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Monday, July 24, 2017

Existing-Home Sales Declined in June

Existing-home sales decreased 1.8% to a seasonally adjusted annual rate of 5.52 million in June, according to the National Association of Realtors (NAR). Despite the decline, sales are 0.7% above a year ago.
"Closings were down in most of the country last month because interested buyers are being tripped up by supply that remains stuck at a meager level and price growth that's straining their budget," said Lawrence Yun, NAR chief economist. "The demand for buying a home is as strong as it has been since before the Great Recession. Listings in the affordable price range continue to be scooped up rapidly, but the severe housing shortages inflicting many markets are keeping a large segment of would-be buyers on the sidelines."

The total housing inventory fell 0.5% to 1.96 million homes available for sale, while the median existing home price climbed to $263,800, up 6.5% from June 2016 ($247,600) as the new peak median sales price. This marks the 64th straight month of year-over-year gains.

Distressed sales were 4% of the total in June, down from 6% a year ago and matching last September as the lowest share of sales since NAR began tracking in October 2008. Three percent of sales were foreclosures and 1% were short sales.

Read the NAR release.
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Wednesday, July 19, 2017

Housing Starts Grew in June

Housing starts increased to a seasonally adjusted annual rate of 1.215 million in June, 8.3% above the revised May rate of 1.122 million and 2.1% above the June 2016 rate.
Housing activity increased 1.6% in the West and jumped 83.7% in the Northeast. The Midwest’s housing activity grew 22.0%, while the South’s decreased 3.8%.
New building permits increased during the month, rising 7.4% to 1.254 million. Permits were up 5.1% from the June 2016 rate.

Housing completions were at a seasonally adjusted annual rate of 1.203 million, up 5.2% from the revised May estimate and 8.1% above the June 2016 rate.

Read the Census release.

Tuesday, July 18, 2017

Builder Confidence Declines Slightly in July

The National Association of Home Builders/Wells Fargo Housing Market Index slowed to 64 in July, a two point decrease from July’s downwardly revised reading of 66.

“Our members are telling us they are growing increasingly concerned over rising material prices, particularly lumber,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas. “This is hurting housing affordability even as consumer interest in the new-home market remains strong.”

All three HMI components posted losses in July but remained at historically solid levels. The component measuring current sales conditions fell two points to 70; the component measuring sales expectations in the next six months decreased two points to 73, and the component measuring buyer traffic moved down one point to 48.

The regional three-month moving averages for HMI scores showed gains in just one of the four regions. The Northeast edged one point up to 47, while the Midwest and West each dropped one point to 66 and 75, respectively. The South fell three points to 67.

Read the NAHB release.
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Friday, July 14, 2017

Industrial Production Rose 0.4% in June

Industrial production grew 0.4% in June after an upwardly revised 0.1% May increase, according to the Federal Reserve. May’s jump was the fifth consecutive month of growth
Manufacturing output grew 0.2% in June after a 0.4% decline in May. Production of durable goods and nondurables both edged up 0.5% during the month. Capacity utilization for manufacturing increased by 0.1 percentage point to 75.4%, a rate that is 3.4 percentage points below its long-run average.

The output of mining continued to rise, increasing 1.6% in June, following a 1.9% May jump. The index in June was 9.9% higher than its year-earlier level.

Utilities remained unchanged in June, following increases in the three previous months.

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Retail Sales Fell in June

There were $473.5 billion in retail and food service sales in June, down 0.2% from the previous month and up 2.8% from June 2016, according to the U.S. Census Bureau. 
Core retail sales – excluding automobiles and parts – also fell 0.2%. Year-over-year core sales increased 2.4%. 

Retail trade sales decreased 0.1% from May and are up 3.0% from last year. Sales at nonstore retailers increased 0.4% from May, while increasing 9.2% year-over-year.

Sales at gasoline stations decreased 1.3% during the month but are up 0.3% from a year ago.

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Consumer Prices Unchanged in June

The Consumer Price Index remained flat in June on a seasonally adjusted basis, according to U.S. Bureau of Labor Statistics. Over the last 12 months, the all-items index rose 1.6%. 
Prices for all items less food and energy, the “core CPI,” increased 0.1% in June, the same as in May. The index rose 1.7% for the 12 months ending in June. 

The food index was unchanged after five consecutive monthly increase. Prices for food at home fell 0.1%, while prices for food away from home remained flat. Over the past 12 months, food prices are up 0.9%.

The energy index decreased 1.6% in June, led by the fuel oil index falling 3.7%.

