Friday, October 30, 2015

Consumer Sentiment Improved in September

Consumer confidence rose to 90.0 in October, up 2.8 points from the previous month according to the University of Michigan Consumer Sentiment Index. The headline index in October is lower than the average level for 2015 so far (93.1).

“The entire October rebound from September was due to gains in confidence among lower income households, while confidence among households with incomes in the top third of the income distribution retreated a bit due to concerns about financial markets,” says Richard Curtin, Chief Economist for UM Surveys of Consumers.

The Current Economic Conditions Index rose 1.1 points to 102.3, and was 4.0 points higher than October of last year. The Index of Consumer Expectations rose 3.9 points to 82.1, and grew 2.5 points year over year.

Personal Income and Consumption Slow in September

Personal income increased $18.6 billion, or 0.1 percent, in September, according to the Bureau of Economic Analysis, down from a 0.4 percent increase in August. Personal consumption expenditures (PCE) increased $15.6 billion, or 0.1 percent, below August’s 0.4 percent increase.

Disposable personal income – personal income less taxes – increased 0.1 percent after gaining 0.4 percent in August.

The personal savings rate – personal savings as a percentage of disposable income – was 4.8 percent, up from 4.7 percent last month.

Wages and salaries decreased $3.7 billion in September, after increasing $36.0 billion in August. The decline was attributable to decreases in the private goods-producing industry and manufacturing.

The price index for PCE decreased 0.1 percent in September, after remaining relatively flat in August. The index excluding food and energy increased 0.1 percent from August and 1.3 percent from a year ago, still below the Federal Reserve’s target of 2.0 percent.

Read the BEA release.
Visit the new Banks and the Economy page.

Thursday, October 29, 2015

GDP Falls to 1.5 Percent for Third Quarter

Real GDP for the third quarter grew at an annual rate of 1.5 percent according to the Bureau of Economic Analysis’s “advance” estimate. In the second quarter, real GDP increased 3.9 percent. The third quarter’s slower growth reflected sharp declines in inventory investment as well as decelerations in exports, fixed investment, consumption, and government spending.

Consumption was the largest contributor to GDP, accounting for 2.19 percent of GDP growth, down from 2.42 percent in the second quarter, as spending growth for both goods and services slowed during the third quarter.

Inventories were the largest drag on GDP, subtracting 1.44 percent from growth, after adding 0.02 percent in the second quarter. Net exports were also a drag, contributing a negative 0.03 percent, compared to a positive contribution last quarter.

Government expenditures contributed 0.30 percent to GDP, down from 0.46 percent in last quarter, as growth in national defense and state and local spending fell in the third quarter.

Read the BEA release.

Wednesday, October 28, 2015

Fed Holds Steady in October

The Federal Reserve Open Market Committee (FOMC) decided against raising the federal funds in October. In a statement released post-meeting, the Committee again stated that the U.S. economy was expanding at a “moderate pace,” but noted that the pace of job gains slowed and that net exports have been “soft.” Inflation also continued to run below long-run objectives – in some part due to declines in energy prices and in prices for non-energy imports.

The FOMC continued to see the outlook for economic activity and the labor market as “nearly balanced,” and expects inflation to rise gradually toward 2 percent over the medium term.

Of the voting members of the Committee, all but Richmond Federal Reserve President Jeffrey Lacker voted to hold the target rate between 0 and 25 basis points. The committee did leave the door open for a December rate hike however. “In determining whether it will be appropriate to raise the target range at its next meeting, the Committee will assess progress – both realized and expected – toward its objectives of maximum employment and 2 percent inflation.”

Read the FOMC statement.

Visit the new Banks and the Economy page.

Consumer Confidence Fell in October

Consumer Confidence declined in October, falling 5 points to 97.6 according to The Conference Board’s Consumer Confidence Index.

The Present Situation Index – a measure of respondents’ appraisal of current business and employment conditions, fell 8.2 points from an eight year high to 112.1, while the Expectations Index – a measure of business employment and total family income expectations in the next six months, fell 2.8 points to 88.0.

“Consumers were less positive in their assessment of present-day conditions, in particular the job market, and were moderately less optimistic about the short-term outlook,” says Lynn Franco, Director of Economic Indicators at The Conference Board. “Despite the decline, consumers still rate current conditions favorably, but they do not anticipate the economy strengthening much in the near-term.”

