Wednesday, November 25, 2015

New Home Sales Rose 10.7 Percent in October

Sales of new single-family homes rose in October to a seasonally adjusted annual rate of 495,000 according to the U.S. Census Bureau and Department of Housing and Urban Development. The October rate is 10.7 percent above the revised September rate of 447,000, and 4.9 above the year ago rate of 472,000.

New home sales increased in three of the four regions. Sales increased by 135.3 percent in the Northeast, 8.9 percent in the South, and 5.3 percent in the Midwest. New home sales contracted by 0.9 percent in the West.

The median sales prices of new houses sold in October was $281,500, down from $307,800 in September. The average price was $366,000, down $3,600 from last month.

At the end of October there was an estimated supply of 5.5 months at the current sales rate, down from 6.0 in September.

In contrast to October’s strong gains in new home sales, sales of existing homes fell 3.4 percent according to the National Association of Realtors.

Read the Census/HUD release.

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Consumer Sentiment Increased in November

Consumer sentiment rose to 91.3 in November, up 1.3 points from the previous month according to the University of Michigan Consumer Sentiment Index. The headline index is lower than the average level for the past six months (91.6).

“The data indicate that consumers have become increasingly aware of economic cross currents in the domestic as well as the global economy. Nearly all of the recent advance was focused on current conditions rather than future economic prospects, and the entire November gain was due to lower income households. Households with incomes in the top third of the distribution, who account for more than half of all spending, expressed a more cautious optimism,” says Richard Curtin, Chief Economist for UM Surveys of Consumers.

The Current Economic Conditions Index rose 2.0 points to 104.3, and was 1.6 points higher than the previous year. The Index of Consumer Expectations rose 0.8 points to 82.9, and grew 3.0 points year over year.

House Prices Rose 0.8 Percent in September

House prices in the U.S. rose 0.8 percent in September on a seasonally adjusted basis, according to the Federal Housing Finance Agency (FHFA) monthly House Price Index (HPI). On a quarterly basis, house prices increased by 1.3 percent from the second quarter, and 5.7 percent from the third quarter of 2014.

“The long-anticipated slowdown in home price appreciation did not occur in the third quarter,” says FHFA Principal Economist Andrew Leventis. “The factors that have contributed to extraordinary price growth over the last few years – low interest rates, tight inventories, strong buyer confidence, and improving income growth – continued to drive prices upward in much of the country. However, as prices continue to rise, reduced affordability will be a stronger market headwind.”

Prices rose in all nine census divisions in September, with increases ranging from 0.1 percent in the West North Central and East South Central Regions, to 1.4 percent in New England. On a yearly basis, the Mountain and Pacific regions posted the strongest gains, with house prices increasing by 9.3 and 8.3 percent respectively. The Middle Atlantic region posted the softest gains, with prices rising only 3.6 percent over the year.

Read the FHFA release.

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Personal Income Rises, Consumption Flat

Personal income increased $68.1 billion, or 0.4 percent, in October, according to the Bureau of Economic Analysis, up from a 0.2 percent increase in September. Personal consumption expenditures (PCE) increased $15.2 billion, or 0.1 percent, consistent with the previous month.

Disposable personal income – personal income less taxes – increased 0.4 percent, up from 0.3 percent in Septmeber.

The personal savings rate – personal savings as a percentage of disposable income – was 5.6 percent, up from 4.3 percent last month.

Wages and salaries increased $45.0 billion, after increasing just $2.5 billion in September. October’s increase was primarily driven by a $36.8 billion wage increase in service-producing industries.

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

Read the BEA release.

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Durable Goods Orders Grew 3.0 Percent in October

New orders for manufactured durable goods increased 3.0 percent to $239.0 billion in October, according to the U.S. Census Bureau. The October increase followed a 0.8 percent decrease in September. The majority of the increase was attributable to an 8.0 percent increase in new orders for transportation equipment. Excluding transportation, new orders increased 0.5 percent.

