Friday, March 31, 2017

Consumer Sentiment Rose in March

Consumer Sentiment increased 0.6 points in March to 96.9, according to the University of Michigan Consumer Sentiment Index.
The Current Economic Conditions Index rose 1.7 points to 113.2, while the Consumer Expectations Index held at 86.5.
“The continued strength in consumer sentiment has been due to optimistic views on three critical components: higher incomes and wealth, more favorable job prospects, and low inflation expectations,” said Richard Curtin, chief economist of UM Surveys of Consumers. “All of these factors, however, have been influenced by partisanship. Democrats expect an imminent recession, higher unemployment, lower income gains, and more rapid inflation, while Republicans anticipate a new era of robust growth in incomes, job prospects, and lower inflation. It is a rare situation that combines increasing optimism, which promotes spending, and rising uncertainty which makes consumers more cautious spenders.”

Read the University of Michigan Surveys of Consumers release.
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Thursday, March 30, 2017

GDP Revised Up to 2.1% for Fourth Quarter

Real GDP for the fourth quarter of 2016 grew at a seasonally adjusted annual rate of 2.1%, according to the Bureau of Economic Analysis’s third estimate, up from the second estimate of 1.9%. The general picture of economic growth remains the same.
The change in GDP estimates reflected upward revisions to personal consumption expenditures and private inventory investment, partly offset by downward revisions to nonresidential fixed investment and to exports.
The upward revision to consumer spending reflected upward revisions to both goods and services. The nonresidential fixed investment downward revision was due to downward revisions to equipment and to intellectual property products.

Real GDP grew at 1.6% in 2016, a slower pace than the 2.6% rate in 2015. The deceleration in real GDP reflected lower private inventory investment and nonresidential fixed investment, along with decelerations in PCE and residential fixed investment.

Read the GDP release.
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Tuesday, March 28, 2017

Consumer Confidence Jumped in March

The Conference Board Consumer Confidence Index increased to 125.6 in March, up 9.5 points from February. The Present Situation Index rose 8.7 points to 143.1, while the Expectations Index jumped 9.9 points to 113.8.
“Consumer confidence increased sharply in March to its highest level since December 2000 (Index, 128.6),” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current business and labor market conditions improved considerably. Consumers’ also expressed much greater optimism regarding the short-term outlook for business, jobs and personal income prospects. Thus, consumers feel current economic conditions have improved over the recent period, and their renewed optimism suggests the possibility of some upside to the prospects for economic growth in the coming months.”

Consumers’ labor market outlook was more upbeat during March. The percentage of consumers expecting more jobs in the coming months increased from 20.9% to 24.8%, while the share anticipating fewer jobs declined from 13.6% to 12.2%. Income expectations also improved, as 21.5% of consumers expected their incomes to increase in coming months, up from 19.2% February.

Read the Conference Board release.
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Friday, March 24, 2017

Durable Goods Orders Increased in February

New orders for manufactured durable goods increased 1.7% in February to $235.4 billion, following a 2.3% January increase, according to the U.S. Census Bureau.
New orders excluding defense rose 2.1% on the month, as orders of nondefense capital goods increased 4.1% to $72.9 billion.

Shipments of manufactured durable goods increased 0.3% to $239.2 billion.

Inventories of manufactured durable goods rose 0.2% to $385.1 billion, following a 0.1% January increase.

Read the Census release.
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Thursday, March 23, 2017

New Home Sales Increased in February

New single-family home sales rose to a seasonally adjusted annual rate of 592,000 in February, according to the U.S. Census Bureau and the Department of Housing and Urban Development. The February level was 6.1% above the revised January rate of 558,000 and 12.8% above the February 2016 level.
Sales rose in most regions, increasing 3.6% in the South, 30.9% in the Midwest, and 7.5% in the West. In contrast, sales in the Northeast fell 21.4%.

The median price of a new home was $296,200, down 3.9% from January. The average price was $390,400.

At the end of February there was an estimated supply of 5.4 months at the current sales rate, down from January.

