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Wednesday, November 30, 2016

Beige Book: Economy Continues to Expand

Economic activity continued to expand across most of the twelve Federal Reserve Districts over the early October to mid-November period, according to the just-released Federal Reserve Beige Book. Most Federal Reserve Districts reported “moderate,” “modest,” or “slight” growth. However, Richmond described economic activity as mixed, while the New York District reported no change in activity.

Banking conditions were primarily stable, with minor improvements seen in loan demand. District reports indicated that the demand for credit varied widely. Credit quality was unchanged across most Districts, with improvements seen in New York, Philadelphia, and Chicago.

Consumer spending was mixed this period. Most Districts reported retail sales slightly higher or expanding at a moderate pace. Motor vehicle sales declined slightly in most reporting Districts during the period, while tourism was mostly positive relative to year-earlier levels.

Even though agricultural conditions varied widely, farmers across reporting Districts were generally satisfied with this year’s harvests. However, low commodity prices continue to weigh on farm income. Many of the reporting Districts continued to see slow improvements in the energy sector as well.

Employment continued to expand during the reporting period. Most Districts saw employment rise at a moderate or modest pace. Wage growth was once again characterized generally as modest across the Districts, while there was slight price growth during the period.

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Personal Income Increases for Seventh Consecutive Month

Income growth outpaced spending in October, pushing the savings rate up. Personal income increased 0.6% ($98.6 billion) in October according to the Bureau of Economic Analysis, up from a 0.4% increase in September. Personal consumption expenditures also increased, rising 0.3% or $38.1 billion. Disposable personal income – personal income less personal taxes – increased $86.5 billion (0.6%).
The personal savings rate – personal savings as a percentage of personal income – was 6.0%, up from September’s rate of 5.7%.

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

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ADP: 216,000 Jobs Added in November

The non-farm private sector exceeded expectations by adding 216,000 jobs in November, according to the ADP National Employment Report. October’s figure was revised downward to 119,000. Service-providing jobs accounted for all of the month’s growth, while goods-producing employment fell during the month.
“This month’s jobs report is a clear sign that the economy is picking up steam as it continues to strengthen,” said Jim Chessen, ABA Chief Economist. “It’s a foregone conclusion that the Fed will move with such a strong job market.”

Growth was widespread in November with businesses of all sizes seeing increases. Small businesses with fewer than 50 employees added 37,000 jobs, while medium-sized businesses with 50-499 employees added 89,000 jobs. Large businesses added 90,000 jobs.

“For the month of November 2016 we saw very strong job growth that has almost doubled in gains over October 2016,” said Ahu Yildirmaz, vice president and head of the ADP Research Institute. “This growth was seen in primarily consumer-driven industries like retail and, leisure and hospitality - across all company sizes. Overall, consumers are feeling confident and are driving the strong performance we currently see in the job market.”

Service-providing employment rose by 228,000 jobs, which was driven by the professional and business services sector which added 68,000 jobs. Health care and social assistance jobs also increased, adding 25,000 jobs. In contrast, goods-producing employment fell by 11,000 jobs. The manufacturing industry led the decline, shedding 10,000 jobs.

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Tuesday, November 29, 2016

ABA Statement on FDIC's Third Quarter Bank Earnings Report

WASHINGTON — “American banks continue to spur economic growth with another strong quarter of activity. Loan growth remained solid in the third quarter, helping to boost loan volume over the last year by nearly $600 billion. Deposit flows were strong, capital levels continued to rise and problem loans fell. Banks are well-positioned to meet the needs of customers seeking to manage their finances or expand their businesses.”

Lending at All-Time High
“Lending rose to an all-time high, with total lending reaching more than $9 trillion in the third quarter, helping to support jobs and communities. Small business loan growth was particularly strong at community banks, which reflects a broad-based improvement in economic conditions in many communities across the country. The outlook may be improving as businesses sense the potential for regulatory relief and lower taxes on the horizon. Small businesses often cite high taxes and government red tape as their company’s biggest concerns.”

Banks Expecting Rise in Rates
“Our expectation is that the Fed will raise rates in December as the economy continues to firm. Banks have been prepared for a rise in rates for some time and are managing that risk. The Fed has made it clear that any increase in the Federal Funds Rate will be gradual, ensuring that borrowing costs will remain low for the foreseeable future.”

