Thursday, April 30, 2015

Personal Income Growth Slowed in March

Personal income increased $6.2 billion, or less than 0.1% in March, according to the Bureau of Economic Analysis — a sharp decline from February’s estimate. Personal consumption expenditures (PCE) increased $53.4 billion, or 0.4%, after a gain of 0.2% in February

Although nominal disposable personal income (DPI) increased $1.6 billion, real DPI actually decreased 0.2% in March.

The price index (deflator) for PCE increased 0.2% in March, consistent with February’s increase. The PCE price index (deflator) excluding food and energy increased 0.1%, the same increase as in February.

Private wages and salaries increased $15.2 billion in March, down from $22.6 billion in February, as the services sector declined by nearly half.

Proprietors’ income decreased $1.5 billion in March after falling $7.7 billion in February. Rental income increased $3.2 billion in March. Personal income receipts on assets decreased by $33.1 billion, after increasing $29.7 billion in February.

Read the BEA release

Wednesday, April 29, 2015

Fed: Growth Slowed Due to 'Transitory Factors'

The Federal Reserve Open Market Committee (FOMC) in their April 29th statement, noted that economic growth slowed during the winter months, partly due to “transitory factors,” and that labor market conditions were largely unchanged since the last meeting. Although growth slowed, the committee expects that growth will expand at a “moderate pace,” and view risks to the economic outlook and labor markets as “nearly balanced.”

The FOMC cited a number of conditions which had weakened over the winter, including declining growth in household spending, even as real incomes grew due to lower energy prices. Growth in business fixed investment also fell.

The committee expects inflation to remain low in the near term, but rise toward 2% over the medium term as the labor market improves and the “transitory effects” of low energy and import prices dissipate.

In discussing the target range for the federal funds rate, the committee reaffirmed its view that the current rate of 0% – 0.25% is appropriate. Once again, the statement noted that it would be data driven in determining when to raise rates, but did not include any calendar references as to when.

Read the Federal Reserve release

GDP Fell Sharply to 0.2%

Real GDP growth fell sharply in the first quarter, growing at a 0.2% seasonally adjusted annual rate according to the Bureau of Economic Analysis’s advance estimate. Growth was slower across most GDP components, most notably in exports which declined by 7.2% after a 4.5% increase in the previous quarter.

Personal consumption was the largest positive contributor to GDP—growing by 1.9%, down from 4.4% in the fourth quarter. Nonresidential fixed investment fell by 3.4%, after an increase of 4.7% in the fourth. Investment in nonresidential structures was the most notable fixed investment loss, decreasing by 23.1% after gaining 5.9% last quarter.

Goods exports declined by 13.3%, likely due in part to strengthening dollar values. Imports of goods and services increased by 1.8%, down from 10.4% in the fourth quarter.

Government consumption expenditures rose by 0.3%, compared to a 7.3% fall in the fourth quarter. State and local government expenditures declined by 1.5% after increasing 1.6%

Read the BEA release

Tuesday, April 28, 2015

Home Prices Rose in February

The 20-City Case-Schiller Composite gained 5.0% year-over-year in February, compared to a 4.5% increase in January. The 10-City Composite gained 4.8% in February, up from 4.3% in January. The National Index reported a 4.2% annual increase for the month, down from the 4.4% increase in January.

On a monthly basis, the 10-City and 20-City Composites both reported increases of 0.5%, the largest gain since July 2014, while the National index gained 0.1%.

Of the sixteen cities reporting month-over-month increases, San Francisco and Denver posted the largest gains with increases of 2.0% and 1.4%. Cleveland posted the largest decline, falling by 1.0%.

Year-over-year, Denver and San Francisco reported the highest gains, increasing by 10.0% and 9.8%. Seventeen cities reported acceleration in year-over-year price increases, while San Diego, Las Vegas and Portland reported that price increases were slowing.

Read the S&P release

Friday, April 24, 2015

Durable Goods Orders Rebound in March

After falling 1.4% in February, new orders for durable manufactured goods increased by 4.0% in March according to the U.S. Census Bureau. This was the second increase over the past three months. Excluding transportation, new orders decreased 0.2%. Excluding defense spending, orders increased 2.6%.