Read the BLS release.
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Thursday, July 13, 2017

Producer Prices Increased 0.1% in June

Producer prices increased 0.1% in June, seasonally adjusted, after remaining unchanged in May, according to the U.S. Bureau of Labor Statistics. Producer prices rose 2.0% for the twelve months ended June 2017. 
The index for final demand goods increased 0.1% in June after falling 0.5% in the previous month. The index for final demand energy fell 0.5%, the second consecutive monthly decline. Prices for final demand foods climbed 0.6%. 

Prices for final demand services moved up 0.2% in June. Most of the increase can be traced to prices for final demand services less trade, transportation and warehousing, which advanced 0.3%.

Read the BLS release.
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Wednesday, July 12, 2017

Beige Book: Economic Activity Expanding at a Slight to Moderate Pace

Economic activity continued to expand at a slight to moderate pace across the twelve Federal Reserve Districts in June, according to the just-released Federal Reserve Beige Book.

Consumer spending softened this period, particularly in auto retail sales which declined in half of the Districts. Manufacturing and non-financial services continued to expand at a modest to moderate pace across the Districts. Agricultural conditions were mixed as regions reported varying moisture conditions. Energy activity improved since the most recent Beige Book, driven by growth in oil and natural gas but somewhat offset by sluggish coal production.

Employment expanded across most Districts at a modest to moderate pace. Labor markets once again remained tight, and employers in most Districts continued to report greater difficulty attracting and retaining qualified workers.

Modest to moderate wage growth was seen in most Districts, with many reporting tight labor market conditions driving wage gains. Prices increased modestly in the majority of districts. Several Districts reported higher construction materials costs but lower gasoline and agricultural prices.

Read the full Federal Reserve report
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Tuesday, July 11, 2017

Small Business Optimism Dips in June, Remains Historically High

The NFIB Small Business Optimism Index dipped to 103.6 in June but maintained the high level of post-election optimism. June’s index was 0.9 point lower than May’s 104.5 reading. Four of the ten index components rose, while five declined.
Reported job creation fell 5 points, as 54% of businesses reported hiring or trying to hire. However, 46% reported few or no qualified applicants for the positions they were trying to fill. Fifteen percent of employers surveyed cited the difficulty of finding qualified workers as their top business problem. A seasonally adjusted net 15% of owners plan to create new jobs, down three points from the previous month. 

Seasonally adjusted, the net percent of owners expecting better business conditions fell six points to a net 33%. The percent of owners reporting higher sales in the past three months compared to the prior three months was negative 4%, a 9-point decline from May’s reading. Seasonally adjusted, the net percent of owners expecting higher real sales volumes fell five points to a net 17% of owners. Capital spending moved down five points as 57% of owners reported capital outlays. The percent of owners planning capital outlays in the next 3 to 6 months increased three points to 30%, which is the highest reading since September 2007.

Credit conditions mostly held steady, as 4% of owners reported that all their borrowing needs were not met, one point higher than May but historically very low. Only 1% of business owners surveyed reported that financing was their top business problem, down one point from May.

Read the NFIB report.
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Monday, July 10, 2017

Consumer Credit Growth Accelerated in May

Consumer credit increased at a seasonally adjusted annual rate of 5.8% in May, up from a revised 4.1% rate in April. Total outstanding credit increased $18.4 billion during the month (compared with $12.9 billion in April) to $3.84 trillion.
Revolving credit grew at an annual rate of 8.7% to $1.0 trillion, compared to a 1.4% increase in April. Non-revolving credit rose at a 4.7% annual rate, or $11.1 billion, compared to April’s rate of $11.7 billion. Total non-revolving credit is now $2.82 trillion.
Federal government holdings of student loans continue to be the largest portion of non-revolving credit, comprising approximately 38.7% of outstanding credit. Depository institutions and finance companies are secondary and tertiary holders, with 24.5% and 21.3%, respectively, of outstanding non-revolving credit.

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Friday, July 7, 2017

222,000 Jobs Added in June

Total nonfarm payroll employment rose by 222,000 in June, an increase from May’s upwardly revised figure of 152,000, according to the Bureau of Labor Statistics. The national unemployment rate nudged up to 4.4%.
Private service-providing industries added a net 162,000 jobs, led by gains in health care and social assistance, which added 59,100 during the month, and by the leisure and hospitality sector, which added 36,000.

Goods-producing employment rose by 25,000 jobs during the month, as gains in construction led the way for the second consecutive month by adding 16,000 in June.

The civilian labor force participation rate was 62.8%, a 0.1% increase from May. Workers unemployed for less than 14 weeks increased 124,000, while the number of long-term unemployed, those jobless for 27 weeks or more, was virtually unchanged at 1.67 million and accounted for 23.8% of the unemployed. The number of discouraged workers was 514,000, a 159,000 increase after four straight monthly declines.

