Friday, August 28, 2015

Consumer Sentiment Fell in August

Consumer confidence fell to 91.9 in August, down 1.2 points from the previous month according to the University of Michigan Consumer Sentiment Index. The index is currently 11.4 percent higher than in August of 2014, but recent volatility in the stock market may affect sentiment in the near future.

“The Black Mondays of October 17, 1987 and August 24, 2015 represent two episodes where the stock market declined due to reasons other than the domestic economy,” says Richard Curtin, Chief Economist for UM Surveys of Consumers. “Prior to each stock decline, the Sentiment Index was very positive, but immediately following, it fell about 10 percent. Consumers quickly dismissed the 1987 episode since it didn’t involve their jobs or incomes, and today’s consumers hold similar favorable views about their job and income prospects.”

The Current Economic Conditions index fell 2.1 points to 105.1, but was 5 percent higher than August of last year, while the Index of Consumer Expectations dropped 0.7 points to 83.4, but grew 17 percent year over year.

Personal Income and Consumption Rose in July

Personal income increased $67.1 billion, or 0.4 percent, in July, according to the Bureau of Economic Analysis, the same pace as in June. Personal consumption expenditures (PCE) increased $37.4 billion, or 0.3 percent, also the same as in June.

Disposable personal income – personal income less taxes – increased 0.4 percent, after gaining 0.2 percent in June.

The personal savings rate as a percentage of disposable income was 4.9 percent, up 2 basis points from June.

Wages and salaries grew $35.8 billion, more than twice the amount as in June, driven largely by increases in service sector payrolls. Goods producing industries and manufacturing payrolls, which contracted in June, also posted gains during July.

The price index for PCE increased 0.1 percent in July, compared to 0.2 percent in June. The index excluding food and energy increased 1.2 percent from a year ago, well below the Federal Reserve’s target of 2.0 percent.

Read the BEA release.

Thursday, August 27, 2015

GDP Revised Up to 3.7% for Second Quarter

Real GDP for the second quarter grew at an annual rate of 3.7 percent, according to the Bureau of Economic Analysis’s second estimate. This is an upward revision from the initial second quarter estimate of 2.3 percent, and well above the first quarter’s rate of 0.6 percent. The acceleration in growth reflected acceleration in personal consumption expenditures (PCE), as well as an increase in government spending and net exports.

Consumption was the largest contributor to GDP, accounting for 2.1 percent of the 3.7 percent growth in the second quarter, up from 1.2 percent in the first. The growth in consumption was driven by an increase in durable goods spending, which rose by 8.2 percent in the second quarter.

Exports of goods and services which had declined 6.0 percent in the first quarter grew 5.2 percent in the second, as the growth rate of imports slowed from 7.1 percent to 2.8 percent. Overall, net exports contributed 0.2 percent to GDP in the second quarter, in contrast to a 1.9 percent drag in the first.

Government expenditures increased by 2.6 percent, after contracting by 0.1 percent in the first. The majority of the spending increase was from state and local governments, which increased spending by 4.3 percent. Government spending accounted for 13 percent of GDP growth in the second quarter, up from 4 percent in the first.

Read the BEA release.

Wednesday, August 26, 2015

Durable Goods Orders Reached 2% Growth in July

New orders for manufactured durable goods increased 2.0 percent to $241.1 billion in July, according to the U.S. Census Bureau. The July increase followed a 4.1 percent increase in June. The majority of the increase can be attributed to a 4.7 percent gain in new orders for transportation equipment. Excluding transportation, new orders increased 0.6 percent.

New orders excluding defense increased 1.0 percent, primarily driven by a 22.3 percent increase in defense capital goods. New orders for non-defense capital goods grew 1.1 percent to $82.3 billion, while shipments increased 0.1 percent to $79.3 billion.

Shipments of manufactured durable goods, up for the past 2 months, increased 1.0 percent to $243.2 billion after a 0.9 percent increase in June.

Inventories of manufactured durable goods were virtually unchanged at $402.1 billion. Inventories grew 0.4 percent in June.

Read the Census release.

Agencies Issue 2014 CRA Small-Biz, Small-Farm Loan Data

The federal banking agencies today issued aggregate data on 2014 small-business, small-farm and community development loans that institutions reported under the Community Reinvestment Act. The data, which commercial banks and savings institutions with about $1.2 billion or more in assets are required to report and others can report voluntarily, show that such institutions made about 5.6 million small-business loans, totaling $214 billion, and about 173,000 farm loans, totaling over $12.9 billion.