Capital Levels Exceed the Most Stringent Regulatory Standards
“Bank capital levels are very strong. This solid footing provides the base for future economic growth, and provides the bulwark against any economic downturns that could arise. More than 99 percent of all banks are highly capitalized at levels far exceeding the most stringent regulatory standards. Total industry capital now stands at $1.87 trillion, up 5 percent compared to the same period a year ago and nearly 31 percent higher than at the end of the recession.”

Consumer Confidence Climbs in November

The Conference Board Consumer Confidence Index increased to 107.1 in November, up 6.3 points from October. The Present Situation Index rose 7.2 points to 130.3, while the Expectations Index jumped 5.7 points to 91.7.

“Consumer confidence improved in November after a moderate decline in October, and is once again at pre-recession levels,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “A more favorable assessment of current conditions coupled with a more optimistic short-term outlook helped boost confidence. And while the majority of consumers were surveyed before the presidential election, it appears from the small sample of post-election responses that consumers’ optimism was not impacted by the outcome. With the holiday season upon us, a more confident consumer should be welcome news for retailers.”

Consumers’ labor market outlook was mixed during November. The percentage of consumers expecting more jobs in the coming months was virtually unchanged at 14.5%. However, the share anticipating fewer jobs declined from 16.6% to 13.8%. Income expectations were largely unchanged, as 17.5% expected their incomes to increase in coming months, the same as in October.

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Third Quarter GDP Revised up to 3.2%

Real GDP for the third quarter of 2016 grew at a seasonally adjusted annual rate of 3.2%, according to the Bureau of Economic Analysis’s revised estimate, up slightly from the advance estimate of 2.9%. The general picture of economic growth remained the same. The increase in the estimate was mostly due to personal consumption expenditures being larger than previously estimated.


The change in GDP reflected an upward revision to personal consumption expenditures that was partly offset by downward revisions to nonresidential fixed investment and private inventory investment.


The upward revision to consumer spending reflected upward revisions to both goods and services. The revision to goods was mostly to “other” nondurable goods and to motor vehicles and parts.

The downward revision to inventory investment reflected downward revisions to construction, mining, utilities, and manufacturing. The nonresidential fixed investment downward revision was due to downward revisions to equipment and to intellectual property products, which were partly offset by an upward revision to nonresidential structures.

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Home Price Growth Continued in September

The 20-City CoreLogic Case-Shiller Composite Index increased 5.1% year-over-year in September, unchanged from August’s increase. The 10-City Composite increased 4.3% annually, up from a 4.2% increase in the previous month. The National Index, which covers all nine Census divisions reported a 5.5% annual gain in September and reached an all-time high.


On a seasonally adjusted monthly basis, both the 10- and 20-City composites increased by 0.1% in September, while the National Index increased 0.4%.

“The new peak set by the S&P Case-Shiller CoreLogic National Index will be seen as marking a shift from the housing recovery to the hoped-for start of a new advance,” said David M. Blitzer, Managing Director and Chairman of the index Committee at S&P Dow Jones Indices. “While seven of the 20 cities previously reached new post-recession peaks, those that experienced the biggest booms – Miami, Tampa, Phoenix and Las Vegas – remain well below their all-time highs. Other housing indicators are also giving positive signals: sales of existing and new homes are rising and housing starts at an annual rate of 1.3 million units are at a post-recession peak.”

Monthly home prices rose in all 20 major cities covered by the index. Tampa saw the highest gains, with prices increasing 0.9% on a seasonally adjusted basis in September.

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Wednesday, November 23, 2016

Consumer Sentiment Rose in November

Consumer Sentiment rose 6.6 points in November to 93.8, according to the University of Michigan Consumer Sentiment Index.

The Current Economic Conditions Index rose 4.1 points to 107.3, while the Consumer Expectations Index rose 8.4 points to 85.2.

The initial reaction of consumers to Trump's victory was to express greater optimism about their personal finances as well as improved prospects for the national economy,” said Richard Curtin, Chief Economist of UM Surveys of Consumers. “The post-election boost in optimism was widespread, with gains recorded among all income and age subgroups and across all regions of the country.”

New Home Sales and Prices Decreased in October

New single-family home sales rose to a seasonally adjusted annual rate of 563,000 in October, according to the U.S. Census Bureau and the Department of Housing and Urban Development. The October level was 1.9% below the revised September rate of 574,000, but is 17.8% above the October 2015 level.


Sales fell in most regions, falling 9.1% in the Northeast, 13.7% in the Midwest and 3.0% in the South. In contrast, sales in the West rose 8.8%.

The median price of a new home was $304,500, down 2.9% from September. The average price was $354,900, a decrease of 6.0% from the previous month.

