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Friday, June 23, 2017

New Home Sales Increased in May

New single-family home sales rose to a seasonally adjusted annual rate of 610,000 in May, according to the U.S. Census Bureau and the Department of Housing and Urban Development. The May level was 2.9% above the revised April rate of 593,000 and 8.9% above the May 2016 level.
Sales grew in two regions, 6.2% in the South and 13.3% in the West. The Midwest and Northeast posted losses of 25.7% and 10.8%, respectively.

The median price of a new home was $345,800, up 11.5% from April. The average price was $406,400.

At the end of May, the estimated supply at the current sales rate remained unchanged at 5.3 months.

Read the Census/HUD release.
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Wednesday, June 21, 2017

Existing-Home Sales Rebounded in May; Median Sales Price at New High

Existing-home sales increased 1.1% to a seasonally adjusted annual rate of 5.62 million in May, according to the National Association of Realtors (NAR). Sales are 2.7% above a year ago and the third highest pace over the last year.
“The job market in most of the country is healthy, and the recent downward trend in mortgage rates continues to keep buyer interest at a robust level," said Lawrence Yun, NAR chief economist. “Those able to close on a home last month are probably feeling both happy and relieved. Listings in the affordable price range are scarce, homes are coming off the market at an extremely fast pace and the prevalence of multiple offers in some markets are pushing prices higher."

The total housing inventory rose 2.1% to 1.96 million homes available for sale, while the median existing home price climbed to $252,800, surpassing last June ($247,600) as the new peak median sales price. This marks the 63rd straight month of year-over-year gains.

Distressed sales were 5% of the total in May, which are 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 20% and 16%, respectively.

Read the NAR release.
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Friday, June 16, 2017

Housing Starts Declined in May

Housing starts fell to a seasonally adjusted annual rate of 1.092 million in May, 5.5% below the revised April rate of 1.156 million and 2.4% below the May 2016 rate. 
 
Housing activity increased 1.3% in the West and remained at the same level in the Northeast. The Midwest and South experienced declines of 9.2% and 8.8%, respectively. 
New building permits decreased during the month, falling 4.9% to 1.168 million. Permits were down 0.8% from the May 2016 rate.

Housing completions were at a seasonally adjusted annual rate of 1.164 million, up 5.6% from the revised April estimate and 14.6% above the May 2016 rate.

Read the Census release.

Thursday, June 15, 2017

Builder Confidence Decreases Slightly in June

The National Association of Home Builders/Wells Fargo Housing Market Index weakened slightly to 67 in June, a two point decrease from May’s downwardly revised reading of 69.

“Builder confidence levels have remained consistently sound this year, reflecting the ongoing gradual recovery of the housing market,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas.

All three HMI components posted losses in June but remained at historically high levels. The component measuring current sales conditions fell two points to 73; the component measuring sales expectations in the next six months decreased two points to 76, and the component measuring buyer traffic moved down two points to 49.

The regional three-month moving averages for HMI scores showed gains in two of the four regions. The Midwest and South both edged one point to 67 and 70, respectively, while the Northeast and West each dropped two points to 46 and 76, respectively.

Read the NAHB release.
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Industrial Production Unchanged in May

Industrial production remained unchanged in May after a revised 1.1% April increase, according to the Federal Reserve. April’s jump was the largest since February 2014. A drop in manufacturing output was offset by increases in mining and utilities output to keep the index flat in May.
Manufacturing output fell 0.4% in May after a revised 1.1% increase in April. Production of durable goods fell 0.8%, while nondurables both edged up 0.1% during the month. Capacity utilization for manufacturing decreased by 0.3 percentage point to 75.5%, a rate that is 2.0 percentage points below its long-run average.

The output of mining continued to rise, increasing 1.6% in May, following a 1.5% April jump. The index in May was 8.3% higher than its year-earlier level.

Utilities output rose 0.4% in May, as higher output for gas utilities outweighed a small decrease for electric utilities.

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Wednesday, June 14, 2017

Fed Raises Rates for Third Time in Six Months

The Federal Reserve Open Market Committee (FOMC) voted to raise the target range for the federal funds rate by 25 basis points to 1 to 1.25 percent. Like in March, the vote was near unanimous, with Minneapolis Fed President Neel Kashkari once again casting the only dissenting vote, wanting to hold rates steady.
The projected policy path for the federal funds rate was similar to March, with the Fed’s dot plot showing one more rate hike this year. Participants estimated a target rate of 1.4 percent for 2017, a 2.1 percent rate for 2018, and a 2.9 percent rate for 2019 (a 10 basis point decrease).