The number of small-business loans rose 12 percent from 2013, and the dollar amount of small business loan originations rose by 2 percent. The number of small-farm loans rose by about 1 percent and the dollar amount increased by 5 percent.

Just over 93 percent of the small-business loans and 78 percent of the small-farm loans were for amounts under $100,000, according to the analysis. It also said nearly 45 percent of the small-business loans and nearly 60 percent of the small-farm loans were extended to firms with revenues of $1 million or less.

Read more.

Tuesday, August 25, 2015

Conference Board: Consumer Confidence Rises after Soft July

Consumer confidence rebounded in August after July’s decline, rising 10.5 points on the month to 101.5, according to The Conference Board’s Consumer Confidence Index.

The Present Situation Index – a measure of respondents’ appraisal of current business and employment conditions, grew 11.1 points to 115.1 in August, while the Expectations Index – a measure of business, employment and total family income expectations in the next six months, grew 10.2 points to 92.5.

“Consumers’ assessment of current conditions was considerably more upbeat, primarily due to a more favorable appraisal of the labor market,” noted Lynn Franco, Director of Economic Indicators at The Conference Board. “The uncertainty expressed last month about the short term outlook has dissipated and consumers are once again feeling optimistic about the near future.”

Outlook for the labor market was more positive in August, as respondents anticipating more jobs in the coming months grew from 13.7 percent to 14.6 percent in July, while those anticipating fewer jobs fell to 13.6 percent from 19.0 percent. Income expectations declined in August, with 16.2 percent of consumers expecting their incomes to increase, down from 17.0 percent last month, while those expecting their incomes to decline rose from 10.0 percent to 11.3 percent.

The outlook for business conditions was mixed as respondents saying business conditions are “good” decreased slightly from 23.4 percent to 23.2 percent in July, while those saying business conditions are “bad” marginally declined from 18.2 percent to 17.6 percent.

Read the release.

New Home Sales Rose 5.4% in July

Sales of new single-family homes rose in July to a seasonally adjusted annual rate of 507,000 according to the U.S. Census Bureau and Department of Housing and Urban Development. The July rate is 5.4 percent above the revised June rate of 481,000 and 25.8 percent above the year-ago rate of 403,000.

New home sales grew month-over-month in three of the four regions, rising 23.1 percent in the Northeast, 5.8 percent in the South, and 6.7 percent in the West, while sales fell 6.9 percent in the Midwest.

The median sales price of new homes sold in July was $285,900, up 3.0 percent from June and considerably higher than the median existing home price of $234,000. The average sales price was $361,600, up 13.1 percent on the month.

At the end of July, there was an estimated supply of 5.2 months at the current sales rate.

Read the release.

Home Prices Continue to Rise in June

The 20-City Case-Shiller Composite gained 5.0 percent year-over-year in June, consistent with May’s gain. The 10-City Composite gained 4.6 percent from the previous year, marginally lower than the year-over-year gain in May. The National Index recorded a 4.5 percent year-over-year gain for the month, compared to a 4.4 percent gain in May.

On a monthly basis, the National Index and 20-City Composite reported gains of 1.0 percent, while the 10-City Composite posted a 0.9 percent gain.

“While prices in San Francisco and Denver are rising far faster than those in Washington DC, New York, or Cleveland, the city-to-city price patterns are little changed in the last year,” said David M. Blitzer, Managing Director and Chairman of the Index Committee. “Two possible clouds on the horizon are a possible Fed rate increase and volatility in the stock market. A one quarter-point increase in the Fed funds rate won’t derail housing. However, if the Fed were to quickly follow that initial move with one or two more rate increases, housing and home prices might suffer,” added Blitzer.

As home prices continue to exceed the rate of both inflation and wage growth, there have been some indications that demand has been affected, with the National Association of Realtors noting that foot traffic has decreased in some markets due to lower inventory and higher prices.

The FHFA seasonally adjusted U.S. House Price Index rose 0.2 percent from May to June. Home prices in the second quarter of 2015 rose 1.2 percent from the previous quarter and 5.4 percent from the second quarter of 2014. Home prices rose in every state from the second quarter 2014 to the second quarter 2015; the highest annual price increases were in Colorado, Nevada, Florida, Hawaii and Washington.

The FHFA HPI is calculated using home sales information from mortgages sold to and from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac.