At the end of October there was an estimated supply of 5.2 months at the current sales rate, up from a 4.8 month supply in September.

Read the Census/HUD release.
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Durable Goods Orders Rise in October

New orders for manufactured durable goods rose 4.8% in October, following a 0.4% increase in September, according to the U.S. Census Bureau.

New orders excluding defense increased 5.2% on the month, as orders of nondefense capital goods rose 14.5% to $80.1 billion.

Shipments of manufactured durable goods, up four of the last five months, rose 0.1% to $234.6 billion.

Inventories of manufactured durable goods were virtually unchanged to $384 billion, following a virtually unchanged September increase.

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Tuesday, November 22, 2016

Existing-Home Sales Increase in October

Existing-home sales rose 2.0% to a seasonally adjusted annual rate of 5.60 million in October, according to the National Association of Realtors (NAR). October’s sales pace was the highest since February 2007 (5.79 million). Annual sales of homes increased across all regions, rising 1.4% in the Northeast, 2.3% in the Midwest, 2.8% in the South and 0.8% in the West.
"October's strong sales gain was widespread throughout the country and can be attributed to the release of the unrealized pent-up demand that held back many would-be buyers over the summer because of tight supply," said NAR Chief Economist Lawrence Yun. "Buyers are having more success lately despite low inventory and prices that continue to swiftly rise above incomes."

Yun added, "The good news is that the tightening labor market is beginning to push up wages and the economy has lately shown signs of greater expansion. These two factors and low mortgage rates have kept buyer interest at an elevated level so far this fall."

The total housing inventory fell 0.5% to 2.02 million homes available for sale, while the median existing home price stood at $232,000, a 6.0% increase from October 2015.

Distressed sales moved up to 5% of the total in October, but down from 6% a year ago. Four percent of sales were foreclosures and 1% were short sales. On average, foreclosures and short sales sold for discounts of 18% and 16%, respectively.

Read the NAR release.
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Thursday, November 17, 2016

Housing Starts Soar in October

Housing starts rose to a seasonally adjusted annual rate of 1.323 million in October, 25.5% above the revised September rate of 1.054 million and 4.6% above the October 2015 rate.
Housing activity increased in all regions, led by strong jumps in the Northeast (44.8%) and the Midwest (44.1%). Activity in the West increased by 23.2% while the South rose 17.9%.
New building permits also rose during the month, increasing 0.3% to 1.129 million. Permits were up 4.6% from the October 2015 rate.

Housing completions were at a seasonally adjusted annual rate of 1.055 million, up 5.5% from the revised September estimate and 7.2% above the October 2015 rate.

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CPI Increases 0.4% in October

The Consumer Price Index increased 0.4% in October on a seasonally adjusted basis. Over the last 12 months, the all-items index rose 1.6% before seasonal adjustment.
Prices for all items less food and energy increased 0.1% in October, the same increase as September. The index rose 2.1% over the past 12 months ending in October.

The food index was unchanged for the fourth consecutive month. Prices for food at home fell 0.2% in October and have fallen 2.3% over the past year. Prices for food away from home increased 0.1% for the month and 2.4% over the course of the year.

The energy index increased 3.5% in October, its largest jump since February 2013. All major energy component indices increased.

Higher prices for shelter and gas were the main causes of inflation in September. The gasoline index rose 7.0 percent in October and accounted for more than half of the all-items increase. The shelter index increased 0.4 percent for second straight month.

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Wednesday, November 16, 2016

Builder Confidence Unchanged in November

The National Association of Home Builders/Wells Fargo Housing Market Index held firm at 63 in November, the same level as the previous month of October.

NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Illinois, notes, “With most of our members responding before the November elections, confidence levels remained unchanged as they awaited the results. Still, builder sentiment has held well above 60 for the past three months, indicating that the single-family housing sector continues to show slow, gradual growth.”

NAHB Chief Economist Robert Dietz is optimistic about the prospects for a steady rise in housing over the coming months, stating, “Ongoing job creation, rising incomes and attractive mortgage rates are supporting demand in the single-family housing sector.”

The index component measuring current sales conditions remained unchanged at 69, while the index measuring buyer traffic rose 1 point to 47. However, the sales expectations component fell two points.

Three out of the four regional three-month moving averages for HMI scores increased. The Northeast, Midwest, and West each rose 2 points to 45, 58 and 77, respectively. The South held steady at 66.

