Wednesday, November 26, 2014

Consumer Confidence at Pre-Crisis Level

Consumer sentiment reached 88.8 in November, up 1.9 points from the previous month, reaching the highest reading since July 2007.

The index for present economic conditions drove November’s increase, increasing 4.4 points to 102.7. Future expectations also edged up, increasing 0.3 points to 79.9.

Inflation expectations eased slightly. Respondents expect inflation over the next year to be 2.8%, down 10 basis points, and over the next 5 years to be 2.6%, down 20 basis points.

New Home Sales Continue to Climb

Sales of new single-family houses in October rose to a seasonally adjusted annual rate of 458,000 according to the U.S. Census Bureau and Department of Housing and Urban Development. The October rate is 0.7% above the revised September rate of 455,000. October’s pace is a 1.8% improvement from a year-ago.

The improving pace was not felt throughout all of the United States. In the Northeast and Midwest sales of new houses rose from the previous month, while in the South and East sales fell. The Midwest saw the largest improvement at 15.8%; The West was the weakest, declining 2.7%.

The median sales price of new houses sold in October was $305,000, up 16.5% from the median of September. The average price was $401,000.

At the end of October, there were an estimated supply of 5.6 months at the current sales rate.

Read the Census report.

New Orders for Durable Manufactured Goods on the Rise

New orders for durable manufactured goods rose 0.4% to $243.8 billion in October, following two consecutive monthly decreases, according to the U.S. Census Bureau. New orders have increased 7.5% since October 2013. However, new orders excluding transportation decreased 0.9% this month.

Shipments of manufactured durable goods increased 0.1% this month, and 5.2% year-over-year. October’s increase was driven by a 3.4% increase in transportation.

Inventories of manufactured durable goods in October, up eighteen of the last nineteen months, increased 0.5% to $406.8 billion – reaching the highest level since the series was first published on a NAICS basis.

Read the U.S. Census Bureau release.

Personal Income & Expenditures Increase in October

Personal income increased $32.9 billion, or 0.2%, in October according to the Bureau of Economic Analysis, steady with the previous month. While personal consumption expenditures increased $27.3 billion, or 0.2% in October, after a decrease of less than 0.1% in September.

Disposable personal income — personal income less personal current taxes — increased $23.4 billion, or 0.2% in October, while real disposable income increased 0.1%, the same increase as last month.

The personal savings rate remained at the same level as the previous month at 5.0%.

Private wages and salaries increased $18.8 billion in October, more than the increase realized in September. Goods-producing industries’ payrolls increased $7.2 billion, manufacturing payrolls increased $4.4 billion and government wages and salaries increased $1.4 billion.

Supplements to wages and salaries also increased in October, rising $18.8 billion – a larger increase than that in September. Increases in proprietors’ income - which decreased in September – was partially offset by lower rental incomes.

The price index for PCE increased 0.1% in October, the same increase as in September. The PCE price index, excluding food and energy, increased 0.2% in October, compared with an increase of 0.1% in September.

Read the BEA release.

Tuesday, November 25, 2014

Fed Details Approvals, Withdrawals of Applications

Seven percent of bank applications in the first half of 2014 — or 42 out of 630 — were withdrawn, according to the Federal Reserve’s first semiannual report on application results released yesterday. One application was denied. The percentage of withdrawals has fallen from 10% in the first half of 2013 and 17% in 2009.

Of the withdrawn applications, 12 were retracted after Fed staff indicated they were unlikely to be approved. Of these, four were withdrawn over Community Reinvestment Act concerns, three because of financial issues, two due to managerial issues and three because of a combination of managerial and legal issues.

Mergers and acquisitions represented 19% of all approved applications in the first half, up from 11% in the first half of 2013. The report showed that the median processing time rose to 30 days from 27 in the first half of 2013, which the Fed attributed to greater complexity in applications.

Read the Federal Reserve report.

Annual Home Price Continues Deceleration

The 20-City Case-Shiller Composite gained 4.9% year-over-year in September, compared with a 5.6% gain in August, as the Index continued its steady deceleration from the 13.7% gain in November 2013. The 10-City Composite gained 4.8% in September from the previous year, down from 5.5% in August. The National Index recorded a 4.8% gain on an annual basis.

On a monthly basis, both the 10-City and the 20-City Composites were slightly negative and the National Index posted a -0.1% change for September.