New orders excluding defense grew 3.2 percent on the month, as orders of non-defense capital goods increased by 13.2 percent to $83.2 billion. Despite an increase in new orders, shipments of non-defense capital goods fell 1.4 percent in October.

Shipments of manufactured durable goods, down two of the last three months, decreased 1.0 percent to $240.1 billion, following a 0.2 percent increase last month.

Inventories of manufactured durable goods, down five of the last six months, decreased 0.2 percent to $397.4 billion, following a 0.6 percent decrease in September.

Read the Census release.

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Tuesday, November 24, 2015

ABA Statement on FDIC’s Third Quarter Bank Earnings Report

By James Chessen, ABA chief economist

“Robust loan growth was the driving factor behind another strong quarter for America’s banking industry.  Lending served as the primary driver of the growth in bank assets as the bread and butter of banking moves to center stage.  Banks are well prepared to manage what is expected to be a slow and gradual increase in interest rates by the Fed.  This gives institutions ample time to adjust while low interest rates will continue to attract business borrowers.  With solid profitability, continually improving asset quality and strong capital levels, U.S. banks remain well positioned to make the loans that help drive economic growth.”
Lending Remains at the Forefront
“Loans increased more than $480 billion year over year as banks continue to make the loans that support job growth. The across-the-board increase in lending continued as businesses and consumers take advantage of historically low interest rates.  There has never been a better time to borrow for businesses eyeing expansion in an improving economy.  As commercial lending grows, it drives new economic activity and creates more employment opportunities.  The increase in lending goes beyond businesses, with consumer lending also expanding. Consumer credit growth reflects the hard work people have done to regain their financial footing after the great recession, which gives them the necessary leeway to responsibly take on a bit more credit.”   
Banks Remain Highly Capitalized as Loans Increase
“Banks remain highly capitalized at levels far exceeding the most stringent regulatory standards. The U.S. financial system is strong and well-positioned to withstand a gradual increase in rates by the Fed as well as any economic circumstance that could arise.  With solid levels of capital, banks have refocused their efforts on deploying it in support of loan growth that helps strengthen our economy.  Total industry capital is now $1.8 trillion, and with reserves banks have set aside for possible loan losses, there is a total buffer of $1.9 trillion protecting the industry from any economic circumstance that could arise.”
Asset Quality Continues to Improve
“Asset quality sustained its five-year trend of improvement as cautious behavior on the part of both banks and borrowers continued to pay off.  Loan losses have now returned to pre-crisis lows.  Underwriting standards will naturally adjust to reflect an improving economy and lower risk of lending.  Bank portfolios continue to improve, but sector-specific concerns remain, particularly with the oil and gas sector due to persistently low prices.  Bankers understand that an increase in energy-sector defaults could pose some downside risk and have taken precautionary measures to ensure they’re prepared for any local economic downturn.”

Conference Board Sees Declining Consumer Confidence

The Conference Board’s Consumer Confidence Index declined for a second straight month in November to a reading of 90.4, down from 99.1 in October and 102.6 in September.

The Present Situation Index also decreased for a second month to 108.1, down from 114.6 in October and 120.3 in September.

The Expectations Index saw a third monthly decline, to 78.6 in November, down from 91.6 in August.

According to Lynn Franco, Director of Economic Indicators at The Conference Board, “The decline was mainly due to a less favorable view of the job market… Heading into 2016, consumers are cautious about the labor market and expect little change in business conditions.”

Read The Conference Board report.
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Home Prices Accelerate in September

The 20-City Case-Shiller Composite gained 5.5 percent year-over-year in September, up from August’s gain of 5.1 percent. The 10-City Composite gained 5.0 percent from the previous year, up from a 4.7 percent annual increase last month. The National Index posted a 4.9 percent annual increase, compared to a 4.6 percent increase in August.

On a monthly basis, the National Index, 10-City Composite and 20-City Composite each reported month-over-month gains of 0.2 percent.

