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Category: Research - Topic: Economics


Pending Home Sales Index increased 1.7% in January
Posted: February 27, 2015 at 10:00 AM (Friday)

Improved buyer demand at the beginning of 2015 pushed pending home sales in January to their highest level since August 2013, according to the National Association of Realtors®. All major regions except for the Midwest saw gains in activity in January.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, climbed 1.7 percent to 104.2 in January from an upwardly revised 102.5 in December and is now 8.4 percent above January 2014 (96.1). This marks the fifth consecutive month of year-over-year gains with each month accelerating the previous month's gain.

For the most part buyers in January were able to overcome tight supply to sign contracts at a pace that highlights the underlying demand that exists in today's market. Contract activity is convincingly up compared to a year ago despite comparable inventory levels,” he said. “The difference this year is the positive factors supporting stronger sales, such as slightly improving credit conditions, more jobs and slower price growth.

It also points to more favorable conditions for traditional buyers entering the market. All-cash sales and sales to investors are both down from a year ago1, creating less competition and some relief for buyers who still face the challenge of limited homes available for sale.

All indications point to modest sales gains as we head into the spring buying season. However, the pace will greatly depend on how much upward pressure the impact of low inventory will have on home prices. Appreciation anywhere near double-digits isn't healthy or sustainable in the current economic environment.

The PHSI in the Northeast inched 0.1 percent to 84.9 in January, and is now 6.9 percent above a year ago. In the Midwest the index decreased 0.7 percent to 99.3 in January, but is 4.2 percent above January 2014.

Pending home sales experienced the largest increase in the South, up 3.2 percent to an index of 121.9 in January (highest since April 2010) and are 9.7 percent above last January. The index in the West rose 2.2 percent in January to 96.4 and is 11.4 percent above a year ago.

Total existing-homes sales in 2015 are forecast to be around 5.26 million, an increase of 6.4 percent from 2014. The national median existing-home price for all of this year is expected to increase near 5 percent. In 2014, existing-home sales declined 2.9 percent and prices rose 5.7 percent.


University of Michigan Consumer Confidence fell in February to 95.4
Posted: February 27, 2015 at 10:00 AM (Friday)

Consumer optimism was affected by lower gas prices and an unusually harsh winter. The small overall decline from January still left consumer confidence at the highest levels in eight years. It is hard not to attribute the small February decline to the temporary impact of the harsh weather, as declines that occurred in the Northeast and Midwest were triple the average loss, while Southern residents grew more optimistic. Low gas prices had a larger impact on lower income households, narrowing the difference between low and high income households. The data indicate that total real personal consumption expenditures will grow at 3.3% during 2015.

Growth Prospects Soften Temporarily
The small February decline was largely due to softening growth prospects for the national economy during the year ahead. When asked to describe recent economic developments in their own words, consumers mentioned the harsh winter weather and its impact on business and employment. Nonetheless, the last time more consumers anticipated year-over-year declines in the jobless rate was thirty years ago. Importantly, there was little change in favorable expectations for continued growth in the economy over the longer term. Despite recent concerns, the last time other than last month consumers were more optimistic about the economy was in 2004.

Wage Gains Narrow
The latest survey found that consumers had reduced the more favorable wage gains they anticipated during the prior two months. In the February 2015 survey, households anticipated an annual income increase of 1.0%, down from 1.9% last month and barely above last February’s 0.9%. While consumers under age 45 expected the largest wage gains, households with incomes in the bottom third reported the largest month-to-month increase.

The Consumer Sentiment Index was 95.4 in the February 2015 survey, just below the January’s expansion peak of 98.1, but well above last February’s 81.6. The Current Conditions Index fell to 106.9 in February from 109.3 one month ago and was well above last February’s 95.4. The Expectations Index fell to 88.0 from 91.0 in January but was substantially above last February reading of 72.7.

The underlying strength that has kept confidence at high levels has been job gains. While buffeted by harsh weather and lower gas prices, consumers have remained focused on gains in jobs and wages. Consumers intend to increase their spending during the year ahead, but they also want to keep a tight reign on their debt as well as to increase their precautionary savings. Few consumers believe that gas prices will not increase in the future, and even fewer think the economy will no longer suffer downturns. Without more robust wage increases, consumers will increasingly condition their spending on the availability of reduced prices.


Chicago Purchasing Managers Index plunged 13.6 points to 45.8 in February
Posted: February 27, 2015 at 09:45 AM (Friday)

The Chicago Business Barometer plunged 13.6 points to 45.8 in February, the lowest level since July 2009 and the first time in contraction since April 2013.

The sharp fall in business activity in February came as Production, New Orders, Order Backlogs and Employment all suffered double digit losses, leaving them below the 50 level which separates contraction from expansion.

The West Coast port strike and the harsh winter probably had a negative impact in February, although it is difficult to gauge the magnitude. It’s too early to conclude that February represents a change in the relatively strong trend seen recently. Nonetheless, the weakness in the Barometer points to softer GDP growth over the first quarter than previously expected.

Supplier Deliveries was the only component to increase between January and February with the port strike at least partly to blame. Unseasonably cold weather and the extreme blizzards seen on the East Coast also had an impact. Purchasing managers reported days to source capital equipment were at the highest level since March 2008.

New Orders suffered the largest monthly decline on record, leaving them at the lowest since June 2009. Lower order intake and output levels led to a double digit decline in Employment which last month increased markedly to a 14-month high.

Disinflationary pressures were still in evidence in February, although the slight bounceback in energy costs pushed Prices Paid to the highest since December – although still below the breakeven 50 level. Some purchasers cited weakness in some metals prices including copper and brass, but others said suppliers were slow to pass along lower prices to customers.

Inventories also contracted at a slower pace in February, after falling by over 15 points in January. Purchasers commented that the inventory drawdown was planned and expected a pickup once the weather turns warm.

Commenting on the Chicago Report, Philip Uglow, Chief Economist of MNI Indicators said, “It’s difficult to reconcile the very sharp drop in the Barometer with the recent firm tone of the survey. There’s some evidence to point to special factors such as the port strike and the weather, although we’ll need to see the March data to get a better picture of underlying growth.“


4Q2014 GDP preliminary estimate increased 2.2%
Posted: February 27, 2015 at 08:30 AM (Friday)

Real gross domestic product -- the value of the production of goods and services in the United States, adjusted for price changes -- increased at an annual rate of 2.2 percent in the fourth quarter of 2014, according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 5.0 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 2.6 percent. With the second estimate for the fourth quarter, private inventory investment increased less than previously estimated, while nonresidential fixed investment increased more.

The increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, exports, state and local government spending, private inventory investment, and residential fixed investment that were partly offset by a negative contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP growth in the fourth quarter primarily reflected an upturn in imports, a downturn in federal government spending, and decelerations in nonresidential fixed investment and in exports that were partly offset by an acceleration in PCE, an upturn in private inventory investment, and an acceleration in state and local government spending.


Kansas City Fed Manufacturing Activity expanded just slightly in February
Posted: February 26, 2015 at 11:00 AM (Thursday)

Tenth District manufacturing activity expanded just slightly in February, but producers expected activity to pick up moderately in the months ahead. Most price indexes continued to decrease, with several reaching their lowest level since 2009.

The month-over-month composite index was 1 in February, down from 3 in January and 8 in December. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The overall slower growth was mostly attributable to large declines in primary metals and computer and electronics production. Looking across District states, the weakest activity was in Colorado, Oklahoma, and New Mexico. In contrast, production activity in the fabricated metals and machinery industries both increased moderately. Other month-over-month indexes were mixed. The production and shipments indexes both moved back into positive territory. In contrast, the new orders index continued to decline, and the employment index decreased from 0 to -4. The finished goods inventory index eased from 8 to 3, and the raw materials inventory index also fell.

Year-over-year factory indexes were also somewhat mixed. The composite year-over-year index remained unchanged at 9, while the production, shipments, and order backlog indexes were higher than last month. The capital expenditures index edged up from 7 to 9, while both inventory indexes were basically unchanged. On the other hand, the new orders index inched lower from 5 to 3, and the employment index fell for the second straight month.

Future factory indexes eased slightly but remained at mostly solid levels. The future composite index moved down from 19 to 11, and the future production, shipments, and new orders index also decreased moderately. The future employment index dropped from 24 to 14, its lowest level in 5 months, and the future capital expenditures index edged down. The future finished goods inventory index fell from 18 to 7, and the future raw materials inventory index also decreased slightly.

Most price indexes continued to decrease in February. The month-over-month finished goods price index remained unchanged at -3, and the raw materials price index dropped from 8 to -6, its lowest level since May 2009. The year-over-year raw materials price index fell from 39 to 29, and the finished goods price index eased slightly. The future raw materials price index moderated from 31 to 25, and the future finished goods price index plummeted from 27 to 6, a five-year low.


DJ-BTMU U.S. Business Barometer fell slightly by 0.1%
Posted: February 26, 2015 at 10:00 AM (Thursday)

For the week ending February 14 2015, the DJ-BTMU U.S. Business Barometer fell slightly by 0.1 percent to 98.3. The decrease in this week’s barometer is mainly owing to weak performances in production indexes, in which all except lumber production reported losses. For instance, auto production slipped again by 6.2 percent, following a 4.2 percent decline in the previous week. As to the consumption side, chain store sales rose by 2.3 percent, although it was partially offset by a sharp drop of 7.1 percent in MBA’s purchase index.

On a year-over-year basis, the barometer showed a gain of 0.7 percent, which compares to an average -3.3 percent decline over the Great Recession (ended in June 2009 according to the NBER). After flat lining in 2006, and declining from 2007 through 2009, the barometer bounced back in 2010 to rise by 3.4 percent, which was the strongest increase since 1994 (+4.0 percent), but not so impressive when compared to an -8.0 percent drop in 2009. The rate of increase for the 2013 slowed to 0.7 percent following 1.5 percent in 2012.

The smoothed version of the barometer, which attempts to account for weekly volatility, remained at 98.3. Its year-over-year growth rate was 1.0 percent.


Weekly Initial Unemployment Claims Increase 31,000 to 313,000
Posted: February 26, 2015 at 08:30 AM (Thursday)

In the week ending February 21, the advance figure for seasonally adjusted initial claims was 313,000, an increase of 31,000 from the previous week's revised level. The previous week's level was revised down by 1,000 from 283,000 to 282,000. The 4-week moving average was 294,500, an increase of 11,500 from the previous week's revised average. The previous week's average was revised down by 250 from 283,250 to 283,000. There were no special factors impacting this week's initial claims.

The advance seasonally adjusted insured unemployment rate was 1.8 percent for the week ending February 14, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending February 14 was 2,401,000, a decrease of 21,000 from the previous week's revised level. The previous week's level was revised down by 3,000 from 2,425,000 to 2,422,000. The 4-week moving average was 2,399,000, an increase of 1,750 from the previous week's revised average. The previous week's average was revised down by 750 from 2,398,000 to 2,397,250.


Real Average Hourly Earnings rose 1.2% in January
Posted: February 26, 2015 at 08:30 AM (Thursday)

Real average hourly earnings for all employees rose 1.2 percent from December to January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from a 0.5 percent increase in average hourly earnings combined with a 0.7 percent decrease in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings increased by 1.2 percent over the month due to the increase in real average hourly earnings combined with no change in the average workweek.

Real average hourly earnings increased by 2.4 percent, seasonally adjusted, from January 2014 to January 2015. This increase in real average hourly earnings, combined with a 0.6 percent increase in the average workweek, resulted in a 3.0 percent increase in real average weekly earnings over this period.


Consumer Price Index declined 0.7% in January, Ex Fd & Engy rose 0.2%
Posted: February 26, 2015 at 08:30 AM (Thursday)

The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.7 percent in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index decreased 0.1 percent before seasonal adjustment.

The energy index fell 9.7 percent as the gasoline index fell 18.7 percent in January, the sharpest in a series of seven consecutive declines. The gasoline decrease was overwhelmingly the cause of the decline in the all items index, which would have risen 0.1 percent had the gasoline index been unchanged. The fuel oil index also fell sharply, and the index for natural gas turned down, although the electricity index rose. The food index was unchanged in January, with the food at home index falling for the first time since May 2013.

The index for all items less food and energy rose 0.2 percent in January. The shelter index rose 0.3 percent, and the indexes for personal care, for apparel, and for recreation increased as well. The medical care index was unchanged, while an array of indexes declined in January, including those for household furnishings and operations, alcoholic beverages, new vehicles, used cars and trucks, airline fares, and tobacco.