Outlook for the labor market was subdued, as respondents anticipating more jobs in the months ahead declined from 14.9 percent to 14.5 percent, while those anticipating fewer jobs increased from 15.9 percent to 16.9 percent. Income expectations also declined, as 18.0 percent of respondents expected incomes to increase, down from 18.7 percent in September.

Read The Conference Board release.

Visit the new Banks and the Economy page.

Tuesday, October 27, 2015

Home Prices Grew 5.1 Percent in August

The 20-City Case-Shiller Composite gained 5.1 percent year-over-year in August, up from July’s gain of 4.9 percent. The 10-City Composite gained 4.7 percent from the previous year, up from a 4.5 percent annual increase last month. The National Index posted a 4.7 percent annual increase, compared to a 4.6 percent increase in July.

Fifteen cities in the 20-City Index reported greater annual price increases in August than in the previous month. San Francisco, Denver and Portland reported the highest gains with year-over-year increases of 10.7 percent, 10.7 percent, and 9.4 percent.

On a monthly basis, both the National Index and 10-City Composite reported gains of 0.3 percent, while the 20-City Composite posted a month-over-month gain of 0.4 percent.

“Most other recent housing indicators also show strength,” says David M Blitzer of S&P Dow Jones Indices. Housing starts topped an annual rate of 1.2 million units in the latest report with continuing strength in both single family homes and apartments. The National Association of Home Builders sentiment survey, reflecting current strength, reached the highest level since 2005, before the housing collapse. Sales of existing homes are running about 5.5 million units annually. However, the September new home sales took an unexpected and sharp drop as low inventories were cited as a possible cause.”

Read the S&P release.

Durable Goods Orders Fell 1.2 Percent in September

New orders for manufactured durable goods decreased 1.2 percent to $231.1 billion in September, according to the U.S. Census Bureau. The September decrease followed a 3.0 percent decrease in August. The majority of the decline was attributable to a 2.9 percent fall in new orders for transportation equipment. Excluding transportation, new orders fell 0.4 percent.

New orders excluding defense fell 2.0 percent on the month, while orders of non-defense capital goods decreased 7.6 percent to $72.2 billion. Shipments of non-defense goods decreased 0.6 percent to $79.8 billion.

Shipments of manufactured durable goods, up three of the last four months, increased 0.2 percent to $242.5 billion, following a 0.5 percent decrease in August.

Inventories of manufactured durable goods, down four of the last five months, declined 0.3 percent to $399.4 billion, following a 0.2 percent decrease in August.

Read the Census release.

Visit the new Banks and the Economy page.

Monday, October 26, 2015

New Home Sales Fell 11.5 Percent in September

Sales of new single-family homes fell in September to a seasonally adjusted annual rate of 468,000 according to the U.S. Census Bureau and Department of Housing and Urban Development. The September rate is 11.5 percent below the revised August rate of 529,000, but 2.0 percent above the year-ago rate of 459,000.

New home sales contracted month-over-month in all four regions, falling by 61.8 percent in the Northeast, 8.7 percent in the South, 8.3 percent in the Midwest, and 6.7 percent in the West.

The median sales price of new houses sold in September was $296,900, up $7,800 from August. The average sales price for a new home was $364,100, up $21,100 from last month.

At the end of September, there was an estimated supply of 5.8 months at the current sales rate, up from 4.9 months in August.

In contrast, sales of existing homes grew 4.7 percent in September, and are 8.8 percent higher than a year ago.

Read the release.

Visit the new Banks and the Economy page.

Thursday, October 22, 2015

Existing Home Sales Rebounded in September

Existing home sales rose 4.7 percent in September to a seasonally adjusted annual rate of 5.55 million, according to the National Association of Realtors (NAR), up from a downwardly revised 5.30 million in August. Existing home sales are now 8.8 percent higher than the year ago level.

Total housing inventory fell 2.6 percent to 2.21 million existing homes available for sale, 3.1 percent lower than a year ago. There was a 4.8 month supply of unsold inventory in September, down from 5.1 months in August. The median existing home price was $221,900, 6.1 percent above September 2014.

“Despite persistent inventory shortages, the housing market has made great strides this year, backed by an increasing share of pent-up sellers realizing the increased equity they’ve gained from rising home prices and using it towards trading up or moving into a smaller home,” says NAR Chief Economist Lawrence Yun. “Unfortunately, first-time buyers are still failing to generate any meaningful traction this year.”