Home prices in three cities declined on a monthly basis, with Chicago declining 0.4 percent and Cleveland and Washington declining 0.1 percent. The cities posting the highest monthly gains were Miami and Portland with 0.9 percent and 0.8 percent increases.

“Home prices and housing continue to show strength with home prices rising at more than double the rate of inflation,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “The general economy appeared to slow slightly earlier in the fall, but is now showing renewed strength. With unemployment at 5 percent and hints of higher inflation in the CPI, most analysts expect the Federal Reserve to raise its Fed Funds target range to 25 to 50 basis points, the first increase since 2006. While this will make news, it is not likely to push mortgage rates far above the recent level of 4 percent on 30 year conventional loans. In the last year, mortgage rates have moved in a narrow range as home prices have risen; it will take much more from the Fed to slow home price gains."

Read the S&P release.
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GDP Revised Up to 2.1 Percent for Third Quarter

Real GDP for the third quarter grew at an annual rate of 2.1 percent according to the Bureau of Economic Analysis’s second estimate. GDP was upwardly revised from the first estimate of 1.5 percent growth, but is down from the growth rate of 3.9 percent during the second quarter. The third quarter’s slower growth partly reflected a downturn in private inventory investment as well as decelerations in exports.

Consumption was the largest contributor to GDP, accounting for 2.05 percent of GDP growth, down from 2.42 percent in the second quarter, as spending growth for both goods and services slowed.

Inventories were the largest drag on GDP growth, subtracting 0.59 percent from growth during the quarter, as non-farm inventories fell by $25.9 billion dollars. Net exports were also a drag, subtracting 0.22 percent, as imports increased.

Government expenditures contributed 0.29 percent to growth, down from 0.46 percent last quarter, as growth in both national defense and state and local spending fell from the previous quarter.

Read the BEA release.
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Monday, November 23, 2015

October Home Sales Dip after Strong September

Existing home sales fell 3.4 percent in October to a seasonally adjusted rate of 5.36 million, according to the National Association of Realtors (NAR), down from a rate of 5.55 million in September. Existing home sales are now 3.9 percent higher than the year ago level.

Total housing inventory fell 2.3 percent to 2.14 million existing homes available for sale, 4.5 percent lower than a year ago. There was a 4.8 month supply of unsold inventory in October, up from 4.7 months in September. The median existing home price was $219,600, up 5.8 percent from October 2014.

“New and existing-home supply has struggled to improve so far this fall, leading to few choices for buyers and no easement of the ongoing affordability concerns still prevalent in some markets,” says NAR Chief Economist Lawrence Yun. “Furthermore, the mixed signals of slowing economic growth and volatility in the financial markets slightly tempered demand and contributed to the decreasing pace of sales.”

The percent of first time homebuyers increased to 31 percent in October, up 2 points from both last month and a year ago.

Existing home sales decreased or remained the same in all four regions, falling 0.8 percent in the Midwest, 3.2 percent in the South, and 8.7 percent in the West. Home sales in the Northeast were essentially unchanged from last month.

Distressed sales fell a percentage point to 6 percent in October, the lowest level since 2008. Five percent of sales were foreclosures while one percent were short sales.

Read the NAR release.

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Wednesday, November 18, 2015

FOMC Minutes: Labor Market Gains Slowed, But Still Improved from Earlier this Year

In the minutes of their October 27 – 28th Federal Open Market Committee (FOMC) meeting, Fed officials outlined their decision to hold off on raising the federal funds rate.

Nearly all members agreed that even though job gains had slowed over the intermeeting period, indicators showed that underutilization of labor resources had diminished, and that economic activity would expand at a pace consistent with the Fed’s dual mandate.

Though most participants agreed that the economy would continue to expand, several indicated that in the current low interest rate environment, the Committee should consider providing “additional monetary policy accommodation if the outlook for economic activity were to weaken to a degree that seemed likely to undermine continued progress in labor market conditions.” The minutes did not detail what this additional accommodation would include.

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 minutes.