Transportation orders rose by 13.5% after a February decline of 1.8%. Shipments of manufactured durable goods increased 1.1% after falling for the past two months. Inventories of manufactured durable goods increased 0.1% to the highest level since the index was first published in 1992. Computers and electronic products drove the increase in inventories, rising 0.7% from February.

Defense new orders for capital goods increased 17.0% in March . New orders for defense aircraft and parts increased 113%; non-defense aircraft orders also experienced large gains, increasing 30.6% in March after declining slightly in February.

Read the U.S. Census release

Thursday, April 23, 2015

New Home Sales Drop in March after February High

Sales of new single-family houses in March were at a seasonally adjusted annual rate of 481,000 according to the U.S. Census Bureau and Department of Housing and Urban Development. The March rate was 11.4% below the revised February rate of 543,000, but 19.4% higher than one year ago.

Sales decreased in all regions except for the Midwest, which had a 5.9% increase in new home sales. The Northeast experienced the largest decline of the regions, falling 33.3% from February. The South and West declined by 15.8% and 3.4%.

The median sales price of new homes sold was $277,400, down 1.5% from last month. The average price was $343,300, a 0.6% decline from February.

At the end of March, there was an estimated supply of 5.3 months at the current seasonally adjusted sales rate.

Read the Census release

Wednesday, April 22, 2015

Existing Home Sales Accelerated in March

Existing home sales rose 6.1% in March to a seasonally adjusted annual rate of 5.19 million, the highest annual rate in 18 months.
The median existing-home price increased 7.8% year-over-year to 212,100 in February, the largest gain since February 2014.

Total housing inventory increased 5.3% to 2.00 million homes available for sale, 2% higher than a year ago. There is currently a 4.6 month supply of total existing homes available for sale, down from 4.7 months in February.

Existing home sales increased across all four regions, with the Midwest experiencing the largest monthly gain in sales, increasing 10.1%. The Northeast climbed 6.9%, followed by a 6.3% increase in the West and a 3.8% increase in the South. “The combination of low interest rates and the ongoing stability in the job market is improving buyer confidence and finally releasing some of the sizable pent-up demand that accumulated in recent years,” stated NAR Chief Economist Lawrence Yun.

All cash sales were 24% of transactions in March, down two points from February and 9 points lower than March 2014.

First-time home buyers represented 30% of buyers, up from 29% last month.

Read the NAR report

Friday, April 17, 2015

Energy and Shelter Drive CPI Monthly Increase

The Consumer Price Index rose 0.2% in March on a seasonally adjusted basis, driven by increases in energy and shelter. Over the last 12 months, the CPI declined 0.1% before seasonal adjustment.

The energy index rose 1.1% in March due to advances in the gasoline index, which increased by 3.9%, the largest increase since February 2013. Fuel oil increased 5.9% from February. Over the past 12 months, all energy indices declined except for electricity, which rose 0.9%.

The food index fell 0.2%, driven by a 0.5% decline in the index for food at home – the largest decline since April 2009. The food index rose 2.3% year-over-year driven by a 2.9% increase in the index for food away from home.

The index for all items less food and energy rose 0.2%, consistent with January and February. The shelter index increased by 0.3%, up from 0.2% in February. Medical care and hospital services saw considerable gains, rising 0.4% and 0.6% after declining in February. Both used and new auto indices rose in March, 1.2% and 0.2% respectively. The index for all items less food and energy rose 1.8% over the last 12 months, up slightly from the 1.7% increase for the 12 months ending in February.

Read the BLS release

Thursday, April 16, 2015

Housing Starts Rose in March

Housing starts in March rose to a seasonally adjusted annual rate of 926,000, 2% above the revised February estimate of 908,000 but 2.5% below the March 2014 estimate. Single family housing starts were at a rate of 618,000, 4.4% higher than the revised February estimate.

Housing starts were mixed across the four regions. In the Northeast housing starts increased by nearly 115%, as February starts were unusually low due to extreme weather conditions. The Midwest posted gains of 31.3% on the month, while the South and West regions posted declines of 3.5% and 19.3%.

