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Monday, October 31, 2016

Personal Income and Consumption Increased in September

Personal income increased 0.3% ($46.7 billion) in September according to the Bureau of Economic Analysis, up from a 0.2% increase in August. Personal consumption expenditures also increased, rising 0.5% or $61.0 billion. Disposable personal income – personal income less personal taxes – increased 0.3% after rising 0.2% in August.


The personal savings rate – personal savings as a percentage of personal income was 5.7%, down from August’s rate of 5.8%.

The Price index for PCE increased 0.2%. Excluding food and energy, the index increased 0.1%.

Read the BEA release.
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Friday, October 28, 2016

Consumer Sentiment Fell in October

Consumer Sentiment fell 4.0 points in October to 87.2 – to the lowest level in two years, according to the University of Michigan Consumer Sentiment Index.


The Current Economic Conditions Index fell 1.0 points to 103.2, while the Consumer Expectations Index fell 5.9 points to 76.8.


“The October decline was due to less favorable prospects for the national economy, with half of all consumers anticipating an economic downturn sometime in the next five years for the first time since October 2014,” said Richard Curtin, Chief Economist of UM Surveys of Consumers. “Objectively, the probability of a downturn during the next five years is far from zero. This would be the longest expansion in 150 years if it lasted just over half of the five year horizon. Nonetheless, the October rise may simply reflect a temporary bout of uncertainty caused by the election.”

Third Quarter GDP Exceeds Expectations at 2.9 Percent

Real GDP grew at a seasonally adjusted annual rate of 2.9% during the third quarter of 2016, according to the Bureau of Economic Analysis’s “advance” estimate, up from 1.4% in the second quarter. The increase reflected positive contributions from personal consumption expenditures, exports, private inventory investment, federal government spending, and nonresidential fixed investment, partially offset by negative contributions from residential fixed investment and state and local government spending.


Consumption was the largest contributor to GDP growth, accounting for 1.5% of the gain, down from 2.9% during the second quarter. Consumption spending increased to an annual rate of $11.6 trillion, up $60.9 billion from the preceding quarter. Net exports also contributed strongly to GDP, accounting for 0.8% of growth.


Residential fixed investment was one of the largest negative contributors, subtracting a total of 0.2% from GDP. Imports were also a drag on GDP, subtracting 0.3% from growth.

Government spending increased during the quarter, as an increase in federal government spending offset a decrease in state and local government spending. Government spending increased by by a seasonally adjusted and annualized $3.6 billion.

Read the BEA release.
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Thursday, October 27, 2016

Durable Goods Orders Fall in September

New orders for manufactured durable goods fell 0.1% in September, following a 0.3% increase in August, according to the U.S. Census Bureau.
New orders excluding defense increased 0.7% on the month, as orders of nondefense capital goods rose 1.5% to $68.2 billion.

Shipments of manufactured durable goods, up three of the last four months, rose 0.8% to $234.5 billion.

Inventories of manufactured durable goods rose 0.1% to $384 billion, following a 0.1% August increase. Machinery led the increase, rising 0.5% to $66 billion.

Read the Census release.
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Wednesday, October 26, 2016

New Home Sales and Prices Increased in September

New single-family home sales rose to a seasonally adjusted annual rate of 593,000 in September, according to the U.S. Census Bureau and the Department of Housing and Urban Development. The September level was 3.1% above the revised August rate of 575,000 and 29.8% above the September 2015 level.


Sales rose in most regions, rising 33.3% in the Northeast, 8.6% in the Midwest and 3.4% in the South. In contrast, sales in the West fell 4.5%.

The median price of a new home was $313,500, up 6.7% from August. The average price was $377,700, an increase of 6.0% from the previous month.

At the end of September there was an estimated supply of 4.8 months at the current sales rate, down from a 4.9 month supply in August.

Read the Census/HUD release.
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Tuesday, October 25, 2016

Consumer Confidence Declined in October

The Conference Board’s Consumer Confidence Index fell to 98.6 in October, down 4.9 points from August. The Present Situation Index fell 7.3 points to 120.6, while the Expectations Index fell 3.3 points to 83.9.


“Consumers’ assessment of current business and employment conditions softened, while optimism regarding the short-term outlook retreated somewhat” said Lynn Franco, Director of Economic Indicators at The Conference Board. “However, consumers’ expectations regarding their income prospects in the coming months were relatively unchanged. Overall, sentiment is that the economy will continue to expand in the near-term, but at a moderate pace.”

