Friday, August 31, 2012

Consumer Sentiment Recovered Slightly in August

Consumer sentiment rose slightly in August, offsetting some of the losses seen in the past two months. August’s consumer sentiment report from the University of Michigan indicated that consumer sentiment rose 2 points to a reading of 74.3. Although this is an improvement, the level remains well below May’s reading of 79.3.

August’s improvement in consumer sentiment was entirely in the present conditions portion of the index, which rose 6 points in August to a reading of 88.7. This improvement is likely due to rising stock prices and a better than expected jobs report in July.

The future expectations portion of the index deteriorated slightly falling one half of a point to a reading of 65.1. The concern about future conditions is understandable with so much uncertainty looming. The combination of the elections, the looming specter of the fiscal cliff, and the possibility of another debt ceiling debate have consumers concerned.

Inflationary expectations ticked up in August, with consumers expecting 3.6% inflation in the next year, up from 3.0% in the previous report. Five year inflationary expectations also rose slightly from 2.7% to 3.0%. The upward pressure on inflationary expectations is likely a result of rising gasoline prices as well as impending increases in food prices due to the drought.

Bernanke Indicates Federal Reserve Open to More Easing

Federal Reserve Chairman Ben Bernanke indicated that the Federal Reserve is open to additional easing in a speech given today in Jackson Hole. In his speech Chairman Bernanke outlined his stance on two issues, the economy as well as the effectiveness of monetary easing. Key takeaways from his remarks follow.

The Economy:
  • Chairman Bernanke described the current economic situation as “far from satisfactory,” indicating that the recent improvement in economic data is not sufficient to indicate a true recovery.
  • The labor market weakness is particularly concerning “not only because of the enormous suffering and waste of human talent it entails, but also because persistently high levels of unemployment will wreak structural damage on our economy that could last years.”
  • Bernanke also noted, importantly, that he believes that the current weakness in the labor market is due to cyclical problems not structural issues. This is important because the Federal Reserve is equipped to assist with cyclical problems, but cannot address structural employment issues.
  • Bernanke also noted that inflation risks will remain subdued, remaining near 2% “despite repeated warnings that excessive policy accommodation would ignite inflation.”
The Effectiveness of Monetary Easing:

  • Bernanke defended the efficacy of monetary easing commenting “A balanced reading of the evidence supports the conclusion that central bank securities purchases have provided meaningful support to the economic recovery while mitigating deflationary risks.”
  • Bernanke also noted that the costs of such easing has not impaired the functioning of markets in which the Fed participates such as mortgage securities and treasuries. Furthermore, there has been no spike in inflationary expectations following easing.
  • "The costs of nontraditional policies, when considered carefully, appear manageable, implying that we should not rule out further use of such policies if economic conditions warrant."
What does Mean?

Chairman Bernanke’s statements indicate that the Federal Reserve has not ruled out additional monetary easing. The economy is not performing at levels that the Fed sees as healthy, particularly the job market. Furthermore, as the weakness in the labor market is cyclical, not structural, the Fed believes that it can help improve the situation. Finally, Bernanke indicated that he sees monetary easing as effective, with manageable risks. Unless next Friday’s jobs report comes in very strong, additional easing of monetary policy, possibly in the form of QE3, is very likely at its September 12 and 13 FOMC meeting.

See Chairman Bernanke's Speech.

Chart of the Week: Business Lending

“Banks continue to aggressively seek out business loans, and our industry’s double-digit lending growth over the last year is a testament to those efforts. The industry’s business lending increased by 15.1 percent year-over-year. Unfortunately, the atmosphere has started to change. Our business customers are telling us that they are hesitant to expand or take on more debt in today’s uncertain environment. In addition, the housing sector continues to be a drag on total lending volume, and will limit loan growth to a gradual pace for the foreseeable future.”

-ABA Chief Economist James Chessen

Thursday, August 30, 2012

Personal Income Growth Outpaced by Strong Consumption Growth in July

Personal income rose 0.3% in July, but was outpaced by strong consumption growth of 0.4% leading the savings rate to tick lower to 4.2%. Personal income grew at 0.3% for the third consecutive month in July. The third strong increase was enough to improve personal income growth from a year ago to 3.6%, up from the 3.5% reported in June.

Consumption grew at a strong 0.4% in July, its strongest pace since February. July's spending was particularly strong for durable goods, where spending rose 0.8% over the month. Non-durable goods spending was also up a notable 0.6% while service spending rose only 0.3%.

