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Friday, January 27, 2017

Consumer Sentiment Rose in January

Consumer Sentiment rose 0.3 points in January to 98.5, according to the University of Michigan Consumer Sentiment Index.
The Current Economic Conditions Index fell 0.6 points to 111.3, while the Consumer Expectations Index rose 0.8 points to 90.3.
“Consumers expressed a higher level of confidence January than any other time in the last dozen years. The post-election surge in confidence was driven by a more optimistic outlook for the economy and job growth during the year ahead as well as more favorable economic prospects over the next five years,” said Richard Curtin, chief economist of UM Surveys of Consumers. “Overall, the post-election surge in consumer confidence was based on political promises, and not, as yet, on economic outcomes.”

Read the University of Michigan Surveys of Consumers release.
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Fourth Quarter GDP Closes Out 2016 at 1.9%

Real GDP grew at a seasonally adjusted annual rate of 1.9% during the fourth quarter of 2016, according to the Bureau of Economic Analysis’s “advance” estimate, down from 3.5% in the third quarter. The deceleration reflected a dip in exports, a rise in imports, a deceleration of PCE, and a slowdown in federal government spending. These were partly offset by an upturn in residential fixed investment, accelerations in nonresidential fixed investment and private inventory investment, and a rise in state and local government spending.
Consumption was the largest contributor to GDP growth, accounting for 1.7% of the gain, down from 2.0% during the third quarter. Consumption spending increased to an annual rate of $11.6 trillion, up $71.3 billion from the preceding quarter.
Fixed investment was a strong contributor, adding a total of 0.7% to GDP. Inventories were also a bright spot, contributing 1.0% of the growth.

Government spending increased during the quarter, as an increase in state and local government spending was slightly offset by a slowdown in federal government spending. Government spending increased by a seasonally adjusted and annualized $8.5 billion.

Net exports were the lone drag on growth, subtracting 1.7% from GDP.

Read the BEA release.
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Durable Goods Orders Inch Down in December

New orders for manufactured durable goods decreased 0.4% in December to $227.0 billion, following a 4.8% November decrease, according to the U.S. Census Bureau.
New orders excluding defense rose 1.7% on the month, as orders of nondefense capital goods increased 3.8% to $66.6 billion.

Shipments of manufactured durable goods, up three of the last four months, rose 1.4% to $238.0 billion.

Inventories of manufactured durable goods were virtually unchanged at $384.4 billion, following 0.2% November increase.

Read the Census release.
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Thursday, January 26, 2017

New Home Sales Decreased in December

New single-family home sales fell to a seasonally adjusted annual rate of 536,000 in December, according to the U.S. Census Bureau and the Department of Housing and Urban Development. The December level was 10.4% below the revised November rate of 598,000 and 0.4% below the December 2015 level.
Sales fell in most regions, declining 41.0% in the Midwest, 12.6% in the South, and 1.3% in the West. In contrast, sales in the Northeast rose 48.4%.

The median price of a new home was $322,500, up 4.3% from November. The average price was $384,000, a decrease of 5.1% from the previous month.

At the end of December there was an estimated supply of 5.8 months at the current sales rate, up from a 5.0 month supply in November.

Read the Census/HUD release.
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Tuesday, January 24, 2017

Existing-Home Sales Decreased in December

Existing-home sales fell 2.8% to a seasonally adjusted annual rate of 5.49 million in December, according to the National Association of Realtors (NAR). Even with the decline in December, existing-home sales finished 2016 as the best year in a decade.
"Solid job creation throughout 2016 and exceptionally low mortgage rates translated into a good year for the housing market," he said. "However, higher mortgage rates and home prices combined with record low inventory levels stunted sales in much of the country in December," said Lawrence Yun, NAR chief economist. "While a lack of listings and fast rising home prices was a headwind all year, the surge in rates since early November ultimately caught some prospective buyers off guard and dimmed their appetite or ability to buy a home as 2016 came to an end."

The total housing inventory fell 10.8% to 1.65 million homes available for sale, while the median existing home price stood at $232,200, a 4.0% increase from December 2015.

Distressed sales moved up to 7% of the total in December, but down from 8% a year ago. Five percent of sales were foreclosures and 2% were short sales. On average, foreclosures and short sales sold for discounts of 20% and 10%, respectively.

Read the NAR release.
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Thursday, January 19, 2017

Housing Starts Rose in December

Housing starts rose to a seasonally adjusted annual rate of 1.226 million in December, 11.3% above the revised November rate of 1.102 million and 5.7% above the December 2015 rate.
Housing activity increased in three out of the four regions, led by strong jumps in the Midwest (31.2%) and the West (23.5%). Activity in the Northeast rose by 18.5% while the South saw a 1.4% decline.
New building permits decreased during the month, falling 0.2% to 1.210 million. However, permits were up 0.7% from the December 2015 rate.