Average hourly earnings increased by 4 cents to $26.25, after a 3-cent increase in May. Over the past year, average hourly earnings have risen by 63 cents, or 2.5%.

Read the BLS release.
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Thursday, July 6, 2017

ISM: Non-Manufacturing Sector Grew in June

The ISM Non-Manufacturing Index registered 57.4 points in June, 0.5 percentage point above May’s figure. This was the 90th consecutive month of growth. Sixteen non-manufacturing industries reported growth in June, while only one reported contraction. 
Growth in the Business Activity Index increased 0.1 point to 60.8. Fourteen industries reported increased business activity and one reported decreased activity. Respondents noted an increased demand for their services and general overall optimism in the economy. 

Non-manufacturing employment grew for the 40th consecutive month. The index decreased 2.0 points to 55.8. Fourteen industries reported increased employment, while two reported decreased employment. 

The New Orders Index grew 2.8 points to 60.5. Fifteen industries reported increased business activity and no industry reported decreased activity.

Supplier deliveries slowed for the 18th consecutive month, as the index registered 52.5 points (readings above 50 for this index indicate slower deliveries). Eight industries reported slower deliveries, while four reported faster deliveries. 

Read the ISM release.
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ADP: 158,000 Jobs Added in June

The non-farm private sector added 158,000 jobs in June, according to the ADP National Employment Report. May’s figure was revised down from 253,000 to 230,000. Professional and business services jobs accounted for 43.6% of June’s growth.
Businesses of all sizes saw increases. Small businesses with fewer than 50 employees were sluggish, adding 17,000 jobs, while medium-sized businesses with 50-499 employees added 91,000. Large businesses added 50,000 jobs.

Mark Zandi, chief economist of Moody’s Analytics, said, “The job market continues to power forward. Abstracting from the monthly ups and downs, job growth remains a stalwart between 150,000 and 200,000. At this pace, which is double the rate of labor force growth, the tight labor market will continue getting tighter.”

Service-providing employment rose by 158,000 jobs, driven by the professional and business services sector which added 69,000. The health services sector had a robust report, adding 33,000 jobs. The education sector was the only reported setback in service-providing employment, losing 6,000 jobs. Goods-producing employment showed no job growth. The manufacturing industry gained 6,000 jobs, offsetting losses of 4,000 and 2,000 in the mining and construction sectors, respectively.

Read the ADP report.
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Wednesday, July 5, 2017

Fed to Consider Shrinking Balance Sheet in Coming Months

The Federal Open Market Committee indicated support for continued gradual rate increases in minutes from their June 13-14 meeting. The Committee voted to lift rates 25 basis points in June and signaled one more hike in 2017 in updated projections. The minutes reflected continued division on the timing of shrinking the Fed’s balance sheet, though the Committee expects to begin implementing a normalization program this year.

Participants’ views on current conditions and the economic outlook questioned the cause of rising asset prices. Some participants suggested an “increased risk tolerance” might be contributing to elevated asset prices, while a few participants offered concern that subdued market volatility, along with a low equity premium, could increase risks to financial stability.

The Committee’s minutes noted that optimism about business prospects “appeared to have recently abated somewhat” as Congress continues to debate healthcare, diminishing the likelihood of a significant fiscal stimulus. “Contacts at some large firms indicated that they had curtailed their capital spending, in part because of uncertainty about changes in fiscal and other government policies,” the minutes showed.

Read the FOMC minutes.

Manufactured Goods Orders Fell in May

New orders for manufactured goods fell 0.8% to $464.9 billion in May, according to the U.S. Census Bureau. It was the second consecutive monthly decrease, following a 0.3% April slide.
New orders for manufactured durable goods decreased 0.8% for the second consecutive month, landing at $229.1 billion in May. Orders for transportation equipment drove the decline, falling 3.0% to $75.9 billion.

Shipments of manufactured durable goods, up following two consecutive monthly decreases, grew 1.0% to $235.8 billion.

Inventories of manufactured durable goods, up ten of the last eleven months, increased 0.2% to $395.8 billion.

Read the Census release.

Construction Spending Holds Steady in May

Construction spending was virtually unchanged in May, landing at a seasonally adjusted annual level (SAAL) of $1,230.1 billion, according to the Census Bureau. April’s spending estimate was revised to a rate of $1,230.4 billion. May’s figure is 4.5% greater than the May 2016 estimate of $1,177.0 billion.
Total private construction was $943.2 billion SAAL, a 0.6% decrease from the revised April estimate of $949.3 billion. Total private construction is 6.2% higher than the May 2016 figure.