Building permits were issued at a seasonally adjusted annual rate of 1.039 million units, a 5.7% decrease from last month’s revised rate of 1.102 million, but 2.9% higher than the March 2014 estimate. Housing completions were at a seasonally adjusted annual rate of 823,000, 3.9% below February’s revised estimate, and 5.8% below the March 2014 rate.

Read the Census release

Wednesday, April 15, 2015

Beige Book: “Moderate” to “Modest” Growth Reported

Economic activities continued to expand across most regions and sectors according to the March edition of the Federal Reserve Beige Book. Most of the 12 districts reported moderate to modest growth.

Banking conditions were positive across all districts. Credit demand increased at a slight to moderate pace in 7 districts. Commercial real estate loan demand was particularly strong in Atlanta and Dallas. Some San Francisco banks have generated a steady pipeline of pending loans, and have increased interest rates slightly to curb demand. C&I loans to areas associated with the energy industry have slowed due to low oil prices.

Consumer spending was mixed with 5 districts reporting higher than normal retail sales, while the other 7 districts reported sales were either down or flat—partly due to unusually cold weather. Retailers were optimistic about future sales and say that savings from lower energy prices are increasing sales for this cycle. Retailers in Dallas and New York expressed concern over the strong dollar.

Labor markets remained stable or improved in most districts. Five districts reported increases in employment; however layoffs were reported in the manufacturing and energy sectors of five districts, primarily due to declining oil and gas prices.

Manufacturing demand was mixed across districts and sectors. Aerospace reported some gains, while fabricated metal products and the chemicals industry weakened. Chemical producers attributed this to the strong dollar. The overall outlook from most districts was positive however.

Real estate activity improved or remained steady in all districts except New York, which reported softening conditions. Chicago reported that inventories were near historic lows, especially for lower priced homes. Cleveland and Philadelphia reported an absence of first time home buyers. Commercial real estate activity remained stable in most districts.

Read the Federal Reserve summary

Homebuilder Confidence Rose in April

Homebuilder’s confidence in the market for newly built single-family homes rose 4 points to 56 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

All three components of the index improved in April. Sales expectations increased from 59 to 64, buyer traffic increased from 37 to 41, and the current sales component rose from 58 to 61.

Regional HMI scores were mixed. The Midwest dropped by 2 points to 54 and the West dropped by 3 points to 58. The South rose by one point to 56 and the North was unchanged at 42.

“As the spring buying season gets underway, home builders are confident that current low interest rates and continued job growth will draw consumers to the market,” stated NAHB Chairman Tom Woods. Chief Economist David Crow added that “[Homebuilders] are feeling optimistic that the housing market will continue to strengthen throughout 2015.”

Read the NAHB/Wells Fargo release

Industrial Production Posts First Quarterly Decline Since 2009

Industrial production decreased 0.6% in March after a 0.1% increase in February. For the first quarter of 2015, industrial production declined at an annual rate of 1.0%, the first quarterly decline since 2009. From March 2014, the index increased 2.0%. Oil and drilling servicing was a large contributor to the quarterly decline, dropping at an annual rate of more than 60%.

Output of utilities fell by 5.9%, after gaining 5.7% in February due to unseasonably cold temperatures. Mining output decreased by 0.7%, the smallest decline since November.

Manufacturing output increased in March by 0.1%, but fell at an annual rate of 1.2% for the quarter. In March durable goods production was up 0.2% due to strong demand for auto parts, while primary metals declined by 3.2%. The energy index declined 2.2% primarily due to a 17.7% decline in the index for oil and gas well drilling.

Business equipment posted a gain in production for the month, increasing by 0.2% due to an increase in output for transit equipment. Consumer goods declined by 0.6% mostly due to a 5% decline in consumer energy products. Output of durable consumer goods increased by 1.7% largely due to a 3.0% gain in automotive products.

Read the Federal Reserve release

Tuesday, April 14, 2015

Small Business Optimism Declines in March

The NFIB Small Business Optimism Index fell to 95.2 in March, down 2.8 points from last month. All ten of the indices reported declines for the month, most notably in expectations for economic improvement, which dropped 6% from last month.