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Industrial Production Unchanged in October

Industrial production was unchanged in October after falling 0.2% in September. Over the last year, industrial production is down by 0.9%.
Manufacturing output rose 0.2% in October after also climbing 0.2% in September. Production of durable goods increased by 0.4%, while nondurable goods production remained unchanged. Capacity utilization for manufacturing increased by 0.1 percentage point to 74.9%, a rate that is 3.6 percentage points below its long-run average.

The mining index moved up 2.1% in October, its largest increase since March 2014. Declines in the extraction of crude oil and natural gas were outweighed by gains for most other mining industries, particularly coal mining.

The utilities index fell 2.6% in October, as the demand for heating was reduced by warmer-than-normal temperatures.

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Producer Prices Unchanged in October

Producer prices remained unchanged in October, seasonally adjusted, after rising 0.3% in September, according to the U.S. Bureau of Labor Statistics. Year over year, producer prices have risen 0.8%, which is the largest 12-month rise since December 2014 (0.9%).
The index for final demand goods rose 0.4% in October after also rising in September. Most of the increase is due to a 2.5% rise in the index for final demand energy. In contrast, there was a 0.8% decrease in the index for final demand foods.

Prices for final demand services fell 0.3% in October after rising 0.1% in both the previous two months. Much of the decline was due to the index for final demand services less trade, transportation, and warehousing, which decreased by 0.3%.

Read the BLS release.
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Tuesday, November 15, 2016

Retail Sales Rose in October

There were $465.9 billion in retail and food service sales in October, up 0.8% from the previous month and 4.3% from October 2015, according to the U.S. Census Bureau.

Core retail sales – excluding automobiles and parts – increased 0.8% after rising 0.7% in September. Year-over-year core sales increased 4.0%.

Retail trade sales rose 1.0% from September and 4.3% from last year. Sales at nonstore retailers increased 1.5% from September, while increasing 12.9% year-over-year.

Sales at gasoline stations continued to climb, rising 2.2% during the month and 0.8% from a year ago.

Read the Census release.
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Tuesday, November 8, 2016

Small Business Optimism Rose in October

The NFIB Small Business Optimism Index rose 0.8 points in October to 94.9. Five of the ten index components posted gains, while four declined.


Labor market conditions softened as only 55% of businesses reported hiring or trying to hire, down 3 points from September. Forty-eight percent reported few or no qualified applicants for the positions they were trying to fill (unchanged from the previous month). Fifteen percent of employers surveyed cited the difficulty of finding qualified workers as their top business problem. A seasonally adjusted net 10% of employees plan to create new jobs, unchanged from the previous month.

The percent of owners reporting higher sales in the past three months fell 1 point to a net negative 7%. Eleven percent of small business owners reported weak sales as their top business problem, down 2 points from September. Capital spending increased as 57% of owners reported capital outlays, up 2 points from September. The percent of owners planning capital outlays in the next 3 to 6 months was unchanged at 27%.

Credit conditions deteriorated some, as 4% of owners reported that all their borrowing needs were not met, down 2 points from the previous month. Only 2% of business owners surveyed reported that financing was their top business problem, up 1 point from September.

Read the NFIB report.
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Monday, November 7, 2016

Consumer Credit Grew 6.3% in September

Consumer credit increased at a seasonally adjusted annual rate of 6.3% in September, down from an 8.8% rate in August. Total outstanding credit increased $19.3 billion during the month (compared with $26.8 billion in August) to $3.71 trillion.


Revolving credit rose at an annual rate of 5.2% to $978.8 billion, compared to a 7.0% increase in August. Non-revolving credit rose at a 6.7% annual rate, or $15.1 billion, compared to August’s rate of $21.1 billion. Total non-revolving credit is now $2.73 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 secondary and tertiary holders, with 25% and 23%, respectively, of outstanding non-revolving credit.

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CRE Lending Standards Tighten, C&I Standards Unchanged

Over the past three months, banks reported that lending standards for C&I loans were largely unchanged while standards for CRE loans tightened, according to the Federal Reserve’s October 2016 Senior Loan Officer Opinion Survey on Bank Lending Practices. The survey results also indicated lower demand for C&I loans from large and middle-market firms, while demand from small firms was little changed. In contrast, demand for construction and development loans (a subset of CRE) increased on net.

Although most bank standards remained unchanged, a net 1.5% of banks surveyed reported tightening standards for C&I lending to large and middle-market firms, while a net 1.5% of those surveyed reported easing lending standards to small firms.

Most respondents who tightened standards reported a less favorable or more uncertain outlook, worsening of industry-specific problems, less aggressive competition from other banks or nonbank lenders, and reduced tolerance for risk.