Private residential construction was $509.6 billion SAAL, 0.6% below April’s downwardly revised rate. May’s figure is 11.2% greater than its May 2016 estimate.

Private nonresidential construction was $433.6 billion, 0.7% below April’s upwardly revised estimate. May’s estimate is 0.8% greater than the May 2016 figure.

Public construction increased 2.1% to $286.9 billion SAAL. May’s figure is 0.6% below the May 2016 estimate.

Read the Census release.
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Manufacturing Sector Expanded in June

The ISM Manufacturing Index registered 57.8 points in June, up 2.9 percentage points from the previous month, according to the Institute for Supply Management. June’s reading indicates a tenth consecutive month of expansion in manufacturing, as readings over 50 points denote expansion. Of the eighteen manufacturing industries, fifteen reported growth, while three reported contraction. Nine of the ten index components grew, while the inventories index was the only to contract.
The Employment Index increased 3.7 points to 57.2 in June, indicating expansion for the ninth consecutive month. Fourteen industries reported expansion, while two reported a decrease in employment.

The New Orders Index grew 4.0 points to 63.5 in June, indicating growth for the tenth consecutive month. Fifteen industries reported expansion, while three reported a decrease in employment.

Export orders increased 2.0 points to 59.5, indicating growth for the sixteenth consecutive month. Twelve industries reported growth while only one of the eighteen reported a decrease in new export orders.

The inventories index registered 49.0 points, down 2.5 points from the previous month. Six industries reported higher inventories, while six reported a decrease.

Read the ISM release.
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Friday, June 30, 2017

Consumer Sentiment Declined in June

Consumer Sentiment fell 2.0 points in June to 95.1, according to the University of Michigan Consumer Sentiment Index.  

The Current Economic Conditions Index rose 0.8 point to 112.5, while the Consumer Expectations Index decreased 3.8 points to 83.9. 
“Although consumer confidence slipped to its lowest level since Trump was elected, the overall level still remains quite favorable. The average level of the Sentiment Index during the first half of 2017 was 96.8, the best half-year average since the second half of 2000, and the partisan gap between Democrats and Republicans stood at 39 Index-points in June, nearly identical to the 38 point gap in February. The partisan divide still meant that June's Sentiment Index of 95.1 was nearly equal to both the average (95.7) between the optimism of Republicans and the pessimism of Democrats and the value for Independents (94.6). Surprisingly, the optimism among Republicans and Independents has largely resisted declines in the past several months despite the decreased likelihood that Trump's agenda will be passed in 2017,” said Richard Curtin, chief economist of UM Surveys of Consumers. “The most important policies to consumers are those that directly or indirectly affect their jobs, incomes, or their financial security. Fortunately, increasing uncertainty about future prospects for the economy has thus far been offset by the resurgent strength in the personal financial situation of consumers. The combination of continuing improvements in personal finances and increasing concerns about the economic outlook is typical around cyclical peaks. Nonetheless, the data provide no indication of an imminent downturn nor do the data provide any indication of a resurgent boom in spending. Even with a much improved 2nd quarter, personal consumption spending is expected to advance during 2017 by about 2.3%.” 

Read the University of Michigan Surveys of Consumers 
release
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Thursday, June 29, 2017

First Quarter GDP Revised up to 1.4%

Real GDP for the First quarter of 2017 grew at a seasonally adjusted annual rate of 1.4%, according to the Bureau of Economic Analysis’s revised estimate, up slightly from the second estimate of 1.2%. The general picture of economic growth remained the same.
 
The increase in the estimate was mostly due to consumer spending on services and exports being larger than previously estimated. This was partially offset by a small downward revision to nonresidential fixed investment.
 
Real gross domestic income increased 1.0% in the first quarter, down from 1.4% in the fourth quarter of 2016. Current-dollar GDP increased 3.4% compared to 4.2% in the previous quarter.


Read the GDP release.
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Tuesday, June 27, 2017

Consumer Confidence Increased Moderately in June

The Conference Board Consumer Confidence Index increased to 118.9 in June, rebounding from declines in the two preceding months. The Present Situation Index rose 5.7 points to 146.3, the second consecutive monthly increase. The Expectations Index declined for the third straight month, falling 1.7 points to 100.6.
“Consumer confidence increased moderately in June following a small decline in May,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current conditions improved to a nearly 16-year high (July 2001, 151.3). Expectations for the short-term have eased somewhat, but are still upbeat. Overall, consumers anticipate the economy will continue expanding in the months ahead, but they do not foresee the pace of growth accelerating.”

Consumers’ labor market outlook remained mixed during June. The percentage of consumers expecting more jobs in the coming months increased from 18.6% to 19.3%, but the share anticipating fewer jobs increased from 12.1% to 14.6%. Income expectations rose, as 22.2% of consumers expected their incomes to increase in coming months, up from 19.1% in May.