The all items index declined 0.1 percent over the last 12 months, the first negative 12-month change since the period ending October 2009. The energy index fell 19.6 percent over the span, with the gasoline index down 35.4 percent. The food index rose 3.2 percent, and the index for all items less food and energy increased 1.6 percent.


New Orders for Durable Goods Increased 2.8%, Ex-Trans Up 0.3%
Posted: February 26, 2015 at 08:30 AM (Thursday)

New orders for manufactured durable goods in January increased $6.5 billion or 2.8 percent to $236.1 billion, the U.S. Census Bureau announced today. This increase, up following two consecutive monthly decreases, followed a 3.7 percent December decrease. Excluding transportation, new orders increased 0.3 percent. Excluding defense, new orders increased 3.0 percent. Transportation equipment, also up following two consecutive monthly decreases, led the increase, $6.0 billion or 9.1 percent to $72.1 billion.

Shipments of manufactured durable goods in January, down three of the last four months, decreased $2.7 billion or 1.1 percent to $245.1 billion. This followed a 1.5 percent December increase. Transportation equipment, down two of the last three months, led the decrease, $1.3 billion or 1.7 percent to $73.9 billion.

Unfilled orders for manufactured durable goods in January, down two consecutive months, decreased $2.0 billion or 0.2 percent to $1,163.4 billion. This followed a 0.9 percent December decrease. Transportation equipment, also down two consecutive months, led the decrease, $1.9 billion or 0.3 percent to $736.8 billion.

Inventories of manufactured durable goods in January, up twenty-one of the last twenty-two months, increased $1.8 billion or 0.4 percent to $412.5 billion. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 0.5 percent December increase. Transportation equipment, also up twenty-one of the last twenty-two months, led the increase, $0.7 billion or 0.5 percent to $134.4 billion.

Nondefense new orders for capital goods in January increased $6.9 billion or 9.5 percent to $79.8 billion. Shipments increased $0.8 billion or 1.0 percent to $80.2 billion. Unfilled orders decreased $0.5 billion or 0.1 percent to $731.0 billion. Inventories increased $0.2 billion or 0.1 percent to $186.9 billion. Defense new orders for capital goods in January decreased $0.4 billion or 5.2 percent to $7.6 billion. Shipments decreased $1.3 billion or 12.0 percent to $9.2 billion. Unfilled orders decreased $1.7 billion or 1.1 percent to $153.4 billion. Inventories increased $0.2 billion or 0.7 percent to $24.2 billion.

Revised seasonally adjusted December figures for all manufacturing industries were: new orders, $470.6 billion (revised from $471.5 billion); shipments, $488.7 billion (revised from $488.2 billion); unfilled orders, $1,165.5 billion (revised from $1,166.9 billion); and total inventories, $653.1 billion (revised from $653.9 billion).


New Home Sales in January at annual rate of 481,000
Posted: February 25, 2015 at 10:00 AM (Wednesday)

Sales of new single-family houses in January 2015 were at a seasonally adjusted annual rate of 481,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 0.2 percent (±22.2%) below the revised December rate of 482,000, but is 5.3 percent (±22.1%)* above the January 2014 estimate of 457,000.

The median sales price of new houses sold in January 2015 was $294,300; the average sales price was $348,300. The seasonally adjusted estimate of new houses for sale at the end of January was 218,000. This represents a supply of 5.4 months at the current sales rate.


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: February 25, 2015 at 07:00 AM (Wednesday)

Continuing a trend throughout February, mortgage applications dropped 3.5% from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending February 20, 2015. This week’s results include an adjustment to account for the Presidents’ Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 3.5% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 12% compared with the previous week. The Refinance Index decreased 8% from the previous week. The seasonally adjusted Purchase Index increased 5% from one week earlier. The unadjusted Purchase Index decreased 2% compared with the previous week and was 2% lower than the same week one year ago.

The refinance share of mortgage activity decreased to 62% of total applications from 66% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.2% of total applications.

The FHA share of total applications increased to 15.3% this week from 15.2% last week. The VA share of total applications increased to 9.6% this week from 8.0% last week. The USDA share of total applications remained unchanged at 0.9% this week.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 3.99% from 3.93%, with points decreasing to 0.33 from 0.35 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.09% from 3.92%, with points decreasing to 0.21 from 0.28 (including the origination fee) for 80% LTV loans.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.82% from 3.73%, with points increasing to 0.15 from 0.12 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.28% from 3.24%, with points decreasing to 0.30 from 0.35 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to 3.28% from 3.09%, with points decreasing to 0.31 from 0.47 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.


Consumer Confidence declined in February to 96.4
Posted: February 24, 2015 at 10:00 AM (Tuesday)

The Conference Board Consumer Confidence Index®, which had increased in January, declined in February. The Index now stands at 96.4 (1985=100), down from 103.8 in January. The Present Situation Index decreased to 110.2 from 113.9, while the Expectations Index declined to 87.2 from 97.0 in January.

According to Lynn Franco, Director of Economic Indicators at The Conference Board: “After a large gain in January, consumer confidence retreated in February, but still remains at pre-recession levels (September 2007, Index, 99.5). Consumers’ assessment of current conditions remained positive, but short-term expectations declined. While the number of consumers expecting conditions to deteriorate was virtually unchanged, fewer consumers expect conditions to improve, prompting a less upbeat outlook. Despite this month’s decline, consumers remain confident that the economy will continue to expand at the current pace in the months ahead.”

Consumers’ appraisal of current conditions was moderately less favorable in February than in January. Those saying business conditions are “good” decreased from 28.2 percent to 26.0 percent, however those claiming business conditions are “bad” decreased from 17.3 percent to 17.0 percent. Consumers were also somewhat less positive in their assessment of the job market, with the proportion stating jobs are “plentiful” decreasing slightly from 20.7 percent to 20.5 percent, and those claiming jobs are “hard to get” increasing from 24.6 percent to 26.2 percent.

Consumers’ optimism about the short-term outlook was considerably less positive in February. Those expecting business conditions to improve over the next six months decreased from 18.9 percent to 16.1 percent, while those expecting business conditions to worsen increased from 8.2 percent to 8.7 percent.

Consumers’ outlook for the labor market was also less optimistic. Those anticipating more jobs in the months ahead decreased from 17.3 percent to 13.4 percent. However, those anticipating fewer jobs declined from 14.8 percent to 14.3 percent. The proportion of consumers expecting growth in their incomes declined from 19.5 percent to 15.1 percent. The proportion expecting a decrease rose from 10.8 percent to 12.0 percent.


