Tuesday, December 30, 2014

National Home Price Continues Deceleration

The 20-City Case-Shiller Composite gained 4.5% year-over-year in October, compared with a 4.8% gain in September, as the pace of home prices across the country continued to steadily decline. The 10-City Composite gained 4.4% in October from the previous year, down from 4.7% in September. The National Index recorded a 4.6% gain on an annual basis in October, compared to a 4.8% gain in September. Although the pace of home prices across the country continue to decelerate, home prices in eight cities rose faster.

On a monthly basis, both the 10-City and the 20-City Composites reported a downturn of 0.1% and the National Index declined 0.2%.

Ten cities of the 20-City Composite (four cities of the 10-City) reported monthly declines in October. Chicago and Cleveland were the primary contributors to the monthly decline, decreasing 1.0% and 0.7%, respectively, partially offset by 0.8% increases in both San Francisco and Tampa.

Year-over-year, Miami increased 9.5%, the highest of the 20 cities, followed by 9.1% growth in San Francisco and 8.0% growth in Las Vegas. Cleveland reported the slowest year-over-year growth, increasing 0.9%, followed by a 1.9% increase in Chicago and a 2.0% increase in New York.

Read the S&P release.

Tuesday, December 23, 2014

Consumer Sentiment Surges in December

According to the University of Michigan Consumer Sentiment Index, consumer sentiment jumped to 93.6 in December, up 4.8 points from the previous month, the highest reading in nearly 8 years.

The improvement to future expectations index led the increase, jumping 6.5 points to 86.4. The index for present conditions also increased, rising 2.1 points to 104.8.

Inflation expectations were mixed. Respondents expect inflation over the next year to be 2.8%, consistent with the previous month’s survey, and over the next 5 years to be 2.8%, up 20 basis points.

New Home Sales Declined in November

Sales of new single-family houses in November declined to a seasonally adjusted annual rate of 438,000 according to the U.S. Census Bureau and Department of Housing and Urban Development. The November rate is 1.6% below both the revised October rate of 445,000 and year-ago rate.

New home sales in three of the four regions declined this month. The Northeast declined 12.0%, the Midwest declined 6.3% and the South declined 6.4%. Conversely, the West increased 14.8%.

The median sales price of new homes sold in November was $280,900, down 3.2% from October. The average price was $321,800, down 14.2% from October.

At the end of November, there were an estimated supply of 5.8 months at the current sales rate.

Read the Census report.

Personal Income & Expenditures Increase in November

Personal income increased $54.4 billion, or 0.4%, in November according to the Bureau of Economic Analysis, compared to a 0.3% increase the previous month. Personal consumption expenditures (PCE) increased $67.9 billion, or 0.6% in November, after a 0.3% increase in October.

Disposable personal income — personal income less personal current taxes — increased $42.4 billion, or 0.3% in November, while real disposable income increased 0.5%.

The personal savings rate declined 0.2 percentage points to 4.4%.

Private wages and salaries increased $38.7 billion in November, compared with an increase of $24.9 billion in October. Goods-producing industries’ payrolls increased $7.3 billion, manufacturing payrolls increased $3.9 billion, service-producing industries’ payrolls increased $31.5 billion and government wages and salaries increased $1.8 billion.

Supplements to wages and salaries also increased in November, rising $5.4 billion, compared with an increase of $4.3 billion in October. Proprietors’ income increased $7.6 billion, compared with an increase of $18.8 billion in October.

The price index for PCE decreased 0.2% in November, in contrast to an increase of less than 0.1% in October. The PCE price index, excluding food and energy, increased less than 0.1% in November, compared with an increase of 0.2% in October.

Read the BEA release.

New Orders for Durable Goods Decreased in November

New orders for durable manufactured goods decreased 0.7% to $242.3 billion in November, according to the U.S. Census Bureau. This decrease, down three of the last four months, followed a 0.3% increase in October. New orders decreased 0.7%; excluding transportation, new orders decreased 0.4%.

Shipments of manufactured durable goods decreased 0.4% this month, yet increased 4.9% year-over-year. November’s decline was driven by a 1.0% decrease in transportation.

Inventories of manufactured durable goods, up nineteen of the last twenty months, increased 0.4% to $408.2 billion – reaching the highest level since the series was first published on a NAICS basis.