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Monday, June 26, 2017

Durable Goods Orders Fell in May

New orders for manufactured durable goods decreased 1.1% in May to $228.2 billion, following a 0.9% April decrease, according to the U.S. Census Bureau.
New orders excluding defense fell 0.6% on the month, as orders of nondefense capital goods decreased 2.4% to $68.3 billion.

Shipments of manufactured durable goods increased 0.8% to $234.9 billion.

Inventories of manufactured durable goods rose 0.2% to $395.4 billion, following a 0.2% April increase.

Read the Census release.
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Friday, June 23, 2017

New Home Sales Increased in May

New single-family home sales rose to a seasonally adjusted annual rate of 610,000 in May, according to the U.S. Census Bureau and the Department of Housing and Urban Development. The May level was 2.9% above the revised April rate of 593,000 and 8.9% above the May 2016 level.
Sales grew in two regions, 6.2% in the South and 13.3% in the West. The Midwest and Northeast posted losses of 25.7% and 10.8%, respectively.

The median price of a new home was $345,800, up 11.5% from April. The average price was $406,400.

At the end of May, the estimated supply at the current sales rate remained unchanged at 5.3 months.

Read the Census/HUD release.
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Wednesday, June 21, 2017

Existing-Home Sales Rebounded in May; Median Sales Price at New High

Existing-home sales increased 1.1% to a seasonally adjusted annual rate of 5.62 million in May, according to the National Association of Realtors (NAR). Sales are 2.7% above a year ago and the third highest pace over the last year.
“The job market in most of the country is healthy, and the recent downward trend in mortgage rates continues to keep buyer interest at a robust level," said Lawrence Yun, NAR chief economist. “Those able to close on a home last month are probably feeling both happy and relieved. Listings in the affordable price range are scarce, homes are coming off the market at an extremely fast pace and the prevalence of multiple offers in some markets are pushing prices higher."

The total housing inventory rose 2.1% to 1.96 million homes available for sale, while the median existing home price climbed to $252,800, surpassing last June ($247,600) as the new peak median sales price. This marks the 63rd straight month of year-over-year gains.

Distressed sales were 5% of the total in May, which are down from 6% a year ago. Four percent of sales were foreclosures and 1% were short sales. On average, foreclosures and short sales sold for discounts of 20% and 16%, respectively.

Read the NAR release.
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Friday, June 16, 2017

Housing Starts Declined in May

Housing starts fell to a seasonally adjusted annual rate of 1.092 million in May, 5.5% below the revised April rate of 1.156 million and 2.4% below the May 2016 rate. 
 
Housing activity increased 1.3% in the West and remained at the same level in the Northeast. The Midwest and South experienced declines of 9.2% and 8.8%, respectively. 
New building permits decreased during the month, falling 4.9% to 1.168 million. Permits were down 0.8% from the May 2016 rate.

Housing completions were at a seasonally adjusted annual rate of 1.164 million, up 5.6% from the revised April estimate and 14.6% above the May 2016 rate.

Read the Census release.

Thursday, June 15, 2017

Builder Confidence Decreases Slightly in June

The National Association of Home Builders/Wells Fargo Housing Market Index weakened slightly to 67 in June, a two point decrease from May’s downwardly revised reading of 69.

“Builder confidence levels have remained consistently sound this year, reflecting the ongoing gradual recovery of the housing market,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas.

All three HMI components posted losses in June but remained at historically high levels. The component measuring current sales conditions fell two points to 73; the component measuring sales expectations in the next six months decreased two points to 76, and the component measuring buyer traffic moved down two points to 49.

The regional three-month moving averages for HMI scores showed gains in two of the four regions. The Midwest and South both edged one point to 67 and 70, respectively, while the Northeast and West each dropped two points to 46 and 76, respectively.

Read the NAHB release.
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Industrial Production Unchanged in May

Industrial production remained unchanged in May after a revised 1.1% April increase, according to the Federal Reserve. April’s jump was the largest since February 2014. A drop in manufacturing output was offset by increases in mining and utilities output to keep the index flat in May.
Manufacturing output fell 0.4% in May after a revised 1.1% increase in April. Production of durable goods fell 0.8%, while nondurables both edged up 0.1% during the month. Capacity utilization for manufacturing decreased by 0.3 percentage point to 75.5%, a rate that is 2.0 percentage points below its long-run average.

The output of mining continued to rise, increasing 1.6% in May, following a 1.5% April jump. The index in May was 8.3% higher than its year-earlier level.