Read the S&P/Case-Shiller release.
Read the FHFA HPI release.

Thursday, August 20, 2015

Home Sales Grew, But High Prices Affect Demand

Existing home sales increased 2.0 percent in July to a seasonally adjusted rate of 5.59 million, according to the National Association of Realtors (NAR), up from a downwardly revised 5.48 million in June. Existing home sales have increased year-over year for the last ten months, and are now 10.3 percent higher than a year ago.

Median existing home prices increased 5.6 percent to $234,000, the forty-first consecutive month of year-over-year price increases. Despite strong sales, rising home prices may be starting to have a negative effect on demand. “Realtors in some markets reported slower foot traffic in July in part because of low inventory and concerns about the continued rise in home prices without commensurate income gains,” noted NAR Chief Economist Lawrence Yun. “Rising rents and flat wage growth make it difficult for many to save for a down payment, and the dearth of supply in affordable price ranges is limiting their options.”

Although wage growth has shown some signs of improvement over the past year according to the Atlanta Fed’s Wage Growth Tracker, growth in wages are well below pre-recession levels, and are not keeping pace with the growth in home prices, which was 4.4 percent on an annual basis in May, according to the Case Schiller Index. This likely had an effect on the share of first time home buyers, which fell for the second consecutive month, dropping 2 points to 28 percent. A year ago, the share of first time buyers was 29 percent.

Total housing inventory declined 0.4 percent to 2.24 million existing homes available for sale, down 4.7 percent from this time a year ago. There is currently a 4.8-month supply of existing homes available for sale, down from a 4.9-month supply in June.

Existing home sales increased in the South and West by 4.1 percent and 3.2 percent respectively, but declined 2.8 percent in the Northeast. Existing home sales were unchanged in the Midwest. Each region also saw year over year gains in median home prices.

Distressed sales – foreclosures and short sales – fell 1 point to 7 percent, the lowest share since 2008. Individual investors purchased 13 percent of homes in July, up from 12 percent in June.

Read the NAR report.
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Wednesday, August 19, 2015

FOMC Minutes: Fed Approaching Conditions for Rate Hike

In the Minutes of their July 28 – 29 Federal Open Market Committee (FOMC) meeting, Fed officials outlined their decision to hold off on raising interest rates, noting that most members believed the conditions for policy firming were not yet met, but were “approaching that point.” In the July and previous meetings, FOMC members expressed a desire to see “some further improvement” in the labor market, as well as “reasonable confidence” that inflation would return to 2% over the long run.

In the July meeting minutes, participants agreed that labor markets had improved further, citing increases in employment and job openings. Despite declines in the labor-force participation rate in June, several participants cited reports from business contacts in their districts, which pointed to signs of job gains and strong labor markets, with participants citing anecdotal evidence regarding firms having difficulty hiring and retaining workers. Several participants however did not share this view, citing the high number of discouraged job seekers and involuntary part-time workers.

In assessing whether economic conditions had improved sufficiently enough to firm monetary policy, the minutes noted that many members thought that labor market underutilization would be “largely eliminated if economic activity evolved as expected.” Conversely, some committee members expressed concern that the rate of full employment could be lower than previously thought, citing the lack of evidence supporting wage growth.

Despite running below current objectives, the Committee believed that incoming economic data bolstered their belief that inflation will return to the 2 percent objective in the long run.

With regard to the foreign economic outlook, at the time of the July meeting participants generally viewed the risks from Greece as having diminished somewhat, but the country faced many challenges that would limit its economic progress over the near term. In China, the recent stock market declines had seemed to have limited implications for its economic growth. However, the Committee noted that “a material slowdown in Chinese economic activity could pose risks to the U.S. economic outlook.”

Read the FOMC minutes.

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Survey: Majority of Bank Customers Pay No Account Fees

Sixty-one percent of bank customers pay no monthly account fees for banking services, according to results from ABA’s annual consumer banking released today. An additional 11 percent of customers pay $3 per month or less. Each figure is down one percentage point from 2014.

Ten percent of customers – up from 7 percent a year before — pay over $10 per month in fees according to the survey of 1,000 U.S. adults, conducted annually for ABA by Ipsos Public Affairs since 1998.

“We’ve seen tremendous innovations to bank services over the last decade that have allowed our customers to bank in the way that is most convenient for them and at little or no cost,” said ABA SVP Nessa Feddis. “Today’s consumers have become adept at using the many options that may allow them to bank for free, whether it’s maintaining a minimum balance, opting for direct deposit or using ATMs owned by their bank.”