Read the U.S. Census Bureau release.

Third Quarter GPD Revised Up to 5.0%

Real GDP growth for the third quarter was revised up to 5.0% in the BEA’s final estimate, well above expectations. The upward revision was driven by increases in personal consumption expenditures and nonresidential fixed investment. The acceleration in percent change in real GDP in the third quarter reflected a downturn in imports, an upturn in federal government spending and an acceleration of personal consumption expenditures that was partly offset by a downturn in private inventory investment and decelerations in exports, in state and local government spending, in residential fixed investment and in nonresidential fixed investment.

Consumption remained the strongest component of growth, contributing 2.2 percentage points to third quarter growth, a 70 basis point increase from the previous estimate. Fixed investment also increased from its second quarter reading, contributing 1.2 percentage points to GDP, 20 basis points higher than the previous estimate. The government contributed 0.8 percentage points to GDP, consistent with the previous two estimates. Inventories were a slight drag on GDP growth.

The economy has now experienced the two strongest back-to-back quarters of growth since 2003. This indicates that the U.S. economic recovery has transitioned into a self-sustainable expansion.

Read the BEA release.

Monday, December 22, 2014

Existing Home Sales Decline as Supply Tightens

Existing home sales declined 6.1% in November to a seasonally adjusted annual rate of 4.93 million. Sales of existing homes dropped to their lowest annual pace since May, but are 2.1% higher than November 2013. Exisitng home sales in October was downwardly revised to a seasonally adjusted annual rate 5.25 million.

The median existing-home price increased 5.0% year-over-year to $205,300 in November, marking the 33rd consecutive month of year-over-year price gains.

Total housing inventory fell 6.7% in November to 2.09 million homes available for sale, yet increased 2.0% from November 2013. There is currently a 5.1-month supply of total existing homes available for sale, unchanged from last month.

Existing home sales weakened in each of the four regions, posting month-over-month declines of 9.6% in the West, 8.9% in the Midwest, 4.2% in the Northeast and 3.2% in the South.

NAR Chief Economist Lawrence Yun noted: “Fewer people bought homes last month despite interest rates being at their lowest levels of the year,” he said. “The stock market swings in October may have impacted some consumers’ psyche and therefore led to fewer November closings. Furthermore, rising home values are causing more investors to retreat from the market.”

All-cash sales were 25% of transactions in November, two percentage points lower than in October and 7 percentage points lower than November 2013.

First-time home buyers represent 31% of all buyers, a one percentage point increase from last month.

This month, Fannie Mae and Freddie Mac unveiled terms for their 97% loan-to-value home loan programs. Fannie began purchasing these low-down-payment loans on Dec. 13 and Freddie will be eligible to start purchasing these loans on March 23, 2015. The fixed-rate loans will be limited to home purchases and no-cash-out refinances, and the borrower must use the home as a primary residence. Fannie Mae mortgagors may take cash out in limited circumstances when refinancing a Fannie mortgage, and Freddie will allow manual underwriting for low-down-payment loans under certain circumstances. Borrowers must participate in a homeownership counseling program, which Fannie and Freddie regulator Mel Watt said would lead to lower default rates.

Read the NAR report.

Wednesday, December 17, 2014

Fed Funds Rate Will Likely Rise in 2015

The FOMC reaffirmed its view that the current zero to 0.25% target range for the federal funds rate remains appropriate for a “considerable time.” The committee noted that, “Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy.”

In the press conference, Chair Janet Yellen noted that almost all participants believe that it will be appropriate to begin raising the federal funds rate in 2015, and move toward the long-run objective of by 2017. The Committee’s forecasted median long-run federal funds rate is currently 3.75%.

In her remarks, Chairwoman Yellen said that the FOMC is unlikely to commence the normalization process of the federal funds rate for at least the next couple (2) meetings. She reiterated that the normalization is based on incoming information from economic indicators.

Chair Yellen noted that the effect of declining oil prices, on net, is positive for the U.S. economy. She said that the lower oil prices act like a tax cut, boosting consumer spending power. She also noted that the Committee sees the downward pressure on headline inflation from declining energy prices as transitory, and that they expect inflation to move back up toward their 2% objective over time.