Nine cities of the 20-City Composite (five cities of the 10-City) reported monthly declines in September. Washington and Atlanta were the primary contributors to the decline, decreasing 0.4% and 0.3%, respectively, partially offset by a 0.6% increase in both Miami and Charlotte and a 0.4% increase in Las Vegas.

Year-over-year, Miami increased 10.3%, the highest of the 20 cities, followed by 9.1% growth in Las Vegas and 7.9% growth in San Francisco. Cleveland reported the slowest growth, increasing 0.8%, followed by a 2.1% increase in Washington and a 2.6% increase in Chicago.

Read the S&P release.

ABA Statement on FDIC’s Third Quarter Bank Earnings Report

ABA's Chief Economist, James Chessen commented on the FDIC's third quarter bank earnings report, which was released today.

"The banking industry posted another solid quarter with a broad-based expansion in lending and a further improvement in asset quality. Capital hit a record high as banks continue to aggressively reinforce the support backing every loan on their books.”

Consumer and Business Lending Shows Broad-Based Improvement

“We continue to see a broad-based growth in lending to both consumers and businesses. Loans to individuals are increasing, buoyed by a strong growth in automobile lending. Banks continue to increase lending to small businesses, and community banks are playing a critical role in meeting that need. The expansion in lending reflects a rising confidence among households and businesses that an improving economy will better enable them to meet their financial obligations.”

Mortgage Lending Continues to Suffer from Excessive Regulation

“It’s painfully clear that new regulatory requirements have restrained mortgage lending and have made it particularly difficult for first-time homebuyers. The complex and liability-laden maze of compliance has made originations very hard to make, especially to borrowers with little or weak credit history."

Earnings Remain Solid

“While net income remains near a record high, ever-increasing compliance and regulatory costs have cut sharply into earnings. Stronger lending trends are promising as controlling expenses can only be pushed so far. As the economy improves and loan volumes pick up, it’s prudent for banks to increase loan loss provisions. While this can be a drag on earnings, it ensures that banks are prepared for any economic circumstance that could arise.”

Interest Rate Risk Front and Center for Banks

“Interest rate risk is front and center for bankers as the Fed’s interest rate liftoff nears. This is one of many risks banks must manage, balancing customer demands for longer-term, low-interest loans against the negative impact of rising rates on funding costs.”

Asset Quality Continues to Improve

“Problem loans are back to levels we saw six years ago, and losses have returned to pre-crisis levels as banks continue to improve their portfolios. The level of non-performing loans is down more than 58 percent since its peak in the first quarter of 2010. While asset quality remains strong, we may have reached the bottom of the credit cycle as the process of purging bad loans nears the finish line.”

High-Quality Capital Continues to Grow

“Capital in the industry is at record levels, providing tremendous support in an expanding economy and a strong foundation to absorb losses in a downturn. Building high-quality capital has been a priority for banks, with the current level 33 percent higher than in 2008. Total industry capital is now over $1.7 trillion, and with reserves banks have set aside for possible loan losses, there is a total buffer protecting the industry of over $1.8 trillion.”

Third Quarter Growth Revised Up to 3.9%

Real GDP increased at an annual rate of 3.9% in the third quarter of 2014, up 0.4 percentage points from the Bureau of Economic Analysis’s preliminary estimate. The improvement from the first estimate was driven by better than expected consumption and nonresidential fixed investment, as well as a smaller drop in inventory investment. Third quarter growth, remains slightly below the strong 4.6% increase seen in the second quarter.

The deceleration in growth from the second quarter to the third was driven primarily by declining inventory investment, which contributed 1.4% to growth in the previous quarter. Inventories tend to fluctuate, as such this slowing was expected. Currently, the inventory to sales ratio remains near an all-time low, boding well for future growth.

Consumption remained the primary driver of growth, contributing 1.5 percent, down slightly from the 1.8 percent in the second quarter.

Fixed investment slowed somewhat in the second quarter, contributing 1.0% to growth. This was driven by a deceleration in both residential and non-residential investment.

Net exports contributed 0.8% to GDP. Exports increased 4.9% in the third quarter, compared with an increase of 11.1% in the second. Imports decreased 0.7%, in contrast to an increase of 11.3% the previous quarter.

Government expenditures, which contributed to 0.8% of GDP, increased 9.9% in the third quarter, compared with a 0.9% decrease in the previous quarter. Notably, defense spending increased 16.0% over the quarter.

Read the BEA report.