Read the ABA release.

Tuesday, August 18, 2015

Housing Starts Rise, Permits Drop

Housing starts in July rose to a seasonally adjusted annual rate of 1.206 million, 0.2 percent above the revised June estimate of 1.204 million and 10.1 percent higher than the July 2014 rate.

Housing activity was mixed across regions, with starts rising in the Midwest and South by 20.1 percent and 7.7 percent respectively, while starts in the North and West fell by 27.5 percent and 3.1 percent.

New building permits fell in July, dropping 16.3 percent below June’s revised estimate to 1.119 million, but increasing 7.5 percent from the previous year. The drop in permits issued fell sharply in the Northeast, falling 60.2 percent month-over-month. Permits for single-family units fell 1.9 percent to a rate of 679,000, while multi-family permits were at a rate of 412,000.

Housing completions in July were at a rate of 987,000, up 2.4 percent from June’s estimate and 14.6 percent from July of last year.

Read the Census release.

Monday, August 17, 2015

Rise in Homebuilder Confidence Continues

The National Association of Home Builders/Wells Fargo Housing Market Index rose 1 point to a level of 61 in August, the highest reading since November 2005.

Two of the three index components posted gains for the month. Current sales conditions rose 1 point to 66, while the buyer traffic index rose 2 points to 45. The index for sales expectations in the next six months was unchanged at 70.

Three of the four regions posted gains in their three-month moving averages. The Northeast region was unchanged at 46 points, while the West and Midwest rose three points to 63 and 58. The South added 2 points, rising to 63.

“Today’s report is consistent with our forecast for a gradual strengthening of the single-family housing sector in 2015,” noted NAHB Chief Economist David Crowe. “Job and economic gains should keep the market moving forward at a modest pace throughout the rest of the year.”

Read the NAHB/Wells Fargo release.

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New York Fed: Household Debt Up Slightly in Second Quarter

Outstanding household debt rose a very slight $2 billion in the second quarter — reaching $11.85 trillion — the Federal Reserve Bank of New York said today. Total outstanding debt remains 6.5 percent below its 2008 peak.

Mortgage debt and HELOC balances decreased in the first quarter, with mortgages falling by $55 billion to $8.12 trillion and HELOC debt dropping $11 billion to $499 billion. Non-mortgage debt increased in all categories — auto loans, student loans, credit card balances and other non-housing balances. Auto loan debt rose by nearly 4 percent, and auto loan originations hit a 10-year high.

Delinquency rates rose slightly for HELOCs, auto loans and student loans, with 11.5 percent of the latter balance more than 90 days delinquent. Delinquent mortgage loan balances declined, and credit card delinquencies held steady.

Read the NY Fed release.

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Friday, August 14, 2015

Industrial Production Gains 0.6% in July

Industrial production increased 0.6 percent in July, after a 0.1 percent gain in June. This was the second consecutive monthly gain. Industrial production has increased 1.3 percent on the year.

After a 0.3 percent decline in June, manufacturing output increased primarily due to gains in motor vehicle assembly. Mining, increased 0.2 percent on the month, down from 0.7 percent in June. Mining output is currently 2.0 percent lower than it was in July of last year. Utilities output declined by 1.0 percent on the month, but increased 4.6 percent from last July.

Capacity utilization reached 78 basis points in July, up 30 basis points from last month’s revised estimate.

Production of final products increased 0.8 percent, largely due to a 1.2 percent increase in output of consumer goods, while energy products posted a loss of 1.3 percent.

Read the Federal Reserve release.

Producer Prices Increased in July

Producer prices climbed 0.2 percent in July, seasonally adjusted, according to the U.S. Bureau of Labor Statistics, attributable to an increase in prices for final demand services, which climbed 0.4 percent. July’s reading marked the third consecutive monthly increase in the index.

Sixty percent of the broad-based price inflation for final demand services could be traced to a 0.4 percent rise in the index for final demand services less trade transportation, and warehousing, while 40 percent of the increase is attributable to increases in prices for guestroom rentals, which rose 9.9 percent.

The index for final demand goods moved down 0.1 percent in July, after rising 0.7 percent in June. The decrease is largely attributable to a 0.6 percent decline in prices for final demand energy, and a 0.1 percent decline in final demand foods. Prices for final demand goods less food and energy were unchanged.