Prices were unchanged in July according to the PCE deflator, with core prices remaining unchanged as well.

Consumption growth outpacing income growth led the savings rate to tick lower, from 4.3% to 4.2%.

Read the BEA report.

Wednesday, August 29, 2012

State Banking Associations Urge Congress to Extend TAG

Multiple state banking associations wrote joint letters to the House and Senate urging members “to quickly pass legislation to temporarily extend full FDIC coverage for non-interest-bearing transaction accounts (TAG) before its December 31, 2012 expiration date.”

“Failure to continue FDIC coverage of these accounts would create disruption and uncertainty in the banking system and for small businesses, municipalities, hospitals, and other entities that use these accounts to meet payroll and operational expenses,” the associations wrote.

The associations noted that banks are fully responsible to pay for the insurance, the insurance is not “free,” nor is it supported by tax dollars.

The associations urged Congress to temporarily extend the TAG program until the economy and financial system truly recover and interest rates return to more normalized standardized. The extension, the associations stated, “would eliminate one element of uncertainty facing depositors.”

Read the joint letter to House members.

Read the joint letter to Senate members.

Second Quarter GDP Revised Up to 1.7%

In its second estimate the Bureau of Economic Analysis revised up its initial estimate of second quarter real GDP growth from 1.5% to 1.7%. Despite the upward revision, GDP growth slowed in the second quarter from 2.0% growth in the first quarter. GDP growth in the second quarter remains the slowest pace seen since the third quarter of last year.

The primary difference between the first and second estimate was a boost in consumption seen in the second estimate. Consumption contributed 1.20% to growth in the second quarter after contributing only 1.05% in the initial estimate. Fixed investment and inventories contributed slightly less to the second estimate than was seen in the first.

The slowing from the first quarter to the second was primarily a result of a slowing in durable goods consumption and construction growth. Consumer spending on durable goods was particularly strong in the first quarter.

Read the BEA release.

Tuesday, August 28, 2012

ABA Comments on FDIC Bank Earnings Report

By James Chessen, ABA Chief Economist

“The banking industry’s performance continues to improve significantly. Increases in business lending, strong capital levels and a reduction in problem loans speak to an industry that’s gaining strength. Challenges remain, including the daunting fiscal decisions ahead for both the United States and Europe. The manner in which these issues are resolved will have a significant impact on our country’s pace of economic growth. The banking industry has worked hard to fortify itself for these and other challenges that lay ahead.”

Business Loans Grow for Eighth Consecutive Quarter

“Banks continue to aggressively seek out business loans, and our industry’s double-digit lending growth over the last year is a testament to those efforts. The industry’s business lending increased by 15.1 percent year-over-year. Unfortunately, the atmosphere has started to change. Our business customers are telling us that they are hesitant to expand or take on more debt in today’s uncertain environment. In addition, the housing sector continues to be a drag on total lending volume, and will limit loan growth to a gradual pace for the foreseeable future.”

Bank Earnings Grow Despite Challenges

"Strong business loan growth and aggressive cost controls are helping banks maintain earnings despite a challenging economic environment. At the same time, knowledge that interest rates will remain low for years means businesses feel no urgency to borrow. Ultimately, the pace of the economy will determine whether businesses decide to expand operations and how quickly banks’ core lending business will return.”

Problem Loans Fall, Failures Continue to Decline

“The industry’s asset quality continues to improve, with problem loans falling to levels not seen since the first quarter of 2009. The number of problem banks fell to the lowest level in ten quarters, and bank failures continue to fall dramatically. Banks, not taxpayers, are solely responsible for all of the FDIC’s expenses, paying about $13.5 billion in premiums over the last year.”

Capital Continues to Grow

“The industry’s capital ratios are at or near record levels, a strong foundation that provides an important buffer for any economic circumstances or challenges that could arise. Banks have added almost $316 billion in capital since 2008 when the financial crisis took hold. Total industry capital is now almost $1.6 trillion. Banks also have set aside more than $176 billion in reserves to cover possible loan losses. Capital plus reserves gives a total buffer protecting the industry of more than $1.78 trillion.”