Philadelphia Nonmanufacturing activity increased in February
Posted: February 24, 2015 at 10:00 AM (Tuesday)

Responses to this month's Nonmanufacturing Business Outlook Survey suggest that local nonmanufacturing activity increased in February. The survey's indicators for general activity, new orders, and sales or revenues all rebounded from last month's lower readings. Responding firms continue to be optimistic about activity over the next six months.

Nonmanufacturing Activity Picked Up
The diffusion index for current activity at the firm level increased from 8.8 in January to 51.0 in February, its highest reading since June 2014 (see Chart 1 above). More than 61 percent of the respondents reported increases in activity, up from 44 percent last month. Firms perceived increasing activity for the region as well, and the general activity index also rose, to 46.9. The more than 55 percent of the respondents who indicated increasing activity in the region far exceeded the 8 percent who indicated decreasing activity.

New Orders and Sales or Revenues Rebounded
Demand for firms' services, as measured by the new orders and sales/revenues indexes, rose this month after falling sharply last month (see Chart 2 below). The new orders index increased from 14.7 in January to 32.7 in February. The share of firms reporting increases in new orders this month (47 percent) grew from last month; furthermore, the percentage of firms reporting decreases declined from 27 percent last month to 14 percent this month. This month's increase in the sales/revenues index exceeded its decline last month, increasing 34 points to 42.9. More than 57 percent of the firms reported increases in sales or revenues compared with 38 percent last month.

Labor Market Indicators Were Positive
Survey results suggest generally positive labor market conditions this month. The full-time employment index edged down 3 points, to 14.3, its second consecutive decrease. The percentage of firms reporting increases in full-time staff (27 percent) exceeded the percentage of firms reporting decreases (12 percent). The part-time employment index increased for the second consecutive month, from 20.6 in January to 24.5 in February. The workweek index increased for the first time since October 2014, to 16.3, after turning negative in January.

Firms Reported an Increase in Prices Received
The prices of inputs rose for firms in February, on balance, as the index for prices paid edged up to 16.3 from 14.7 last month. The percentage of respondents reporting increases in input prices (22 percent) exceeded the percentage of respondents reporting decreases (6 percent), and most respondents (55 percent) reported no change. Firms also reported increases in prices for their own goods and services. Nearly 27 percent of the respondents reported higher prices received, up from 18 percent last month, while the percentage of firms reporting decreases declined from 15 percent last month to 6 percent this month. Overall, the prices received index increased for the first time in three months, rising 18 points to 20.4.

Capital Expenditures Growth Remained Positive
Firms continued to report increases, on net, in capital expenditures this month, and both spending indexes improved upon last month's readings. The index for expenditures on physical plant rose 9 points, to 12.2. The share of respondents reporting increases (16 percent) exceeded the share reporting decreases (4 percent). The equipment and software expenditures index also increased, from 20.6 last month to 24.5 this month, as a smaller percentage of firms reported decreases in expenditures this month (6 percent) compared with last month (12 percent).

Future Indicators Remain High
Optimism about future activity over the next six months remained widespread and further improved at the individual firm level. The firm-level future general activity index increased 20 points, to 81.6, its highest reading since June 2014 (see Chart 1 above). Nearly 82 percent of the firms expect activity to increase over the next 6 months compared with 62 percent last month. None of the respondents expect activity six months from now to decrease either at their own firms or in the region. The future activity index for the region decreased slightly but also remained high, at 81.6.

Summary
The February Nonmanufacturing Business Outlook Survey results suggest increased activity in the region among nonmanufacturing firms. Index readings for general activity at both the company and regional levels, new orders, and sales/revenues rebounded from their drops last month. Firms remained optimistic about future growth.


Richmond Fed's Current Activity Index dropped 6 points to a reading of 0
Posted: February 24, 2015 at 10:00 AM (Tuesday)

Fifth District manufacturing activity slowed in February, according to the most recent survey by the Federal Reserve Bank of Richmond. Shipments and the volume of new orders flattened, while the backlog of orders declined. Hiring in the sector was weak and the average workweek shrank, although wage growth advanced modestly. Despite the soft current conditions, producers were upbeat about future business opportunities. Expectations were for solid increases in shipments and new orders in the six months ahead, with greater capacity utilization. In addition, manufacturers looked for a build-up in backlogged orders and minimal vendor lead-times.

Compared to January's outlook, producers expected slower employment growth and less growth in the average workweek. Although wage growth expectations remained solid in February, the outlook was less robust than a month earlier.

Prices of raw materials and finished goods were little changed in February. Looking ahead, manufacturers expected slower price growth over the next six months than they had a month ago.

Manufacturing activity slowed this month, with several components flattening. The composite index dropped to zero from January's reading of 6. The shipments index slipped to −1 from 10, the volume of new orders fell six points to −2, and the index for the number of employees shed one point to end at 4.

Capacity utilization also dropped in February, settling 13 points lower at −4. The indicator for vendor lead times fell to 2 from 5. Backlogs of new orders remained in the doldrums, with that index falling another point to −10 this month.

Finished goods inventories continued to grow solidly, although that index also fell below last month's reading. The index declined to 20 from 25. Raw materials inventories rose nearly on pace with January's reading, with the index three points lower this month at 16.


S&P/Case-Shiller Home Price Indices increase 0.1% in December
Posted: February 24, 2015 at 09:00 AM (Tuesday)

S&P Dow Jones Indices today released the latest results for the S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices. Data released today for December 2014 shows a slight uptick in home prices across the country. Nine cities reported monthly increases in prices.

Year-over-Year
Both the 10-City and 20-City Composites saw year-over-year increases in December compared to November. The 10-City Composite gained 4.3% year-over-year, up from 4.2% in November. The 20-City Composite gained 4.5% year-over-year, compared to a 4.3% increase in November. The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 4.6% annual gain in December 2014 versus 4.7% in November.

The fastest year-over-year gains were in San Francisco and Miami, where prices rose 9.3% and 8.4% over the last 12 months. Twelve cities, including Cleveland, Denver, and Seattle, saw prices rise faster in the year to December than a month earlier. Las Vegas led the declining annual returns with 6.9%, down from 7.7% annually.

Month-over-Month
The National index was slightly negative in December, while both composite Indices were positive. Both the 10- and 20-City Composites reported slight increases of 0.1%, while the National Index posted a -0.1% change for the month. Miami and Denver led all cities in December with increases of 0.7% and 0.5% respectively. Chicago and Cleveland offset those gains by reporting decreases of -0.9% and -0.5% respectively.