Utilities output rose 0.4% in May, as higher output for gas utilities outweighed a small decrease for electric utilities.

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Wednesday, June 14, 2017

Fed Raises Rates for Third Time in Six Months

The Federal Reserve Open Market Committee (FOMC) voted to raise the target range for the federal funds rate by 25 basis points to 1 to 1.25 percent. Like in March, the vote was near unanimous, with Minneapolis Fed President Neel Kashkari once again casting the only dissenting vote, wanting to hold rates steady.
The projected policy path for the federal funds rate was similar to March, with the Fed’s dot plot showing one more rate hike this year. Participants estimated a target rate of 1.4 percent for 2017, a 2.1 percent rate for 2018, and a 2.9 percent rate for 2019 (a 10 basis point decrease).

In their decision to move the target rate, the Committee noted that the labor market has “continued to strengthen and that economic activity has been rising moderately so far this year.” Monetary policy remains accommodative, supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

The Committee included a statement about how it will begin to unwind its $4.5 trillion balance sheet, noting that it “currently expects to begin implementing a balance sheet normalization program this year, provided that the economy evolves broadly as anticipated.” The program would gradually reduce the Fed’s holdings by allowing a fixed amount of assets- $6 billion of Treasuries and $4 billion of mortgage-backed securities- to roll off on a monthly basis. These amounts will increase on a quarterly basis by $6 billion for Treasuries and $4 billion for mortgage-backed securities until they reach $30 billion and $20 billion, respectively.

Read the FOMC statement.
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Retail Sales Slipped in May

There were $473.8 billion in retail and food service sales in May, down 0.3% from the previous month and up 3.8% from May 2016, according to the U.S. Census Bureau.
Core retail sales – excluding automobiles and parts – also fell 0.3%. Year-over-year core sales increased 3.8%.

Retail trade sales decreased 0.3% from April and are up 4.0% from last year. Sales at nonstore retailers increased 0.8% from April, while increasing 10.2% year-over-year.

Sales at gasoline stations decreased 2.4% during the month, but are up 6.2% from a year ago.

Read the Census release.
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Consumer Prices Decreased 0.1% in May

The Consumer Price Index increased 0.1% in May on a seasonally adjusted basis, according to U.S. Bureau of Labor Statistics. Over the last 12 months, the all-items index rose 1.9%.
Prices for all items less food and energy, the “core CPI,” increased 0.1% in May, the same as in April. The index rose 1.7% for the 12 months ending in May.

The food index increased 0.2%, its fifth consecutive increase. Prices for food at home rose 0.1%, while prices for food away from home increased 0.2%. Over the past 12 months, food prices are up 0.9%.

The energy index decreased 2.7% in May, led by the gasoline index falling 6.4%.

Read the BLS release.
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Tuesday, June 13, 2017

Small Business Optimism Remained Strong in May

The NFIB Small Business Optimism Index held steady at 104.5 in May, maintaining the high level of post-election optimism. Five of the ten index components rose, while four declined.
Reported job creation has improved, as 59% of businesses reported hiring or trying to hire. However, 51% reported few or no qualified applicants for the positions they were trying to fill. Nineteen percent of employers surveyed cited the difficulty of finding qualified workers as their top business problem. A seasonally adjusted net 18% of owners plan to create new jobs, up two points from the previous month.

Seasonally adjusted, the net percent of owners expecting better business conditions rose one point to a net 39%. The percent of owners reporting higher sales in the past three months compared to the prior three months remained at 5%. Seasonally adjusted, the net percent of owners expecting higher real sales volumes rose two points to a net 22% of owners. Capital spending moved up three points as 62% of owners reported capital outlays. The percent of owners planning capital outlays in the next 3 to 6 months increased one point to 28%, which is high for the recovery but well below historical levels for periods of growth.

Credit conditions mostly held steady, as 3% of owners reported that all their borrowing needs were not met, unchanged from April. Only 1% of business owners surveyed reported that financing was their top business problem, down one point from April.

Read the NFIB report.
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Producer Prices Unchanged in May

Producer prices were unchanged in May, seasonally adjusted, after rising 0.5% in April, according to the U.S. Bureau of Labor Statistics. Producer prices rose 2.4% for the twelve months ended May 2017.
The index for final demand goods decreased 0.5% in May, the largest drop since February 2016. Most of the decline was due to a 3.0% decrease in the index for final demand energy. Additionally, prices for final demand foods fell 0.2%.

Prices for final demand services moved up 0.3% in May. Most of the increase can be traced to prices for final demand trade services, which advanced 1.1%.