Housing Starts Fell in October

Housing starts fell to a seasonally adjusted annual rate of 1.060 million, 11.0 percent below the revised September estimate of 1.191 million, and 1.8 percent below the October 2014 rate. Housing starts have remained above 1 million for 7 consecutive months.

Housing activity was mixed across regions, rising 10.2 percent in the Northeast and 15.0 percent in the Midwest, while falling 18.6 percent in the South and 16.2 percent in the West.

New building permits rose in October to 1.150 million, up 4.1 percent from September’s estimate and 2.7 percent above the October 2014 estimate.

Housing completions in October were at a seasonally adjusted annual rate of 965,000, 6.0 percent below September’s estimate, but up 5.2 percent from October 2014.

Read the Census release.

Tuesday, November 17, 2015

Home Builder Confidence Dips in November

The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) declined three points to 62 in November, after reaching a 10-year high in October.

Two of the three index components posted losses in November. Sales expectations fell five points to 70 and current sales conditions declined three points to 67. Buyer traffic rose one point to 48.

The three-month moving averages for the index increased in two of the four regions. The West increased four points to 73 and the Northeast rose three points to 50. The Midwest and the South remained unchanged at 60 and 65, respectively.

“Even with this month’s drop, builder confidence has remained in the 60s for six straight months — a sign that the single-family housing market is making long-term headway,” said NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo. “However, our members continue to voice concerns about the availability of lots and labor.”

“The November report is pullback from an unusually high October, and is more in line with the consistent, modest growth that we have seen throughout the year,” said NAHB Chief Economist David Crowe. “A firming economy, continued job creation and affordable mortgage rates should keep housing on an upward trajectory as we approach 2016.”

Read the NAHB release.
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Industrial Production Fell 0.2 Percent in October

Industrial production decreased 0.2 percent in October, consistent with September’s decrease. Total industrial production is 7.2 points above its 2012 level and 0.3 percent above the year ago level.

Manufacturing output rose 0.4 percent on the month driven by a 0.5 percent increase in output of durable goods and a 0.3 increase in production of nondurable goods.

Mining output fell 1.5 percent, after falling 2.4 percent in September. Mining output is now 6.9 percent below year ago levels.

Utilities output declined by 2.5 percent, as a decrease for electric utilities was partly offset by an increase for natural gas utilities.

Capacity utilization was 77.5 percent, down 0.2 points from September and 2.6 points below its long-run average.

Read the Federal Reserve release.
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CPI Increased Broadly in October

The Consumer Price Index increased 0.2 percent in October. The increase was broad-based, with modest increases in the indexes for food, energy and all items less food and energy.

The energy index rose 0.3 percent in October after declining by 4.7 percent in September, as prices for gasoline increased by 0.4 percent on the month after a 9.0 percent fall in September. The electricity index increased as well, rising by 0.4 percent. Energy prices have fallen by 17.1 percent over the last 12 months.

Prices for non-food and energy items increased 0.2 percent, the same as in the previous month. The increase was tied to the continued rise of the shelter index, which rose 0.3 percent for the second consecutive month. Prices for medical care services and medical care commodities increased 0.8 and 0.2 percent respectively, while the indices for both new and used vehicles fell 0.2 and 0.3 percent.

Food prices grew 0.1 percent, the smallest increase since May. The index for food at home rose 0.1 percent, while the index for food away from home rose 0.2 percent. Over the last year, prices for food at home increased 0.7 percent, while prices for food away from home increased by 2.9 percent.

Read the BLS release.
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Friday, November 13, 2015

Retail Sales Rose 0.1 Percent in October

There were $447.3 billion of retail and food service sales in October (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 1.7 percent from October 2014.

Core retail sales – excluding automobile and parts grew 0.2 percent after declining 0.4 percent in September. Year-over-year, sales excluding automobiles and parts increased 0.5 percent.