Housing completions were at a seasonally adjusted annual rate of 1.123 million, down 7.9% from the revised November estimate, but 8.7% above the December 2015 rate.

Read the Census release.
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Wednesday, January 18, 2017

Beige Book: Economic Expansion to Close Out 2016

Economic activity continued to expand at a modest pace across most of the twelve Federal Reserve Districts over the period from late-November to the end of the year, according to the just-released Federal Reserve Beige Book. Most Federal Reserve Districts reported “moderate” or “modest” growth.

Consumer spending was mostly positive this period. Most Districts reported expanded retail sales, but several noted that sales over the holiday season were disappointing. Manufacturers in most Districts reported increased sales, a turnaround from earlier in the year. Firms across the country and industries were optimistic about growth in 2017.

Employment continued to expand during the period, with the reporting of tight or tightening labor markets. Most Districts saw employment rise at a slight to moderate pace. Wage growth was characterized generally as modest across the Districts, while there was modest price growth during the period, intensifying somewhat since the last report.

Read the full Federal Reserve report.
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Builder Confidence Inches Back from December High

The National Association of Home Builders/Wells Fargo Housing Market Index fell to 67 in January, a 2 point decrease from a downwardly revised December reading of 69.

“Builders begin the year optimistic that a new Congress and administration will help create a better business climate for small businesses, particularly as it relates to streamlining and reforming the regulatory process,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas.

All three HMI components declined in January. The component measuring current sales conditions fell 3 points to 72, the component measuring sales expectations declined 2 points to 76, and the component measuring buyer traffic fell 1 point to 51.

The regional three-month moving averages for HMI scores were generally positive. The Northeast rose 2 points to 52 and the Midwest rose 3 points to 64, while the West and the South held steady at 79 and 67, respectively.

Read the NAHB release.
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Industrial Production Increased in December

Industrial production rose 0.8% in December after decreasing 0.7% in November. Over the last year, industrial production is up by 0.5%.
Manufacturing output increased 0.2% in December after a small decline of 0.1% in November. Production of durable goods increased by 0.5%, while most nondurables industries posted declines during the month. Capacity utilization for manufacturing increased by 0.1 percentage point to 74.8%, a rate that is 3.7 percentage points below its long-run average.

The mining index was unchanged in December. Crude oil extraction and oil and gas well drilling posted gains but were offset by declines in other mining categories.

The utilities index rose 6.6% in December, as temperatures returned to normal following unseasonably warm weather in November. The gain was the largest since December 1989.

Read the Fed release.
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CPI Increased 0.3% in December

The Consumer Price Index increased 0.3% in December on a seasonally adjusted basis. Over the last 12 months, the all-items index rose 2.1%.
Prices for all items less food and energy, the “core CPI,” increased 0.2% in December, the same increase as November. The index rose 2.2% for the 12 months ending in December.

The food index was unchanged for the sixth consecutive month, as prices for food at home fell 0.2%, while prices for food away from home increased 0.2%. Over the past 12 months, food prices have fallen 0.2%.

The energy index increased 1.5% in December, after a 1.2% November gain. The gasoline index posted a strong gain, rising 3.0% following a 2.5% November increase.

Read the BLS release.
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Friday, January 13, 2017

Producer Prices Increased 0.3% in December

Producer prices rose 0.3% in December, seasonally adjusted, after climbing 0.4% in November, according to the U.S. Bureau of Labor Statistics. Producer prices rose 1.6% in 2016, after declining 1.1% in 2015.
The index for final demand goods rose 0.7% in December, the largest jump since June. The increase was led by a 2.6% rise in the index for final demand energy. There was a smaller 0.3% increase in the index for final demand goods less food and energy.

Prices for final demand services ticked up 0.1% in December, after rising 0.5% in November. Much of the advance was due to the index for final demand services less trade, transportation, and warehousing, which increased by 0.2%.

Read the BLS release.
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Retail Sales Rose in December

There were $469.1 billion in retail and food service sales in December, up 0.6% from the previous month and 4.1% from December 2015, according to the U.S. Census Bureau.
Core retail sales – excluding automobiles and parts – increased 0.2% after rising at the same rate in November. Year-over-year core sales increased 3.4%.

Retail trade sales increased 0.8% from November and are up 4.3% from last year. Sales at nonstore retailers increased 1.3% from November, while increasing 13.2% year-over-year.

Sales at gasoline stations continued to climb, rising 2.0% during the month and 6.3% from a year ago.

Read the Census release.
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Tuesday, January 10, 2017

Small Business Optimism Soared in December

The NFIB Small Business Optimism Index posted a strong increase of 7.4 points in December to 105.8, the highest reading in twelve years. Seven of the ten index components rose, while two declined and one was unchanged.
Even with the increased optimism, reported job creation remained weak in December, as only 51% of businesses reported hiring or trying to hire. Forty-four percent reported few or no qualified applicants for the positions they were trying to fill. Twelve 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, which is the strongest reading in the recovery.