Regarding household loans, lending standards for all types of residential real estate mortgages were little changed on balance, with the exception of GSE-eligible loans, for which a moderate net fraction of banks reported easing standards.

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Friday, November 4, 2016

International Trade Balance Narrowed in September

The U.S. international trade deficit narrowed in September to $36.4 billion, down from $40.5 billion in August, according to the U.S. Census Bureau and the Bureau of Economic Analysis. The narrowing reflected a $1.0 billion increase in exports along with a $3.0 billion decrease in imports.


The goods deficit decreased $2.6 billion to $57.5 billion, while the services surplus increased $1.4 billion to $21.1 billion.

Exports of goods increased $0.6 billion to $126.1 billion in September, driven largely by a $2.1 billion increase in capital and consumer goods. Exports of foods decreased by $1.7 billion, largely due to a $2.0 billion decrease in soybean exports. Exports of services increased $0.4 billion to $63.1 billion.

Imports of goods fell $2.0 billion to $183.7 billion, mostly due to declines in capital goods, such as civilian aircraft, and consumer goods. Imports of services fell $1.0 billion due to declines in charges for the use of intellectual property associated with the 2016 Summer Olympic Games.

Read the Census/BEA release.
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161,000 Jobs Added in October, Unemployment Down to 4.9%

Total nonfarm payroll employment rose by 161,000 in October, down from September’s upwardly revised figure of 191,000, according to the Bureau of Labor Statistics. The national unemployment rate fell 0.1 point to 4.9%. The majority of gains occurred in professional and business services and in health care.


Private-service providing industries added a net 142,000 jobs, led by gains in professional and business services, which added 43,000 jobs during the month and 542,000 over the year, and by health care, which added 31,000 jobs this month and 415,000 over the year.

Goods-producing employment was unchanged during the month, as modest gains in construction employment were offset by job losses in manufacturing and mining.

The civilian labor force participation rate was 62.8%, little changed from August. The number of long-term unemployed, those jobless for 27 weeks or more, was unchanged at 2.0 million and accounted for 25.2% of the unemployed. The number of discouraged workers was 487,000, down 178,000 from a year earlier.

Average hourly earnings rose 10 cents to $26.92. Hourly earnings have increased 2.8% over the past year.

Read the BLS release.
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Thursday, November 3, 2016

ISM: Non-Manufacturing Sector Growth Continues

The ISM Non-Manufacturing Index registered 54.8 points in October, down 2.3 points from the previous month. Despite the decline, September marked the 81st consecutive month of growth as indicated by readings over 50 points. Thirteen non-manufacturing industries reported growth in October, while five reported contraction.


Growth in the Business Activity Index slipped 2.6 points to 57.7. Eleven industries reported increased business activity and four reported decreased activity. Respondents noted an increase in consumer spending, and that projects which were on hold have been resumed.

Non-manufacturing employment grew for the fifth consecutive month, albeit at a slowing pace; the index slipped 4.1 points to 53.1. Some respondents noted an increase in sales positions to meet market demand, along with higher turnover and an increase in open positions.

The New Orders Index fell 2.3 points to 57.7, indicating strong growth (but at a slower pace). Some respondents commented that they had been awarded new contracts, while others noted that they had experienced “organic growth.”

Supplier deliveries slowed for the 10th consecutive month, as the index registered 50.5 points (readings above 50 for this index indicate slower deliveries). Six industries reported slower deliveries, while 5 reported faster deliveries.

Read the ISM release.
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Manufactured Goods Orders Rose in September

New orders for manufactured goods rose 0.3% to $455.5 billion in September, according to the U.S. Census Bureau. The September reading followed a 0.4% increase in August.


New orders for manufactured durable goods fell 0.3% to $226.8 billion, after increasing 0.2% in August. Orders for transportation drove the decrease, falling 1.1% to $77.2 billion.

Shipments of manufactured durable goods, up three of the last four months, increased 0.8% to $234.3 billion. Transportation equipment led the increase, rising 2.2% to $82.0 billion.

Inventories of manufactured durable goods increased for the third consecutive month, rising 0.1% to $383.8 billion. Machinery once again led the increase, rising 0.4% to $65.9 billion.

Read the Census release.
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Job Cuts Fall to Five-Month Low

Employers announced plans to cut 30,740 jobs in October, according to a report issued by Challenger Gray & Christmas. October’s announced cuts were 31% lower than September’s. Year-to-date, employers have announced 466,352 job cuts, down 14% from the first 10 months of 2015.