Consumers’ labor market outlook was mixed during October. The share of consumers expecting more jobs in the coming months fell 2.6 points to 13.1%. However, the share anticipating fewer jobs declined from 18.1% to 17.0%. Income expectations were largely unchanged, as 17.5% expected their incomes to increase in coming months, the same as in September.

Read the release.
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Home Prices Grew in August

The 20-City CoreLogic Case-Shiller Composite Index increased 5.1% year-over-year in August, up from a 5.0% July increase. The 10-City Composite index increased 4.3% annually, up from a 4.1% increase in the previous month. The National Index, which covers all nine Census divisions reported a 5.3% gain, up from 5.0% in July.


On a seasonally adjusted monthly basis, both the 10- and 20-City composites increased by 0.4% in August, while the National Index increased 0.5%.

“Supported by continued moderate economic growth, home prices extended recent gains,” says David Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “All 20 cities saw prices higher than a year earlier with 10 enjoying larger annual gains than last month.”

Monthly home prices rose in 14 of the 20 major cities covered by the index. San Francisco saw the highest gains, with prices increasing 1.0% on a seasonally adjusted basis in August. In contrast, prices in Atlanta, Chicago, Detroit and Las Vegas fell 0.1%.

Read the S&P release.
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Thursday, October 20, 2016

First-Time Buyers Lifted Existing Home Sales in September

Existing home sales rose 3.2% to a seasonally adjusted annual rate of 5.47 million in September, according to the National Association of Realtors (NAR). Sales were spurred by a surge in first-time home buyers. Annual sales of homes increased across all regions, rising 5.7% in the Northeast, 3.9% in the Midwest, 0.9% in the South and 5.0% in the West.


“The home search over the past several months for a lot of prospective buyers, and especially for first-time buyers, took longer than usual because of the competition for the minimal amount of homes for sale,” said NAR Chief Economist Lawrence Yun. “Most families and move-up buyers look to close before the new school year starts. Their diminishing presence from the market towards the end of the summer created more opportunities for aspiring first-time homeowners to buy last month.”

The total housing inventory rose 1.5% to 2.04 million homes available for sale, while the median existing home price moved up 5.6% over the year to $234,200.

Distressed sales fell to 4% of the total in September, the lowest share since NAR began tracking them in 2008. Three percent of sales were foreclosures and 1% were short sales. On average, foreclosures and short sales sold for discounts of 15% and 11%, respectively.

Read the NAR release.
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Wednesday, October 19, 2016

Housing Starts Fell Sharply in September

Housing starts fell to a seasonally adjusted annual rate of 1.047 million in September, 9.0% below the revised august estimate of 1.150 million and 11.9% below the September 2015 rate.


Housing activity fell in most regions, falling 36.0% in the Northeast, 14.1% in the Midwest and 5.3% in the South. Activity in the Midwest was virtually unchanged during the month.


In contrast, new building permits rose 6.3% to 1.152 million. Permits are now 8.5% above the September 2015 rate.

Housing completions were at a seasonally adjusted annual rate of 951,000, down 8.4% from the revised August estimate and 5.8% below the September 2015 rate.

Read the Census release.
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Beige Book: Economic Expansion Continues

Economic activity expanded across most of the twelve Federal Reserve Districts over the late August to early October period, according to the just-released Federal Reserve Beige Book. Most Federal Reserve Districts reported “modest” or “moderate” expansion; however, the New York District reported no change in activity.

Banking conditions remained favorable, despite seasonal softening in some lending categories. Competition and credit quality for borrowers remained strong across the Districts. Several Districts noted that delinquency rates remained low or declined since the last report.

Consumer spending was mixed this period. The near-term outlook in the Boston, Philadelphia, Richmond, Atlanta and St. Louis Districts was for modest growth, while the Cleveland and Kansas City Districts anticipated flat sales. Several Districts noted the effects of unseasonably warm weather on sales of cold-weather apparel and of the strong dollar on spending by international customers.

Agricultural conditions were once again mixed amid strong production and low prices. Contacts in the Kansas City District noted that weak farm income was affecting borrower liquidity, and farmers in the Dallas District expressed concerned about their ability to get financing for the next year.

Employment expanded at a modest pace, as labor market conditions remained tight. Hiring was strong in the Richmond, Chicago, St. Louis and San Francisco Districts, while manufacturing layoffs were noted in the New York District. Contacts noted difficulty hiring for a wide range of positions, including manufacturing, health care, and construction.