USDA Predicts Farm Income to Reach New Highs in 2012

The USDA’s Economic Research Service predicts that large gains in crop sales and indemnities will lead farm income measures to reach new highs in 2012. Net cash income is forecast to reach $139.3 billion, 3.4% above 2011 levels. Net farm income and net value added are both expected to rise in 2012 reaching $122.2 billion and $172.6 billion respectively. If these forecasts are realized, all three measures will reach all-time highs in 2012.

The widespread drought and high temperatures lead to large increases in the value of this year’s crop and crop insurance indemnity payments. These factors more than offset the declining milk sales as well as crop production expenditures.

The drought has led to large cuts in the projected U.S. corn and soybean yields in 2012. Both corn and soybean supplies in the U.S. are expected to hit 9-year lows. Moreover, the quality of the remaining crop has deteriorated as 50% of the corn crop is believed to be in very-poor to poor condition as of August 5th. This compares to 16% rated at this level in 2011.

Read the ERS report.

Home Prices Continued Improvement in June

Home prices saw strong increases in June, as the S&P’s Case-Shiller index indicated home price increases from year-ago levels for the first time since September 2010. The Case-Shiller 10- and 20-city indices both saw strong gains over the month of 2.2% and 2.3% respectively. Both indices now indicate home price appreciation from year-ago levels. The 10-city index is 0.1% above its level one year ago and the 20-city index has risen 0.5% over the same period.

June’s home price strength was widespread, with all 20 metropolitan areas surveyed seeing strong gains. Detroit saw the strongest gains, with prices rising 6.0% in the month. Minneapolis, Chicago and Atlanta all saw home prices appreciate over 4% over the month as well. The weakest growth was seen in Charlotte and San Diego which saw prices appreciate 1.0% and 1.1% over the month respectively.

Seeing positive year-over year growth for home prices is a good sign, however, there is a long way to go before home prices recover. Prices in the 20-city index remain 31.1% below their July 2006 peak.

Read the S&P release.

Monday, August 27, 2012

Federal Reserve Makes History in Publishing Their Unaudited Quarterly Reports

Today, the Federal Reserve Board began publishing quarterly combined Federal Reserve Bank financial reports. The Board released first and second quarter 2012 reports and will release third quarter 2012 financial information 60 days after the end of the quarter.

While unaudited, the quarterly reports will communicate financial information more frequently and in greater detail than the annual financial statements. The Board of Governors and the Reserve Banks has published annual statements, audited by an independent firm, for years.

Read the Federal Reserve press release and review the Board’s first and second quarter 2012 reports.

Credit Risk in Shared National Credit Portfolio Declined

The credit quality of large loan commitments owned by U.S. banks, foreign banking organizations and nonbanks improved in 2012 for the third consecutive year. According to the Shared National Credits Review for 2012, the volume of criticized loans fell 8.1% from 2011, but remained high when compared with pre-crisis levels at $295 billion. Criticized assets represented 10.6% of the portfolio in 2012, compared with 12.7% in 2011.

The primary reasons cited for the improved credit quality were better operating performance among borrowers, debt restructurings, bankruptcy resolutions, and ongoing access to equity markets.

“Although nonbank entities, such as securitization pools, hedge funds, insurance companies, and pension funds, owned the smallest share of loan commitments, they owned the largest share (62.4 percent) of classified credits (rated substandard, doubtful, or loss).”

Read the FDIC release.

Thursday, August 23, 2012

New Home Sales Rose 3.6% in July

New single-family home sales rose 3.6% in July to an annualized pace of 372,000 units. July’s gain perfectly offset June’s slowdown as July’s pace matches May’s. Sales growth has been strong in the past year, with July’s level 25.3% better than a year ago. July’s pace matches the fastest pace since April 2010.

July’s strength varied by region, with the Northeast faring the best by far. Sales in the northeast rose 76.5% over the month. The Midwest also saw gains of 7.7% during July. Both the South and the West saw mild slowing of 1.6% and 0.9% respectively.

The month’s supply of new homes on the market fell to 4.6, remaining near historic lows. Much of the low supply is due to the still low level of housing starts, which remain at less than half of their 50- year average.

The median price of a new home fell 2.4% in July to $224,000.

Read the Census report.

Wednesday, August 22, 2012

Many on FOMC Favor Easing if Growth Fails to Pickup

The Federal Open Market Committee may favor additional easing if the economy fails to pick up according to the minutes released from the committee’s July 31- August 1 meeting.

“Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery.”

The committee observed that unemployment is well above levels consistent with its dual mandate, while inflation remains subdued.