Retail trade sales were flat on the month once again, but increased 1.2 percent from last year’s level. Nonstore retailers and sales of motor vehicles and parts also saw strong year-over-year gains, rising 7.1 and 6.2 percent respectively.

Miscellaneous store retailers and nonstore retailers saw the strongest monthly gains, with sales improving 1.8 and 1.4 percent on the month. Sales at gasoline stations saw the largest losses of any group, falling 0.9 percent on the month. Sales at gasoline stations are down 20 percent from October of last year.

Read the Census release.

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Producer Prices Fell in October

Producer prices fell 0.4 percent in October, seasonally adjusted, after falling 0.5 percent in September according to the U.S. Bureau of Labor Statistics. Seventy percent of the October decrease was attributable to a decrease in prices for final demand services.

Prices for final demand goods fell 0.4 percent, the fourth consecutive month of decreases. Over one third of October’s goods index decline was attributable to prices for light motor trucks, which fell 1.8 percent during the month. Prices for final demand goods less foods and energy fell 0.3 percent, while prices for final demand foods fell 0.8 percent for the second consecutive month.

The index for final demand services fell 0.3 percent, primarily due to a decline in margins for fuels and lubricants retailing, which fell 15.8 percent. Prices for final demand transportation and warehousing increased 0.1 percent. In contrast, final demand services less trade, transportation and warehousing fell 0.1 percent.

Read the BLS release.

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Thursday, November 12, 2015

Neel Kashkari to Lead Minneapolis Fed

The Federal Reserve Bank of Minneapolis announced that Neel Kashkari will be the Bank’s 13th President and CEO.

Mr. Kashkari has spent time in both the public and private sector, most recently, as a managing director and executive office holder at PIMCO from 2009 to 2013. Prior to joining PIMCO, he served at the Treasury Department, beginning as a special assistant to Secretary Paulson in 2006, before being appointed to oversee the Troubled Asset Relief Program (TARP) in 2008. Prior to joining Treasury, he was a vice president at Goldman Sachs.

Mr. Kashkari’s is viewed as hawkish on monetary policy, describing quantitative easing as “morphine” on his Twitter account. “Makes u feel better but doesn’t cure,” he says.

Though Mr. Kashkari’s appointment will take effect on January 1, 2016, he will not have a voting presence on the Federal Reserve Open Market Committee until 2017.

Read more.

Tuesday, November 10, 2015

Small Business Optimism Flat in October

The NFIB Small Business Optimism Index was unchanged in October at 96.1 points. Five of the ten components posted gains on the month, while three components posted losses.

Business owners reported a halt in hiring activity, as owners added a net 0.0 workers per firm in recent months. Fifty-five percent of owners reported hiring or trying to hire, while 48 percent reported few or no qualified applicants for their available positions.

Capital spending was unchanged for the second month in a row, with 58 percent of businesses reporting capital outlays. Only 26 percent of owners are planning capital outlays in the next 3 to 6 months, up 1 percent from September’s reading, as owners expect a continuation of economic “under-performance.”

The earnings trends index fell 3 points in October, as the net portion of owners reporting higher earnings fell to a negative 16 percent. Reports of increased labor compensation fell 2 points to a net 21 percent of small business owners.

Credit conditions remained satisfactory, as only 3 percent of owners reported that all their borrowing needs were not met, up 1 point from September’s record low. Fifty-three percent of respondents explicitly stated that they did not want a loan, down 4 percent from September. Just 2 percent of owners cited financing as their top business problem compared to 5 percent during the great recession.

Read the NFIB release.

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Monday, November 9, 2015

NY Fed to Publish Overnight Bank Funding Rate

The Federal Reserve Bank of New York will begin publishing the overnight bank funding rate (OBFR) in the beginning of 2016. The new indicator more accurately measures overnight borrowing costs for U.S. banks. The OFBR will be calculated as a volume weighted median of federal funds and Eurodollar transactions, and is intended to complement the effective federal funds rate.