Read the BLS release.

Thursday, August 13, 2015

Retail Sales Increased 0.6% in July

There were $446.5 billion of retail and food services sales in July (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 0.6 percent from the previous month, and a 2.4 percent increase from July of last year.

Core retail sales – excluding automobiles and parts – increased 0.4 percent from the previous month, and 1.3 percent from the previous year.

Retail trade sales increased by 0.6 percent from June, and 1.6 percent from July 2014. Motor vehicle parts and dealers’ sales increased by 1.4 percent on the month, and 6.9 percent on the year. Conversely, sales at gasoline stations declined 15.2 percent from last year. Sales at food services and drinking places were up 9.0 percent from last July.

Read the Census release.

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Tuesday, August 11, 2015

Small Business Optimism Edged Up in July

The NFIB Small Business Optimism Index increased 1.3 points in July to 95.4, after falling 4 points in June. Seven of the ten components posted gains over the last month.

The number of owners planning to increase employment rose 3 points from June. Fifty-seven percent of owners reported hiring or trying to hire, while 48 percent reported few or no qualified applicants for the positions they were trying to fill – a 4 percent increase from June.

Capital spending increased, as 61 percent reported capital outlays – a 7 point gain over the last two months. Only 24 percent of owners are planning capital outlays in the next 3 to 6 months, as owners expect for a continuation of economic “under-performance.”

The earnings trends index fell 2 points on the month after dropping 10 points in June. The net portion of owners reporting higher earnings fell to a negative 19 percent, while reports of increased labor compensation rose 2 points to a net 23 percent.

Credit conditions continued to be satisfactory for small business owners; just 4 percent of owners reported that their borrowing needs were not met, down 1 percent from the previous month. Financing and interest rates were the least cited concern, consistent with the previous month. Taxes were the single most important problem cited by owners, followed closely by government requirements and red tape.

Read the NFIB release.

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Friday, August 7, 2015

Consumer Credit Grew 7.3% (SAAR) in June

Consumer credit increased to a seasonally adjusted annual rate (SAAR) of 7.3 percent in June to $3.42 trillion. Revolving credit rose at an annual rate of 7.4 to $906 billion, and non-revolving credit increased at an annual rate of 7.3 percent to $2.51 trillion.

Total outstanding consumer credit increased by $20.7 billion, up from the previous month’s $16.5 billion increase. Total outstanding non-revolving credit increased $15.2 billion, up from $14.9 billion in May. Outstanding revolving credit increased by $5.5 billion – a much faster pace than May’s $1.6 billion.

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

Read the Federal Reserve release.

BLS: 215,000 Jobs Added in July

Total nonfarm payroll employment rose by 215,000 in July, down from last month’s upwardly revised 231,000. The unemployment rate remains unchanged at 5.3 percent. The Federal Reserve has placed its full employment estimate between 5.0 and 5.2 percent.

Retail trade, healthcare, professional and technical services, and financial activities led the gains in employment. Retail trade and financial activities posted numbers that were consistent with their June gains (35,900 and 17,000), while healthcare and social services added 30,100 jobs, down from over 55,000 in June. Manufacturing posted healthier job gains at 15,000 after a sluggish June. Employment in mining and logging contracted by 4,000.

The civilian labor force participation rate was unchanged at 62.6 percent – the lowest participation rate since April 2014.

Average hourly earnings rose 5 cents to $24.99 – a 2.1 percent increase year over year.

The number of long-term unemployed, those jobless for 27 weeks or more, was little changed at 2.2 million. This group accounts for 26.9 percent of the unemployed. The number of discouraged workers, those not looking for work because they believe no jobs are available, was 668,000 – little changed from a year ago.

Read the BLS release.

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Thursday, August 6, 2015

Job Cuts Reach Highest Level Since 2011

Employers announced plans to shed 105,696 workers from their payrolls in July, according to a report issued by Challenger, Gray & Christmas. July’s announced cuts marked the highest monthly total since 2011.

July’s job cuts were 125 percent higher than the planned layoffs announced in July 2014. In the first 7 months of 2015, employers have announced 393,368 job cuts – 34 percent more than the number of cuts announced in the first 7 months of 2014.

The report indicates that the surge of announced layoffs were largely due to rollbacks in the U.S. Army, which announced plans to eliminate 57,000 troops and civilians from their payrolls over the next two years.