In their decision to move the target rate, the Committee noted that the labor market has “continued to strengthen and that economic activity has been rising moderately so far this year.” Monetary policy remains accommodative, supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

The Committee included a statement about how it will begin to unwind its $4.5 trillion balance sheet, noting that it “currently expects to begin implementing a balance sheet normalization program this year, provided that the economy evolves broadly as anticipated.” The program would gradually reduce the Fed’s holdings by allowing a fixed amount of assets- $6 billion of Treasuries and $4 billion of mortgage-backed securities- to roll off on a monthly basis. These amounts will increase on a quarterly basis by $6 billion for Treasuries and $4 billion for mortgage-backed securities until they reach $30 billion and $20 billion, respectively.

Read the FOMC statement.
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Retail Sales Slipped in May

There were $473.8 billion in retail and food service sales in May, down 0.3% from the previous month and up 3.8% from May 2016, according to the U.S. Census Bureau.
Core retail sales – excluding automobiles and parts – also fell 0.3%. Year-over-year core sales increased 3.8%.

Retail trade sales decreased 0.3% from April and are up 4.0% from last year. Sales at nonstore retailers increased 0.8% from April, while increasing 10.2% year-over-year.

Sales at gasoline stations decreased 2.4% during the month, but are up 6.2% from a year ago.

Read the Census release.
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Consumer Prices Decreased 0.1% in May

The Consumer Price Index increased 0.1% in May on a seasonally adjusted basis, according to U.S. Bureau of Labor Statistics. Over the last 12 months, the all-items index rose 1.9%.
Prices for all items less food and energy, the “core CPI,” increased 0.1% in May, the same as in April. The index rose 1.7% for the 12 months ending in May.

The food index increased 0.2%, its fifth consecutive increase. Prices for food at home rose 0.1%, while prices for food away from home increased 0.2%. Over the past 12 months, food prices are up 0.9%.

The energy index decreased 2.7% in May, led by the gasoline index falling 6.4%.

Read the BLS release.
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Tuesday, June 13, 2017

Small Business Optimism Remained Strong in May

The NFIB Small Business Optimism Index held steady at 104.5 in May, maintaining the high level of post-election optimism. Five of the ten index components rose, while four declined.
Reported job creation has improved, as 59% of businesses reported hiring or trying to hire. However, 51% reported few or no qualified applicants for the positions they were trying to fill. Nineteen percent of employers surveyed cited the difficulty of finding qualified workers as their top business problem. A seasonally adjusted net 18% of owners plan to create new jobs, up two points from the previous month.

Seasonally adjusted, the net percent of owners expecting better business conditions rose one point to a net 39%. The percent of owners reporting higher sales in the past three months compared to the prior three months remained at 5%. Seasonally adjusted, the net percent of owners expecting higher real sales volumes rose two points to a net 22% of owners. Capital spending moved up three points as 62% of owners reported capital outlays. The percent of owners planning capital outlays in the next 3 to 6 months increased one point to 28%, which is high for the recovery but well below historical levels for periods of growth.

Credit conditions mostly held steady, as 3% of owners reported that all their borrowing needs were not met, unchanged from April. Only 1% of business owners surveyed reported that financing was their top business problem, down one point from April.

Read the NFIB report.
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Producer Prices Unchanged in May

Producer prices were unchanged in May, seasonally adjusted, after rising 0.5% in April, according to the U.S. Bureau of Labor Statistics. Producer prices rose 2.4% for the twelve months ended May 2017.
The index for final demand goods decreased 0.5% in May, the largest drop since February 2016. Most of the decline was due to a 3.0% decrease in the index for final demand energy. Additionally, prices for final demand foods fell 0.2%.

Prices for final demand services moved up 0.3% in May. Most of the increase can be traced to prices for final demand trade services, which advanced 1.1%.

Read the BLS release.
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Wednesday, June 7, 2017

Consumer Credit Growth Slowed in April

Consumer credit increased at a seasonally adjusted annual rate of 2.6% in April, down from a revised 6.2% rate in March. Total outstanding credit increased $8.1 billion during the month (compared with $19.6 billion in March) to $3.82 trillion.
Revolving credit grew at an annual rate of 1.8% to $1.0 trillion, compared to a 6.5% increase in March. Non-revolving credit rose at a 2.9% annual rate, or $6.6 billion, compared to March’s rate of $14.2 billion. Total non-revolving credit is now $2.81 trillion.
Federal government holdings of student loans continue to be the largest portion of non-revolving credit, comprising approximately 38.7% of outstanding credit. Depository institutions and finance companies are secondary and tertiary holders, with 24.5% and 21.4%, respectively, of outstanding non-revolving credit.