Seasonally adjusted, the net percent of owners expecting better business conditions shot up 38 points to a net 50%. The percent of owners reporting higher sales in the past three months rose 1 point to a net negative 7%. Seasonally adjusted, the net percent of owners expecting higher real sales volumes rose 20 points to a net 31% of owners. Capital spending jumped as 63% of owners reported capital outlays, up 8 points from November. The percent of owners planning capital outlays in the next 3 to 6 months increased 5 points to 29%.

Credit conditions held steady, as 4% of owners reported that all their borrowing needs were not met. Only 2% of business owners surveyed reported that financing was their top business problem, unchanged from the past two months.

Read the NFIB report.
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Monday, January 9, 2017

Consumer Credit Surged in November

Consumer credit increased at a seasonally adjusted annual rate of 7.9% in November, up from a 5.2% rate in October. Total outstanding credit increased $24.6 billion during the month (compared with $14.1 billion in October) to $3.75 trillion.
Revolving credit rose at an annual rate of 13.5% to $992.4 billion, compared to a 2.4% increase in October. Non-revolving credit rose at a 5.9% annual rate, or $13.5 billion, compared to October’s rate of $11.8 billion. Total non-revolving credit is now $2.76 trillion.
The large increase in revolving consumer credit can partly be attributed to the holiday season, with spending fueled by credit cards. Also, more consumers are gaining access to credit as the economy continues to brighten.

Read the Fed release.
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Friday, January 6, 2017

Manufactured Goods Orders Fell in November

New orders for manufactured goods decreased 2.4% to $458.3 billion in November, according to the U.S. Census Bureau. The November reading followed four months of increases.
New orders for manufactured durable goods fell 4.5% to $228.8 billion, after increasing 5.0% in October. Orders for transportation equipment drove the decrease, rising 13.2% to $76.7 billion.

Shipments of manufactured durable goods increased 0.1% to $234.2 billion. Primary metals led the decrease, falling 2.0% to $18.1 billion.

Inventories of manufactured durable goods increased 0.2% to $384.1 billion.

Read the Census release.
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International Trade Balance Widened in November

The U.S. international trade deficit expanded in November to $45.2 billion, up from $42.6 billion in October, according to the U.S. Census Bureau of Economic Analysis. The expansion reflected a $0.4 billion decrease in exports along with a $2.4 billion increase in imports.
The goods deficit increased $3.4 billion to $66.6 billion, while the services surplus rose $0.5 billion to $21.4 billion.

Exports of goods fell $0.7 billion to $122.4 billion in November, driven by decreases in capital goods. Exports of capital goods fell by $1.8 billion, largely due to a $1.3 billion decrease in civilian aircraft exports. Exports of services increased $0.3 billion to $63.5 billion.

Imports of goods increased $2.7 billion to $189.0 billion, mostly due to an increase in industrial supplies and materials, which rose by $2.2 billion. Imports of services decreased $0.3 billion to $42.1 billion in November.

Read the Census/BEA release.
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156,000 Jobs Added in December, Strongest Wage Growth since Recession

Total nonfarm payroll employment rose by 156,000 in December, down from November’s upwardly revised figure of 204,000, according to the Bureau of Labor Statistics. The national unemployment rate moved up slightly to 4.7% as more people entered the labor force. The majority of gains occurred in health care and restaurants.
Private-service providing industries added a net 132,000 jobs, led by gains in education and health services, which added 70,000 jobs during the month, and by leisure and hospitality, which added 24,000 jobs this month.

Goods-producing employment rose by 12,000 jobs during the month, as gains in manufacturing led the way.

The civilian labor force participation rate was 62.7%, virtually unchanged from November. The number of long-term unemployed, those jobless for 27 weeks or more, decreased to 1.8 million and accounted for 24.3% of the unemployed. The number of discouraged workers was 426,000, down over 35% from a year earlier.

Average hourly earnings increased by 10 cents to $26.00, which was the fastest rise in worker pay since 2009. Hourly earnings have increased 2.9% over the past year.

Read the BLS release.
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Thursday, January 5, 2017

ISM: Non-Manufacturing Sector Continued Growth in December

The ISM Non-Manufacturing Index registered 57.2 points in December, matching November’s figure. This was the 83rd consecutive month of growth. Twelve non-manufacturing industries reported growth in December, while three reported contraction.
Growth in the Business Activity Index decreased 0.3 points to 61.4. Eleven industries reported increased business activity and four reported decreased activity. Respondents noted an expanded business base and business activity has remained strong and continues to increase.