December recorded mixed monthly figures. Nine cities recorded higher monthly figures, and six posted decreases. Five cities reported relatively flat monthly changes for December. Miami had the largest increase of all 20 cities at 0.7% month-over-month.

Analysis
“The housing recovery is faltering. While prices and sales of existing homes are close to normal, construction and new home sales remain weak. Before the current business cycle, any time housing starts were at their current level of about one million at annual rates, the economy was in a recession” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “The softness in housing is despite favorable conditions elsewhere in the economy: strong job growth, a declining unemployment rate, continued low interest rates and positive consumer confidence.

“Movements in home prices show clear regional patterns. The western half of the nation plus Miami and Atlanta enjoyed year-over-year increases of 5% or more. San Francisco and Miami were the strongest. Dallas, Denver, Las Vegas and Atlanta also experienced solid gains. Phoenix was an exception to the western strength with only a 2.4% increase; San Diego was a bit under 5% at 4.8%. The Midwest and Northeast lagged. Boston was the strongest among this weak group with prices up 3.8%. The regional patterns and the weakness in new construction and new sales may reflect decreasing mobility – fewer people moving to different parts of the country or seeking jobs in different regions.”

Graphical Representations of the U.S. Housing Market
Chart 1 below depicts the annual returns of the U.S. National, the 10-City Composite and the 20-City Composite Home Price Indices. The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 4.6% annual gain in December 2014. The 10- and 20-City Composites reported year-over-year increases of 4.3% and 4.5%.

As of December 2014, average home prices for the MSAs within the 10-City and 20-City Composites are back to their autumn 2004 levels. Measured from their June/July 2006 peaks, the peak-to-current decline for both Composites is approximately 16-17%. Since the March 2012 lows, the 10-City and 20-City Composites have recovered 28.2% and 29.1%.


Existing-Home Sales fell 4.9% in January
Posted: February 23, 2015 at 10:00 AM (Monday)

Existing-home sales declined in January to their lowest rate in nine months, but the pace was higher than a year ago for the fourth straight month, according to the National Association of Realtors®. All major regions experienced declines in January, with the Northeast and West seeing the largest.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 4.9 percent to a seasonally adjusted annual rate of 4.82 million in January (lowest since last April at 4.75 million) from an upwardly-revised 5.07 million in December. Despite January’s decline, sales are higher by 3.2 percent than a year ago.

The housing market got off to a somewhat disappointing start to begin the year with January closings down throughout the country. January housing data can be volatile because of seasonal influences, but low housing supply and the ongoing rise in home prices above the pace of inflation appeared to slow sales despite interest rates remaining near historic lows. Realtors® are reporting that low rates are attracting potential buyers, but the lack of new and affordable listings is leading some to delay decisions.

Total housing inventory at the end of January increased 0.5 percent to 1.87 million existing homes available for sale, but is 0.5 percent lower than a year ago (1.88 million). Unsold inventory is at a 4.7-month supply at the current sales pace – up from 4.4 months in December.

The median existing-home price for all housing types in January was $199,600, which is 6.2 percent above January 2014. This marks the 35th consecutive month of year-over-year price gains.

Although sales cooled in January, home prices continued solid year-over-year growth. The labor market and economy are markedly improved compared to a year ago, which supports stronger buyer demand. The big test for housing will be the impact on affordability once rates rise.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage in January fell to 3.67 percent, its lowest level since May 2013 (3.54 percent), and down from 3.86 percent in December. The average annual rate was 4.17 percent in 2014. The percent share of first-time buyers declined to 28 percent in January, the lowest since June 2014 (also 28 percent) and down from 29 percent in December. First-time buyers represented 26 percent of sales last January.

The Federal Housing Administration’s overly restrictive approval process limits buyers’ access to condos even though these properties are among the strongest in the agency’s portfolio. Condominiums offer an affordable option and are the first step to homeownership for many homebuyers. NAR has urged the FHA to develop policies that will give buyers access to more flexible and affordable financing opportunities and a wider choice of approved condo developments.

All-cash sales were 27 percent of transactions in January, up from 26 percent in December but down from 33 percent in January of last year. Individual investors, who account for many cash sales, purchased 17 percent of homes in January, unchanged from last month and below January 2014 (20 percent). Sixty-seven percent of investors paid cash in January.

Distressed sales – foreclosures and short sales – were 11 percent of sales in January, unchanged from last month but down from 15 percent a year ago. Eight percent of January sales were foreclosures and 3 percent were short sales. Foreclosures sold for an average discount of 15 percent below market value in January (unchanged from December), while short sales were discounted 12 percent (also unchanged from last month).

Properties typically stayed on the market slightly longer in January (69 days) than December (66 days) and a year ago (67 days). Short sales were on the market the longest at a median of 128 days in January, while foreclosures sold in 63 days and non-distressed homes took 68 days. Thirty percent of homes sold in January were on the market for less than a month.

Single-family and Condo/Co-op Sales

Single-family home sales dropped 5.1 percent to a seasonally adjusted annual rate of 4.27 million in January from 4.50 million in December, but are 3.9 percent above the 4.11 million pace a year ago. The median existing single-family home price was $199,800 in January, up 6.3 percent from January 2014.

Existing condominium and co-op sales declined 3.5 percent to a seasonally adjusted annual rate of 550,000 units in January from 570,000 in December, and are now 1.8 percent below a year ago. The median existing condo price was $198,300 in January, which is 5.3 percent higher than a year ago.


Texas Manufacturing Activity Remains Flat
Posted: February 23, 2015 at 10:00 AM (Monday)

Texas factory activity posted a second month of no growth in February, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, remained near zero (0.7) and indicated output was essentially unchanged from January levels.

Other measures of current manufacturing activity reflected contraction in February. The new orders index pushed further into negative territory, coming in at -12.2, its lowest reading since June 2009. The shipments index fell to -3.3, also reaching a low not seen since 2009. The capacity utilization index turned negative as well, dropping from 5.1 to -4.9.

Perceptions of broader business conditions remained rather pessimistic this month. The general business activity index moved further negative to -11.2, posting its lowest reading in nearly two years. The company outlook index remained slightly negative and edged down from -3.8 to -4.4.