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Monday, June 5, 2017

Manufactured Goods Orders Fell in April

New orders for manufactured goods fell 0.2% to $469.0 billion in April, according to the U.S. Census Bureau. It was the first decrease in five months. The April reading followed a 1.0% March increase.
New orders for manufactured durable goods decreased 0.8% to $231.0 billion. Orders for transportation equipment drove the decline, falling 1.4% to $78.4 billion.

Shipments of manufactured durable goods, down three of the last four months, decreased 0.4% to $232.8 billion.

Inventories of manufactured durable goods, up nine of the last ten months, increased 0.2% to $394.6 billion.

Read the Census release.
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ISM: Non-Manufacturing Sector Grew in May

The ISM Non-Manufacturing Index registered 56.9 points in May, 0.6 percentage point below April’s figure. This was the 89th consecutive month of growth. Seventeen non-manufacturing industries reported growth in May, while only one reported contraction.
Growth in the Business Activity Index decreased 1.7 points to 60.7. Sixteen industries reported increased business activity and one reported decreased activity. Respondents noted that the market continues to grow at a steady pace, and there is increased activity industry wide.

Non-manufacturing employment grew for the 39th consecutive month. The index increased 6.4 percentage points to 57.8. Fifteen industries reported increased employment, while one reported decreased employment.

The New Orders Index fell 5.5 points to 57.7. Sixteen industries reported increased business activity and one reported decreased activity.

Supplier deliveries slowed for the 17th consecutive month, as the index registered 51.5 points (readings above 50 for this index indicate slower deliveries). Seven industries reported slower deliveries, while four reported faster deliveries.

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Friday, June 2, 2017

International Trade Balance Widened in April

The U.S. international trade deficit widened in April to $47.6 billion, up from $45.3 billion in March, according to the U.S. Census Bureau and the U.S. Bureau of Economic Analysis. The increase reflected a $1.9 billion growth in imports along with a $0.5 billion decrease in exports.
The goods deficit increased $2.3 billion to $68.4 billion, while the services surplus decreased less than $0.1 billion to $20.8 billion.

Exports of goods decreased just over $0.5 billion to $126.9 billion in April, driven by a $0.7 billion decrease in consumer goods. Exports of services increased less than $0.1 billion to $64.0 billion.

Imports of goods increased $1.8 billion to $193.8 billion, mostly due to a significant increase in consumer goods, which grew by $1.9 billion. Imports of services increased less than $0.1 billion to $43.3 billion in April.

Read the Census/BEA release.
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138,000 Jobs Added in May, Unemployment at 16-Year Low

Total nonfarm payroll employment rose by 138,000 in May, a decrease from April’s downwardly revised figure of 174,000, according to the Bureau of Labor Statistics. The national unemployment rate moved down to 4.3%, the lowest rate since May 2001.
Private service-providing industries added a net 131,000 jobs, led by gains in education and health services, which added 47,000 during the month, and by professional and business services, which added 38,000.

Goods-producing employment rose by 16,000 jobs during the month, as gains in construction led the way by adding 11,000.

The civilian labor force participation rate was 62.7%, a 0.2% decrease from April. Workers unemployed for less than 14 weeks fell 356,000, while the number of long-term unemployed, those jobless for 27 weeks or more, rose to 1.7 million and accounted for 24.2% of the unemployed. The number of discouraged workers was 355,000, falling for the fourth straight month.

Average hourly earnings increased by 4 cents to $26.22, after a 5-cent increase in April. Over the past year, average hourly earnings have risen by 63 cents, or 2.5%.

Read the BLS release.
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Thursday, June 1, 2017

Job Cuts Surged in May

Employers announced plans to cut 51,692 jobs in May, according to a report issued by Challenger, Gray & Christmas. May’s announced cuts were 41% more than April’s. The month’s figure was 71% higher than May 2016.

The retail sector continues to lead the way in job cuts, with 55,910 so far this year. This is 31.6% higher than the same period last year. However, the energy sector continued to hold strong, announcing 296 cuts in May, which brings the total to 8,635 in 2017. This is an 88.5% decrease from this point last year when the energy sector had shed 75,232 jobs.