The committee noted, “a new large-scale asset purchase program… could provide additional support for the economic recovery.” Such action could also boost consumer and business confidence, reinforcing the committee’s objectives.

The FOMC also reportedly discussed extending their pledge to hold rates at exceptionally low “at least through late 2014," but ultimately held off.

Since the FOMC’s meeting at the beginning of August, several promising economic reports have been released. Payroll employment grew by 163,000 in July, its fastest pace in five months. In addition industrial production and consumer confidence also rose.

Read the FOMC Minutes from the July 31- Aug 1 meeting.

Existing Home Sales Rose 2.3% in July

Existing home sales rebounded in July, rising 2.3% to an annualized pace of 4.5 million units. July’s gain was not enough to offset June’s fall, which saw existing home sales fall 5.4%. Although below their May and June highs, home sales now remain 10.4% above year-ago levels. July’s improvement was widespread across the various regions, with only the West failing to see gains.

Multi-family units accounted for more of the gain than single family homes, however both rose month-over-month.

The month’s supply of homes on the market fell slightly to 6.4. This occurred despite an increase in listings, which rose 1.3% from the previous month. Listings are now down almost 24% over the year, likely a result of fewer distressed properties on the market.

Home prices continued to improve in July despite seeing a modest drop from last month. The median price of an existing home is now 9.4 percent higher than year-ago levels, a strong improvement from the 7.5% reported in June.

Read the National Association of Realtors report.

Friday, August 17, 2012

Chart of the Week: Housing

The NAHB's housing market index has recovered significantly since the beginning of the year.

Thursday, August 16, 2012

Housing Starts Fell 1.1% in July

Despite new housing starts declining 1.1% in July, new residential construction indicators remain strong. Housing starts fell to an annualized pace of 746,000 units, up 22% from July 2011. Some of July’s slowing may be a correction following June’s strong 6.8% gain. Over the past 12 months housing starts has averaged a pace of 697,000 units, up from 686,000 in June. In fact, this measure has improved every month since August 2011.

Housing permits issued, a forward looking indicator, rose 6.8% in July to an annual rate of 812,000 permits. Total permit issuance is now running at its strongest pace since August 2008 after gaining 30% year-over-year.

Though housing starts are improving, they remain well below historical levels. There is a long way to go before starts make it back to their long run average of 1.5 million units per year.

Read the Census report.

Wednesday, August 15, 2012

Industrial Production Rose 0.6% in July

Industrial production accelerated in July, growing 0.6% after growing just 0.1% in the previous two months. July’s pace is more than double the average pace for the previous six months and the second highest reading this year.

Strong increases in utilities output and mining drove the increase, with each growing 1.3% and 1.2% respectively. In June, mining contributed only 0.5% to growth, while utilities fell 3.3%.

Manufacturing grew at a healthy 0.5% in July, aided by strong growth in motor vehicles, which gained 3.3% over the month. Without motor vehicles manufacturing would have grown at 0.2% in July. High-tech production was strong as well, growing at 1.6%.

The capacity utilization rate rose strongly in July to 79.3%, well up from the 78.9% reported the previous month and the 78.8% averaged over the previous six months.

Read the Fed report.

Consumer Prices Remained Unchanged in July

Inflation slowed in July as consumer prices failed to appreciate for the fourth consecutive month. Falling energy prices continued to weigh on overall inflation, although less so than previous months. Core inflation slowed to 0.1% in July, after four consecutive months at 0.2%. Overall consumer prices have now risen just 1.4% from year-ago levels, down from the 1.7% reported in June.

Falling energy prices continued to restrain inflation in July, although by less than in the previous three months. Energy prices fell just 0.3% in July after averaging a drop of 2.5% over the previous three months. Food prices appreciated 0.1% in July, after failing to grow in June.

Core price appreciation was driven by a 0.1% rise in the prices of services. Goods prices were stagnant in July. Both have slowed from June where each grew 0.2%.

Read the BLS release.

Auto Bailout Costs Increase; Bank Programs Return Profits

According to a recent Treasury Department report to Congress the auto industry bailout will cost taxpayers $25.05 billion, a $3.35 billion increase from Treasury’s previous estimate. As part of the Troubled Asset Relief Program (TARP) Treasury invested $79.69 billion into the auto industry. As of July 2012, less than half of the original auto industry investment has been paid back.