The percent share of first time homebuyers fell to 29 percent after reaching the highest level of the year (32 percent) in August.

Existing home sales increased in all four regions, rising 8.6 percent in the Northeast, 6.7 in the West, 3.8 percent in the South and 2.3 percent in the Midwest.

Distressed sales remained at 7 percent for the third month in a row. Foreclosures comprised 6 percent of September sales, while 1 percent were short sales.

Read the NAR release.

Visit the new Banks and the Economy.

House Prices Rose 0.3 Percent in August

House prices in the U.S. rose 0.3 percent in August on a seasonally adjusted basis according to the Federal Housing Finance Agency (FHFA) monthly House Price Index (HPI), down from a 0.5 percent monthly gain in July. The FHFA HPI is calculated using home sales information from mortgages sold to, or guaranteed by Fannie Mae and Freddie Mac. According to the Index, housing prices are up 5.5 percent from one year ago.

Prices rose in six of the nine census divisions, with changes ranging from a 0.8 percent increase in the East South Central division, to declines of 0.4 percent in both the East North Central, and Middle Atlantic regions. On a yearly basis, all divisions posted gains. Prices in the Mountain division saw the most pronounced gains, rising 8.3 percent year over year, followed by the Pacific and South Atlantic regions at 7.4 and 7.3 percent respectively. New England and the Middle Atlantic saw more modest gains with prices increasing by 3.2 and 2.2 percent.

Read the FHFA release.

Visit the new Banks and The Economy.

Tuesday, October 20, 2015

ABA Survey: 94 Percent of Consumers Say Retailers Should Improve Security Systems to Protect Financial Information

WASHINGTON — An overwhelming majority of consumers think retailers should be taking steps to protect consumer data from hackers, according to a new survey released today by the American Bankers Association.

Following high-profile data breaches at major retailers including Target and Home Depot, 94 percent of consumers say it is important for retailers to upgrade their security controls, and 70 percent say retailers should be installing EMV chip-enabled card readers as soon as possible. The survey of 1,006 U.S. adults was conducted for ABA by Ipsos Public Affairs, an independent market research firm, Sept. 28-30, 2015.

Merchants are not currently subject to a national data security standard like financial institutions, but consumers believe they should be with 78 percent of consumers saying the government should hold retailers, banks and other companies involved in the payments system to the same security standards. When asked where cardholders feel most vulnerable to fraud following a credit card purchase, 64 percent say they are most concerned about hackers breaking into retailers’ computer systems, compared to just 16 percent who cite physical card theft and 13 percent who cite “phishing” scams.

“Millions of Americans have had their most sensitive information compromised in retailer data breaches, so it’s understandable that consumers are concerned that retailers aren’t doing more to prevent future hacking incidents,” said Doug Johnson, ABA’s senior vice president of payments and cybersecurity policy. “These survey results reaffirm what we’ve believed all along. Retailers need to join with banks and payment networks to combat fraud and focus on the future by updating their payment security systems and proactively working to address emerging threats head-on.”

The survey also found that consumers recognize the importance of innovation in securing customer data, with 88 percent of respondents saying they believe it is important for credit card companies to prioritize the development of new, dynamic payment technologies to stay ahead of ever-evolving criminal threats. Dynamic technologies – such as tokenization used in mobile wallets like Apple Pay – generate new information for every credit card transaction, rendering stolen financial information useless.

Not surprisingly, consumers also continue to value the zero-liability policies offered by financial institutions, with 81 percent of respondents saying they place value on not being liable for fraudulent charges on their cards.

“Regardless of whether banks or retailers are ultimately responsible for the cost of credit card fraud, zero-liability for consumers is our top priority and will not change now or in the future,” Johnson said. “Securing customer data is and will remain the top priority for banks and other financial institutions across the U.S., despite the evolving criminal threats we might face.”

Click here for an infographic of the survey results.

About the Survey

These are findings from an Ipsos poll conducted on behalf of the American Bankers Association. Fielded from September 28 – 30, 2015, the survey reveals consumers’ views on data security, and what is needed to protect sensitive financial information. For the survey, a sample of 1,006 U.S. adults aged 18 and over was interviewed online, including 817 respondents who said they own at least one credit card.

