Friday, May 26, 2017

Consumer Sentiment Held Strong in May

Consumer Sentiment increased 0.1 point in May to 97.1, according to the University of Michigan Consumer Sentiment Index.  
The Current Economic Conditions Index fell 1.0 point to 111.7, while the Consumer Expectations Index rose 0.7 point to 87.7. 
“Consumer sentiment has continued to move along the high plateau established following Trump's election. The final May figure was virtually unchanged from either earlier in May or the April reading. Indeed, the May figure was nearly identical with the December to May average of 97.3. Moreover, the partisan divide between Democrats and Republicans has also remained largely unchanged, with the first expecting a recession and the other more robust economic growth,” said Richard Curtin, chief economist of UM Surveys of Consumers. “Since no major policies, such as healthcare, taxes, or infrastructure spending have yet been adopted, the partisan divide may reflect differences in policy preferences expressed as expected economic outcomes. Despite the expected bounce back in spending in the current quarter, personal consumption is expected to advance by 2.3% in 2017, although this is based on averages across the political divide, which has never been as extreme as it is currently.” 

Read the University of Michigan Surveys of Consumers release
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Durable Goods Orders Decreased in April

New orders for manufactured durable goods decreased 0.7% in April to $231.2 billion, following a 2.3% March increase, according to the U.S. Census Bureau.

New orders excluding defense fell 0.8% on the month, as orders of nondefense capital goods decreased 1.9% to $70.4 billion.

Shipments of manufactured durable goods decreased 0.3% to $233.0 billion.

Inventories of manufactured durable goods rose 0.1% to $394.2 billion, following a 0.2% March increase.

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First Quarter GDP Revised up to 1.2%

Real GDP for the First quarter of 2017 grew at a seasonally adjusted annual rate of 1.2%, according to the Bureau of Economic Analysis’s revised estimate, up slightly from the advance estimate of 0.7%. The general picture of economic growth remained the same.
The increase in the estimate was mostly due to nonresidential fixed investment and personal consumption expenditures being larger than previously estimated.
The upward revision to consumer spending reflected upward revisions to household utilities and food services. 

The downward revision to private inventory investment reflected downward revisions to nondurable goods manufacturing. The nonresidential fixed investment upward revision was due to upward revisions to intellectual property products.

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Thursday, May 25, 2017

FOMC Articulates Continued Rationale for Gradual Rate Rise Plan

The Federal Open Market Committee yesterday released minutes illuminating its rationale at its May 2-3 meeting for holding the target federal funds rate at 0.75 to 1 percent but sticking to a plan for gradual rate increases throughout the year. The unanimous decision came in light of accelerating economic growth, which followed a notable slowing that prompted the committee to hold rates after its March meeting.

The committee pointed out continued economic growth, most notably in the form of job gains, with a few members noting that global uncertainty had waned. FOMC members also said they will “closely monitor inflation indicators and global economic and financial developments” to determine when to next raise rates, and by how much. The minutes continue to signal the committee’s plans for two more rate hikes in 2017. 

Read the FOMC minutes.
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Wednesday, May 24, 2017

Existing-Home Sales Fell in April

Existing-home sales decreased 2.3% to a seasonally adjusted annual rate of 5.57 million in April, according to the National Association of Realtors (NAR). Despite the decline, sales are still at the fourth highest pace over the last year.
"Last month's dip in closings was somewhat expected given that there was such a strong sales increase in March at 4.2 percent, and new and existing inventory is not keeping up with the fast pace homes are coming off the market," said Lawrence Yun, NAR chief economist. "Demand is easily outstripping supply in most of the country and it's stymieing many prospective buyers from finding a home to purchase."

The total housing inventory rose 7.2% to 1.93 million homes available for sale, while the median existing home price stood at $244,800, a 6.0% increase from April 2016.

Distressed sales were 5% of the total in April, which are down from 7% a year ago. Three percent of sales were foreclosures and 2% were short sales. On average, foreclosures and short sales sold for discounts of 18% and 12%, respectively.

Read the NAR release.
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Tuesday, May 23, 2017

New Home Sales Decreased in April

New single-family home sales rose to a seasonally adjusted annual rate of 569,000 in April, according to the U.S. Census Bureau and the Department of Housing and Urban Development. The April level was 11.4% below the revised March rate of 642,000 but 0.5% above the April 2016 level.
Sales fell in each region, 7.5% in the Northeast, 26.3% in the West, 13.1% in the Midwest and 4.0% in the South.

The median price of a new home was $309,200, down 3.0% from March. The average price was $368,300.

At the end of April there was an estimated supply of 5.7 months at the current sales rate, up from 4.9 months in March.

Read the Census/HUD release.
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Tuesday, May 16, 2017

Industrial Production Increased 1.0% in April, Largest Gain Since February 2014

Industrial production increased 1.0% in April after a revised 0.4% March increase. This was the third consecutive monthly increase and largest gain since February 2014. Over the last year, industrial production was up 2.2%.
Manufacturing output increased 1.0% in April after a 0.4% decline in March. As with the overall index, this increase was its largest since February 2014. Production of durable goods and nondurables both rose 1.0% during the month. Capacity utilization for manufacturing increased by 0.9 percentage point to 75.9%, a rate that is 2.5 percentage points below its long-run average.

The output of mining rose 1.2% in April after a 0.4% fall in March, largely because of pickups in coal mining and in drilling and support activities.

Utilities output climbed 0.7% in April, as warmer-than-normal temperatures boosted air-conditioning usage.

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