“Once published, the OBFR will provide a new measure of overnight U.S. – based bank funding costs. Since it is based on a larger set of transactions than other existing rates, it will offer market participants a more comprehensive gauge of overnight unsecured borrowing costs for U.S. – based banks. In normal market conditions, the OBFR and the fed funds rate are likely to track each other closely, although differences may emerge in periods of stress.”

Read more.

Friday, November 6, 2015

Consumer Credit Grew at 10.0 Percent (SAAR) in September

Consumer credit increased in September at a seasonally adjusted annual rate of 10.0 percent, rising to $3.50 trillion. Revolving credit rose at an annual rate of 8.7 percent to $925 billion, and non-revolving credit increased at an annual rate of 10.5 percent to $2.57 trillion.

Total outstanding consumer credit increased $28.9 billion, up from August’s $16.0 billion increase. Total outstanding non-revolving credit increased $22.2 billion, up from a $12.0 billion increase in the previous month. Outstanding revolving credit grew by $6.7 billion, up from $4.0 billion in August.

Federal Government holdings of student loans continue to be the largest portion of non-revolving credit, comprising 36 percent of outstanding credit. Depository institutions and finance companies are the secondary and tertiary holders of non-revolving credit, holding 25 percent and 24 percent respectively. Depository institutions continue to be the primary holder of revolving credit, holding 83 percent.

Read the Federal Reserve release.

Economy Added 271,000 Jobs, Unemployment Fell to 5.0 Percent

Total nonfarm payroll employment rose by 271,000 in October, an increase from the previous month’s total of 137,000 jobs. The unemployment rate fell from 5.1 to 5.0 percent, the lower-end of the Federal Reserve’s full employment estimate of 5.0 to 5.2 percent.

The majority of gains occurred in professional and business services, which added 78,000 jobs, up from 33,000 in September. Health care and social assistance followed with 56,700 jobs added, up from 47,100 in September. Over the past year, the health care sector has added 495,000 jobs.

Goods producing industries added 27,000 jobs, after declining the past two months, as the construction sector grew by 31,000. Growth was partially offset by the mining and logging and durable goods manufacturing sectors, which shed 4,000 and 3,000 jobs.

The civilian labor force participation rate held steady at 62.4 percent. The number of long-term unemployed, those jobless for 27 weeks or more was also unchanged at 2.1 million.

The number of discouraged workers, those not looking for work because they believe no jobs are available, was 665,000, little changed from a year ago.

Average hourly earnings rose 9 cents to $25.20. Year-over-year, hourly earnings have grown 2.5 percent.

Read the BLS release.

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Thursday, November 5, 2015

Oil Industry Accounts for One Quarter of Job Cuts in October

Employers announced plans to cut 50,504 jobs in October, according to a report issued by Challenger, Gray & Christmas. October’s announced cuts were 14 percent lower than September, and 1.3 percent lower than a year ago.

Year-to-date, employers have announced 543,935 cuts, 31 percent higher than the 414,591 cuts announced by this point last year and 13 percent higher than the 2014 year-end total.

More than one quarter of October’s cuts (13,671 cuts) were oil related. Nearly one in five job cuts announced this year have been the result of low oil prices. The oil industry has announced the most job cuts of any industry this year, with a total of 90,052 job cuts so far. In the first 10 months of 2014, the oil industry announced just 10,402 job cuts, 766 percent lower than the same period in 2015.

“Despite the surge in job cuts across several sectors, it is hardly time to panic. While falling oil prices are impacting the bottom lines of companies in the energy and industrial goods sectors, they are helping many other employers, such as those in transportation and plastics manufacturing,” said John A. Challenger, CEO of Challenger, Gray & Christmas.

The second highest job cuts so far this year were from the government, mostly due to cuts in the military. Year-to-date the government announced 69,105 job cuts, 226 percent higher than the same period last year.

The retail industry had the third highest announced job cuts so far this year, with 5,153 cuts in October. Year-to-date, the industry announced 64,983 job cuts, up 67 percent from the same period last year.