“The retail industry is still shedding jobs. We are now seeing the effect of changing consumer behavior in grocery shopping. Grocery stores are no longer immune from online shopping. Meal delivery services and Amazon are competing with traditional grocers, and Amazon announced it is opening its first ever brick-and mortar store in Seattle. Amazon Go, which mixes online technology and the in-store experience, is something to keep an eye on since it may potentially change the grocery store shopping experience considerably,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

Telecommunications companies have reported 10,815 job cuts through May this year, 40% more than the 6,404 cuts through this point last year.

The service industry shed 4,082 jobs last month, totaling 12,347 through May this year. This is an 83% increase from May 2016.

Read the Challenger, Gray & Christmas release.
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Manufacturing Sector Expanded in May

The ISM Manufacturing Index registered 54.9 points in May, up 0.1 percentage point from the previous month, according to the Institute for Supply Management. May’s reading indicates a ninth consecutive month of expansion in manufacturing, as readings over 50 points denote expansion. Of the eighteen manufacturing industries, fifteen reported growth while one reported contraction.
The Employment Index increased 1.5 points to 53.5 in May, indicating expansion for the eighth consecutive month. Eleven industries reported expansion, while five reported a decrease in employment.

The New Orders Index increased 2.0 points to 59.5 in May, indicating growth for the eighth consecutive month. Fourteen industries reported expansion, while one reported a decrease in employment.

Export orders decreased 2.0 points to 57.5, indicating growth for the fifteenth consecutive month. Eleven industries reported growth while two of the eighteen reported a decrease in new export orders.

The inventories index registered 51.5 points, up 0.5 point from the previous month. Six industries reported higher inventories, while six reported a decrease.

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Construction Spending Fell 1.4% in April

Construction spending decreased 1.4% in April to a seasonally adjusted annual level (SAAL) of $1,218.5 billion, according to the Census Bureau. March’s spending estimate was revised to a rate of $1,235.5 billion. April’s figure is 6.7% greater than the April 2016 estimate of $1,142.5 billion.
Total private construction was $943.3 billion SAAL, a 0.7% decrease from the revised March estimate of $949.7 billion.

Private residential construction was $516.7 billion SAAL, 0.7% below March’s rate.

Private nonresidential construction was $426.6 billion, 0.6% below March’s estimate.

Public construction decreased 3.7% to $275.3 billion SAAL.

Read the Census release.
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ADP: 253,000 Jobs Added in May

The non-farm private sector added 253,000 jobs in May, according to the ADP National Employment Report. April’s figure was revised down from 177,000 to 174,000. Professional and business services jobs accounted for over a third of May’s growth.
Growth was widespread in May with businesses of all sizes seeing strong increases. Small businesses with fewer than 50 employees added 83,000 jobs, while medium-sized businesses with 50-499 employees added 113,000. Large businesses added 57,000 jobs.

“May proved to be a very strong month for job growth,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Professional and business services had the strongest monthly increase since 2014. This may be an indicator of broader strength in the workforce since these services are relied on by many industries.”

Service-providing employment rose by 205,000 jobs, driven by the professional and business services sector which added 88,000. The education and health services sectors had a robust report, adding 54,000 jobs. The leisure and hospitality sectors, along with the information sector, were the only reported setbacks, losing 11,000 and 8,000 jobs, respectively. Goods-producing employment increased by 48,000 jobs. The construction industry led the gain, adding 37,000 jobs, while the manufacturing industry gained 8,000.

Read the ADP report.
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Wednesday, May 31, 2017

Beige Book: Economy Expanding at Modest to Moderate Pace

Economic activity continued to expand at a modest to moderate pace across most of the twelve Federal Reserve Districts over the period from early April through late May, according to the just-released Federal Reserve Beige Book.

Consumer spending softened this period as reports of stagnant nonauto retail sales were accompanied by lower readings in auto sales compared to last year’s record highs. Manufacturing continued to expand at a moderate pace across the Districts. Non-financial services continued to expand steadily while agricultural conditions were mixed with some regions noting that unusually wet weather delayed planting. A majority of Districts reported that firms expressed positive near-term outlooks, but optimism slowed somewhat in a few Districts.

Employment expanded across most Districts at a modest to moderate pace. Labor markets once again remained tight, and employers in most Districts reported having greater difficulty attracting and retaining qualified workers.

Modest to moderate wage growth was seen in most Districts, with many reporting offering higher wages to fill the worker shortages. Prices increased modestly, though some Districts cited falling prices for certain final goods, including groceries, apparel, and autos.