Thursday, November 20, 2014

First Year-Over-Year Rise in Existing Home Sales in a Year

Existing home sales rose 1.5% in October to a seasonally adjusted annual rate of 5.26 million. Sales are now above the year-over-year levels for the first time in a year, and have reached the highest annual pace since September 2013. Sales in September was upwardly revised to a seasonally adjusted annual rate 5.18 million.

The median existing-home price increased 5.5% year-over-year to $208,300 in October, marking the 32nd consecutive month of year-over-year price gains.

Total housing inventory fell 2.6% in October to 2.22 million homes available for sale, yet increased 5.2% from October 2013. There is currently a 5.1-month supply of total existing homes available for sale, the lowest since March.

NAR Chief Economist Lawrence Yun noted: “The growth in housing supply this year will likely prevent the drastic sales slowdown and coinciding spike in home prices we saw last winter due to low inventory. However, more housing starts are needed to increase supply, meet current demand and keep price growth in check.”

All-cash sales were 27% of transactions in October, a three-percentage point climb from September but four percentage points lower than October 2013.

First-time home buyers represent less than 30% of all buyers, the lowest level in nearly three decades. Earlier this month, Federal Housing Finance Agency Director Mel Watt offered details about several guidelines his agency intends to issue for loans with 3-5% down payments to be purchased by housing GSEs Fannie Mae and Freddie Mac. Speaking to a housing industry conference in New Orleans, Watt explained that the agency’s goal is to help address some of the headwinds to first-time homeownership. “We know that the size of a down payment — by itself — is not the most reliable indicator of whether a borrower will repay a loan,” he explained.

Regionally, existing home sales climbed 2.9% month-over-month in the Northeast, 5.1% in the Midwest and 2.8% in the South. However, sales in the West declined 5.0%.

Read the NAR report.

CPI Unchanged in October, Increased 1.7% Yearly

The Consumer Price Index was unchanged in October on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported. The index increased 1.7% in the past year, before seasonal adjustment.

The index for food prices increased 0.1% on a seasonally adjusted basis, the smallest increase since June. However, food prices increased 3.1% from October 2013, the largest unadjusted change since April 2012.

Energy prices declined 1.9% over the month, the fourth consecutive drop, led by a 3.0% fall in energy commodities (a 3.0% decline in gasoline and 4.0% in fuel oil). Energy services declined 0.2%, as a 2.7% reduction in utility gas service was partially offset by a 0.5% increase in electricity.

The index for all items less food and energy rose 0.2% in October after increasing 0.1% in September. The monthly increase was led by rising prices for new vehicles (0.2%), services less energy services (0.3%), shelter (0.2%), transportation services (0.8%) and medical care services (0.2%), partially offset by a decline of 0.9% in used cars and trucks and 0.2% in apparel.

On a yearly basis, the energy index has fallen 1.6%. The fuel oil index has declined 6.5% and the gasoline index has fallen 5.0%. However, the index for natural gas has increased 3.4% and the electricity index has advanced 3.1%.

Read the Bureau of Labor Statistics report.

Wednesday, November 19, 2014

Federal Funds Rate Likely to be Maintained for a “Considerable Time”

Some Federal Reserve board members opined that the language used in the statement, which indicates that the current target range for the federal funds rate would likely be maintained for a “considerable time” after the end of the asset purchase program, should be eliminated, the minutes of the Federal Open Market Committee meeting of October 28-29 revealed. Nonetheless, the phrase “considerable time” was used in the Committee’s press conference in October, as other Committee members thought the phrase was useful in communicating the Committee’s policy intentions. Committee members noted that the removal of this language might be seen as signaling a significant shift in the stance of policy, potentially resulting in an unintended tightening of financial conditions. The Committee agreed to maintain the target range for the federal funds rate at 0% to 0.25%.

In October, the FOMC concluded its open-ended bond buying program associated with QE3, completing the tapering of purchases that it began last December. All members but one supported the conclusion of the asset purchase program and maintaining and exiting policy of reinvesting principle payments from its holdings of agency debt and agency MBS.

With regard to the state of the economy, most of the FOMC meeting participants agreed that economic activity continued to expand at a moderate pace. Labor market conditions improved somewhat further, with solid job gains and a lower unemployment rate. Inflation, which participants expect may be held down in the near term by lower energy prices and other factors, is expected to move toward the Committee’s 2% goal in coming years. However, some Committee members expressed concern that inflation might persist below the Committee’s objective for quite some time.