Housing Starts Rebound in September

Housing starts rose 6.5 percent to a seasonally adjusted annual rate of 1.206 million in September. This is 17.5 percent above the September 2014 rate of 1.026 million.

Housing activity rose in three of the four regions, rising 25.4 percent in the West, 23.4 percent in the Northeast and 0.6 percent in the South, but declining 12.2 percent in the Midwest.

New building permits declined in September to 1.103 million, down 5.0 percent from August’s estimate but 4.7 percent above September 2014’s estimate.

Housing completions in September were at a seasonally adjusted annual rate of 1.028 million, up 7.5 percent from August’s estimate and 8.4 percent higher than a year ago.

Read the Census release.
Visit the new Banks and the Economy.

Monday, October 19, 2015

Home Builder Confidence at Highest Level Since 2005

The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) reached a level of 64 in October, the highest reading since late 2005.

Two of the three index components posted gains on the month. Current sales conditions improved 3 points to 70, while the index measuring buyer traffic was unchanged at 47. The index measuring sales expectations in the next six months rose 7 points to 75, after declining last month.

The three-month moving averages for the index increased in all four regions. The Northeast, Midwest and South rose 1 point each to 47, 60, and 65 points, while the West rose 5 points to 69.

“The fact that builder confidence has held in the 60’s since June is proof that the single-family housing market is making lasting gains,” says NAHB Chairman Tom Woods. “However, our members continue to tell us there are still pockets of softness in some markets across the nation.”

NAHB Chief Economist David Crowe was optimistic about the index’s increase in recent months. “This upward momentum shows that our industry is strengthening at a gradual but consistent pace,” said Crowe. “With firm job creation, economic growth and the release of pent-up demand, we expect housing to keep moving forward as we start to close out 2015.”

Read the NAHB release.

Visit the new Banks and the Economy.

Friday, October 16, 2015

Industrial Production Fell 0.2 Percent in September

Industrial production decreased 0.2 percent in September, after falling 0.1 percent in August. Total industrial production is 7.1 points above its 2012 level and 0.4 percent above the year ago level.

Manufacturing output fell 0.1 percent on the month due to a 0.2 percent decline in durable goods output. Nondurable goods production remained unchanged in September.

Mining output fell 2.0 percent in September, the first decrease since May. Mining output is now 5.7 percent below year ago levels.

Utilities output grew by 1.3 percent, as a warmer than usual September created increased demand for air conditioning. The increase in electricity use was partially offset by a decrease in gas utilities output due to weak heating demand.

Capacity utilization was 77.5 percent, down 0.3 points from August and 2.6 points below its long-run average.

Read the Federal Reserve release.

Visit the new Banks and the Economy.

Thursday, October 15, 2015

CPI Continues Decline in September

The Consumer Price Index decreased 0.2 percent in September. The energy index drove the decline, followed by several non-food and -energy commodities. The index was essentially unchanged over the last 12 months.

The energy index declined 4.7 percent in September, the second consecutive monthly decline. All energy commodities fell 8.6 percent, with gasoline falling 9.0 percent and fuel oil falling 2.4 percent. Energy services fell 0.4 percent, as electricity fell 0.5 percent and utility gas service fell 0.3 percent.

The index for all items less food and energy increased 0.2 percent from the previous month and 1.9 percent from the previous year. The monthly rise was driven by increases in the indices for services less energy services (0.3 percent), shelter (0.3 percent) and medical care services (0.3 percent), partially offset by decreases in apparel (-0.3 percent), medical care commodities (-0.2 percent) and used cars and trucks (-0.2 percent).

The index for food increased 0.4 percent from the previous month, the largest monthly increase since May 2014. On a yearly basis the food index increased 1.6 percent. All components of the food index contributed to the increase as food at home increased 0.4 percent and food away from home increased 0.5 percent.

Read the BLS release.

Wednesday, October 14, 2015

Beige Book: Modest Economic Activity, Tight Labor Markets

Economic activity continued to expand modestly across the twelve Federal Reserve Districts from mid-August through early October according to the October 2015 edition of the Federal Reserve Beige Book. Most districts reported modest economic activity, while two districts reported increased activity and one district noted a slight decline in economic activity.

Banking conditions were generally positive, as lending activity increased, loan quality was steady to improved and lending standards were little changed or somewhat easier.

Consumer spending grew modestly during the period. Most districts reported that non-auto sales grew at a modest or moderate rate, while vehicle sales grew more strongly. Nonfinancial services activity generally strengthened.

