Friday, August 28, 2015

Consumer Sentiment Fell in August

Consumer confidence fell to 91.9 in August, down 1.2 points from the previous month according to the University of Michigan Consumer Sentiment Index. The index is currently 11.4 percent higher than in August of 2014, but recent volatility in the stock market may affect sentiment in the near future.

“The Black Mondays of October 17, 1987 and August 24, 2015 represent two episodes where the stock market declined due to reasons other than the domestic economy,” says Richard Curtin, Chief Economist for UM Surveys of Consumers. “Prior to each stock decline, the Sentiment Index was very positive, but immediately following, it fell about 10 percent. Consumers quickly dismissed the 1987 episode since it didn’t involve their jobs or incomes, and today’s consumers hold similar favorable views about their job and income prospects.”

The Current Economic Conditions index fell 2.1 points to 105.1, but was 5 percent higher than August of last year, while the Index of Consumer Expectations dropped 0.7 points to 83.4, but grew 17 percent year over year.

Personal Income and Consumption Rose in July

Personal income increased $67.1 billion, or 0.4 percent, in July, according to the Bureau of Economic Analysis, the same pace as in June. Personal consumption expenditures (PCE) increased $37.4 billion, or 0.3 percent, also the same as in June.

Disposable personal income – personal income less taxes – increased 0.4 percent, after gaining 0.2 percent in June.

The personal savings rate as a percentage of disposable income was 4.9 percent, up 2 basis points from June.

Wages and salaries grew $35.8 billion, more than twice the amount as in June, driven largely by increases in service sector payrolls. Goods producing industries and manufacturing payrolls, which contracted in June, also posted gains during July.

The price index for PCE increased 0.1 percent in July, compared to 0.2 percent in June. The index excluding food and energy increased 1.2 percent from a year ago, well below the Federal Reserve’s target of 2.0 percent.

Read the BEA release.

Thursday, August 27, 2015

GDP Revised Up to 3.7% for Second Quarter

Real GDP for the second quarter grew at an annual rate of 3.7 percent, according to the Bureau of Economic Analysis’s second estimate. This is an upward revision from the initial second quarter estimate of 2.3 percent, and well above the first quarter’s rate of 0.6 percent. The acceleration in growth reflected acceleration in personal consumption expenditures (PCE), as well as an increase in government spending and net exports.

Consumption was the largest contributor to GDP, accounting for 2.1 percent of the 3.7 percent growth in the second quarter, up from 1.2 percent in the first. The growth in consumption was driven by an increase in durable goods spending, which rose by 8.2 percent in the second quarter.

Exports of goods and services which had declined 6.0 percent in the first quarter grew 5.2 percent in the second, as the growth rate of imports slowed from 7.1 percent to 2.8 percent. Overall, net exports contributed 0.2 percent to GDP in the second quarter, in contrast to a 1.9 percent drag in the first.

Government expenditures increased by 2.6 percent, after contracting by 0.1 percent in the first. The majority of the spending increase was from state and local governments, which increased spending by 4.3 percent. Government spending accounted for 13 percent of GDP growth in the second quarter, up from 4 percent in the first.

Read the BEA release.

Wednesday, August 26, 2015

Durable Goods Orders Reached 2% Growth in July

New orders for manufactured durable goods increased 2.0 percent to $241.1 billion in July, according to the U.S. Census Bureau. The July increase followed a 4.1 percent increase in June. The majority of the increase can be attributed to a 4.7 percent gain in new orders for transportation equipment. Excluding transportation, new orders increased 0.6 percent.

New orders excluding defense increased 1.0 percent, primarily driven by a 22.3 percent increase in defense capital goods. New orders for non-defense capital goods grew 1.1 percent to $82.3 billion, while shipments increased 0.1 percent to $79.3 billion.

Shipments of manufactured durable goods, up for the past 2 months, increased 1.0 percent to $243.2 billion after a 0.9 percent increase in June.

Inventories of manufactured durable goods were virtually unchanged at $402.1 billion. Inventories grew 0.4 percent in June.

Read the Census release.

Agencies Issue 2014 CRA Small-Biz, Small-Farm Loan Data

The federal banking agencies today issued aggregate data on 2014 small-business, small-farm and community development loans that institutions reported under the Community Reinvestment Act. The data, which commercial banks and savings institutions with about $1.2 billion or more in assets are required to report and others can report voluntarily, show that such institutions made about 5.6 million small-business loans, totaling $214 billion, and about 173,000 farm loans, totaling over $12.9 billion.

The number of small-business loans rose 12 percent from 2013, and the dollar amount of small business loan originations rose by 2 percent. The number of small-farm loans rose by about 1 percent and the dollar amount increased by 5 percent.

Just over 93 percent of the small-business loans and 78 percent of the small-farm loans were for amounts under $100,000, according to the analysis. It also said nearly 45 percent of the small-business loans and nearly 60 percent of the small-farm loans were extended to firms with revenues of $1 million or less.

Read more.

Tuesday, August 25, 2015

Conference Board: Consumer Confidence Rises after Soft July

Consumer confidence rebounded in August after July’s decline, rising 10.5 points on the month to 101.5, according to The Conference Board’s Consumer Confidence Index.

The Present Situation Index – a measure of respondents’ appraisal of current business and employment conditions, grew 11.1 points to 115.1 in August, while the Expectations Index – a measure of business, employment and total family income expectations in the next six months, grew 10.2 points to 92.5.

“Consumers’ assessment of current conditions was considerably more upbeat, primarily due to a more favorable appraisal of the labor market,” noted Lynn Franco, Director of Economic Indicators at The Conference Board. “The uncertainty expressed last month about the short term outlook has dissipated and consumers are once again feeling optimistic about the near future.”

Outlook for the labor market was more positive in August, as respondents anticipating more jobs in the coming months grew from 13.7 percent to 14.6 percent in July, while those anticipating fewer jobs fell to 13.6 percent from 19.0 percent. Income expectations declined in August, with 16.2 percent of consumers expecting their incomes to increase, down from 17.0 percent last month, while those expecting their incomes to decline rose from 10.0 percent to 11.3 percent.

The outlook for business conditions was mixed as respondents saying business conditions are “good” decreased slightly from 23.4 percent to 23.2 percent in July, while those saying business conditions are “bad” marginally declined from 18.2 percent to 17.6 percent.

Read the release.

New Home Sales Rose 5.4% in July

Sales of new single-family homes rose in July to a seasonally adjusted annual rate of 507,000 according to the U.S. Census Bureau and Department of Housing and Urban Development. The July rate is 5.4 percent above the revised June rate of 481,000 and 25.8 percent above the year-ago rate of 403,000.

New home sales grew month-over-month in three of the four regions, rising 23.1 percent in the Northeast, 5.8 percent in the South, and 6.7 percent in the West, while sales fell 6.9 percent in the Midwest.

The median sales price of new homes sold in July was $285,900, up 3.0 percent from June and considerably higher than the median existing home price of $234,000. The average sales price was $361,600, up 13.1 percent on the month.

At the end of July, there was an estimated supply of 5.2 months at the current sales rate.

Read the release.