Notably, FOMC staff revised down projections for real GDP growth a little over the medium term in response to a further rise in the foreign exchange value of the dollar, deterioration in global growth prospects and a decline in equity prices. But even with this forecast of slower expansion, real GDP is still expected to rise faster than potential output in 2015 and 2016.

Read the FOMC minutes.

Fed Announces Appointment of the Chairs and Deputy Chairs for 2015

The Federal Reserve Board has announced the designation of the chairs and deputy chairs of the 12 Federal Reserve Banks for 2015. Each Reserve Bank has a nine-member board of directors. The Board of Governors in Washington appoints three of these directors and each year designates one of its appointees as chair and a second as deputy chair.

View the 2015 chairs and deputy chairs.

Housing Starts Dip in October, Still Above 1 Million Pace

Housing starts in October dipped to a seasonally adjusted annual rate of 1.009 million, 2.8% below the revised September estimate of 1.038 million, but 7.8% above the October 2013 rate of 936,000. Single-family housing starts grew at a rate of 696,000, 4.2% above the revised September figure of 668,000. The rate of growth for multifamily units was 300,000, 15.5% below the revised September estimate of 355,000.

The slowing rate of housing starts was broad based. Housing starts in the Midwest declined 18.5% to 145,000 total units, the largest of the four regions, followed by a 16.4% decline to 97,000 units in the Northeast and a 10.9% decline to 221,000 units in the West. The South, the only region to experience an acceleration in housing starts, increased 10.1% to 546,000 units.

Building permits were at a seasonally adjusted annual rate of 1.080 units, which is 4.8% above the revised September rate of 1.031 and 1.2% above the year-ago estimate of 1.067. Building permits for single-family units were at a rate of 640,000, 1.4% above the September figure of 631,000. Building permits for multifamily units were 300,000.

Housing completions in October were at a seasonally adjusted annual rate of 881,000, 8.8% below the revised Septmeber estimate of 966,000, but 8.1% above the year-ago rate of 815,000. Single-family housing completions were at a rate of 585,000, 7.4% below the revised September rate of 632,000. The October rate for multifamily units was 289,000.

Read the Census release.

Tuesday, November 18, 2014

Federal Reserve Released Survey of Young Workers

The Federal Reserve published a new report based on its 2013 Survey of Young Workers. The survey found that 45% of respondents are optimistic about future employment opportunities compared to 21% who are pessimistic and 34% who are not sure. Respondents with higher levels of education, work experience and job opportunities were more likely to be optimistic about their job future than respondents who lack such skills and experiences.

Also, young workers are responding to the labor market's increasing demand for postsecondary credentials and degrees. Thirty-seven percent of the respondents reported that they have the level of education and training needed for the type of job they would like to hold in the next five years. The respondents' confidence in their education increased with each level of attainment. In addition, nearly one-third of the total respondents are currently enrolled in an education or training program. Nonstudents who are interested in additional education named financial considerations as their top barriers to enrollment.

Read the Federal Reserve report.

Builder Confidence Rose in November

Homebuilders confidence in the market for newly built single-family homes rose 4 points to 58 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The index has remained above the 50-point benchmark for five consecutive months.

All three components of the index improved in November. Present single family sales increased 5 points to 62, single family sales for the next 6 months increased 2 points to 66 and traffic of prospective buyers increased 4 points to 45.

The largest increase in the HMI was recorded in the Northeast, which increased 12 points to 51, while the West increased 7 points to 60, the Midwest increased 3 points to 56 and the South increased 2 points to 62.

“Growing confidence among consumers is what’s fueling this optimism among builders,” said NAHB Chairman Kevin Kelly. “Low interest rates, affordable home prices and solid job creation are contributing to a steady housing recovery,” NAHB Chief Economist David Crowe noted.

Read the NAHB release.

Producer Prices Rose in October

The Producer Price Index for final demand rose 0.2% in October, seasonally adjusted, following a 0.1% decline in September and no change in August. On an unadjusted basis, the index for final demand advanced 1.5% for the 12 months ended in October, the smallest 12-month increase since a 1.2% rise in February 2014.

Final demand services rose 0.5%, the largest increase since July 2013. The October advance can be traced to a 1.5% increase in margins for final demand trade services.

Prices for final demand goods declined 0.4%, the fourth consecutive decrease. The decline was led by a 3.0% decline in energy, partially offset by a 1.0% increase in foods. Over 80% of the October decline in prices for final demand goods can be attributed to the index for gasoline, which dropped 5.8%.