The FOMC expects the economy to continue expanding at a moderate pace. Labor indicators are expected to move toward the Committee’s long-run objective, as the “underutilization of the labor resources continues to diminish.” However, Yellen noted that there continues to be room for further improvement in the labor market. Inflation has continued to run below the Committee’s long-run objective of 2%, partly reflecting decline in energy prices, but inflation is expected to rise toward the 2% objective “as the labor market improves further and the transitory effects of lower energy prices and other factors dissipate.” However, the Committee currently anticipates that, even after inflation and employment are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below what the Committee considers the long-run norm.

The Committee will maintain accommodative financial conditions by continuing the existing policy of reinvesting principal payments from its holdings of agency debt and agency MBS in agency MBS and of rolling over maturing Treasury securities at auction.

Read FOMC press release.
See Economic Projections.

CPI Declined in November, Mostly Due to Gasoline

The Consumer Price Index declined 0.3% in November on a seasonally adjusted basis, primarily due a decline in the index for gasoline, the U.S. Bureau of Labor Statistics reported. The all items index increased 1.3% in the past year, before seasonal adjustment, a notable decline from the 1.7% figure from the 12 months ending in October.

The index for all items less food and energy rose 0.1% in November following a 0.2% increase in October, and has risen 1.7% over the last 12 months, compared to 1.8% for the 12 months ending in October

The energy index declined 3.8% in November, the fifth monthly decline in a row, and 4.8% over the past 12 months. The gasoline index fell 6.6%, the sharpest decline since December 2008 and was the main cause of the decrease in the seasonally adjusted all items index. The indexes for fuel oil and natural gas declined 3.5% and 1.7%, respectively.

The index for food prices increased 0.2% on a seasonally adjusted basis, and increased 3.2% in the past year before seasonal adjustment. The index for food at home rose 0.1% in November and has risen 3.4% over the past year. The index for food away from home increased 0.4% in November, its largest increase since January 2012, and has risen 2.9% over the past year.

Electricity was the only major component index to rise in November; it increased 0.1% and has risen 2.8% over the past year.

Read the Bureau of Labor Statistics report.

Keating on CNBC: ‘Grin and Grimace’ over Oil Prices

ABA President and CEO Frank Keating yesterday discussed the two sides to this year’s major decline in oil prices on CNBC’s “Street Signs” program, describing it as “grin and grimace.” “Consumers are grinning; we can buy more, we can save more,” he said. “It was American genius that made this happen, but it has its downside.”

That downside comes from the effects of declining prices on job growth and state revenues in the oil patch — a much bigger area thanks to newer technologies such as fracking and horizontal drilling. Thirty-five states are producers of oil and gas, Keating explained. “The residuals and ancillaries are very significant. The decline is worrisome but not calamitous — yet.”

Watch the interview.

ABA Report: Credit Card Use Rebounds in Second Quarter

Second-quarter credit card spending rebounded after a decline in the first three months of the year, according to the latest edition of ABA’s Credit Card Market Monitor released today. Subprime card spending jumped 14.3%, while prime account spending rose 10.3% and super-prime account purchases increased 8.2%. The share of borrowers who pay off their balances each month rose by 0.6 points to 29% of all accounts.

“Strong economic growth in the second quarter offset declines in the first quarter,” said ABA SVP Molly Wilkinson. “The significant economic growth we’ve seen in recent months makes it likely that credit card market trends will continue for the remainder of 2014 and beyond.”

New account volume rose 10% year-on-year, driven mostly by growth in subprime and prime accounts. The average credit line for new accounts rose slightly for subprime and prime accounts but increased 1.2% for super-prime accounts, reflecting lenders’ higher “confidence in consumers’ ability to manageable their household debt,” Wilkinson explained.

Read the Monitor.

Monday, December 15, 2014

Homebuilder Confidence Dips in December

The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) fell one point to a level of 57 in December, after rising 4 points the previous month.

The HMI is made of three components, two of which experienced losses this month. The index for current sales decreased one point to 61 and the index measuring expectations for future sales dropped one point to 65. The index gauging traffic of prospective buyers remained at 45.

Of the four regions, two experienced declines in the three-month average. The Midwest recorded a three-point loss to 54 and the South dropped two points to 60. On the other hand, the West increased by four points to 62 and the Northeast edged up one point to 45.

“Members in many markets across the country have seen their businesses improve over the course of the year, and we expect builders to remain confident in 2015,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Del.