Read the release.
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Wednesday, November 4, 2015

ISM: Non-Manufacturing Index Grew in September

The Non-Manufacturing ISM Report on Business Index rose to 59.1 in October, up 2.2 points from September’s reading. Readings above 50 indicate growth in the sector. Fourteen non-manufacturing industries reported growth in October, while only the mining industry reported contraction.

The Business Activity Index increased 2.8 points to 63.0, marking the 75th consecutive month of growth in business activity. Respondents noted that business activity had generally increased over the last month and that store traffic had been heavy.

Non-manufacturing employment continued to grow, with the index increasing 0.9 points to 59.2, marking the 20th consecutive month of growth in non-manufacturing employment. Respondents noted that they were consistently adding full time employees, and that hiring had increased due to gains in revenue. Eleven industries reported growth in employment, up from 10 last month. Four industries – utilities; accommodation and food services; information; and mining reported shedding jobs.

The New Orders Index increased 5.3 points to 62.0, growing for the 75th consecutive month. Respondents reported adding new customers during the month, as well as increasing customer demand due to expanding products and services.

Supplier deliveries continued to slow as the index registered 52.0 percent, down slightly from September. Readings above 50 indicate slower deliveries. Nine industries, including retail trade and utilities reported slower deliveries, while five industries reported faster deliveries.

Read the ISM release.

U.S. Foreign Trade Deficit Narrowed in September

The U.S. international trade deficit narrowed in September to $40.8 billion, down $7.2 billion from August. The decrease in the deficit reflected an increase in exports and a decrease in imports. September exports were $187.9 billion, up $3.0 billion on the month, while imports fell $4.2 billion to $228.7 billion.

The goods deficit fell $7.3 billion to $60.3 billion, while the surplus in services was essentially flat at $19.5 billion. The petroleum deficit fell $1.3 billion to $5.6 billion.

Exports of goods increased $2.9 billion to $127.3 billion, driven by increases in consumer and capital goods. Exports of services increased $0.1 billion to $60.6 billion, largely related to the travel sector and business services.

Imports of goods fell $4.4 billion to $187.6 billion, as imports of industrial supplies and materials, along with capital goods fell $1.6 billion and $1.0 billion respectively. Imports of services increased $0.1 billion to $41.1 billion, almost entirely due to travel.

Read the Census/BEA release.

ADP: 182,000 Jobs Added in October

According to the ADP National Employment Report, the non-farm private sector added 182,000 jobs in October, down from 190,000 in September. The goods-producing sector saw faster job growth for the month, while the pace of growth in the service-providing sector slowed.

“Job growth as measured by the ADP Research Institute is not slowing meaningfully in contrast with the recent slowdown in the government’s data,” said Mark Zandi, chief economist of Moody’s Analytics. “The economy is creating close to 200,000 jobs per month. Job gains are broad based with energy and manufacturing alone subtracting from the top line. Small businesses, in particular, are contributing to the labor market’s solid performance”

Small businesses, with less than 50 employees added 90,000 jobs in October, up from 47,000 in September. Medium-sized businesses, with 50-499 employees added 63,000 jobs, up from 42,000 in September. Large businesses, with 500 or more employees added 29,000 jobs, down sharply from the 100,000 added in September.

Goods producing employment rose by 24,000 jobs – three times higher than September’s rate, as construction jobs grew by 35,000 and manufacturing jobs fell at a much slower pace.

Service-providing employment rose by 158,000, down from 182,000 in September. Professional and business services contributed 13,000 jobs, less than half of last month’s contribution, while the trade transportation and utilities sector expanded by 35,000 jobs, down from 38,000 in September.

Read the ADP release.

Tuesday, November 3, 2015

Manufactured Goods Orders Down 1.0 Percent in September

New orders for manufactured goods fell in September for the second consecutive month, falling 1.0 percent to $466.3 billion, according to the U.S. Census Bureau. New orders excluding transportation fell 0.6 percent to $391.0.