The number of owners reporting an increase in employment fell 5 points. Fifty percent of owners reported hiring or trying to hire. Forty-two percent reported difficulty filling those positions due to lack of qualified applicants.

An increased number of business owners responded that all of their credit needs were not met, up 2 points from last month, but only 3% of businesses reported that financing was their top business problem. Taxes were the single most important problem cited by small business owners, followed by government requirements and red tape.

Read the NFIB report

Producer Prices Increased for First Time in Months

Producer prices rose 0.2% in March according to the U.S. Bureau of Labor Statistics. This was the first increase after 4 consecutive monthly declines. Most of the rise in final demand prices is attributable to final demand goods. On a yearly basis, producer prices are down 0.8%, down from a 0.6% decline reported in February.

Final demand goods rose by 0.3% in March, the first increase in eight months. Final demand energy drove the advance, as the gasoline index increased by 7.2%.Final demand for foods decreased 0.8% while demand less foods and energy rose 0.2%.

Final demand services increased by 0.1% following a 0.5% decrease in February. Sixty percent of the March increase is attributable to a 4.1% increase in prices for portfolio management, partially offset by a 0.2% decline in transportation and warehousing and a 0.2% decline in trade.

Read the BLS release

Retail Sales Increased in March

There were $441.4 billion of retail and food services sales in March (after adjustment for seasonal variation and holiday and trading-day differences but not for price changes), according to the U.S. Census Bureau. This level represented an increase of 0.9% from the previous month, and 1.3% from March of last year.

Core retail sales—excluding automobiles, building materials, and gasoline—increased by 0.4% in March, after remaining unchanged last month.

Retail trade sales increased by 0.9% from February, and 0.5% from March 2014. Gasoline sales declined by 0.6% for the month, and were 22% lower than a year ago. Sales from food services and drinking places rose by 7.7% on the year.

Read the Census Bureau release

Wednesday, April 8, 2015

FOMC Members Divided over Timing of Increase

The Federal Open Market Committee (FOMC) minutes of the March 17-18 meeting showed that some committee members were divided over when to raise interest rates. Several members believed that economic data warranted a raise in rates at the June meeting, while others believed that declining energy prices and the dollar’s appreciation were reason to delay the first increase until later in the year. A couple of participants suggested that the economic outlook likely would not call for liftoff until 2016.

The Committee noted that labor markets had improved further, though the economy had “moderated somewhat,” a change in language from the last meeting’s minutes which said that the economy was improving at a “solid” pace. A factor in the economy’s moderation was the slowdown in the growth of exports, a byproduct of the strengthening dollar.

The FOMC stated that the increase in the federal funds rate will depend on further improvement in the labor market and confidence that inflation will move back to its 2% medium term objective. The Committee believes current inflation to be artificially low due to weak energy prices.

Committee participants emphasized that monetary policy will remain highly accommodative even after the first increase in rates, noting that their data-dependent approach would not necessarily mandate increases at each subsequent meeting.

Read the FOMC minutes

Consumer Delinquencies Tick Up, Still Near Historic Lows

Delinquencies in closed-end loans and bank cards rose slightly in last year’s fourth quarter but remain near record lows, according to the ABA Consumer Credit Delinquency Bulletin that was released today. The broader results paint a positive picture, with delinquencies in seven of the eleven individual loan categories falling.

The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, rose three basis points to 1.54 percent of all accounts -- well under the 15-year average of 2.29 percent. Bank card delinquencies ticked up one basis point to 2.52 percent of all accounts, also well below their 15-year average of 3.75 percent.

Delinquencies in two of the three home-related categories -- home equity loans and home equity lines of credit -- trended downward, falling to 3.23 percent and 1.48 percent, respectively. Delinquencies for property improvement loans increased 11 basis points to 0.93 percent.

“The economy is better, incomes are higher and the risk of lending is lower,” said ABA Chief Economist James Chessen. “People have a greater capacity to repay their debts, and we expect delinquencies will continue to fluctuate near these low levels for the foreseeable future.”