Read the NAHB release.

Industrial Production Rebounded in November

Industrial Production increased 1.3% in November, after slightly increasing in October. At 106.7 percent of its 2007 average, total industrial production was 5.2% above its level of a year earlier.

Manufacturing output rose 1.1%, and the rates of change for the previous months were revised upward. The capacity rate for manufacturing moved up 0.8 percentage points. Factory output is now estimated to have been above its late-2007 pre-recession peak in both October and November.

Utilities production increased 5.1%, after decreasing 0.7% in October, and the utilization rate increased 3.9 percentage points.

Mining, the only industry group to decline in November, fell 0.1%, and the utilization rate for mines fell 0.8 percentage points.

All indexes for the major market groups increased in November. The 2.5% gain in consumer goods was its largest since August 1998. The output of business equipment and business supplies each rose 1.2%. The production of materials advanced 0.8%.

The capacity utilization rate for the total industry increased 0.8 percentage point in November to 80.1%, a rate equal to its long-run (1972-2013) average.

Read the Federal Reserve release.

Fed’s LMCI Dips to 2.9%

The Federal Reserve’s Labor Market Conditions Index (LMCI) was 2.9 in November, following a reading of 3.9 in October and 4.5 in September. The LMCI generally declines during recessions and typically rises during expansions.

The LMCI is a Federal Reserve staff research product developed to summarize overall labor market conditions. It is the primary source of common variation among 19 labor market indicators, placing greater weight on indicators whose movements are highly correlated with each other—like the unemployment rate and payroll employment—and primarily reflects those indicators that are in broad agreement.

The included indicators cover categories such as unemployment, underemployment, employment, workweeks, wages, vacancies, hiring, layoffs, quits and surveys of consumers and businesses. All indicators are measured at a monthly frequency and are seasonally adjusted.

A few indicators account for the bulk of the improvement in the LMCI since the end of the recession, as is typical in a recovery. In the first two years of the recovery, the insured unemployment rate made a large contribution to the improvement in the LMCI, reflecting a substantial slowing in layoffs; this contribution has since diminished. Gains in private payroll employment and declines in the unemployment rate have been consistent contributors to the improvement, although more in some years than in others. So far in 2014, private employment and the unemployment rate have been the primary sources of improvement in the LMCI.

The Federal Reserve plans to release the updated LMCI after 10:00 a.m. on the first business day following the Bureau of Labor Statistics’ monthly Employment Situation report.

Read the LMCI FEDS Note.
Download the data set.

Friday, December 12, 2014

Consumer Sentiment Booms in December

According to the University of Michigan Consumer Sentiment Index, consumer sentiment jumped to 93.8 in December, up 5.0 points from the previous month, the highest reading in over 8 years.

The improvement to future expectations led the increase, jumping 6.2 points to 86.1. The index for present conditions also increased, rising 2.0 points to 105.7.

Inflation expectations edged up. Respondents expect inflation over the next year to be 2.9%, up 10 basis points from the previous month’s survey, and over the next 5 years to be 2.9%, up 30 basis points.

Producer Prices Fell in November

The Producer Price Index for final demand declined 0.2% in November, seasonally adjusted, following a 0.2% increase in October and a 0.1% decline in September. On an unadjusted basis, the index for final demand advanced 1.4% for the 12 months ended in November, continuing the trend of slower annual growth that began in August of this year.

The index for final demand goods declined 0.7%, the fifth consecutive decrease. The broad-based decline was led by a 3.1% decline in energy, as well as a 0.2% decline in foods. Sixty percent of the November decline in prices for final demand goods can be attributed to the index for gasoline, which dropped 6.3%.

Final demand services rose 0.1%, driven by a 4.0% increase in prices for loan services as well as increases in the margin for machinery and equipment wholesaling, food wholesaling, food and alcohol retailing and bundled wired telecommunications access services.

Prices for finished goods moved down 0.7% in November, the largest decrease since July 2009, led by a 2.7% drop in finished consumer energy goods and a 0.5% decline in finished consumer foods.

The index for processed goods for intermediate demand moved down 1.0% in November, the largest decrease since March 2013. Two-thirds of the broad-based decline was the result of prices for processed energy goods, which fell 3.4%. Unprocessed goods for intermediate demand decreased 1.3%, driven by a 3.7% decrease in energy materials, partially offset by a 0.9% increase in foodstuffs and feedstuffs.