Labor markets tightened in most districts, as some reported labor shortages, particularly for skilled workers. Wage growth was mostly subdued, though there were some scattered reports of increased wage pressures.

Performance in the manufacturing industry generally weakened, with a number of districts noting adverse effects from the energy sector. Motor vehicles, aerospace and transportation equipment industries reported strength, while metals industries were generally weaker—in part due to the strong dollar.

Read the Federal Reserve release.

Retail Sales Rose 0.1 Percent in September

There were $447.7 billion of retail and food service sales in September (after adjustment for seasonal variation and holiday and trading-day differences but not for price changes), a monthly increase of 0.1 percent, according to the U.S. Census Bureau. Retail sales increased 2.4 percent from September 2014.

Core retail sales – excluding automobiles and parts – fell 0.3 percent from the previous month but increased 0.8 percent from September 2014.

Retail trade sales were flat, virtually unchanged from August, but rose 1.7 percent above last year’s level. Year over year sales from food services and drinking places, as well as motor vehicle and parts dealers saw strong year over year improvements, rising 7.9 and 8.8 percent respectively.

Motor vehicles and parts dealers also saw strong monthly gains, with sales improving 1.7 percent from August. Conversely, sales at gasoline stations fell 3.2 percent on the month and have fallen 19.7 percent from this time last year.

Read the Census release.

Producer Prices Declined in September

Producer prices fell 0.5 percent in September, seasonally adjusted, after remaining unchanged in August according to the U.S. Bureau of Labor Statistics. The September decrease was attributable to a decrease in prices for final demand goods and services.

Prices for final demand goods fell 1.2 percent, the largest decline since January when prices fell 1.9 percent. Over two thirds of September’s decline was attributable to prices for gasoline, which fell 16.6 percent during the month. Prices for final demand goods less foods and energy remained unchanged, while prices for final demand foods fell 0.8 percent.

The index for final demand services decreased by 0.4 percent – the largest decline since February. Nearly half of the decline could be traced to prices for final demand services less trade, transportation, and warehousing which fell 0.3 percent. Over 25 percent of the decline was attributable to a drop in prices for securities brokerage, dealing, investment advice, and related services, which fell 4.3 percent.

Read the BLS release.

Tuesday, October 13, 2015

Millennials’ Money Stress Affecting Other Areas of Life

More than four in 10 U.S. millennials — those aged 18 to 34 — say they are “chronically stressed” about money, and that money stress is spilling over into their emotional well-being, leisure activities, personal relationships and physical health, according to a Bank of America/USA Today survey released today. Of those who worry about money, more than half say they get anxious about it on a weekly basis, and 30 percent say they worry they won’t have enough money to make it through month’s end.

More than six in 10 say they worry some or a lot about the cost of living, and 58 percent say that where they live makes them concerned about their ability to save. Taxes are source of worry for about 43 percent of millennials.

Compared to a similar survey last fall, top financial stress points remain similar but show a longer-term focus in some areas. For example, millennials are six percentage points less likely this year to worry about spending too much, while they are four points more likely to worry about the costs of having children and three points more likely to be concerned about putting aside enough for retirement.

Read more.

Angus Deaton Receives 2015 Nobel Prize for Economics

Princeton University Professor Angus Deaton has received the 2015 Nobel Prize in Economic Sciences for his work regarding individual consumption choices and aggregate outcomes.

Professor Deaton received this year’s award for three achievements: for developing a system to estimate demand for different goods with John Muellbauer in the 1980’s; for his studies of the link between consumption and income in the 1990’s; and his survey work measuring living standards and poverty in developing countries.

In an interview with Adam Smith of Nobel Media, Deaton reflected on why so much of his work was focused at collecting data at the household level. “It’s about people in the end . . .you have to understand what makes people tick, and you have to understand, you know, what’s good for them. And for me it’s always been about trying to understand behavior and to try to infer from that behavior,” said Deaton.

Professor Deaton’s work on demand systems came about after a number of economists in the 1960’s and 1970’s found that existing models did not accurately predict how demand varied with prices and incomes. The work of Deaton and Muellbauer demonstrated that the existing models were too restrictive to reflect actual consumer choice. The new system which they developed is still a standard tool for studying economic policy today.

Read more.