Labor market indicators reflected only minor employment growth and slightly shorter workweeks. The February employment index moved down from 9 to 1.3. Fifteen percent of firms reported net hiring, compared with 14 percent reporting net layoffs. The hours worked index edged further into negative territory, coming in at -1.6.

Prices fell slightly in February and upward pressure on wages continued to ease. The raw materials prices index held steady at -1.7, indicating marginal downward pressure on input costs. The finished goods prices index was also slightly negative but edged up from -6.7 to -4.4. Manufacturers are no longer expecting sizeable price increases six months ahead, as the indexes of future prices were in single digits this month, down markedly from 2014 readings. The wages and benefits index edged down for a second month in a row and came in at 16.8.

Expectations regarding future business conditions rebounded somewhat in February. The index of future general business activity shot up 12 points to 5.5 after posting a negative reading in January. The index of future company outlook rose nearly 10 points to 11.8, although it remains well below the index level seen throughout 2014. Indexes for future manufacturing activity showed mixed movements in February but remained in solidly positive territory.


Chicago Fed National Activity picked up slightly in January
Posted: February 23, 2015 at 08:30 AM (Monday)

Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) edged up to +0.13 in January from –0.07 in December. Three of the four broad categories of indicators that make up the index increased from December, and only one of the four categories made a negative contribution to the index in January.

The index’s three-month moving average, CFNAI-MA3, ticked down to +0.33 in January from +0.34 in December. January’s CFNAI-MA3 suggests that growth in national economic activity was above its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests modest inflationary pressure from economic activity over the coming year.

The CFNAI Diffusion Index, which is also a three-month moving average, increased slightly to +0.20 in January from +0.16 in December. Forty-eight of the 85 individual indicators made positive contributions to the CFNAI in January, while 37 made negative contributions. Forty-three indicators improved from December to January, while 42 indicators deteriorated. Of the indicators that improved, 14 made negative contributions.

Employment-related indicators contributed +0.18 to the CFNAI in January, down from +0.28 in December. Nonfarm payrolls increased by 257,000 in January, after rising by 329,000 in the previous month; and the unemployment rate ticked up to 5.7 percent in January from 5.6 percent in December.

Production-related indicators made a contribution of +0.02 to the CFNAI in January, up from –0.22 in December. Industrial production increased 0.2 percent in January after declining 0.3 percent in the previous month, and manufacturing production increased 0.2 percent in January after being unchanged in December. The contribution of the sales, orders, and inventories category to the CFNAI increased to +0.03 in January from a neutral reading in December.

The contribution of the consumption and housing category to the CFNAI increased to –0.10 in January from –0.13 in December.

Consumption indicators improved, on balance, pushing the category higher. However, housing permits decreased to 1,053,000 annualized units in January from 1,060,000 in December, and housing starts decreased to 1,065,000 annualized units in January from 1,087,000 in the previous month.

The CFNAI was constructed using data available as of February 19, 2015. At that time, January data for 51 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index. The December monthly index was revised to –0.07 from an initial estimate of –0.05. Revisions to the monthly index can be attributed to two main factors: revisions in previously published data and differences between the estimates of previously unavailable data and subsequently published data. The revision to the December monthly index was due mostly to the former.


U.S. Leading Economic Index increased 0.2%
Posted: February 19, 2015 at 10:00 AM (Thursday)

The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.2 percent in January to 121.1 (2010 = 100), following a 0.4 percent increase in December, and a 0.3 percent increase in November.

The U.S. Leading Economic Index increased again in January, but its pace of growth has moderated in recent months. While the LEI suggests a positive short-term outlook in 2015, the lack of strong momentum in residential construction, along with a weak outlook for new orders in manufacturing, poses a downside risk for the U.S. economy.

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.2 percent in January to 111.6 (2010 = 100), following a 0.2 percent increase in December, and a 0.5 percent increase in November.

The Conference Board Lagging Economic Index® (LAG) for the U.S. increased 0.3 percent in January to 115.3 (2010 = 100), following a 0.3 percent increase in December, and a 0.3 percent increase in November.


Philadelphia January Outlook Suggest Continued Modest Growth
Posted: February 19, 2015 at 10:00 AM (Thursday)

Firms responding to the Manufacturing Business Outlook Survey indicated continued modest growth in the region’s manufacturing sector in February. Although the current activity index fell for the third consecutive month, it remained positive, and the employment indicator increased from its reading last month. The survey’s future activity index also fell but continues to reflect general optimism about manufacturing growth in the region over the next six months.

Indicators Reflect Modest Growth
The diffusion index for current general activity fell slightly, from a reading of 6.3 in January to 5.2 this month. Half of the responding firms indicated there was no change in activity from January to February. The current new orders index fell 3 points, but the shipments and unfilled orders indexes turned positive and rose 15 and 16 points, respectively. The index for delivery times increased 6 points but remained negative, while the index for inventories rose 16 points.

The survey’s indicators for current labor market conditions suggest a slight improvement this month, as the employment index increased 6 points and returned to a positive reading. The percentage of firms reporting increases in employment (21 percent) exceeded the percentage reporting decreases (17 percent). The workweek index was negative with almost no change from last month.

Price Indexes Remain Subdued
Fifteen percent of the firms reported higher prices paid this month, 5 percentage points below the number that reported higher prices paid last month, and the prices paid index fell 5 points. The prices received index remained unchanged at close to zero. Eighty percent of the firms reported no change in prices received, and the percentage of firms reporting higher prices received was equivalent to the percentage reporting lower prices received (10 percent).

Firms Expect Growth to Continue
The diffusion index for general future activity fell from a reading of 50.9 in January to 29.7 in February (see Chart 1). Forty-two percent of the firms expect activity to grow six months from now. The survey’s indicators of future growth for new orders, shipments, unfilled orders, delivery times, and inventories declined, but future indexes for the number of employees and average workweek showed slight improvement. Thirty-seven percent of the firms are expecting growth in their employment levels over the next six months, compared with 33 percent last month, and the future employment index increased 3 points.

Firms Expect to Increase Production to Meet Rising Demand
In Special Questions, firms were asked to characterize current demand and production of their manufactured products and make comparisons to the fourth quarter of last year (excluding seasonal effects). Most firms (55 percent) reported an increase in underlying demand, while 20 percent reported a decrease. Fifty-four percent of the firms anticipate increasing production, and 33 percent expect to cut production.

Summary
Responses to the February Manufacturing Business Outlook Survey suggest continued modest expansion of the region’s manufacturing sector. Firms reported that overall activity continued to rise, and the survey’s future activity indexes remain positive, suggesting continued optimism about manufacturing growth. Firms also remain optimistic about employment increases over the next six months.