Read the ABA release

Tuesday, April 7, 2015

Consumer Credit Grew 5.6% (SAAR) in February

Consumer credit increased at a seasonally adjusted annual rate of 5.6% in February to $3.34 trillion. Revolving credit contracted 5.0% (to $885 billion) and non-revolving credit increased by 9.4% ($2.5 trillion).

Total outstanding consumer credit increased by $15.5 billion. Total outstanding nonrevolving credit increased by $19.2 billion, while outstanding revolving credit decreased by $3.7 billion.

Federal Government holdings of student loans continue to be the largest portion of non-revolving credit, making up 36% of outstanding credit. Finance companies and depository institutions are the secondary holders of non-revolving credit, each holding approximately 25%. Depository institutions continue to be the primary holder of revolving credit, holding 82%.

Read the Federal Reserve release.

Monday, April 6, 2015

Non-Manufacturing ISM Index Drops Slightly in March

The Non-Manufacturing ISM Report on Business Index was 56.5 in March, down 0.4 points from February. Index readings above 50 indicate expansion in the non-manufacturing economy. March was the 62nd consecutive month of economic growth. Fourteen industries reported growth in March, while four industries—Mining; Educational Services; Other Services; and Utilities—contracted.

The Business Activity Index was 57.5, 1.9 points lower than the previous month. Respondents noted that “current business conditions are positive,” and that lower fuel prices were “improving overall profits.”

The Employment index was 56.6, up 0.2 points from February, as 13 industries reported employment increases. Respondents noted that “funding [was] available for additional positions.”

The New Orders index expanded for the 68th consecutive month, rising 1.1 points to 57.8. Respondents cited new customers and “higher loan application volume,” as reasons for the increase.

Prices paid increased for the first time in 3 months. The index rose to 52.4, up from 49.7 in February. Eleven industries reported an increase, while 4 reported decreases.

Supplier deliveries dropped slightly to 54 points, down 1.0 point from last month. Nine industries reported slower deliveries while Mining, Agriculture, Educational Services, and Finances and Insurance reported faster deliveries.

Read the ISM release

Friday, April 3, 2015

U.S. Added 126,000 Jobs in March, Lowest Since 2013

Total Nonfarm payroll employment rose by 126,000 in March, down sharply from January’s revised estimate of 201,000 and well below the 12-monthly average of 269,000. The unemployment rate held steady at 5.5%; the Federal Reserve has placed its full-employment estimate between 5.0% and 5.2%.

Goods producing industries shed jobs in March, losing a total of 13,000 jobs, a large portion of which were concentrated in support activities for oil and gas extraction. Food services and drinking places added only 9,000 jobs after adding 66,000 in February. Construction activities flat-lined after gaining 29,000 jobs in February.

Education and health services added 38,000 jobs, down from 57,000 in February. Employment in transportation and warehousing, information, financial activities, and government changed little over the month.

The civilian labor force participation rate remained virtually unchanged at 62.7%. It has held between 62.7% and 62.9% since April 2014.

Average hourly earnings increased by 7 cents to $24.76. Hourly earnings have increased by 2.1% over the last year.

The number of long-term unemployed, those jobless for 27 weeks or more, was little changed at 2.6 million. This group accounts for 29.8% of the unemployed. The number of involuntary part-time workers was little changed at 6.7 million.

Read the BLS release

Thursday, April 2, 2015

Factory Orders Increased After Prolonged Decline

New orders for manufactured goods increased $800 million to $468.3 billion in February, following a $3.3 billion decline in January, according to the U.S. Census Bureau. Before February's increase new orders declined for six consecutive months.

Shipments increased $3.6 billion to $481.3 billion after decreasing $11.2 billion in January. Inventories increased $900 million to $651.0 billion following a $2.9 billion decrease in January. Unfilled orders decreased $5.9 billion to $1,156.3 billion, following a $3.3 billion decrease in January.

The inventories-to-shipments ratio was 1.35, down from 1.36 on January.

Read the Census Bureau report.

Lower Imports Narrowed U.S. Foreign Trade Deficit in February

The U.S. international trade deficit in goods and services decreased $7.2 billion to $35.4 billion in February, as the decline in imports outpaced the decline in exports.