NY Fed: Inflation and Earnings Expectations Decline

Inflation expectations decreased for the third consecutive month at both the one-year ahead and three-year ahead levels, as earnings growth expectations also declined according to the New York Fed’s October Survey of Consumer Expectations (SCE).

Median one-year ahead inflation expectations fell 6 basis points to 2.73 percent in September, tying April’s reading for the lowest of the year. Median three-year ahead inflation expectations fell 3 basis points to 2.84 percent, the lowest reading in two years.

Consumer expectations for changes in home prices increased slightly in September, as consumers expect home prices to rise 3.09 percent over the next year, a six basis point increase from August’s reading but down from a 3.46 percent expectation last year.

One year earnings growth expectations fell 26 basis points to 2.19 percent, while earnings growth uncertainty ticked up 12 basis points to 1.97 percent.

Consumer were less optimistic in their expectations for credit availability a year from now, as 28.79 percent expect credit to be somewhat harder to obtain a year from now, a 3.24 percent increase from last month’s reading. However, the share of consumers expecting it to be much harder to obtain credit a year from now, fell from 6.54 percent in August, to 6.40 percent in September, and the portion of consumer expecting it to be much easier to obtain credit one year from now increased from 0.81 percent to 0.90 percent.

Read the NY Fed release.

Small Business Optimism Increased in September

The NFIB Small Business Optimism Index reached 96.1 points in September, up 0.2 points from August’s reading. Seven of the ten components posted gains on the month, while three fell.

Business owners reported improvement in hiring activity, as owners added a net 0.18 workers per firm in recent months, the highest level of the year. Fifty-three percent of owners reported hiring or trying to hire, but 45 percent reported few or no qualified applicants for the positions they were trying to fill.

Capital spending was unchanged in September, with 58 percent of businesses reporting capital outlays. Only 25 percent of owners are planning capital outlays in the next 3 to 6 months, up 1 percent from August’s reading, as owners expect a continuation of economic “under-performance.”

The earnings trends index improved 2 points in September, as the net portion of owners reporting hiring earnings improved to a negative 13 percent, a 6 point increase from July. Reports of increased labor compensation remained at a net 23 percent of small business owners.

Credit conditions were satisfactory for small business owners. Only two percent reported that all their borrowing needs were not met, a record low. A record high 57 percent explicitly stated that they did not want a loan. Just one percent of owners cited financing as their top business problem compared to 5 percent during the great recession.

Read the NFIB release.

Thursday, October 8, 2015

FOMC Minutes: Inflation Still Below Target

In the minutes of their September 16th – 17th Federal Open Market Committee (FOMC) meeting, Fed officials outlined their decision to hold off on raising the federal funds rate, noting that although labor market conditions had improved considerably since the beginning of the year, headline inflation continued to run below target.

Members agreed that labor markets had improved over the year, with both payroll gains and the falling unemployment rate reaching a level close to their estimates of longer-run normal rates. Participants anticipated that economic activity would continue to expand at a rate which would cause further job growth and fewer underutilized resources. Inflation remained low, however, and members continued to expect declining oil prices and a strengthening dollar to exert downward pressure on inflation in the near term.

Although many members agreed that improvement in the labor market had met or would soon meet their criteria for raising interest rates, some committee members indicated that their confidence that inflation would return to the 2 percent objective over the medium term had not increased due to global economic and financial developments. However, most members did agree that inflation would move to the Committee’s 2 percent objective if economic activity continued to expand as expected.

During a press-conference immediately after the meeting in September, Federal Reserve Chair Janet Yellen stated that the possibility of raising rates was discussed, but ultimately it was decided that it was not the appropriate time. Chair Yellen continues to expect it will be appropriate to increase the federal funds rate later this year.

Of the voting members of the Committee, all but Richmond Federal Reserve President Jeffrey Lacker voted to hold the target rate between 0 and 25 basis points.

Read the FOMC minutes.

Wednesday, October 7, 2015

Consumer Credit Grew at 5.6 Percent (SAAR) in August

Consumer credit increased in August at a seasonally adjusted annual rate of 5.6 percent, rising to $3.47 trillion. Revolving credit rose at an annual rate of 5.3 percent to $918 billion, and non-revolving credit increased at an annual rate of 5.7 percent to $2.55 trillion.