Read the Census/HUD release.
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Wednesday, March 22, 2017

Existing-Home Sales Slipped in February

Existing-home sales fell 3.7% to a seasonally adjusted annual rate of 5.48 million in February, according to the National Association of Realtors (NAR). Total existing-home sales cooled off after a strong start to 2017.
"Realtors are reporting stronger foot traffic from a year ago, but low supply in the affordable price range continues to be the pest that's pushing up price growth and pressuring the budgets of prospective buyers," said Lawrence Yun, NAR chief economist. "Newly listed properties are being snatched up quickly so far this year and leaving behind minimal choices for buyers trying to reach the market."

The total housing inventory rose 4.2% to 1.75 million homes available for sale, while the median existing home price stood at $228,400, a 7.7% increase from February 2016.

Distressed sales remained at 7% of the total in February, which are down from 10% a year ago. Six percent of sales were foreclosures and 1% were short sales. On average, foreclosures and short sales sold for discounts of 18% and 17%, respectively.

Read the NAR release.
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Monday, March 20, 2017

Industrial Production Unchanged in February

Industrial production was unchanged in February after decreasing 0.1% in January. Over the last year, industrial production was up 0.3%.
Manufacturing output increased 0.5% in February, the same increase as January. Production of durable goods rose 0.6%, while nondurables rose 0.4% during the month. Capacity utilization for manufacturing increased by 0.3 percentage point to 75.6%, a rate that is 2.8 percentage points below its long-run average.

The mining index increased 2.7% in February as most mining industries posted increases.

The utilities index fell 5.7% in February, largely because unseasonably warm weather reduced the demand for heating.

Read the Fed release.
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Thursday, March 16, 2017

Housing Starts Rose in February

Housing starts rose to a seasonally adjusted annual rate of 1.288 million in February, 3.0% above the revised January rate of 1.251 million, and 6.2% above the February 2016 rate.
Housing activity increased in only one out of the four regions as the West saw housing starts jump 35.7%. The Northeast, Midwest, and South experienced declines of 9.8%, 4.6%, and 3.8%, respectively.
New building permits decreased during the month, falling 6.2% to 1.213 million. However, permits were up 4.4% from the February 2016 rate.

Housing completions were at a seasonally adjusted annual rate of 1.114 million, up 5.4% from the revised January estimate and 8.7% above the February 2016 rate.

Read the Census release.
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Wednesday, March 15, 2017

Fed Raises Rates for First Time in 2017

The Federal Reserve Open Market Committee (FOMC) voted to raise the target range for the federal funds rate by 25 basis points to 0.75 to 1 percent. The vote was near unanimous, with Minneapolis Fed President Neel Kashkari casting the only dissenting vote, wanting to hold rates steady.
The projected policy path for the federal funds rate was in line with December’s, with the Fed’s dot plot showing three rate hikes this year. Participants estimated a target rate of 1.4 percent for 2017, a 2.1 percent rate for 2018, and a 3.0 percent rate for 2019.

In their decision to move the target rate, the Committee noted that the labor market has “continued to strengthen and that economic activity has continued to expand at a moderate pace.” Monetary policy remains accommodative, supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

The Committee once again announced that it is maintaining its policy of reinvesting principal payments from its holdings of agency debt and mortgage-backed securities, and of rolling over maturing Treasury securities at auction, anticipating it will do so until normalization of the federal funds rate is under way.

Read the FOMC statement.
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Builder Confidence Reaches 12-Year High in March

The National Association of Home Builders/Wells Fargo Housing Market Index rose to 71 in March, a six point increase from February’s reading of 65.

“Builders are buoyed by President Trump’s actions on regulatory reform, particularly his recent executive order to rescind or revise the waters of the U.S. rule that impacts permitting,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas.

All three HMI components increased in March. The component measuring current sales conditions rose seven points to 78, the component measuring sales expectations increased five points to 78, and the component measuring buyer traffic rose eight points to 54.

The regional three-month moving averages for HMI scores were mixed. The Northeast fell one point to 48 and the Midwest rose three points to 68. The South increased one point to 68 and the West fell three points to 76.