Non-manufacturing employment grew for the seventh consecutive month, but at a slower pace. The index decreased 4.4 points to 53.8. Nine industries reported increased employment, while four reported decreased employment.

The New Orders Index rose 4.6 points to 61.6. Some respondents commented that departments are trying to spend their budget money before year-end and new capital projects are being initiated.

Supplier deliveries slowed for the 12th consecutive month, as the index registered 52.0 points (readings above 50 for this index indicate slower deliveries). Seven industries reported slower deliveries, while two reported faster deliveries.

Read the ISM release.
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ADP: 153,000 Jobs Added in December

The non-farm private sector added 153,000 jobs in December, according to the ADP National Employment Report. November’s figure was revised downward slightly to 215,000. Service-providing jobs accounted for all of the month’s growth, while goods-producing employment fell during the month.
Growth was widespread in December with businesses of all sizes seeing increases. Small businesses with fewer than 50 employees added 18,000 jobs, while medium-sized businesses with 50-499 employees added 71,000 jobs. Large businesses added 63,000 jobs.

“As we exit 2016, it’s interesting to note that the private sector generated an average of 174,000 jobs per month, down from 209,000 in 2015,” said Ahu Yildirmaz, vice president and head of the ADP Research Institute. “And while job gains in December were slightly below our monthly average, the U.S. labor market has experienced unprecedented seven years of growth that has brought us to near full employment. As we enter 2017, the tightening labor market will likely slow the growth.”

Service-providing employment rose by 169,000 jobs, which was driven by the trade, transportation, and utilities sector which added 82,000 jobs. Health care and social assistance jobs also increased, adding 26,000 jobs. In contrast, goods-producing employment fell by 16,000 jobs. The manufacturing industry led the decline, shedding 9,000 jobs.

Read the ADP report.
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Low Job Cuts in December

Employers announced plans to cut 33,627 jobs in December, according to a report issued by Challenger, Gray & Christmas. December’s announced cuts were 25% higher than November’s. For the year, employers have announced 526,915 job cuts, down 12% from 2015.

The steepest job cuts for the year occurred in the energy sector, which announced 107,714 layoffs over 2016. Most of these cuts were announced in the first half of the year, as the industry suffered from historically low oil prices. However, as oil prices started to recover, job cuts declined.

“Oil prices are back on the rise. The new administration poised to take over the White House in January could further benefit the industry by relaxing regulations and drilling restrictions. Oil companies may once again start to expand in 2017. Ironically, the only obstacle in their way may be a shortage of skilled workers,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

The computer industry also saw a rise in job cuts. Firms announced 66,821 job cuts during the year, 7.4% more than in 2015. The industry faces uncertainty moving forward.

“It is hard to say how the tech sector will do under the new administration. Many rely on offshoring as well as the employment of foreign talent immigrating to the U.S. Both of those business practices are likely to come under threat in the coming year. However, the new administration’s pro-business policies may ultimately favor these firms and many others. Only time will tell,” Challenger concluded.

Read the Challenger Gray & Christmas release.
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Tuesday, January 3, 2017

Construction Spending Rose in November

Construction spending increased 0.9% in November to a seasonally adjusted annual level (SAAL) of $1,182.1 billion, according to the Census Bureau. October’s spending estimate was revised to a rate of $1,171.4 billion. During the first eleven months of the year, construction spending amounted to $1,070.9 billion, up 4.4% from the first eleven months of 2015.
Total private construction rose to $892.8 billion SAAL, up 1.0% from the revised October estimate of $884.3 billion.

Private residential construction was $462.9 billion SAAL, 1.0% above October’s rate.

Private nonresidential construction rose 0.9% to $429.9 billion, largely due to increases in lodging and office projects.

Public construction increased 0.8% to $289.3 billion SAAL, largely due to jumps in educational and highway construction projects.

Read the Census release.
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Manufacturing Sector Expanded in December

The ISM Manufacturing Index registered 54.7 points in December, up 1.5 points from the previous month, according to the Institute for Supply Management. December’s reading indicates a fourth consecutive month of expansion in manufacturing, as readings over 50 points denote expansion. Of the eighteen manufacturing industries, eleven reported growth while six reported contraction.
The Employment Index rose 0.8 points to 53.1 in December, indicating expansion for the third consecutive month. Nine industries reported expansion, while six reported a decrease in employment.

The New Orders Index jumped 7.2 points to 60.2 in December, indicating growth for the fourth consecutive month. Twelve industries reported increases in new orders while four reported decreases.

Export orders increased 4.0 points to 56.0, indicating growth in exports for the tenth consecutive month. Eleven industries reported growth while none of the eighteen reported a decrease in new export orders.

The inventories index registered 47.0 points, indicating that raw materials inventories contracted for the 18th consecutive month.

Read the ISM release.
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