Read the BLS report.

Household Net Worth Dipped in the Third Quarter

According to the Federal Reserve’s Flow of Funds report, household net worth in the third quarter of 2014 was $81.3 trillion, a 0.2% decrease ($141 billion) from the previous quarter, yet a 6.7% increase ($5.1 trillion) from the previous year.

Nonfinancial assets of households and nonprofit organizations increased 1.0% from the previous quarter and 5.6% over the previous year. Real estate values contributed to most of the growth, increasing 1.1% from the previous quarter and 6.3% from the previous year.

Financial assets of households and nonprofit organizations declined 0.5% from the previous quarter, yet increased 6.3% from the previous year. The quarterly decline was driven by dips in credit market instruments, corporate equities and mutual fund shares. Household checkable deposits and currency grew, albeit at a slower rate, 3.5% from the second quarter.

Household debt increased 2.7% annually to $13.4 trillion (excluding charge-offs of home mortgages). Net mortgage originations continued to be weak, as mortgage debt edged up slightly from the previous quarter, but was slightly lower than the third quarter of 2013. Consumer credit continued to rise at a solid pace, increasing 2.3% from the previous quarter.

The household savings rate dipped to 5.0% in the third quarter, a 0.1 percentage point decline from the second quarter and 0.2 percentage points below third quarter of 2013.

Nonfinancial business debt rose at an annual rate of 5.2%, similar to the previous quarter. As in recent years, corporate bonds accounted for most of the increase.

Federal government debt increased at an annual rate of 7.2%, up from a 2.5% annual rate in the previous quarter. On the other hand, state and local government debt declined at an annual rate of 2.8% in the third quarter, after increasing at an annual rate of 1.2% in the previous quarter.

Read the Federal Reserve release.

Thursday, December 11, 2014

Retail Sales Rise in November

Retail and food service sales for November were $449.3 billion, up 0.7% from the previous month, and 5.1% above last year, according to a report released this morning by the U.S. Census Bureau. The monthly increase was well above expectations. Sales gains for October and September were revised upward by 0.2 percentage points each.

Motor vehicle and parts dealers increased sales by 1.7%, leading overall growth. Total sales, excluding auto and gas grew 0.6% this month. The increase was led by building supply stores (1.4%), clothing and accessories stores (1.2%), nonstore retailers (1.0%) and department stores (1.0%).

Gasoline stations sales declined 0.8% due to lower gasoline prices. Miscellaneous store retailers also declined, falling 1.7% from the previous month.

Read the Census report.

Tuesday, December 9, 2014

FDIC Releases State Profiles for Third Quarter

The FDIC has updated the State Profiles for the third quarter of 2014. These individualized profiles for the fifty states, Puerto Rico and the Virgin Islands are a one-page resource outlining state-specific economic indicators and banking trends. The profiles include the employment growth rates, housing indicators and other economic indicators, as well as the asset quality and loan concentrations of banks headquartered in particular states.

Access the FDIC State Profiles.

Small Business Optimism Rose to Pre-Recession Level

The NFIB Small Business Optimism Index leaped 2 points to 98.1 in November, the highest level since February 2007. The Index increase was mainly due to gains in Expectations for Business Conditions in Six Months (16 points) and Expectations for Real Sales Volumes (5 points). However, Expected Credit Conditions, Plans to Increase Inventories and Plans to Make Capital Outlays declined one point each, and Plans to Increase Employment moved up just one point.

The NFIB noted that the improvement in expectations for the next 6 months and expectations for higher sales was likely due to the results of the midterm elections in the beginning of November. When asked if now is a good time to expand substantially, 5% fewer respondents said “no”, and of those saying “no” the percent who blamed the political climate fell 9 percentage points to 19%, the lowest reading since January 2012.

Although GDP growth in the second and third quarters has been strong, the type of growth contributing to GDP—increase in exports and building inventories—has not helped small businesses.

Taxes took the top spot as the single most important problem for small businesses, followed closely by government regulation and red tape. Financing and interest rates remains the least cited concern, although it edged up to 3% of respondents from 2% in the previous month.

Read the NFIB report.