Read the full Federal Reserve report.
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Tuesday, May 30, 2017

Consumer Confidence Declines for Second Consecutive Month

The Conference Board Consumer Confidence Index decreased to 117.9 in May, down 1.5 points from April. The Present Situation Index rose 0.4 point to 140.7, while the Expectations Index declined 2.8 points to 102.6.

"Consumer confidence decreased slightly in May, following a moderate decline in April,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “However, consumers’ assessment of present-day conditions held steady, suggesting little change in overall economic conditions. Looking ahead, consumers were somewhat less upbeat than in April, but overall remain optimistic that the economy will continue expanding into the summer months.”

Consumers’ labor market outlook was mixed during May. The percentage of consumers expecting more jobs in the coming months decreased from 21.9% to 18.6%, while the share anticipating fewer jobs decreased from 13.8% to 12.0%. Income expectations rose, as 19.2% of consumers expected their incomes to increase in coming months, up from 18.7% in April.

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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.

Read the Census release.
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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.

Read the GDP release.
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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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Housing Starts Declined in April

Housing starts fell to a seasonally adjusted annual rate of 1.172 million in April, 2.6% below the revised March rate of 1.203 million but 5.7% above the April 2016 rate. 
 
Housing activity increased in two out of the four regions as the Midwest and West saw housing starts increase 1.0% and 8.7%, respectively. The Northeast and South experienced declines of 10.3% and 7.4%, respectively. 
 
New building permits decreased during the month, falling 2.5% to 1.230 million. However, permits were up 5.7% from the April 2016 rate.

Housing completions were at a seasonally adjusted annual rate of 1.106 million, down 8.6% from the revised March estimate and 15.1% above the April 2016 rate.

Read the Census release.
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Monday, May 15, 2017

Builder Confidence Strengthens in May

The National Association of Home Builders/Wells Fargo Housing Market Index grew to 70 in May, a two point increase from April’s reading of 68.

“This report shows that builders’ optimism in the housing market is solidifying, even as they deal with higher building material costs and shortages of lots and labor,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas.

Two of the three HMI components grew in May. The component measuring current sales conditions increased two points to 76; the component measuring sales expectations jumped four points to 79, and the component measuring buyer traffic fell one point to 51.

The regional three-month moving averages for HMI scores were showed gains in three of the four regions. The Northeast and South both grew three points to 49 and 71, respectively, while the Midwest held steady at 68. The West rose one point 78.

Read the NAHB release.
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Friday, May 12, 2017

Retail Sales Grew in April

There were $474.9 billion in retail and food service sales in April, up 0.4% from the previous month and up 4.5% from April 2016, according to the U.S. Census Bureau. March’s estimate was revised from down 0.2% to up 0.1%. 
Core retail sales – excluding automobiles and parts grew 0.3%. Year-over-year core sales increased 4.5%. 

Retail trade sales increased 0.4% from March and are up 4.5% from last year. Sales at nonstore retailers increased 1.4% from March, while increasing 11.9% year-over-year.

Sales at gasoline stations increased 0.2% during the month, but are up 12.3% from a year ago.

Read the Census release.
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Consumer Prices Increased 0.2% in April

The Consumer Price Index increased 0.2% in April on a seasonally adjusted basis, rebounding from a 0.3% decline in March. Over the last 12 months, the all-items index rose 2.2%. 
Prices for all items less food and energy, the “core CPI,” increased 0.1% in April, up from March’s 0.1% decline. The index rose 1.9% for the 12 months ending in April.

The food index increased 0.2%, its fourth consecutive increase. Prices for food at home rose 0.2%, while prices for food away from home also increased 0.2%. Over the past 12 months, food prices are up 0.5%.

The energy index increased 1.1% in April. The gasoline index rose 1.2% following a 6.2% March decline.

Read the BLS release.
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Thursday, May 11, 2017

Producer Prices Increased 0.5% in April

Producer prices climbed 0.5% in April, seasonally adjusted, after falling 0.1% in March, according to the U.S. Bureau of Labor Statistics. Producer prices rose 2.5% for the twelve months ended April 2017, which is the largest increase since the twelve months ended February 2012.
The index for final demand goods also increased 0.5% in April. The growth was led by a 0.9% increase in the index for final demand foods. The index for final demand energy increased by 0.8 after falling 2.9% in March.

Prices for final demand services moved up 0.4% in April. Most of the increase can be traced to prices for final demand services less trade, transportation, and warehousing, which advanced 0.8 percent.