Prices for finished goods moved down 0.3% in October, the third consecutive decrease, led by a 2.7% drop in finished consumer energy goods. The decline was partially offset by a 1.4% increase in finished consumer foods.

Processed goods for intermediate demand moved down 0.9% in October, the largest decrease since March 2013, led by a 3.2% decline in processed energy goods. Unprocessed goods for intermediate demand decreased 2.4%, led by a 5.5% decrease in energy materials, partially offset by a 1.0% increase in foodstuffs and feedstuffs.

Read the BLS report.

Monday, November 17, 2014

Industrial Production Dipped in October

Industrial Production declined 0.1% in October, after advancing 0.8% in September. At 104.9 percent of its 2007 average, total industrial production in October was 4.0% above its level of a year earlier, however 40 basis points lower than the September year-over-year growth rate. The growth rate for the first three quarters of 2014 was 3.3%, down after growing 3.9% in the first quarter and 5.7% in the first two quarters.

The capacity utilization rate for the total industry declined 0.3 percentage points in October to 78.9%. The capacity utilization rate for manufacturing edged down 0.1 percentage point to 77.2%, a rate 1.5 percentage points below its long-run average.

Mining had the largest decline, falling 0.9%, followed by a 0.7% decline in utilities. Manufacturing output rose 0.2%, as the production of nondurable goods rose 0.3% and the production of durable goods edged up 0.1%.

Both materials and consumer goods declined 0.2%, partially offset by construction and business equipment, which rose 0.2% and 0.6%, respectively.

Read the Federal Reserve release.

Friday, November 14, 2014

Retail Sales rebound, rising 0.3% in October

Retail sales increased 0.3% in October, a modest increase that offset a decline the previous month. Despite the monthly increase, year-over-year growth slowed to 4.1%. Falling gas prices have held sales lower at gas stations, but should free up money for spending in other areas and boost confidence.

Excluding gasoline stations and autos, sales increased a strong 0.6% over the month. The strongest gains were seen by non-store retailers, which was likely driven partially by the release of Apple’s IPhone 6.

Read the Census report.

Tuesday, November 11, 2014

Small Business Optimism Rebounded in October

Small business optimism rebounded by 0.8 points in October, settling at an index of 96.1. This reading tied with August as the highest since 2007. The gain was largely due to an increase in owners planning to increase capital spending and those expecting higher sales in the next 3 months. Six of the ten components improved and the remaining four declined.

Financing continued to be of no real concern for small business conditions, with only 2% of respondents citing it as the single most important problem. Government requirement and red tape held the top spot at 22%, with taxes remaining at the number two spot at 21%.

Finding quality labor shot up from 9% of respondents to 12%, highlighting a growing problem of businesses struggling to find skilled workers.

Read the NFIB report.

Friday, November 7, 2014

Consumer Credit Grew 5.9% (SAAR) in September

Consumer credit increased at a seasonally adjusted annual rate of 5.9% in September to $3.27 trillion. The growth rate was 2.0% for revolving credit (to $881 billion)—following a 0.3% drop in August—and 7.3% for non-revolving credit (to 2.4 trillion).

Total outstanding consumer credit increased by $15.9 billion. Total outstanding non-revolving credit grew by $14.5 billion, primarily driven by increases of $10.9 billion in student loans and $7.4 billion in auto loans. Total outstanding revolving credit increased by $1.4 billion.

The Federal Government continues to be the primary holder of non-revolving credit, holding 34%, followed by finance companies and depository institutions, with 26% each. Depository institutions continue to be the primary holder of revolving credit, holding 81%.

Read the Federal Reserve release.

Payrolls Rise 214,000, Unemployment Rate Falls

Total nonfarm payroll employment rose by 214,000 in October, in line with the 222,000 average over the past 12 months. The unemployment rate edged down to 5.8%, the lowest unemployment rate since July 2008. Both the September and August readings were revised upward by 8,000 and 23,000 respectively, for a net gain of 31,000 more jobs.

Employment increases were predominantly in the food services and drinking places, retail trade and health care. Food services added 42,000 jobs, well above the average gain of 26,000 over the past 12 months. Retail trade payrolls rose by 27,000 and healthcare added 25,000 jobs.

The participation rate was 62.8, in line with the last 12 months but still below the long-run average. The number of unemployed individuals declined by 267,000 in October. The number of new entrants in the labor force was 416,000.