DJ-BTMU U.S. Business Barometer increased by 0.1%
Posted: February 19, 2015 at 10:00 AM (Thursday)

For the week ending February 7 2015, the DJ-BTMU U.S. Business Barometer increased by 0.1 percent to 98.4, extending the positive trend for two weeks in a row, as gains in production indexes topped losses in consumption indexes. All production indexes except auto production posted gains in this week’s business barometer, particularly electric output and coal production, which rose by 4.0 and 11.3 percent, respectively. On the consumption side, however, MBA’s purchase index dipped by 6.5 percent, while chain store sales fell by 2.0 percent.

On a year-over-year basis, the barometer showed a gain of 1.2 percent, which compares to an average -3.3 percent decline over the Great Recession (ended in June 2009 according to the NBER). After flat lining in 2006, and declining from 2007 through 2009, the barometer bounced back in 2010 to rise by 3.4 percent, which was the strongest increase since 1994 (+4.0 percent), but not so impressive when compared to an -8.0 percent drop in 2009. The rate of increase for the 2013 slowed to 0.7 percent following 1.5 percent in 2012.

The smoothed version of the barometer, which attempts to account for weekly volatility, remained at 98.4. Its year-over-year growth rate was 1.1 percent.


Weekly Initial Unemployment Claims Decrease 21,000 to 283,000
Posted: February 19, 2015 at 08:30 AM (Thursday)

In the week ending February 14, the advance figure for seasonally adjusted initial claims was 283,000, a decrease of 21,000 from the previous week's unrevised level of 304,000. The 4-week moving average was 283,250, a decrease of 6,500 from the previous week's unrevised average of 289,750. There were no special factors impacting this week's initial claims.

The advance seasonally adjusted insured unemployment rate was 1.8 percent for the week ending February 7, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending February 7 was 2,425,000, an increase of 58,000 from the previous week's revised level. The previous week's level was revised up 13,000 from 2,354,000 to 2,367,000. The 4-week moving average was 2,398,000, a decrease of 9,500 from the previous week's revised average. The previous week's average was revised up by 3,500 from 2,404,000 to 2,407,500.


Treasury International Capital Data for December 2014
Posted: February 18, 2015 at 04:00 PM (Wednesday)

The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for December 2014. The sum total in December of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC outflow of $174.8 billion. Of this, net foreign private outflows were $143.7 billion, and net foreign official outflows were $31.1 billion.

Foreign residents decreased their holdings of long-term U.S. securities in December; net sales were $5.8 billion. Net purchases by private foreign investors were $14.5 billion, while net sales by foreign official institutions were $20.3 billion. U.S. residents decreased their holdings of long-term foreign securities, with net sales of $41.2 billion.

Taking into account transactions in both foreign and U.S. securities, net foreign purchases of long-term securities were $35.4 billion. After including adjustments, such as estimates of unrecorded principal payments to foreigners on U.S. asset-backed securities, overall net foreign acquisitions of long-term securities are estimated to have been $45.9 billion in December.

Foreign residents increased their holdings of U.S. Treasury bills by $24.8 billion. Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities increased by $10.1 billion. Banks' own net dollar-denominated liabilities to foreign residents decreased by $230.8 billion.


Industrial Production increased 0.2%
Capacity Utilization unch% to 79.4%

Posted: February 18, 2015 at 09:15 AM (Wednesday)

Industrial production increased 0.2 percent in January after decreasing 0.3 percent in December. The rates of change in output for September through December are all slightly lower than previously published; even so, production is estimated to have advanced at an annual rate of 4.3 percent in the fourth quarter of last year. In January, manufacturing output moved up 0.2 percent and was 5.6 percent above its year-earlier level. The index for mining decreased 1.0 percent, with the decline more than accounted for by a substantial drop in the index for oil and gas well drilling and related support activities. The output of utilities increased 2.3 percent. At 106.2 percent of its 2007 average, total industrial production in January was 4.8 percent above its level of a year earlier. Capacity utilization for the industrial sector was unchanged in January at 79.4 percent, a rate that is 0.7 percentage point below its long-run (1972–2014) average


January Housing Starts down 2.0%, Permits down 0.7%
Posted: February 18, 2015 at 08:30 AM (Wednesday)

BUILDING PERMITS
Privately-owned housing units authorized by building permits in January were at a seasonally adjusted annual rate of 1,053,000. This is 0.7 percent (±0.6%) below the revised December rate of 1,060,000, but is 8.1 percent (±2.0%) above the January 2014 estimate of 974,000. Single-family authorizations in January were at a rate of 654,000; this is 3.1 percent (±0.9%) below the revised December figure of 675,000. Authorizations of units in buildings with five units or more were at a rate of 372,000 in January.

HOUSING STARTS
Privately-owned housing starts in January were at a seasonally adjusted annual rate of 1,065,000. This is 2.0 percent (±10.4%) below the revised December estimate of 1,087,000, but is 18.7 percent (±14.5%) above the January 2014 rate of 897,000. Single-family housing starts in January were at a rate of 678,000; this is 6.7 percent (±10.6%) below the revised December figure of 727,000. The January rate for units in buildings with five units or more was 381,000.

HOUSING COMPLETIONS
Privately-owned housing completions in January were at a seasonally adjusted annual rate of 930,000. This is 1.3 percent (±7.4%) above the revised December estimate of 918,000 and is 9.4 percent (±10.4%) above the January 2014 rate of 850,000. Single-family housing completions in January were at a rate of 649,000; this is 2.3 percent (±7.0%) below the revised December rate of 664,000. The January rate for units in buildings with five units or more was 274,000.


Producer Price Index decreased 0.8% in January, ex Fd & Engy down 0.2%
Posted: February 18, 2015 at 08:30 AM (Wednesday)

The Producer Price Index for final demand decreased 0.8 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices moved down 0.2 percent in both December and November. On an unadjusted basis, the index for final demand was unchanged for the 12 months ended in January.

In January, the 0.8-percent decline in final demand prices can be traced primarily to a 2.1-percent decrease in the index for final demand goods. Prices for final demand services fell 0.2 percent.

Within intermediate demand, the index for processed goods declined 2.8 percent, prices for unprocessed goods dropped 9.4 percent, and the index for services moved down 0.2 percent.