Read the full Federal Reserve report.
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Tuesday, October 18, 2016

CPI Up 0.3% in September

The Consumer Price Index increased 0.3% in September on a seasonally adjusted basis. Over the last 12 months, the all-items index rose 1.5%, its largest 12-month increase since October 2014.


Prices for all items less food and energy increased 0.1% in September, after rising 0.3% in August. The index rose 2.2% over the past 12 months ending in September.

The food index was unchanged for the third consecutive month. Prices for food at home fell 0.1% in September and have fallen 2.2% over the past year. Prices for food away from home increased 0.2% for the month and 2.4% over the course of the year.

The energy index increased 2.9% in September, rising for the fifth consecutive month, its largest advance since April. All major energy component indices increased.

Higher prices for shelters and gas were the main causes of inflation in September. The gasoline index rose 5.8 percent in September and accounted for more than half of the all-items increase. The shelter index increased 0.4 percent, its largest increase since May.

Read the BLS release.

Builder Confidence Remained Solid in October

The National Association of Home Builders/Wells Fargo Housing Market Index was 63 in October, down from a reading of 65 in September, but still well above the peak of 61 over the prior nine months.

“The October reading represents a mild pullback from a jump in September, and indicates that the housing market continues to make slow and steady gains,” said NAHB Chief Economist Robert Dietz. “Moreover, mortgage rates remain low and the HMI index measuring future sales expectations has been over 70 for the past two months. These factors will sustain continued growth in the single-family market in the months ahead.”

Two of the three index components posted losses in October. The component measuring current sales conditions decreased 2 points to 69, and the index measuring buyer traffic fell 1 point to 46. The sales expectations component rose 1 point to 72.

The regional three-month moving averages for HMI scores increased. The Northeast, Midwest and South each rose 1 point to 43, 56 and 65 respectively. The West rose 2 points to 75.

Read the NAHB release.

Monday, October 17, 2016

Industrial Production Edged Up in September

Industrial production moved up 0.1% in September, after falling 0.5% in August. For the third quarter as a whole, industrial production rose at an annual rate of 1.8%, the first quarterly increase since the third quarter of 2015.


Manufacturing output rose 0.2% in September after falling 0.5% in August. Production of durable goods remained unchanged, but nondurable goods production increased 0.5%. Capacity utilization for manufacturing increased 0.1% to 74.9%, a rate that is 3.6% below its long-run average.

The mining index moved up 0.4% in September. Gains for oil and gas well drilling and servicing, coal mining, and nonmetallic mineral mining more than offset a drop in crude oil extraction.

The utilities index fell 1.0% in September after falling 0.3% in August. Year-over-year, the utilities index fell 0.4%.

Read the Fed release.
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Friday, October 14, 2016

Solid Producer Price Rise in September

The Producer Price Index rose at a seasonally adjusted annual rate (SAAR) of 3.3% in September and were up 0.7% from a year earlier, the U.S. Bureau of Labor Statistics reported today. Excluding the more volatile components of food and energy, the index also rose 3.3% for the month, seasonally adjusted and annualized, and 1.5% from the prior September.

Most of the September rise was due to a 8.1% SAAR increase in the index for goods, while the index for services inched up only 1.1% SAAR. Thirty percent of the September rise in the index for goods was due to a 35.1% rise in energy prices, primarily the price of gasoline.

Read the press release.

Strong Retail Sales in September

Retail and food services sales rose to a seasonally adjusted annual level of $459.8 billion in September, an increase of 0.6% from August and 2.7% from September 2015, according to the U.S. Census Bureau.

Retail trade sales were up 0.6% from August and 2.2% from a year earlier. Non-store retail sales were up 10.6% from September 2015, while prices for food services and drinking places were up 6.1% over this period.

The September rebound in retail sales, following a disappointing summer, was led by stronger vehicle demand, accompanied by higher spending on furniture, home building supplies and sporting goods. Sales of appliances and electronics, as well as health care, were soft

Read the press release.

Wednesday, October 12, 2016

FOMC Minutes: Hike May be Appropriate ‘Relatively Soon’

Fed officials were divided during the September 20-21 Federal Open Market Committee (FOMC) meeting as to whether a rate hike was warranted, according to the minutes of the meeting released today.

The minutes noted that “a reasonable argument could be made either for an increase at this meeting or waiting for some additional information on the labor market and inflation,” and that several members believed that a rate hike would be appropriate “relatively soon” if economic developments continued as expected.