Total outstanding consumer credit increased by $16.0 billion, down from last month’s $18.9 billion increase. Total outstanding non-revolving credit increased $12.0 billion, down from a $14.7 billion increase in July. Outstanding revolving credit increased by $4.0 billion, slightly less than the $4.2 billion increase last month.

Federal Government holdings of student loans continue to be the largest portion of non-revolving credit, comprising 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.

Tuesday, October 6, 2015

U.S. Foreign Trade Deficit Widens in August

The U.S International trade deficit increased in August to $48.3 billion, up $6.5 billion from June. The higher deficit reflected a decrease in exports and an increase in imports. August exports were $185.1 billion, down $3.7 billion. Imports were $233.4 billion, $2.8 billion more than in July.

The goods deficit increased $6.6 billion to $67.9 billion, while the surplus in services increased $0.1 billion to $19.6 billion.

Exports of goods decreased $4.1 billion to $124.5 billion, driven by a $2.2 billion decrease in industrial supplies and materials. Exports of services increased $0.4 billion to $60.6 billion, driven by a $0.1 billion increased in financial services.

Imports of goods increased $2.5 billion to $192.4 billion, largely due to a $2.1 billion increase in cell phones and other household goods. Imports of services increased $0.3 billion to $41.1 billion, mostly due to travel and freight services.

The petroleum deficit decreased $1.2 billion from the previous month and $7.2 billion from the previous year to $6.9 billion.

Read the Census/BEA release.

Monday, October 5, 2015

ISM: Non-Manufacturing Index Fell

The Non-Manufacturing ISM Report on Business Index fell to 56.9 in September, down 2.1 points from August, but still positive, as readings above 50 indicate growth in the sector. Thirteen non-manufacturing industries reported growth in August, while four – Mining; Arts, Entertainment & Recreation; Retail Trade and Other Services – reported contractions.

The Business Activity Index registered 60.2, down 3.7 points from August’s reading. Respondents noted that the business climate has been improving, and firms are making more marketing efforts and rolling out capital improvement projects.

Non-manufacturing employment continued to grow, increasing 2.3 points to 58.3 percent. Employment has been growing for 19 consecutive months. Respondents noted increasing staffing for new programs and expanded business offerings. Ten industries reported growth in employment, while five industries – Mining; Arts, Entertainment & Recreation; Real Estate; Rental & Leasing; Public Administration and Retail Trade – reported a reduction in employment.

The New Orders index fell 6.7 points on the month to 56.7, but still grew overall for the 74th consecutive month. Respondents indicated that business is expanding as new, very large projects begin.

Supplier deliveries slowed as the index registered 52.5 points, consistent with the previous month. Readings above 50 indicate slower deliveries. Thirteen industries reported slower or no change to supplier deliveries while five industries – Mining; Utilities; Information; Finance & Insurance and Retail Trade – reported faster deliveries.

Read the ISM report.

Friday, October 2, 2015

Manufactured Goods Orders Down 1.7 Percent in August

New orders for manufactured goods fell in August after two consecutive monthly increases, dropping 1.7 percent to $473.0 billion.

New orders for manufactured durable goods fell 2.3 percent to $235.5 billion, following a 1.9 percent increase in July. New orders for transportation equipment led the decrease, falling 6.1 percent to $78.3 billion, as new orders for non-defense aircraft and parts, and ships and boats fell 5.9 and 27.4 percent respectively.

Shipments decreased 0.7 percent to $480.1 billion, following a 0.2 percent decrease in July. Inventories declined by 0.3 percent to $648.4 billion, following a 0.3 percent decrease in July. Unfilled orders fell 0.2 percent to $1,195.0 billion, after a 0.2 percent increase. The unfilled orders-to-shipments ratio was 6.87, down from 6.89 last month.

Read the Census release.

142,000 Jobs Added in September

Total nonfarm payroll employment rose by 142,000 in September, an increase from last month’s downwardly revised 136,000. The unemployment rate remained at 5.1 percent, within the Federal Reserve’s full employment estimate of 5.0 and 5.2 percent.

The majority of job gains were in health care and social assistance, which added 36,400, down from the 47,600 added in August. The leisure and hospitality sector followed with 35,000 jobs added, an increase of 3,000 from August.

Goods-producing industries shed jobs again in September. The mining industry shed 12,000, and the manufacturing industry dropped 9,000. Construction added 9,000 jobs and motor vehicles and parts added 2,100.