Read the NAHB release.
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Retail Sales Rose in February

There were $474.0 billion in retail and food service sales in February, up 0.1% from the previous month and 5.7% from February 2016, according to the U.S. Census Bureau.
Core retail sales – excluding automobiles and parts – increased 0.2% after rising by 1.2% in January. Year-over-year core sales increased 5.7%.

Retail trade sales increased 0.1% from January and are up 5.9% from last year. Sales at nonstore retailers increased 1.2% from January, while increasing 13.0% year-over-year.

Sales at gasoline stations declined 0.6% during the month, but are up 19.6% from a year ago.

Read the Census release.
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CPI Increased 0.1% in February

The Consumer Price Index increased 0.1% in February on a seasonally adjusted basis. Over the last 12 months, the all-items index rose 2.7%.
Prices for all items less food and energy, the “core CPI,” increased 0.2% in February, down slightly from January. The index rose 2.2% for the 12 months ending in February.

The food index increased 0.2% its largest rise since September 2015. Prices for food at home rose 0.3%, while prices for food away from home increased 0.2%. Over the past 12 months, food prices are unchanged.

The energy index decreased 1.0% in February. The gasoline index posted a decline of 3.0% following a 7.8% January increase.

Read the BLS release.
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Tuesday, March 14, 2017

Producer Prices Increased 0.3% in February

Producer prices rose 0.3% in February, seasonally adjusted, after climbing 0.6% in January, according to the U.S. Bureau of Labor Statistics. Producer prices rose 2.2% for the twelve months ended February 2017, which is the largest increase since the twelve months ended March 2012.
The index for final demand goods rose 0.3% in February. The increase was led by a 0.6% rise in the index for final demand energy. There was a smaller 0.1% increase in the index for final demand goods less food and energy.

Prices for final demand services ticked up 0.4% in February. Much of the advance was due to the index for final demand services less trade, transportation, and warehousing, which increased by 0.5%.

Read the BLS release.
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Small Business Optimism Remained Strong in February

The NFIB Small Business Optimism Index decreased 0.6 points in February to 105.3, maintaining the high level of post-election optimism. Three of the ten index components rose, while six declined. All of the index components have held near record highs since the remarkable increases after the election.
Reported job creation has improved, as 52% of businesses reported hiring or trying to hire. However, 44% reported few or no qualified applicants for the positions they were trying to fill. Seventeen percent of employers surveyed cited the difficulty of finding qualified workers as their top business problem. A seasonally adjusted net 15% of owners plan to create new jobs, down three points but still a strong reading.

Seasonally adjusted, the net percent of owners expecting better business conditions fell one point to a net 47%. The percent of owners reporting higher sales in the past three months rose four points to 2%, the first positive reading since early 2015. Seasonally adjusted, the net percent of owners expecting higher real sales volumes fell three points to a net 26% of owners. Capital spending increased as 62% of owners reported capital outlays, up three points from January. The percent of owners planning capital outlays in the next 3 to 6 months fell one point to 26%.

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

Read the NFIB report.
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Friday, March 10, 2017

235,000 Jobs Added in February

Total nonfarm payroll employment rose by 235,000 in February, down slightly from January’s upwardly revised figure of 238,000, according to the Bureau of Labor Statistics. The national unemployment rate moved was little changed at 4.7%. The majority of gains occurred in construction, private educational services, manufacturing, and health care.
Private-service providing industries added a net 132,000 jobs, led by gains in education and health services, which added 62,000 jobs during the month, and by professional and business services, which added 37,000 jobs this month.

Goods-producing employment rose by 95,000 jobs during the month, as gains in construction led the way.

The civilian labor force participation rate was 63.0%, an increase from January. The number of long-term unemployed, those jobless for 27 weeks or more, was virtually unchanged at 1.8 million and accounted for 23.8% of the unemployed. The number of discouraged workers was 522,000, little changed from a year earlier.

Average hourly earnings increased by 6 cents to $26.09, after a 5-cent increase in January. Over the past year, average hourly earnings have risen by 2.8%.