Though members generally acknowledged that labor market conditions improved over the year, some noted that increased labor force participation may cause the labor supply to expand more than previously expected.

Regarding inflation, several members remarked that inflation progress had been “slow,” while some noted that PCE price inflation was close to meeting the Committee’s 2 percent objective.

Three members dissented from the decision to maintain the target rate at 25-50 bps, voting instead to raise rates by 25 basis points. The dissenters cautioned that if rates were left low for too long, the unemployment rate may be pushed below its longer-run normal level over the coming year.

Read the FOMC Minutes.
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Friday, October 7, 2016

Consumer Credit Grew 8.5% in August

Consumer credit increased at a seasonally adjusted annual rate of 8.5% in August, up from a 5.9% rate in July. Total outstanding credit rose $25.9 billion during the month (compared with $14.5 billion in July) to $3.69 trillion.


Revolving credit rose at an annual rate of 7.0% to $974.6 billion, compared to a 3.5% increase in July. Non-revolving credit rose at a 9.0% annual rate, or $20.2 billion, compared to July’s rate of 6.7%. Total outstanding non-revolving credit is now $2.71 trillion.


Federal government holdings of student loans continue to be the largest portion of non-revolving credit, comprising approximately 38% of outstanding credit. Depository institutions and finance companies are the secondary and tertiary holders, with 25% and 23%, respectively, of outstanding non-revolving credit.

Read the Fed release.

156,000 Jobs Added in September, Unemployment Rose to 5.0%

Total nonfarm payroll employment rose by 156,000 in September, down from August’s upwardly revised figure of 167,000. The national unemployment rate increased to 5.0%. The majority of gains occurred in professional and business services and in health care.


Private-service providing industries added a net 157,000 jobs, led by gains in professional and business services, which added 67,000 jobs during the month and 582,000 over the year. Healthcare employment also continued to trend up, adding 33,000 jobs in September and 445,000 since September 2015.

Goods-producing employment added a net 10,000 jobs, as solid gains in construction were partially offset by job losses in manufacturing.

The civilian labor force participation rate was 62.9%, up slightly from August. The number of long-term unemployed, those jobless for 27 weeks or more, was unchanged at 2.0 million and accounted for 24.9% of the unemployed. The number of discouraged workers was 553,000 in September, little changed from the previous year.

Average hourly earnings rose 6 cents to $25.79. Hourly earnings have increased 2.6% over the past year.

According to Bank of the West Chief Economist Scott Anderson, today’s employment news “shows that moderate job growth continues. In many ways it was a Goldilocks number – not too hot or not too cold – for the market and the Fed. The number was weak enough and labor force gains strong enough to take some of the air out of the hawks fears that the FOMC is behind the curve in raising rates. At the same time, it keeps the FOMC on track for another December rate move. The improvement in average hourly earnings growth and hours worked is particularly encouraging, suggesting that the average worker is finally benefiting from the economic expansion and tightening labor market.”

Read the BLS release.
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Thursday, October 6, 2016

Job Cuts Surged in September

Employers announced plans to cut 44,324 jobs in September, according to a report issued by Challenger Gray & Christmas. September’s cuts were 38% higher than August’s. Employers have announced 435,612 job cuts through the first nine months of 2016, down 12% from a year ago.

“Heavy job cutting in the energy sector defined the first half of the year. But each quarter has seen the number of overall job cuts decline as this sector stabilized and the economy continued to improve,” said John Challenger, CEO of Challenger, Gray & Christmas.

Cuts in the education sector led the increase in September, as announced layoffs increased 363% to 8,671. The computer industry also experienced significant losses once again, announcing 4,152 cuts. Year-to-date, the computer industry has cut 59,719 jobs.

Although cuts in the first three quarters of this year have been lower compared to 2015, the report suggests that we could see a surge in layoffs during final quarter of the year.

“This year could be particularly volatile in the fourth quarter, with employers holding off on significant moves until they see election results,” says Challenger. “It’s not simply who wins the White House, but there are Senate races and countless ballot initiatives on issues like minimum wages that will influence business strategies going forward.”

Read the Challenger, Gray & Christmas release.
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Wednesday, October 5, 2016

Manufactured Goods Orders Rose in August

New orders for manufactured goods rose 0.2% to $453.1 billion in August, according to the U.S. Census Bureau. The August reading followed a 1.4% increase in July.