The civilian labor force participation rate fell to 62.4 percent, after holding at 62.6 percent for the past three months.

The number of long-term unemployed, those jobless for 27 weeks or more, was 2.1 million, down 83,000 from the previous month. This group accounts for 26.6 percent of the unemployed. The number of discouraged workers, those not looking for work because they believe no jobs are available, was 635,000, little changed from a year ago.

Average hourly earnings fell 1 cent to $25.09, following a 9 cent gain in August. Year-over-year, hourly earnings have risen by 2.2 percent.

Read the BLS release.

Thursday, October 1, 2015

Construction Spending Up 0.7 Percent in August

Construction Spending grew 0.7 percent in August to $1,086.2 billion (SAAR). July spending was revised down to $1,079.1 billion (0.4 percent growth). Construction spending during the first 8 months of 2015 amounted to $683.4 billion, 9.8 percent higher than in the first 8 months of 2014.

Total private construction spending rose to $788.0 billion (SAAR), 0.7 percent above the revised July estimate of $782.3 billion.

Private residential construction spending rose to a seasonally adjusted annual rate of $383.3 billion (SAAR), up 1.3 percent from July’s estimate as construction of both single and multi-family units increased.

Private non-residential construction spending reached a rate of $404.7 billion (SAAR), up 0.2 percent from the previous month, as construction related to lodging, manufacturing and power increased.

Public construction spending grew 0.5 percent to $298.2 billion (SAAR), after declining in July. Power-related construction posted the strongest gains for the month, increasing 10.0 percent from July.

Read the Census release.

Manufacturing Growth Slowed for Third Consecutive Month

The ISM Manufacturing Index fell to 50.2 points in September – down 0.9 from August’s reading. However, the manufacturing sector is still growing, as readings above 50 indicate expansion. Of the 18 component industries, 7 reported growth in September, down from 10 in August. Respondents’ sentiment was mixed, with some reporting increased business, while others reported slowing due to nervous consumers.

The employment index declined 0.7 points to 50.5 – still growing, but at a slower pace than in previous months. September marked the third consecutive month of slower growth in manufacturing employment. Eight of the eighteen industries reported employment growth, while nine, including Petroleum, Primary Metals, and Plastics and Rubber Products, reported contraction.

The index for new orders fell 1.6 points from August’s reading to 50.1 percent, growing at a slower pace than the previous month.

Export orders registered 46.5 percent in September, the same as August and the fourth consecutive month of decreases (readings below 50 indicate contraction). Five industries – Furniture & Related Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Chemical Products; and Fabricated Metal Products – reported growth in exports, while 11 industries, including Wood Products and Petroleum Products, reported contraction.

The inventories Index registered 48.5 points, the same as in August, indicating that raw materials inventories contracted for the third consecutive month.

The price index fell 1 point to 38.0, indicating that raw materials prices have decreased for the 11th consecutive month.

Read the ISM release.

Computer Industry Cuts over 30,000 Jobs in September

Employers announced plans to cut 58,877 jobs in September, according to a report issued by Challenger, Gray & Christmas. September’s announced cuts marked a 43 percent increase from the cuts announced in August and was the third largest of the year.

More than half of September’s cuts came from the computer industry, which announced plans to reduce payrolls by 32,500. Hewlett Packard’s 30,000 planned reduction made up the majority of the cuts.

Year-to-date, the industry has announced 58,874 cuts, just below 59,928 for all of 2014.

On a quarterly basis, 205,759 job cuts were announced in the third quarter, up 40 percent from the cuts announced in the second quarter. Year-to-date, 493,431 layoffs have bene planned, up 36 percent from the first 9 months of 2014.

“Job cuts have already surpassed last year’s total and are on track to end the year as the highest annual total since 2009, when nearly 1.3 million layoffs were announced at the tail-end of the recession,” said John A. Challenger, CEO of Challenger, Gray & Christmas.

The energy sector experienced the greatest number of cuts for the year, losing 72,708 jobs to date. Layoffs in the sector have slowed, however, as only 12,208 of those jobs were lost in the most recent quarter.

“While oil cuts have slowed, the issues that helped drive oil prices down in the first place are still impacting the economy,” said Challenger. “We could see more fallout, which appears to have its origins in China, which after years of building up its national infrastructure appears to now have far too much capacity. As a result, manufacturing plants, retail stores, and even entire apartment buildings are sitting empty.”

Read the release.