Friday, December 5, 2014

Consumer Credit Grew 4.9% (SAAR) in October

Consumer credit increased at a seasonally adjusted annual rate of 4.9% in October to $3.28 trillion. The growth rate was 1.3% for revolving credit (to $883 billion) and 6.2% for non-revolving credit (to $2.4 trillion).

Total outstanding consumer credit increased by $13.2 billion. Total outstanding non-revolving credit increased by $12.3 billion, while total outstanding revolving credit increased by $1 billion.

The Federal Government continues to be the primary holder of non-revolving credit, holding 35%, followed by finance companies and depository institutions, which hold 26% and 25%, respectively. Depository institutions continue to be the primary holder of revolving credit, holding 82%.

Read the Federal Reserve release.

U.S. Foreign Trade Deficit Narrows

The U.S. international trade deficit in goods and services decreased $200 million to $43.4 billion in October as exports increased more than imports.

Exports increased by $2.3 billion (1.2%) to $197.5 billion, primarily due to a $2 billion increase in goods exports driven by increases in exports for civilian aircrafts and generators, transformers and accessories. Exports of services increased $300 million to $59.5 billion in October.

Imports increased by $2.2 billion (0.9%) to $241 billion, primarily driven by a $2 billion increase in goods imports to $200.7 billion driven by imports of trucks, buses and special purpose vehicles as well as passenger cars. Imports of services increased $200 million to $40.3 billion in October.

The goods deficit remained unchanged at $62.7 billion, the service surplus increased $100 million to $19.2 billion and the petroleum deficit increased $1.2 billion to $15.2 billion.

Both exports and imports increased with the European Union, China and Mexico. The goods deficit with the European Union increased $900 million to $12.7 billion and the goods deficit with Mexico increased $400 million to $5.2 billion. With China, the goods deficit decreased $3 billion to $32.6 billion. The increase in exports signals that the economies of United States trading partners are improving.

Read the Census Bureau release.
Read full report.

Payrolls Rise 321,000, Unemployment Rate Unchanged

Total nonfarm payroll employment rose by 321,000 in November, the highest monthly increase since January 2012. November’s job gains were well above expectations. The unemployment rate remained unchanged at 5.8%. Both the September and October readings were revised upward by 15,000 and 29,000 respectively, for a net gain of 44,000 more jobs.

Employment increases were widespread. Service-providing jobs led growth, which increased by 266,000 jobs. Professional and business services added 86,000 jobs, retail trade added 50,200 jobs and education and health services added 38,000 jobs. Some of the growth in retail jobs might be due to seasonal factors. Goods-producing industries added 48,000 jobs, mainly in the manufacturing and construction sectors which added 28,000 and 20,000 jobs, respectively.

“We are looking at the best annual pace of job growth in 15 years. The strong economic growth during the second and third quarters has caused the labor market to kick into a higher gear," said ABA Chief Economist Jim Chessen.

The participation rate was unchanged at 62.8, in line with the last 12 months but still below the long-run average. The number of unemployed individuals declined by 115,000 in November.

Over the year, wage growth in average hourly earnings have risen by 2.1%, 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 101,000 to 2.8 million. This group, which accounts for 31% of the unemployed, declined by 1.2 million in the past 12 months. The number of involuntary part-time workers, individuals employed part time for economic reasons, declined by 177,000 in November to 6.9 million, nearly 1 million less than November of last year.

Read the BLS report.

Thursday, December 4, 2014

ABA Updated Banking Information Page for Third Quarter

ABA’s Banking Information page has been updated with third quarter data. The page serves as a quick one-stop reference for banking industry statistics from the FDIC’s Quarterly Banking Profile as well as other FDIC data releases not featured in the QBP. The Banking Information page provides quick and easy access to current and historical information like the number of institutions, mergers and charters, total assets by asset size and the top 100 agricultural banks by dollar volume and concentration, among many others.

The Conditions of the Industry, a one-page reference outlining headline data for the quarter, has also been updated and can be found on the Banking Information page.

Visit the Banking Information page.
Read the Conditions of the Industry.

Wednesday, December 3, 2014

Beige Book: Economic Activity Continued to Expand

Economic activity continued to expand in all 12 districts, according to the 8th Federal Reserve Beige Book of 2014 covering the period from October through mid-November. Many districts also noted being optimistic about the outlook for future economic activity.