“The transition from the military to the civilian workforce is always challenging, but the economy is in a much better position to absorb this influx of job seekers now, compared to two or three years ago,” says John A. Challenger, CEO of Challenger, Gray & Christmas. “This does not mean it will be easy for these service men and women, most of whom undoubtedly thought the military would offer career-long job security.”

The technology sector announced significant layoffs during July, as both Microsoft’s Nokia division and Qualcomm downsized. Overall, the computer and electronics sectors announced 18,891 cuts in July. However, job cuts for these sectors are down 47 percent on the year.

Read the press release.

Wednesday, August 5, 2015

Non-Manufacturing ISM Index Reaches Record High

The Non-Manufacturing ISM Report on Business Index rose 4.3 points to 60.3 in July, the highest reading of the index since its inception in 2008 (index readings above 50 indicate expansion). Fifteen industries reported growth in July, while two – Professional, Scientific & Technical Services; and Mining – reported contraction.

The Business Activity Index registered 64.9, up 3.4 points from June’s reading. Respondents reported increases in advertising and that “pent up demand was starting to loosen.”

The Employment Index was 59.6 percent, up 6.9 percent from June. June marked the 17th consecutive month of employment growth in the non-manufacturing sector. Respondents reported the need for additional staff to meet service needs, and support organizational growth.

The New Orders Index rose 5.5 points to 63.8, the highest reading since 2005. Some respondents reported increased customer interest in new products, and more available work. Thirteen industries reported growth of new orders, while three – Other Services; Professional, Scientific & Technical Services; and Mining contracted.

The Supplier Deliveries slowed as the index rose 1.5 points to 53. Readings above 50 indicate slower deliveries. Seven industries reported slower deliveries, while eight reported no change.

Read the ISM release.

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U.S. Foreign Trade Deficit Added $2.9 billion in June

The U.S. international trade deficit widened in June to $48.3 billion, up $2.9 billion from May. The increase reflected a $0.1 billion decrease in exports and a $2.8 billion increase in imports.

The goods deficit grew $2.9 billion to $63.5 billion, while the services surplus remained essentially unchanged at $19.7 billion.

Exports of goods decreased $0.2 billion to $127.6 billion, driven by a $0.8 billion decrease in capital goods, offset by an increase in exports of consumer goods. Exports of services increased $0.1 billion to $61.0 billion.

Imports of goods increased $2.7 billion to $191.1 billion, largely due to increases in pharmaceutical preparations and a $0.9 billion increase in oil imports. Imports of services increased $0.1 billion to $41.4 billion.

Read the Census/BEA release.

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ADP: 185,000 New Private Sector Jobs in July

According to the ADP National Employment report, the non-farm private sector added 185,000 jobs in July, down from 229,000 in June. Both the goods-producing and service-providing sectors saw slower job growth.

Small businesses, with less than 50 employees, added 59,000 jobs, down from 118,000 in June. Medium-size businesses, with 50 to 499 employees, added 62,000 jobs, down from 78,000 in June. Large businesses, with 500 or more employees, added 64,000 jobs, up from 34,000 in June.

Goods-producing employment rose by 8,000, down from 13,000 in June. Manufacturing added 2,000 jobs after gaining 9,000 in June.

Service –providing sector employment rose by 178,000, down from 216,000 in June. Professional/business services contributed the largest gain, adding 42,000. Trade/transportation/utilities added 25,000 jobs and financial activities added 10,000 jobs.

Read the ADP release.

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Tuesday, August 4, 2015

Manufactured Goods Orders Increased in June

New orders for manufactured goods increased 1.8 percent to $478.5 billion, following a 1.1 percent decrease in May. June’s increase followed two consecutive monthly decreases.

New orders for transportation equipment, also following two monthly decreases, grew 9.3 percent to $78.5 billion, as orders for defense and non-defense aircraft and parts increased 31.4 and 65.4 percent. New orders for manufactured durable goods increased slightly, rising 0.4 percent to $243.6 billion.

Shipments increased a half percent to $240.0 billion, up from a 0.4 percent decrease in May. Inventories rose again, increasing 0.6 percent to $403.0 billion. Inventories have increased for twenty-four of the last twenty-five months. Unfilled orders were virtually unchanged from the previous month at $1.194 trillion. Unfilled orders fell a half percent in May.

Read the Census release.

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Monday, August 3, 2015

Lending Standards Ease as Demand Increases

Over the past three months, banks reported easing lending standards and increased demand for a variety of home loan types. Lending standards for C&I and CRE loans remained little changed as demand increased, according to the July Federal Reserve Senior Loan Officer Opinion Survey.