Read the BLS release.
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Wednesday, June 7, 2017

Consumer Credit Growth Slowed in April

Consumer credit increased at a seasonally adjusted annual rate of 2.6% in April, down from a revised 6.2% rate in March. Total outstanding credit increased $8.1 billion during the month (compared with $19.6 billion in March) to $3.82 trillion.
Revolving credit grew at an annual rate of 1.8% to $1.0 trillion, compared to a 6.5% increase in March. Non-revolving credit rose at a 2.9% annual rate, or $6.6 billion, compared to March’s rate of $14.2 billion. Total non-revolving credit is now $2.81 trillion.
Federal government holdings of student loans continue to be the largest portion of non-revolving credit, comprising approximately 38.7% of outstanding credit. Depository institutions and finance companies are secondary and tertiary holders, with 24.5% and 21.4%, respectively, of outstanding non-revolving credit.

Read the Fed release.
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Monday, June 5, 2017

Manufactured Goods Orders Fell in April

New orders for manufactured goods fell 0.2% to $469.0 billion in April, according to the U.S. Census Bureau. It was the first decrease in five months. The April reading followed a 1.0% March increase.
New orders for manufactured durable goods decreased 0.8% to $231.0 billion. Orders for transportation equipment drove the decline, falling 1.4% to $78.4 billion.

Shipments of manufactured durable goods, down three of the last four months, decreased 0.4% to $232.8 billion.

Inventories of manufactured durable goods, up nine of the last ten months, increased 0.2% to $394.6 billion.

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ISM: Non-Manufacturing Sector Grew in May

The ISM Non-Manufacturing Index registered 56.9 points in May, 0.6 percentage point below April’s figure. This was the 89th consecutive month of growth. Seventeen non-manufacturing industries reported growth in May, while only one reported contraction.
Growth in the Business Activity Index decreased 1.7 points to 60.7. Sixteen industries reported increased business activity and one reported decreased activity. Respondents noted that the market continues to grow at a steady pace, and there is increased activity industry wide.

Non-manufacturing employment grew for the 39th consecutive month. The index increased 6.4 percentage points to 57.8. Fifteen industries reported increased employment, while one reported decreased employment.

The New Orders Index fell 5.5 points to 57.7. Sixteen industries reported increased business activity and one reported decreased activity.

Supplier deliveries slowed for the 17th consecutive month, as the index registered 51.5 points (readings above 50 for this index indicate slower deliveries). Seven industries reported slower deliveries, while four reported faster deliveries.

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Friday, June 2, 2017

International Trade Balance Widened in April

The U.S. international trade deficit widened in April to $47.6 billion, up from $45.3 billion in March, according to the U.S. Census Bureau and the U.S. Bureau of Economic Analysis. The increase reflected a $1.9 billion growth in imports along with a $0.5 billion decrease in exports.
The goods deficit increased $2.3 billion to $68.4 billion, while the services surplus decreased less than $0.1 billion to $20.8 billion.

Exports of goods decreased just over $0.5 billion to $126.9 billion in April, driven by a $0.7 billion decrease in consumer goods. Exports of services increased less than $0.1 billion to $64.0 billion.

Imports of goods increased $1.8 billion to $193.8 billion, mostly due to a significant increase in consumer goods, which grew by $1.9 billion. Imports of services increased less than $0.1 billion to $43.3 billion in April.

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138,000 Jobs Added in May, Unemployment at 16-Year Low

Total nonfarm payroll employment rose by 138,000 in May, a decrease from April’s downwardly revised figure of 174,000, according to the Bureau of Labor Statistics. The national unemployment rate moved down to 4.3%, the lowest rate since May 2001.
Private service-providing industries added a net 131,000 jobs, led by gains in education and health services, which added 47,000 during the month, and by professional and business services, which added 38,000.

Goods-producing employment rose by 16,000 jobs during the month, as gains in construction led the way by adding 11,000.

The civilian labor force participation rate was 62.7%, a 0.2% decrease from April. Workers unemployed for less than 14 weeks fell 356,000, while the number of long-term unemployed, those jobless for 27 weeks or more, rose to 1.7 million and accounted for 24.2% of the unemployed. The number of discouraged workers was 355,000, falling for the fourth straight month.

Average hourly earnings increased by 4 cents to $26.22, after a 5-cent increase in April. Over the past year, average hourly earnings have risen by 63 cents, or 2.5%.

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Thursday, June 1, 2017

Job Cuts Surged in May

Employers announced plans to cut 51,692 jobs in May, according to a report issued by Challenger, Gray & Christmas. May’s announced cuts were 41% more than April’s. The month’s figure was 71% higher than May 2016.