Read the BLS release.
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Thursday, March 9, 2017

Job Cuts Declined in February

Employers announced plans to cut 39,957 jobs in February, according to a report issued by Challenger, Gray & Christmas. February’s announced cuts were 19% less than January’s. The month’s figure was 40% lower than February 2016.

The retail sector once again led the way in job cuts, announcing 11,889 layoffs. The industry continues to move toward online and away from brick-and-mortar operations. Job cuts in retail are 580% more than the energy sector, which is the next highest so far this year.

“Retailers are experiencing a tremendous transformation from the traditional business model. The cost of digitizing merchandise, moving sales to online, and downsizing physical stores will likely take a toll on employees in this field,” said Andrew Challenger, vice president of Challenger, Gray & Christmas.

The energy sector, on the other hand, has reported only 5,930 job cuts so far this year. This is an 87% decline in job cuts compared to this point last year.

“The energy sector announced over 107,000 jobs last year. It seems the bleeding has stopped for now. The new administration and EPA chief Scott Pruitt have already enacted legislation to aid oil & gas companies, but it remains to be seen if those actions will result in more jobs,” said Challenger.

Read the Challenger Gray & Christmas release.
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Wednesday, March 8, 2017

ADP: 298,000 Jobs Added in February

The non-farm private sector added 298,000 jobs in February, according to the ADP National Employment Report. January’s figure was revised upward to 261,000. Service-providing jobs accounted for most of the month’s growth, while goods-producing employment surged as well.
Growth was widespread in February 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 104,000 jobs, while medium-sized businesses with 50-499 employees added 122,000 jobs. Large businesses added 72,000 jobs.

“February was a very good month for workers,” said Mark Zandi, chief economist of Moody’s Analytics. “Powering job growth were the construction, mining and manufacturing industries. Unseasonably mild winter weather undoubtedly played a role. But near record high job openings and record low layoffs underpin the entire job market.”

Service-providing employment rose by 193,000 jobs, driven by the professional and business services sector which added 66,000 jobs. Health care and social assistance jobs also increased, adding 38,000 jobs. Goods-producing employment increased by 106,000 jobs. The construction industry led the gain, adding 66,000 jobs.

Read the ADP report.
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Tuesday, March 7, 2017

Consumer Credit Growth Retreats in January

Consumer credit increased at a seasonally adjusted annual rate of 2.8% in January, down from a 4.7% rate in December. Total outstanding credit increased $8.8 billion during the month (compared with $14.8 billion in December) to $3.77 trillion.
Revolving credit fell at an annual rate of 4.6% to $995.1 billion, compared to a 4.3% increase in December. Non-revolving credit rose at a 5.5% annual rate, or $12.6 billion, compared to December’s rate of $11.2 billion. Total non-revolving credit is now $2.78 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 22%, respectively, of outstanding non-revolving credit.

Read the Fed release.
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International Trade Balance Widened in January

The U.S. international trade deficit widened in January to $48.5 billion, up from $44.3 billion in December, according to the U.S. Census Bureau and the U.S. Bureau of Economic Analysis. The overall increase reflected a $1.1 billion increase in exports along with a $5.3 billion increase in imports.
The goods deficit increased $4.0 billion to $69.7 billion, while the services surplus decreased $0.2 billion to $21.4 billion.

Exports of goods rose $1.1 billion to $128.0 billion in January, driven by increases in industrial supplies and materials. They saw a jump of $2.1 billion, largely due to increases in crude oil and other petroleum products. Exports of services decreased less than $0.1 billion to $64.1 billion.

Imports of goods increased $5.1 billion to $197.6 billion, mostly due to an increase in consumer goods, which rose by $2.4 billion. Imports of services increased $0.2 billion to $42.9 billion in January.

Read the Census/BEA release.
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Monday, March 6, 2017

Manufactured Goods Orders Rose in January

New orders for manufactured goods increased 1.2% to $470.2 billion in January, according to the U.S. Census Bureau. The January reading followed a 1.3% December increase.
New orders for manufactured durable goods jumped 2.0% to $230.7 billion, after decreasing for two consecutive months. Orders for transportation equipment drove the increase, rising 6.2% to $76.5 billion.