On net, approximately 7.1 percent of respondents reported easing standards for commercial and industrial lending to large and middle-market firms, while 5.9 percent on net reported eased standards for small business lending. Most respondents who eased standards on C&I loans cited more-aggressive competition from other banks or nonbanks as a reason for doing so, while a smaller number of respondents attributed the easing of terms to an increased risk tolerance and more favorable economic outlook. Conversely, banks that reported tightening lending standards cited industry specific problems or a less favorable economic outlook.

A modest net fraction of banks eased underwriting standards on mortgages – particularly for qualified mortgage jumbo mortgages loans. Moderate to large net fractions of banks reported stronger demand across most categories of mortgages.

The survey contained a special set of questions regarding the current level of lending standards, rather than changes in standards over the survey period. The banks generally reported that C&I lending standards remained at levels that were easier than or near the midpoints of their ranges since 2005. In particular, lending standards for smaller firms with sales of less than $50 million have loosened gradually over the past few years.

Read the release.

July ISM Manufacturing Index Reports Weaker Growth

The ISM Manufacturing Index fell to 52.7 points in July – down 0.8 points from June’s reading. The manufacturing sector is still growing as readings above 50 indicate expansion. Of the 18 component industries, 11 reported growth in July, unchanged from the previous month. Respondents noted that business conditions have changed little from last month, and that falling oil prices are driving prices lower and “creating an expectation of even lower prices in the coming months.”

The production index increased 2.0 points to 56.0, growing at a faster pace than the previous month.

The employment index decreased 2.8 points to 52.7 in July, indicating that employment is growing a slower pace. Ten of the manufacturing industries reported growth in employment, while eight industries – Petroleum and Coal Products; Primary Metals; Plastics & Rubber Products; Miscellaneous Manufacturing; and Chemical Products – reported decreases in employment.

The index for new orders increased 0.5 points to 56.5, while inventories fell 3.5 points to 49.5 following two consecutive months of growth.

Export orders for July registered 48.0 points, indicating that the volume of exports decreased for the month. The imports index registered 52.0, growing at a slower pace than in June.

The inventories index fell 3.5 points to 49.5, indicating that raw materials are contracting.

The prices index registered 44.0 points, down 5.5 points from June, marking the ninth consecutive month of decreases in prices for raw materials.

Read the ISM release.

Slow Growth for Construction Spending in June

Construction spending increased 0.1 percent in June to a seasonally adjusted annual rate (SAAR) of $1,064.6 billion. May spending was revised up from $1,035.8 to $1,063.5 billion. Construction spending during the first six months of 2015 amounted to $482.7 billion, 8 percent higher than the first six months of 2014.
Total private construction fell to $766.4 billion (SAAR), 0.5 percent below May’s revised estimate of $770 billion.

Private residential construction rose to $371.6 billion (SAAR), 0.4 percent above May’s revised estimate as construction of multi-family homes increased for the month.

Private non-residential construction fell to $394.8 billion (SAAR), down 1.3 percent from May, but up 14.6 percent from a year ago. Private non-residential construction declined across most categories, with the exception of lodging and amusement and recreation.

Public construction spending grew 1.6 percent to $298.2 billion (SAAR). The 1.7 percent increase in public nonresidential construction was partially offset by a 3.8 percent decline in public residential construction.

Read the Census release.

Personal Income and Expenditures Grew in June

Personal income increased $68.1 billion, or 0.4 percent, in June according to the Bureau of Economic Analysis, the same pace as the previous month. Personal consumption expenditures (PCE) increased $25.9 billion, or 0.2 percent, after increasing at a 0.7 percent rate in May.

Disposable personal income – personal income less personal current taxes – increased $60.6 billion, or 0.5 percent in June, after gaining 0.4 percent in May. Real disposable income increased 0.2 percent in June, up from a 0.1 percent increase in May.

The personal savings rate as a percentage of disposable income was 4.8 percent, up 20 basis points from May.

Wages and salaries increased $18.3 billion, compared with an increase of $32 billion in May. Services producing industries saw growth in payrolls, while goods-producing industries contracted some.

The price index for PCE increased 0.2 percent in June, compared with an increase of 0.3 percent in May. The PCE price index excluding food and energy increased 0.1 percent in May, and increased 1.3 percent from a year ago.

Read the BEA release.

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