The retail sector continues to lead the way in job cuts, with 55,910 so far this year. This is 31.6% higher than the same period last year. However, the energy sector continued to hold strong, announcing 296 cuts in May, which brings the total to 8,635 in 2017. This is an 88.5% decrease from this point last year when the energy sector had shed 75,232 jobs.

“The retail industry is still shedding jobs. We are now seeing the effect of changing consumer behavior in grocery shopping. Grocery stores are no longer immune from online shopping. Meal delivery services and Amazon are competing with traditional grocers, and Amazon announced it is opening its first ever brick-and mortar store in Seattle. Amazon Go, which mixes online technology and the in-store experience, is something to keep an eye on since it may potentially change the grocery store shopping experience considerably,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

Telecommunications companies have reported 10,815 job cuts through May this year, 40% more than the 6,404 cuts through this point last year.

The service industry shed 4,082 jobs last month, totaling 12,347 through May this year. This is an 83% increase from May 2016.

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Manufacturing Sector Expanded in May

The ISM Manufacturing Index registered 54.9 points in May, up 0.1 percentage point from the previous month, according to the Institute for Supply Management. May’s reading indicates a ninth consecutive month of expansion in manufacturing, as readings over 50 points denote expansion. Of the eighteen manufacturing industries, fifteen reported growth while one reported contraction.
The Employment Index increased 1.5 points to 53.5 in May, indicating expansion for the eighth consecutive month. Eleven industries reported expansion, while five reported a decrease in employment.

The New Orders Index increased 2.0 points to 59.5 in May, indicating growth for the eighth consecutive month. Fourteen industries reported expansion, while one reported a decrease in employment.

Export orders decreased 2.0 points to 57.5, indicating growth for the fifteenth consecutive month. Eleven industries reported growth while two of the eighteen reported a decrease in new export orders.

The inventories index registered 51.5 points, up 0.5 point from the previous month. Six industries reported higher inventories, while six reported a decrease.

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Construction Spending Fell 1.4% in April

Construction spending decreased 1.4% in April to a seasonally adjusted annual level (SAAL) of $1,218.5 billion, according to the Census Bureau. March’s spending estimate was revised to a rate of $1,235.5 billion. April’s figure is 6.7% greater than the April 2016 estimate of $1,142.5 billion.
Total private construction was $943.3 billion SAAL, a 0.7% decrease from the revised March estimate of $949.7 billion.

Private residential construction was $516.7 billion SAAL, 0.7% below March’s rate.

Private nonresidential construction was $426.6 billion, 0.6% below March’s estimate.

Public construction decreased 3.7% to $275.3 billion SAAL.

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ADP: 253,000 Jobs Added in May

The non-farm private sector added 253,000 jobs in May, according to the ADP National Employment Report. April’s figure was revised down from 177,000 to 174,000. Professional and business services jobs accounted for over a third of May’s growth.
Growth was widespread in May with businesses of all sizes seeing strong increases. Small businesses with fewer than 50 employees added 83,000 jobs, while medium-sized businesses with 50-499 employees added 113,000. Large businesses added 57,000 jobs.

“May proved to be a very strong month for job growth,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Professional and business services had the strongest monthly increase since 2014. This may be an indicator of broader strength in the workforce since these services are relied on by many industries.”

Service-providing employment rose by 205,000 jobs, driven by the professional and business services sector which added 88,000. The education and health services sectors had a robust report, adding 54,000 jobs. The leisure and hospitality sectors, along with the information sector, were the only reported setbacks, losing 11,000 and 8,000 jobs, respectively. Goods-producing employment increased by 48,000 jobs. The construction industry led the gain, adding 37,000 jobs, while the manufacturing industry gained 8,000.

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Wednesday, May 31, 2017

Beige Book: Economy Expanding at Modest to Moderate Pace

Economic activity continued to expand at a modest to moderate pace across most of the twelve Federal Reserve Districts over the period from early April through late May, according to the just-released Federal Reserve Beige Book.

Consumer spending softened this period as reports of stagnant nonauto retail sales were accompanied by lower readings in auto sales compared to last year’s record highs. Manufacturing continued to expand at a moderate pace across the Districts. Non-financial services continued to expand steadily while agricultural conditions were mixed with some regions noting that unusually wet weather delayed planting. A majority of Districts reported that firms expressed positive near-term outlooks, but optimism slowed somewhat in a few Districts.

Employment expanded across most Districts at a modest to moderate pace. Labor markets once again remained tight, and employers in most Districts reported having greater difficulty attracting and retaining qualified workers.

Modest to moderate wage growth was seen in most Districts, with many reporting offering higher wages to fill the worker shortages. Prices increased modestly, though some Districts cited falling prices for certain final goods, including groceries, apparel, and autos.

Read the full Federal Reserve report.
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