Lending activity improved on net, as business lending increased for most loan types. Consumer lending increased as well, and several districts reported continued strength in demand for auto loans. A few districts noted aggressive competition on loan pricing and terms or an easing of loan standards.

Consumer spending continued to advance in most districts; some Fed contacts attributed the higher spending trend to lower gasoline prices and an early cold spell spurring sales of winter apparel.

Employment gains were pervasive throughout the districts, as several noted an increase in temporary staffing and an increase in temporary-to-permanent job transitions. Most districts reported little change in holiday-related hiring relative to last year.

Construction and real estate activity expanded, but in varying degrees across the districts. Residential construction increased on balance as multifamily construction remained stronger than single-family construction in many districts.

Overall price and wage inflation remained subdued. Several districts cited the decline in the price of oil and its effects on gasoline and diesel prices.

Read the Federal Reserve release.

Non-Manufacturing ISM Index Rebounded in November

The Non-Manufacturing ISM Report on Business Index was 59.3 in November, 2.2 percentage points higher than the previous month. Index readings above 50 indicate expansion in the non-manufacturing economy. November was the 58th consecutive month of economic growth. Fourteen industries reported growth in November, while two industries—arts, entertainment & recreation and utilities—contracted.

The Business Activity Index increased 4.4 percentage points to 64.4, indicating growth in business for the 60th consecutive month. Respondents attributed growth to “more customer orders” and “new business and planned capital expenditure.”

The Employment Index was 56.7 in November, 2.9 percentage points lower than the previous month. Survey responses included reasons such as: “capital projects approved that strained resource levels” and “still understaffed for current requirements.”

The New Orders Index was 61.4, 2.3 percentage points higher than October, the 64th consecutive month of growth. Respondents reported the increase was driven by “year-end spend-down” and “more customer orders.”

The Supplier Deliveries Index rebounded from its slight contraction in October, increasing 5.0 percentage points to 54.5. The increase was driven by two industries: management of companies & support services and finance & insurance.

Read the ISM Release.

ADP: Private Sector Added 208,000 Jobs in November

According to the ADP National Employment report, the private sector added 208,000 jobs in November. The private sector added fewer jobs this month than in October, but still remains above 200,000 jobs. The November report upwardly revised the October headline number by 3,000 jobs and downwardly revised September’s number by 12,000 jobs.

Small businesses, companies with fewer than 49 employees, added 101,000 jobs, 2,000 fewer than in October. Medium businesses, companies with 50 to 499 employees, increased employment at a much slower rate in November, adding just 65,000 jobs compared to 122,000 jobs added in October. Large businesses, companies with greater than 500 employees, added 42,000 jobs in November, an improvement compared to the 7,000 jobs added in October.

Goods-producing employment rose by 32,000 jobs, 14,000 fewer jobs than in October, as both construction and manufacturing added fewer jobs. The service-providing sector employment rose by 176,000 jobs, 11,000 fewer than in October. The service sector decline was primarily due to lower job growth in the professional/business services sector, which added 37,000 jobs, 16,000 fewer than the previous month.

Read the ADP release.

Monday, December 1, 2014

ISM Manufacturing Index Dips in November, But Still Expanding

The ISM manufacturing index dipped 0.3 percentage points to 58.7 in November. Index readings above 50 indicate expansion in the manufacturing economy. As of November, the index has been expanding for 18 consecutive months, albeit at a slower pace. Of the 18 manufacturing industries indexed, 14 reported growth in November.

The New Orders Index rose 0.2 points to 66.0, however the Inventory Index decreased 1.0 point to 51.5. As a result, the gap between New Orders and Inventories—a proxy for future production—widened to 14.5 points.

The Employment Index declined 0.6 points to 54.9. This is the 17th consecutive quarter of growth in employment. Eleven of the 18 manufacturing industries indexed reported growth in employment. However, three industries—apparel, leather & allied products, computer & electronic products and transportation equipment—posted declines.

Exports recorded the largest increase, rising 3.5 points to 55.0, as the level of exports continued to grow for the 24th consecutive month. Imports also increased, growing 1.5 points to 54.5.

Prices, the only indicator to dip below 50, dropped 9 percentage points to 44.5. This is the first time since July 2013 that the index is reporting a decrease in the price of raw materials.

Read the ISM release.