Shipments of manufactured durable goods were virtually unchanged, holding at $238.8 billion. This followed a 1.7% December increase.

Inventories of manufactured durable goods decreased 0.1% to $384.1 billion.

Read the Census release.
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Friday, March 3, 2017

ISM: Non-Manufacturing Sector Grew in February

The ISM Non-Manufacturing Index registered 57.6 points in February, 1.1 percentage points above January’s figure and the highest reading since October 2015. This was the 86th consecutive month of growth. Sixteen non-manufacturing industries reported growth in February, while two reported contraction.
Growth in the Business Activity Index increased 3.3 points to 63.6, the highest reading since February 2011. Thirteen industries reported increased business activity and one reported decreased activity. Respondents noted an optimistic business climate and seasonal uptick over a typically slow January.

Non-manufacturing employment grew for the 36th consecutive month. The index increased 0.5 percentage point to 55.2. Eleven industries reported increased employment, while four reported decreased employment.

The New Orders Index rose 2.6 points to 61.2. Some respondents commented that they had new clients onboard and are spending new budgets.

Supplier deliveries slowed for the 14th consecutive month, as the index registered 50.5 points (readings above 50 for this index indicate slower deliveries). Five industries reported slower deliveries, while five reported faster deliveries.

Read the ISM release.
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Wednesday, March 1, 2017

Beige Book: Economic Expansion Continues into 2017

Economic activity continued to expand at a modest to moderate pace across the twelve Federal Reserve Districts over the period from January to mid-February, according to the just-released Federal Reserve Beige Book.

Consumer spending expanded at a moderate pace this period. Most Districts reported expanded retail sales at a subdued pace, with numerous Districts reporting an ongoing shift from purchases made in-store to those made online. Manufacturers in most Districts reported accelerated activity, although at a moderate pace. Firms across the country and industries were still optimistic about growth in the coming months, but less so than the prior report.

Some Districts reported widening labor shortages as labor markets remained tight to start the year. Most Districts saw employment rise at a moderate pace. Wage growth was characterized generally as modest or moderate across the Districts, while price growth was little changed from the prior period.

Read the full Federal Reserve report.
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Construction Spending Declined in January

Construction spending decreased 1.0% in January to a seasonally adjusted annual level (SAAL) of $1,180.3 billion, according to the Census Bureau. December’s spending estimate was revised to a rate of $1,192.2 billion. January’s figure is 3.1% greater than the January 2016 estimate of $1,144.9 billion.
Total private construction rose to $911.6 billion SAAL, up 0.2% from the revised December estimate of $909.4 billion.

Private residential construction was $476.4 billion SAAL, 0.5% above December’s rate.

Private nonresidential construction was $435.3 billion, virtually the same as December’s estimate.

Public construction decreased 5.0% to $268.7 billion SAAL, largely due to declines in educational and highway construction projects.

Read the Census release.
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Manufacturing Sector Expanded in February

The ISM Manufacturing Index registered 57.7 points in February, up 1.7 points from the previous month and the highest reading since August 2014, according to the Institute for Supply Management. February’s reading indicates a sixth consecutive month of expansion in manufacturing, as readings over 50 points denote expansion. Of the eighteen manufacturing industries, seventeen reported growth while only one reported contraction.
The Employment Index declined 1.9 points to 54.2 in February, indicating expansion for the fifth consecutive month. Ten industries reported expansion, while five reported a decrease in employment.

The New Orders Index increased 4.7 points to 65.1 in February, indicating growth for the sixth consecutive month. Sixteen industries reported increases in new orders while none reported decreases.

Export orders increased 0.5 point to 55.0, indicating growth for the twelfth consecutive month. Six industries reported growth while only one of the eighteen reported a decrease in new export orders.

The inventories index registered 51.5 points, indicating that raw materials inventories are growing for the first time after nineteen consecutive months of contraction.

Read the ISM release.
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