New orders for manufactured durable goods fell 1.2 percent to $231.2 billion, after falling 2.9 percent in August. New orders for transportation equipment led the decrease, falling 3.1 percent to $75.3 billion, as orders for non-defense aircrafts and parts fell by over $5 billion in September.

Shipments increased 0.1 percent to $242.2 billion, following a 0.5 percent decline in August. Inventories fell once again, declining 0.4 percent to $399.1 billion, after a 0.2 percent August decrease. Unfilled orders fell for the second consecutive month, falling 0.5 percent to $1,187.9 billion, after a 0.3 percent decrease last month.

Read the Census release.

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Monday, November 2, 2015

C&I Lending Standards Little Changed as Demand Flattens

Over the past three months, banks reported easing lending standards and weaker demand for a variety of home loan types. Lending standards for C&I and CRE loans were largely unchanged as demand remained flat in the third quarter, according to the October Federal Reserve Senior Loan Officer Opinion Survey.

Although the majority of banks did not change their lending standards, a net 7.3 percent of banks reported tightening standards for commercial and industrial lending to large and middle market firms, while a net 1.4 percent reported tightening standards for small business lending. Most respondents who tightened standards for C&I loans cited a less favorable or more uncertain economic outlook, as well as worsening of industry-specific problems. Some banks also attributed tightening to a reduced risk tolerance and decreased activity in the secondary market for loans. The few banks which eased lending standards cited aggressive competition from banks and nonbank lenders as their reason for doing so.

A modest net fraction of banks eased underwriting standards on mortgages eligible for purchase by government sponsored enterprises, and on qualified mortgage loans. However, modest net fractions of banks reported weaker demand across most categories of mortgages.

Read the release.

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October ISM Manufacturing Index Reports Softer Growth

The ISM Manufacturing Index fell to 50.1 points in October – down 0.1 point from September’s reading. However, the manufacturing industry is still growing, as readings above 50 indicate expansion. Of the 18 manufacturing industries, 7 reported growth in September, consistent with October. Survey respondents expressed concern about currency exchanges causing an impact on their bottom line, but also expressed sentiment that business activity is “acceptable” despite some slowing.

The employment index fell 2.9 points to 47.6, indicating contraction after 5 consecutive months of growth. October’s reading was also the lowest since August 2009. Only 5 of the 18 industries reported growth, while 7 industries, including petroleum, plastics, primary metals and transportation reported contraction.

The index for new orders increased 2.8 points to 52.9, indicating growth for the 35th consecutive month.

Export orders were 47.5 percent in October marking the 5th consecutive monthly decline. Six industries reported growth in export orders, including wood products and manufacturing. Seven industries, including apparel, plastics and primary metals, contracted.

The inventories index fell 2.0 points to 46.5 in October, indicating that raw materials inventories have contracted for the fourth consecutive month.

The price index rose 1 point to 39 in October, indicating that raw materials prices have increased for the 12th consecutive month.

Read the ISM release.

Construction Spending Rose 0.6 Percent in September

Construction spending grew 0.6 percent in September to $1,094.2 billion (SAAR). August’s spending estimate was revised up slightly to $1.087.5 billion (0.7 percent growth). Construction spending during the first 9 months of 2015 amounted to $786.6 billion, 10.5 percent higher than in the first 9 months of 2014.

Total private construction spending rose to $794.2 billion (SAAR), 0.6 percent above the revised August estimate of $789.7 billion.

Private residential construction spending rose to a seasonally adjusted annual rate of $394.7 billion, up 1.9 percent from August’s estimate, as construction of single and multifamily units increased by 1.3 percent and 4.9 percent respectively.

Private non-residential construction fell 0.7 percent to a seasonally adjusted annual rate of $399.5 billion, as construction related to power, lodging, commercial development, and other segments fell.

Public construction spending grew 0.7 percent to $300.0 billion (SAAR), after falling in August. Construction related to education posted strong increases in September, rising 2.4 percent from August to $69.1 billion in September.

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