New orders for manufactured durable goods increased 0.1% to $227.3 billion, after remaining unchanged in July. Orders for transportation equipment drove the increase, rising 0.7% to $78.2 billion.

Shipments of manufactured durable goods, down following two consecutive increases, fell 0.2% to $232.2 billion. Transportation drove the decrease, falling 0.9% to $80.1 billion.

Inventories of manufactured durable goods increased for the second consecutive month, rising 0.2% to $383.8 billion. Machinery led the increase, rising 0.5% to $65.7 billion.

Read the Census release.
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ADP: 154,000 Jobs Added in September

The non-farm private sector added 154,000 jobs in September, according to the ADP National Employment Report, a decrease from August’s revised growth of 175,000. Service providing jobs accounted for most of the month’s growth, while goods-producing employment increased for the first time since March.


Small businesses with fewer than 50 employees added 34,000 jobs, down from 68,000 in August. Medium-sized businesses with 50-499 employees added 56,000 jobs, up from 40,000 last month. Large businesses added 64,000 jobs, up from 56,000 in September.

Service-providing employment rose by 151,000 jobs, 45,000 of which were in the professional and business services sector. Goods-producing employment increased for the first time in six months, adding a net 3,000 jobs, largely due to gains in the construction industry.

“Job gains in September eased a bit when compared to the past 12-month average,” said Ahu Yildirmaz, vice president and head of the ADP Research Institute. “We also observed softening this month in trade/transportation/utilities, possibly due to a continued tightening U.S. labor market and lackluster consumer spending.”

Read the ADP report.
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ADP: 154,000 Jobs Added in September

The non-farm private sector added 154,000 jobs in September, according to the ADP National Employment Report, a decrease from August’s revised growth of 175,000. Service providing jobs accounted for most of the month’s growth, while goods-producing employment increased for the first time since March.


Small businesses with fewer than 50 employees added 34,000 jobs, down from 68,000 in August. Medium-sized businesses with 50-499 employees added 56,000 jobs, up from 40,000 last month. Large businesses added 64,000 jobs, up from 56,000 in September.

Service-providing employment rose by 151,000 jobs, 45,000 of which were in the professional and business services sector. Goods-producing employment increased for the first time in six months, adding a net 3,000 jobs, largely due to gains in the construction industry.

“Job gains in September eased a bit when compared to the past 12-month average,” said Ahu Yildirmaz, vice president and head of the ADP Research Institute. “We also observed softening this month in trade/transportation/utilities, possibly due to a continued tightening U.S. labor market and lackluster consumer spending.”

Read the ADP report.
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Monday, October 3, 2016

Construction Spending Fell for Second Consecutive Month

Construction spending for August was estimated at a seasonally adjusted annual level (SAAL) of $1,142.2 billion according to the U.S. Census Bureau, down 0.7% from a revised July estimate of $1,150.6 billion. During the first eight months of the year, construction spending amounted to $755.0 billion, up 4.9% from the first eight months of 2015.


Total private construction fell to $871.6 billion SAAL, down 0.3% from the revised July estimate of $874.6 billion.

Private residential construction was $449.2 billion SAAL, 0.3% below July’s rate.

Private nonresidential construction fell 0.4% to $422.4 billion SAAL, due largely to declines in power and manufacturing-related projects.

Public construction fell 2.0% to $270.5 billion SAAL, largely due to a decline in highway and street construction.

Read the Census release.
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Manufacturing Expanded in September

The ISM Manufacturing Index registered 51.5 points in September, up 2.1 points from August. September’s reading indicates expansion in the manufacturing sector (readings over 50 points denote expansion). Of the eighteen manufacturing industries, seven reported growth while eleven reported contraction.


The Employment Index registered 49.7 points in September, up 1.4 points from August’s reading but indicating contraction for the third consecutive month. Seven industries reported employment growth, while, eight including petroleum & coal products and transportation equipment, reported contraction.

The New Orders Index increased 6.0 points to 55.1 in September, after contracting in August. Nine industries, including wood products and miscellaneous manufacturing, reported growth, while six industries reported contraction.

Export orders slipped 0.5 points to 52.0, indicating growth in exports for the seventh consecutive month (but at a slowing pace). Wood products, miscellaneous manufacturing, transportation equipment, along with four other industries experienced growth in exports, while seven industries reported decreases.

The inventories index registered 49.5, indicating that raw materials inventories contracted for the 15th consecutive month.

Read the ISM release.
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