Over the year, wage growth in average hourly earnings remained at 2%, consistent with growth since the end of the recession.

The number of long term-term unemployed, those jobless for 27 weeks or more, dropped by just 38,000 to 2.9 million. This group, which accounts for 32% of the unemployed, declined by 1.1 million in the past 12 months. The number of involuntary part-time workers, individuals employed part time for economic reasons, declined by 76,000 in October to 7 million, nearly 1 million less than October of last year.

"At the current pace of job creation (through October), the economy will add 2.74 million jobs this year (2.67 million private jobs). Right now, 2014 is on pace to be the best year for both total and private sector job growth since 1999," said ABA Chief Economist Jim Chessen.

Read the BLS report.

Wednesday, November 5, 2014

ISM Non-Manufacturing Index Dipped in October

The service sector of the economy grew for the 57th consecutive quarter in October, however at a slightly slower pace, according to the ISM Non-Manufacturing Index. The index was 57.1 in October, 1.5 percentage points lower than the previous month but 1.7 percentage points higher than a year ago. Any reading above 50 signifies that the industry is expanding.

Business output declined 2.9 percentage points in October, reflecting a 1.9 percentage point decline in new orders. New export orders declined 4 percentage points while imports increased 3.5 percentages points. Nonetheless, non-manufacturing growth remains strong as 15 industries reported increased business activity, while just two industries reported decreased activity.

Despite the slower growth in the non-manufacturing industry, employment increased by 1.1 percentage points continuing the 8-month trend of growth.

Read the ISM report.

ADP: Private Sector Added 230,000 Jobs in October

According to the ADP’s National Employment Report, the private sector added 230,000 jobs in October. The pace of job growth improved from 225,000 in September and has been above 200,000 in 6 of the last 7 months, indicative of a healthy and growing labor market.

Job gains continued to be centered in the service sector, which added 181,000 jobs last month. The goods sector also had a second strong month, adding 48,000 jobs at the second fastest pace this year. The growth was driven by 53,000 new jobs in professional and business services.

Read the ADP release.

Monday, November 3, 2014

Bank Lending Standard Continued to Ease

Over the past three months, banks loosened lending standards while loan demand rose slightly over the prior three months, according to the October Federal Reserve’s Senior Loan Officer Survey. Moreover, the pricing terms generally eased for loans.

Overall, 10.5% of the responding banks reported easing standards for commercial and industrial (C&I) lending to large and medium sized borrowers, and a net 8.2% loosened standards for small business loans. A net 15.8% of banks reported stronger loan demand for medium-to-large borrowers and a net 5.5% reported stronger demand from small borrowers.

The survey found that C&I lending generally increased to larger firms and CRE lending generally increased to firms of all sizes. The report also found that CRE lending standards have eased generally. The easing standards for C&I was due to increased competition from other banks.

Credit card, auto and nontraditional closed-end mortgage loans to households saw unchanged loan standards since the last report. There was mixed demand for prime residential mortgages. The survey found that a net fraction of large banks reported easing standards on prime residential mortgages while smaller banks reported that standards for prime residential mortgages were on net unchanged.

Read the release.

ISM Manufacturing Index Up for 17th Straight Month in October

The ISM manufacturing index rose to 59.0 for October, tying August for the highest level since early 2011. The index has been above its expansionary threshold of 50 for 17 months.

The details of the report were strong. The New Orders Index rose 5.8 points to 65.8 and the Inventory Index rose 1.0 point to 52.5. As a result, the gap between New Orders and Inventories - a proxy for future production – rose to 13.3 points. The Employment Index grew 0.9 point to 55.5.

The one area of weakness, the Export Orders Index, declined 2.0 points to 51.5. A slowdown in international demand has begun to impact exports, and will continue to trickle through other manufacturing indicators.

Read the ISM release.

Construction Spending Declined in September

Construction spending declined 0.4% in September on a seasonally adjusted basis. Moreover, the level for July was revised down, making the August decline less of a drag then previously reported. Nonetheless, spending in September was 2.9% higher than the year-ago level.

Non-residential construction dropped 1.0% over September, yet was 4.2% above the year-ago level. Spending on power and utility structures drove the monthly decline, shrinking 3.1% from August.

Public construction saw the steepest decline, shrinking 1.3%, yet was up 1.7% from the year-ago level.

Private residential construction grew 0.4% and single family homes grew 1.1% in September.

Read the Census report.