“One might be inclined to speculate that the impending election might be causing employers to hold off on major workforce decisions,” said John Challenger, CEO of Challenger Gray & Christmas. “This low monthly total is most likely due to the fact that the economy is relatively healthy and that most employers don’t see those conditions changing in the next three to six months.”

The computer industry led job cuts for the second consecutive month, announcing plans for 4,792 layoffs in October. So far this year, the industry has announced 64,511 cuts.

“Heavier job cuts in the tech sector this year have been more indicative of an industry that is in flux, as opposed to one that is in trouble. That is the nature of technology, so it is not unusual to see workforce volatility,” said Challenger.

Read the Challenger Gray & Christmas release.
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Wednesday, November 2, 2016

Fed Holds Steady in November

The Federal Open Market Committee (FOMC) once again maintained the current target for the federal funds rate at 25-50 basis points in November. “The Committee judges that the case for an increase in the federal funds rate has continued to strengthen but decided, for the time being, to wait for some further evidence of continued progress toward its objectives,” said the FOMC in a statement following their Wednesday meeting.

The Committee noted that both inflation and economic activity had picked up from earlier in the year, although business fixed investment remained soft. “The Committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will strengthen somewhat further. Inflation is expected to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further.”

Though the FOMC agreed to maintain the current federal funds rate, Kansas City Federal Reserve President Esther George and Cleveland Federal Reserve President Loretta Mester dissented from the action, preferring to raise the target rate by 25 basis points.

Read the FOMC statement.
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ADP: 147,000 Jobs Added in October

The non-farm private sector added 147,000 jobs in October, according to the ADP National Employment Report, a decrease from September’s upwardly revised figure of 202,000. Service-providing jobs accounted for all of the month’s growth, while goods-producing employment fell during the month.


Small businesses with fewer than 50 employees added 34,000 jobs, down from 54,000 in September. Medium-sized businesses with 50-499 employees added 48,000 jobs, down from 80,000 last month. Large businesses added 64,000 jobs, down from 69,000 in September.

“Job growth appears to be shifting from small to large companies due to the lessening impact the global economic environment had on large companies earlier in the year,” said Ahu Yildirmaz, vice president and head of the ADP Research institute. “This is also true because large companies often have the resources to attract workers with better pay and benefit packages.”

Service-providing employment rose by 165,000 jobs, 69,000 of which were in the professional and business services sector. Health care and social assistance jobs also increased, adding 34,000 jobs. In contrast, goods-producing employment fell by 18,000 jobs. The construction industry led the decline, shedding 15,000 jobs.

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Tuesday, November 1, 2016

Manufacturing Sector Expands for Second Consecutive Month

The ISM Manufacturing Index registered 51.9 points in October, up 0.4 points from the previous month, according to the Institute for Supply Management. October’s reading indicates a second consecutive month of expansion in manufacturing, as readings over 50 points denote expansion. Of the eighteen manufacturing industries, ten reported growth while eight reported contraction.


The Employment Index rose 3.2 points to 52.9 in October, indicating expansion following three months of contraction. Eleven industries reported expansion, while five (including apparel and petroleum & coal products) reported shrinkage.

The New Orders Index slipped 3.0 points to 52.1 in October, down from September but still indicating growth. Eight industries reported increases in new orders while eight reported decreases.

Export orders increased 0.5 points to 52.5, indicating growth in exports for the eighth consecutive month. Textile mills, miscellaneous manufacturing and food, along with four other industries reported growth, while five reported decreases.

The inventories index registered 47.5 points, indicating that raw materials inventories contracted for the 16th consecutive month.The inventories index registered 47.5 points, indicating that raw materials inventories contracted for the 16th consecutive month.

Read the ISM release.
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Construction Spending Slipped in September

Construction spending fell 0.4% in September to a seasonally adjusted annual level (SAAL) of $1,150 billion, according to the Census Bureau. August’s spending estimate was revised up to a rate of $1,154 billion. During the first nine months of the year, construction spending amounted to $863 billion, up 4.4% from the first nine months of 2015.


Total private construction fell to $880 billion SAAL, down 0.2% from the revised August estimate of $881.6 billion.

Private residential construction was $454 billion SAAL, 0.5% above August’s rate.

Private nonresidential construction fell 1.0% to $426 billion, largely due to declines in commercial construction projects.

Public construction fell 0.9% to $270 billion SAAL, largely due to declines in educational and highway construction projects.

Read the Census release.
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