Read the BLS release.
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Tuesday, May 9, 2017

Small Business Optimism Remains Strong in April

The NFIB Small Business Optimism Index decreased 0.2 points in April to 104.5, maintaining the high level of post-election optimism. Five of the ten index components rose, while three declined.
Reported job creation has improved, as 55% of businesses reported hiring or trying to hire. However, 48% reported few or no qualified applicants for the positions they were trying to fill. Sixteen percent of employers surveyed cited the difficulty of finding qualified workers as their top business problem. A seasonally adjusted net 16% of owners plan to create new jobs, unchanged and a strong reading.

Seasonally adjusted, the net percent of owners expecting better business conditions fell eight points to a net 38%, a sign that business owners were concerned by Congress’ tentativeness on healthcare reform at the end of March. The percent of owners reporting higher sales in the past three months compared to the prior three months remained at 5%. Seasonally adjusted, the net percent of owners expecting higher real sales volumes rose two points to a net 20% of owners. Capital spending decreased five points as 59% of owners reported capital outlays. The percent of owners planning capital outlays in the next 3 to 6 months dropped two points to 27%, which is just below the highest reading since the financial crisis but well below historical levels for periods of growth.

Credit conditions mostly held steady, as 3% of owners reported that all their borrowing needs were not met, a decrease of one point from March. Only 2% of business owners surveyed reported that financing was their top business problem, unchanged from the past five months.

Read the NFIB report.

Monday, May 8, 2017

Consumer Credit Growth Strong in March

Consumer credit increased at a seasonally adjusted annual rate of 5.2% in March, up from a revised 4.4% rate in February. Total outstanding credit increased $16.4 billion during the month (compared with $13.8 billion in February) to $3.81 trillion.
Revolving credit grew at an annual rate of 2.4% to $1.0 trillion, compared to a 2.0% increase in February. Non-revolving credit rose at a 6.2% annual rate, or $14.5 billion, compared to February’s rate of $12.1 billion. Total non-revolving credit is now $2.81 trillion.
Federal government holdings of student loans continue to be the largest portion of non-revolving credit, comprising approximately 39% of outstanding credit. Depository institutions and finance companies are secondary and tertiary holders, with 25% and 22%, respectively, of outstanding non-revolving credit.

Read the Fed release.
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Friday, May 5, 2017

211,000 Jobs Added in April

Total nonfarm payroll employment rose by 211,000 in April, an increase from March’s downwardly revised figure of 79,000, according to the Bureau of Labor Statistics. The national unemployment rate moved down to 4.4%, the lowest rate in more than 10 years. 
Private service-providing industries added a net 173,000 jobs, led by gains in leisure and hospitality services, which added 55,000 during the month, and by health care and social assistance, which added 41,000.

Goods-producing employment rose by 21,000 jobs during the month, as gains in mining and logging led the way by adding 10,000.

The civilian labor force participation rate was 62.9%, a 0.1% decrease from March. The number of long-term unemployed, those jobless for 27 weeks or more, was little changed at 1.6 million and accounted for 22.6% of the unemployed. The number of discouraged workers was 450,000, falling for the third straight month.

Average hourly earnings increased by 7 cents to $26.19, after a 2-cent increase in March. Over the past year, average hourly earnings have risen by 65 cents, or 2.5%.

Read the BLS 
release.
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Thursday, May 4, 2017

Manufactured Goods Orders Rose in March

New orders for manufactured goods increased 0.2% to $478.2 billion in March, according to the U.S. Census Bureau. The March reading followed a 1.2% February increase. 
New orders for manufactured durable goods rose 0.9% to $239.4 billion, the third consecutive month of growth. Orders for transportation equipment drove the increase, rising 2.6% to $83.6 billion.

Shipments of manufactured durable goods increased 0.3% to $240.1 billion. This was the third consecutive month of marginal growth.

Inventories of manufactured durable goods increased 0.2% to $386.0 billion.

Read the Census release.
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International Trade Balance Narrowed in March

The U.S. international trade deficit narrowed slightly in March to $43.7 billion, down from $43.8 billion in February, according to the U.S. Census Bureau and the U.S. Bureau of Economic Analysis. The overall decrease reflected a $1.7 billion decrease in exports along with a $1.7 billion decrease in imports. 
The goods deficit decreased $0.3 billion to $65.5 billion, while the services surplus increased $0.4 billion to $21.8 billion.