On the other hand, TARP’s bank programs have already earned a significant profit for taxpayers. As of July, Treasury has recovered $264.72 billion from TARP’s bank programs through repayments, dividends, interest, and other income – compared to the $245 billion initially invested. Taxpayers have benefitted from a $19.62 billion positive return from TARP bank programs. Treasury expects the bank programs will ultimately return $22.17 billion to taxpayers.

Read Treasury’s report to Congress.
Read ABA’s white paper: TARP Bank Programs Repaid in Full: May 2012

Tuesday, August 14, 2012

Retail Sales Saw Strong Gains in July

Retail sales increased more than expected in July, rising 0.8% over the month. Consumer spending recovered at department stores, auto dealers, and electronics outlets. Some of the gain seen in July may payback for the 0.7% decline seen in June. Looking at core retail sales the payback trend is less significant, as retail sales grew 0.9% in July after declining 0.4% the previous month. Retail sales are now 4.1% above year-ago levels.

Sporting goods stores and non-store retailers saw the greatest gains, rising 1.6% and 1.5% respectively. Auto retailers saw string gains as well, rising 0.8%. Gasoline stations also posted their first improvement in four months, rising 0.5%.

Read the Census release.

Producer Prices Rose 0.3% in July

Producer prices rose 0.3% in July, faster than the 0.1% pace set in June and well above the -0.4% average seen in the second quarter. July’s growth was the fastest in five months.

Finished energy prices continued to fall, however core goods and foods more than made up the small deficit.

Crude prices rose for the first time in five months, rising 1.8%, however remain 9.6% below year ago levels as the global slowdown depressed demand. Read the BLS release.

Friday, August 10, 2012

Chart of the Week: Trade Surplus

The financial services industry provides a large trade surplus in the United States.

Thursday, August 9, 2012

U.S. Trade Deficit Narrowed Sharply in June

The U.S. trade deficit narrowed sharply in June, falling to $42.9 billion, down from $48.0 billion in May. The deficit has narrowed for three consecutive months and now stands at its lowest level since late 2010. The narrowing trade gap was led by both an increase in exports (0.9%) and a decrease in imports (1.5%).

The majority of the narrowing was seen in the real goods balance, which fell from a $47.7 billion deficit to a $44.2 billion deficit. Much of the narrowing in the goods balance came from the nonpetroleum balance, as the petroleum balance only narrowed by $0.3 billion.

June’s trade data represents a smaller than expected trade gap. This is more favorable for second quarter GDP growth than the assumptions made by the Bureau of Economic Analysis in its initial estimate.

Read Census' report.

Tuesday, August 7, 2012

Consumer Credit Increased $6.5 Billion in June

Consumer credit continued to grow in June, increasing by $6.5 billion. Consumer credit has now increased for 21 of the past 22 months. Consumer credit grew at a 3% annualized rate, well below the year-to-date average of 5.6%.

June’s growth in consumer credit was driven entirely by a $10.2 billion gain in non-revolving credit. Non-revolving credit has increased for 10 consecutive months. The increase in non-revolving credit is driven primarily by growth in student loans which accounted for over 90% of the gain according to non-seasonally adjusted data.

Revolving credit gave back some of its large gains from May, falling $3.7 billion in June. Revolving credit has recovered some, but still remains 15% below its prerecession peak.

Read the Federal Reserve release.

Keating Discusses LIBOR and Big Bank Break-Up Talk on Fox Business

ABA President and CEO Frank Keating offered perspective on the LIBOR issue as well as calls to break up large banks in a live Fox Business interview.

Keating noted that only five of the top 50 banks in the world are based in the U.S. and that breaking them up would hand their business over to our foreign competitors.

Monday, August 6, 2012

Banks Eased Standards Slightly as Loan Demand Grew

The Federal Reserve’s Senior Loan Officer Survey indicated that banks eased standards on business loans slightly in the second quarter in the face of stronger demand. About 10% of banks reported easing standards somewhat on C&I loans to large and middle market firms. The banks reported easing standards for smaller businesses as well, with standards reportedly eased at about 5% of banks.

Of the banks that relaxed lending standards over the past quarter, over 90% attributed the loosening to increased competition from banks and non-bank lenders.

Demand for C&I loans picked up from large and medium sized firms, with a net 8% of banks reporting stronger demand. Demand from small businesses was unchanged in the second quarter, with a net 0% seeing increased demand.

Credit standards for prime mortgages were unchanged over the quarter while banks continued to tighten standards for non-traditional mortgages.

