The percentage of firms reporting lower input prices (18 percent) was greater than the percentage of firms reporting higher input prices (17 percent). The prices paid index increased 7 points but remained negative for the fifth consecutive month.

Future Indexes Continue to Slide
The diffusion index for future general activity fell from a revised reading of 24.1 to 19.1 this month. The index has trended down since last summer and is now at its lowest reading since November 2012 (see Chart 1 above). The largest share of firms expects an increase in activity over the next six months (43 percent), but 24 percent expect declines. The future indexes for new orders and shipments also deteriorated this month, decreasing 13 points and 15 points, respectively. Firms’ forecasts for future employment have been modest during the past few months. The future employment index fell from 7.0 in December to 5.5 this month, the lowest reading since November 2012.

Energy Price Reductions Are Positive Overall
In this month’s special questions, firms were asked about the effects of lower energy prices on manufacturing business. The responses indicate that the net effects have been positive but that a large share of firms reported negative impacts from decreased demand from energy-producing customers. Nearly 51 percent of the firms reported overall positive effects from lower energy prices, while 30 percent reported negative effects. The largest percentage (33 percent) characterized the effect as slightly positive. Over 41 percent of the firms cited that falling energy prices had lowered the costs of production, but nearly the same percentage of firms (42 percent) said the lower prices had decreased demand from energy production–related customers. For 22 percent of the firms, energy cost reductions were increasing sales margins, but on the negative side, 22 percent indicated that the lower energy costs had reduced revenues. With regard to their own expectations for energy prices over the next six months, firms were evenly divided about whether their forecasts for energy prices would increase (32 percent) or decrease (30 percent) demand. About the same percent (30 percent) said demand would not be affected.

Summary
Weakness in regional manufacturing conditions continued this month, according to firms responding to the January survey. While indexes for current general activity and new orders remained negative, the indexes increased from lower readings at the end of last year. Firms reported an increase in shipments this month but a modest decrease in employment. Indicators for future conditions remained positive overall but suggested a continuing deterioration in confidence about manufacturing growth for the first half of 2016.


Weekly Initial Unemployment Claims Increase 10,000 to 293,000
Posted: January 21, 2016 at 08:30 AM (Thursday)

In the week ending January 16, the advance figure for seasonally adjusted initial claims was 293,000, an increase of 10,000 from the previous week's revised level. The previous week's level was revised down by 1,000 from 284,000 to 283,000. The 4-week moving average was 285,000, an increase of 6,500 from the previous week's revised average. The previous week's average was revised down by 250 from 278,750 to 278,500. There were no special factors impacting this week's initial claims.

The advance seasonally adjusted insured unemployment rate was 1.6 percent for the week ending January 9, 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 January 9 was 2,208,000, a decrease of 56,000 from the previous week's revised level. The previous week's level was revised up 1,000 from 2,263,000 to 2,264,000. The 4-week moving average was 2,227,750, an increase of 3,250 from the previous week's revised average. The previous week's average was revised up by 250 from 2,224,250 to 2,224,500.


Consumer Price Index declined 0.1% in December, Ex Fd & Engy rose 0.1%
Posted: January 20, 2016 at 08:30 AM (Wednesday)

The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.1 percent in December on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 0.7 percent before seasonal adjustment.

The indexes for energy and food both declined for the second month in a row, leading to the decline in the seasonally adjusted all items index. The energy index fell 2.4 percent as all major component energy indexes declined. The food index fell 0.2 percent as the index for food at home decreased 0.5 percent, led by a sharp decline in the index for meats, poultry, fish, and eggs.

The index for all items less food and energy rose 0.1 percent in December, its smallest increase since August. The index for shelter continued to rise, and the indexes for medical care, household furnishings and operations, motor vehicle insurance, education, used cars and trucks, and tobacco also increased in December. However, a number of indexes declined, including those for apparel, airline fares, personal care, new vehicles, and communication.

The all items index rose 0.7 percent over the last 12 months, compared to the 0.5 percent 12 month increase for the period ending November. The food index rose 0.8 percent over the last 12 months, though the index for food at home declined. The energy index fell 12.6 percent, with all its major components decreasing. The index for all items less food and energy increased 2.1 percent over the last 12 months.


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