Exports of goods decreased just over $2.0 billion to $126.3 billion in March, driven by a $0.6 billion decline in oil and $0.6 billion reduction in petroleum products. Exports of services increased $0.3 billion to $64.7 billion.

Imports of goods decreased $1.7 billion to $191.8 billion, mostly due to a decrease in capital goods, which fell by $0.9 billion. Imports of services decreased less than $0.1 billion to $43.0 billion in March.

Read the Census/BEA release.
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Job Cuts Declined in April

Employers announced plans to cut 36,602 jobs in April, according to a report issued by Challenger, Gray & Christmas. April’s announced cuts were 15% less than March’s. The month’s figure was 43% lower than April 2016.

The retail sector continues to lead the way in job cuts, with 50,133 so far this year. This is 36% higher than the same period last year. However, the energy sector held strong, announcing 459 cuts in April, which brings the total to 8,725 in 2017. This is an 87% decrease from this point last year when the energy sector had shed 67,660 jobs.

“Although restructuring in the retail sector continues to shed jobs, we aren’t seeing the wide scale layoffs in other sectors, like energy or tech,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

Telecommunications companies have reported 10,269 job cuts through April this year, 70% more than the 6,023 cuts through this point last year.

“The FCC is expected to lift a ban on merger talks in the telecom industry which will likely result in companies paring down to make themselves more attractive in these deals. We could see even more cuts in the coming months from this sector,” said Challenger.

Read the Challenger Gray & Christmas release.
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Wednesday, May 3, 2017

Fed Holds Rates Steady

The Federal Reserve Open Market Committee (FOMC) unanimously voted to hold the target range for the federal funds rate steady at 0.75 to 1 percent at their May meeting. The Committee had raised rates by 25 basis points at their previous meeting in March with the expectation of two more rate increases this year.

The FOMC recognized that growth in economic activity, and especially in consumer spending, slowed in the first quarter, but noted that it is “likely to be transitory and [the Committee] continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace.” The Committee also pointed out that the labor market has continued to strengthen and business investment has firmed.

There were no clear signals indicating a move at the upcoming June meeting, but the Committee stated their expectation of economic conditions continuing to evolve in a manner that will warrant gradual increases in the federal funds rate. Fed officials noted their intent to maintain the existing policy regarding the handling of the balance sheet, with no further clues as to when or how the portfolio reinvestment policy could change in the future.

Read the FOMC statement.
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ISM: Non-Manufacturing Sector Grew in April

The ISM Non-Manufacturing Index registered 57.5 points in April, 2.3 percentage points above March’s figure. This was the 88th consecutive month of growth. Sixteen non-manufacturing industries reported growth in April, while only one reported contraction.
Growth in the Business Activity Index increased 3.5 points to 62.4. Seventeen industries reported increased business activity and one reported decreased activity. Respondents noted that business activity was very solid with higher activity over the past few months.

Non-manufacturing employment grew for the 38th consecutive month. The index decreased 0.2 percentage point to 51.4. Nine industries reported increased employment, while five reported decreased employment.

The New Orders Index rose 4.3 points to 63.2. Some respondents commented that they had won more projects and were ramping up new programs.

Supplier deliveries slowed for the 16th consecutive month, as the index registered 53.0 points (readings above 50 for this index indicate slower deliveries). Six industries reported slower deliveries, while one reported faster deliveries.

Read the ISM release.
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ADP: 177,000 Jobs Added in April

The non-farm private sector added 177,000 jobs in April, according to the ADP National Employment Report. March’s figure was revised down to 255,000. Service-providing jobs accounted for most of the month’s growth. 
 
Growth was widespread in April with businesses of all sizes seeing strong increases, with strong gains for small and medium-sized businesses. Small businesses with fewer than 50 employees added 61,000 jobs, while medium-sized businesses with 50-499 employees added 78,000 jobs. Large businesses added 38,000 jobs.

“In April we saw a moderate slowdown from the strong pace of hiring in the first quarter,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Despite a dip in job creation, the growth is more than strong enough to accommodate the growing population as the labor market nears full employment. Looking across company sizes, midsized businesses showed persistent growth for the past six months.”

Service-providing employment rose by 165,000 jobs, driven by the professional and business services sector which added 72,000 jobs. Leisure and hospitality jobs, along with health care and social assistance, also increased, adding 35,000 and 22,000 jobs, respectively. Goods-producing employment increased by 12,000 jobs. The manufacturing industry led the gain, adding 11,000 jobs, while the construction industry lost 2,000 jobs.