Read the Federal Reserve's Senior Loan Officer Survey.

Friday, August 3, 2012

ISM Non-Manufacturing Improved Slightly in July

Services improved slightly in July with the ISM non-manufacturing index raising to 52.6, up from 52.1 in June, however still below the 53.7 of May. In June the index was at its lowest level since January 2010. Although the report is not encouraging, any reading above 50 indicates growth in the service sector. In fact, the non-manufacturing index has remained above 50 for over 30 consecutive months.

The details of July’s report were mixed. The general business activity index rose 5.5 points, to 57.2 from 51.7 in June. However, the employment index fell 3.0 points, to 49.3, below its neutral threshold of 50 for the first time since December 2011.

The backlog orders index dropped in July, falling 3.0 points to 44.5, while the inventory index rose 1.5 points.

Combined with the manufacturing index, which contracted for the second consecutive month in July, the July ISMs suggest the economy is moving sideways.

Read the ISM's Report.

U.S. Economy Added 163,000 Jobs in July

The economy added 163,000 jobs in July as the unemployment rate rose slightly to 8.3%. The gain is well above the expectations of 100,000. July’s growth is the largest jobs gain since February, an improvement from the 64,000 jobs created in June and the second quarter average of 75,000 new jobs.

The private sector continues to drive job growth, adding 172,000 jobs in July, up from the 73,000 added in June. The public sector shed 9,000 jobs in July, the same amount shed in June but fewer than the 29,000 job drag in May.

July’s job creation was broad based across industries, with only construction and government contracting over the month.

The unemployment rate rose one tenth of one percentage point to 8.3% in July.

Read the BLS release.

Wednesday, August 1, 2012

FOMC Takes No Action in August Statement

The Federal Open Market Committee announced no changes to monetary policy in its August 1st statement. No immediate action was expected today, as the Fed took action in its previous statement to extend operation twist. In its June statement, the FOMC extended Operation Twist in an effort to further push long term interest rates down.

The committee downgraded their assessment of the economy, noting that “economic activity decelerated somewhat over the first half of this year.” This is less optimistic than the language used in the previous release that observed the economy “expanding moderately this year.”

The statement strengthened the case for future action, promising, should conditions warrant it, to “provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.”

See the statements side by side below.

Constructions Spending Rose 0.4% in June

Total constructions spending rose by 0.4% in June over the previous month’s levels and now stands 7% above year-ago levels. Private construction, particularly residential, drove the growth.

Private construction rose 0.7% over the month, down from the 2.1% growth seen in May, but strong nonetheless. Residential construction was the primary driver of growth in June, increasing 1.3% over the previous month. Non-residential construction spending was nearly flat, growing just 0.1%.

Public construction spending was unchanged in June, and has now failed to drag on growth for two consecutive months.

Read the Census report.

Manufacturing Contracted For Second Month in July

The ISM manufacturing index remained in contractionary territory for the second consecutive month despite recovering slightly from June’s reading. July’s ISM manufacturing reading recovered 0.2 points to 49.8, remaining below the neutral threshold of 50. In June the index plunged 3.8 points to 49.7, the third largest decline since the recovery began. This drop is particularly concerning as the larger two drops were closely followed by a jump that offset them.

The details of July’s report were not encouraging, as the primary increase came from a buildup of inventories, which rose from a reading of 44.0 to 49.0. The forward looking new orders measure improved, but only slightly, reaching 48.0. The employment index deteriorated significantly falling 4.4 points to 52.0.

The difference between new orders and inventories, often seen as a proxy for future production fell from 3.8 to -1.0 in July, the first time this measure has been negative since September 2011.

Read the ISM's release.

ADP Employment Rose 163,000 in July

ADP reports that nonfarm private payrolls increased by 163,000 in July, down slightly from the 172,000 jobs added in June. June’s growth was revised down slightly from an initially reported 176,000. After June’s report the Bureau of Labor Statistics reported the economy added 80,000 nonfarm jobs in June, this report would suggest a slight slowing from that pace.

Gains in employment continue to center in the service sector, which added 148,000 jobs in July, slightly less than the 151,000 the previous month. The goods producing sector added 15,000 July.

Manufacturing employment rose 6,000 in July, following upwardly revised growth of 9,000 in June. Construction employment also saw small gains in July, adding 5,000 jobs and continuing 12 consecutive months of gains.

Read ADP's release.