The goods deficit declined by $7.4 billion to $55.2 billion, the service surplus decreased to $19.7 billion, and the petroleum deficit declined $2.6 billion to $8.1 billion.

Exports decreased by $3.0 billion to $186.2 billion, primarily due to a $2.9 billion decline in goods exports driven by decreased capital goods and industrial supplies and materials exports. Exports of services decreased $100 million to $60.6 billion.

Imports decreased by $10.2 billion to $221.7 billion, driven by a $10.3 billion decline in goods imports to $180.8 billion. The decrease was driven by a $4.4 billion decline in industrial supplies and materials imports. Imports of services increased $100 million to $40.9 billion.

The deficit with China decreased by $2.0 billion to $27.3 billion, as the decrease in imports was larger the decrease in exports.

Read the Census Bureau release.
Read the full report.

Wednesday, April 1, 2015

ISM Manufacturing Index Reports Slow Growth

The ISM Manufacturing index decreased 1.4 points to 51.5 in March. Index readings above 50 indicate expansion in the manufacturing economy. Respondents again cited challenges regarding the West Coast port slowdown, as well as issues stemming from lower oil prices, which had positive and negative effects depending on the industry. Of the 18 manufacturing industries indexed, 10 reported growth in March, down from 12 in February.

The indices for both new orders and inventories declined in March, dropping by 0.7 and 1.0 points, respectively, but remained above the 50 point mark. The gap between these two indices was only 0.3 points, indicating that production is more or less on pace with demand.

The employment index decreased to 50.0 in March, down 1.4 points from February. Seven of the 18 manufacturing industries reported employment growth. Additionally, seven industries reported a decline in employment: Apparel; Textile Mills; Petroleum & Coal Products; Electrical Equipment; Appliances and Components; Computer and Electronic Products; Food, Beverage & Tobacco; and Miscellaneous Manufacturing.

Exports orders declined 1.0 point to 47.5, marking the third consecutive month of contraction. Imports decreased 1.5 points to 52.5.

The Prices Index rose to 39.0, up 4 points from February, marking the fifth consecutive month of raw material prices decreasing.

Read the ISM report

Construction Spending Slowed in February

Construction spending declined 0.1% in February to a seasonally adjusted annual rate of $967.2 billion. January spending was revised down from $971.4 to $967.9 billion. Year-over-year construction spending increased by 2.1%

Total private construction rose to $698.2 billion, a 0.2% increase from January and a 1.8% increase from February of last year.

Private residential construction declined to $349.8 billion, down 0.2% from January and 2.1% from the previous year. The majority of the decline was in single family residential construction, which dropped 1.4% on the month. Multi-family residential construction grew sharply, rising 4.1% on the month and 31.5% over the past year.

Non-residential construction increased 0.5% from January, and 5.9% from one year ago.

Public construction declined 0.8% for the month, but was 3.1% higher than February of last year.

Read the Census Bureau release

ADP: Private Sector Added 189,000 Jobs in March

According to the ADP National Employment report, the private sector added 189,000 jobs in March, as the goods-producing sector experienced sharp declines in growth compared to the previous month. The March report upwardly revised the January and February numbers by 7,000 and 2,000 jobs respectively.

Small businesses, companies with fewer than 50 employees, added 108,000 jobs, 5,000 more than in February. Medium businesses, companies with 50 to 499 employees added 62,000 jobs, 5,000 more than in February. Large businesses, companies with greater than 500 employees added 19,000 jobs, down from 53,000 in February.

Goods producing employment rose by 5,000 jobs, compared with 22,000 jobs the previous month. The construction industry added 17,000 jobs, down from 28,000 in February. Manufacturing was the only sector to lose jobs, dropping 1,000 in the last report after adding 2,000 jobs in February.

Service providing sector employment rose by 184,000, 8,000 fewer jobs than in February. The slower growth was partially due to declines in the trade, transportation and utilities sectors, which added 7,000 fewer jobs than the February report. Financial activities added 16,000 new jobs, down from last month’s 19,000 but still near a record high.

Read the ADP release