Read the ADP report.
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Monday, May 1, 2017

Construction Spending Decreased in March

Construction spending decreased 0.2% in March to a seasonally adjusted annual level (SAAL) of $1,218.3 billion, according to the Census Bureau. February’s spending estimate was revised to a rate of $1,220.7 billion. March’s figure is 3.6% greater than the March 2016 estimate of $1,176.4 billion.
Total private construction was $940.2 billion SAAL, nearly the same as the revised February estimate of $940.1 billion.

Private residential construction was $503.4 billion SAAL, 1.2% above February’s rate.

Private nonresidential construction was $436.8 billion, 1.3% below February’s estimate.

Public construction decreased 0.9% to $278.1 billion SAAL, largely due to a decrease in educational projects.

Read the Census release.
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Manufacturing Sector Expanded in April

The ISM Manufacturing Index registered 54.8 points in April, down 2.4 percentage points from the previous month, according to the Institute for Supply Management. April’s reading indicates an eighth consecutive month of expansion in manufacturing, as readings over 50 points denote expansion. Of the eighteen manufacturing industries, sixteen reported growth while one reported contraction.

The Employment Index decreased 6.9 points to 52.0 in April, indicating expansion for the seventh consecutive month but at a slower rate. Twelve industries reported expansion, while four reported a decrease in employment.

The New Orders Index decreased 7.0 percentage points to 57.5 in April, indicating growth for the seventh consecutive month. Sixteen industries reported expansion, while none reported a decrease in employment.

Export orders increased 0.5 point to 59.5, indicating growth for the fourteenth consecutive month. Thirteen industries reported growth while only one of the eighteen reported a decrease in new export orders.

The inventories index registered 51.0 points, up 2.0 points from the previous month. This reading indicates that raw materials inventories are growing.

Read the ISM release.
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Friday, April 28, 2017

Consumer Sentiment Held Strong in April

Consumer Sentiment increased 0.1 point in April to 97.0, according to the University of Michigan Consumer Sentiment Index.
The Current Economic Conditions Index fell 0.5 point to 112.7, while the Consumer Expectations Index rose 0.5 point to 87.0.
“Consumer sentiment continued to travel along the high plateau established following Trump's election, with only minor deviations from its five month average of 97.4. There was widespread agreement among consumers on their very positive assessments of the current state of the economy as well as widespread disagreement on future economic prospects,” said Richard Curtin, chief economist of UM Surveys of Consumers. “Although the partisan divide has slightly narrowed in recent months, it still reflects a very pessimistic economic outlook among Democrats and a very optimistic outlook among Republicans. The partisan divide on the Expectations Index was 51.0 points in April (61.4 vs. 112.4), down from last month's 63.1 (59.4 vs. 122.5), with Republicans moderating their optimism more than Democrats reduced their pessimism. Selective perception of news is the driving force behind the partisan divide.”

Read the University of Michigan Surveys of Consumers release.
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First Quarter GDP Weak

Real GDP grew at a seasonally adjusted annual rate of 0.7% during the first quarter of 2017, according to the Bureau of Economic Analysis’s “advance” estimate, down from 2.1% in the fourth quarter. The deceleration in real GDP reflected a deceleration in personal consumption expenditures along with drawbacks in private inventory investment and in state and local government spending. These were partly offset by an increase in exports and higher fixed investment.
Consumption, usually the largest contributor to GDP growth, accounted for only 0.2% of the gain, down from 2.4% during the fourth quarter. Consumption spending increased to an annual rate of $11.7 trillion, up $9.7 billion from the preceding quarter.
Fixed investment was a strong contributor, adding a total of 1.6% to GDP. Inventories, on the other hand, subtracted 0.9% from the growth.

Government spending decreased during the quarter, as both federal and state and local government spending were down. Government spending decreased by a seasonally adjusted and annualized $12.4 billion.

Net exports were positive, adding 0.1% to GDP.

Read the BEA release.
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Thursday, April 27, 2017

Durable Goods Orders Increased in March

New orders for manufactured durable goods increased 0.7% in March to $238.7 billion, following a 2.3% February increase, according to the U.S. Census Bureau.
New orders excluding defense rose 0.1% on the month, as orders of nondefense capital goods increased 1.2% to $75.0 billion.

Shipments of manufactured durable goods increased 0.2% to $239.8 billion.

Inventories of manufactured durable goods rose 0.1% to $385.7 billion, following a 0.2% February increase.

Read the Census release.
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