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: February 18, 2015 at 07:00 AM (Wednesday)

Mortgage applications decreased 13.2% from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending February 13, 2015.

The Market Composite Index, a measure of mortgage loan application volume, decreased 13.2% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 12% compared with the previous week. The Refinance Index decreased 16% from the previous week. The seasonally adjusted Purchase Index decreased 7% from one week earlier. The unadjusted Purchase Index decreased 2% compared with the previous week and was 1% higher than the same week one year ago.

Mortgage rates increased to their highest level since the beginning of the year last week, and application volume dropped sharply as a result, particularly for refinances. The market index declined to its lowest level since the week ending January 2nd as purchase application activity decreased seven% and refinance applications decreased 16%. Refinance volume fell particularly for larger loans, as evidenced by the decline of almost $25,000 in the average loan size for a refinance loan.

The refinance share of mortgage activity decreased to 66% of total applications from 69% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.3% of total applications.

The FHA share of total applications increased to 15.2% this week from 14.1% last week. The VA share of total applications decreased to 8.0% this week from 8.3% last week. The USDA share of total applications increased to 0.9% from 0.7% last week.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 3.93% from 3.84%, with points increasing to 0.35 from 0.31 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 3.92% from 3.90%, with points increasing to 0.28 from 0.19 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.73% from 3.72%, with points decreasing to 0.12 from 0.13 (including the origination fee) for 80% LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.24% from 3.15%, with points increasing to 0.35 from 0.29 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to 3.09% from 3.07%, with points increasing to 0.47 from 0.44 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.


Builder Confidence fell 2 points in February to 55
Posted: February 17, 2015 at 10:00 AM (Tuesday)

Builder confidence in the market for newly built, single-family homes in February fell two points to a level of 55 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today.

Overall, builder sentiment remains fairly solid, with this slight downturn largely attributable to the unusually high snow levels across much of the nation.

For the past eight months, confidence levels have held in the mid- to upper 50s range, which is consistent with a modest, ongoing recovery. Solid job growth, affordable home prices and historically low mortgage rates should help unleash growing pent-up demand and keep the housing market moving forward in the year ahead.

Two of the three HMI components posted losses in February. The component gauging current sales conditions edged one point lower to 61 while the component measuring buyer traffic fell five points to 39. The gauge charting sales expectations in the next six months held steady at 60.

Looking at the three-month moving averages for regional HMI scores, the Northeast fell a single point to 46, and the Midwest and South each posted a two-point drop to 54 and 57, respectively. The West rose two points to 68.


Empire State Manufacturing Survey Conditions Improve Modestly
Posted: February 17, 2015 at 08:30 AM (Tuesday)

The February 2015 Empire State Manufacturing Survey indicates that business activity continued to expand at a modest pace for New York manufacturers. The headline general business conditions index edged down two points to 7.8. The new orders index fell five points to 1.2—evidence that orders were flat—while the shipments index climbed to 14.1. Employment indexes pointed to an increase in employment levels and little change in the average workweek. The prices paid index inched up two points to 14.6, indicating continued moderate input price increases, while the prices received index fell nine points to 3.4, suggesting a slowdown in selling price increases. Indexes for the six-month outlook, while generally positive, conveyed markedly less optimism than in recent months, with the index for future general business conditions falling twenty-three points. The capital spending index shot up eighteen points to 32.6, its highest level in more than three years.

Business Conditions Improve Modestly
The general business conditions index edged down two points to 7.8 in February, suggesting that conditions for New York manufacturers improved modestly for a second consecutive month. Twenty-nine percent of respondents reported that conditions had improved, while 21 percent reported that conditions had worsened. The new orders index fell five points to 1.2, indicating that orders were essentially flat. The shipments index climbed five points to 14.1, signaling that shipments increased at a faster pace this month. The unfilled orders index remained negative at -6.7. The delivery time index rose out of negative territory for the first time in several months: At 1.1, the index suggested that delivery times had not shortened as in previous months, but rather were little changed. The inventories index, at
-2.3, showed that inventory levels were slightly lower.

Price Increases Remain Subdued
The prices paid index inched up two points to 14.6, signaling a moderate increase in input prices for a fifth consecutive month. The prices received index fell nine points to 3.4, indicating that the pace of selling price increases slowed. Labor market indicators pointed to an increase in employment levels, but little change in hours worked: the index for number of employees dipped four points to 10.1, while the average workweek index came in at -1.1.

Firms Less Optimistic
Indexes assessing the six-month outlook, though generally positive, conveyed considerably less optimism about future business activity than in recent months. The index for future general business conditions plunged twenty-three points to 25.6, its lowest level in more than two years. The future new orders and shipments indexes also posted significant declines. The future prices paid index fell several points to 27.0, and the future prices received index declined ten points to 5.6, its lowest level in more than five years. The index for expected number of employees, though lower, remained positive at 24.7. The capital expenditures index surged eighteen points to 32.6, its highest level in more than three years, and the technology spending index rose to 19.1.


Forecasters Unchanged Outlook for Growth, but Brighter Outlook for Labor Markets
Posted: February 13, 2015 at 10:00 AM (Friday)

The outlook for growth in the U.S. economy over the next three years has changed little from the survey of three months ago, according to 39 forecasters surveyed by the Federal Reserve Bank of Philadelphia. The forecasters predict real GDP will grow at an annual rate of 2.7 percent this quarter and 3.0 percent next quarter. On an annual-average over annual-average basis, real GDP will grow 3.2 percent in 2015, up 0.2 percentage point from the previous estimate. The forecasters predict real GDP will grow 2.9 percent in 2016, 2.7 percent in 2017, and 2.7 percent in 2018.

A brighter outlook for the labor market accompanies the nearly stable outlook for growth. The forecasters predict that the unemployment rate will be an annual average of 5.4 percent in 2015, before falling to 5.1 percent in 2016, 5.0 percent in 2017, and 4.9 percent in 2018. The projections for 2015, 2016, and 2017 are below those of the last survey.

The panelists also predict an improved outlook on the employment front. They have revised upward their estimates for job gains in the next four quarters. The forecasters see nonfarm payroll employment growing at a rate of 269,300 jobs per month this quarter, 233,800 jobs per month next quarter, 222,000 jobs per month in the third quarter of 2015, and 229,400 jobs per month in the fourth quarter of 2015. The forecasters’ projections for the annual-average level of nonfarm payroll employment suggest job gains at a monthly rate of 252,500 in 2015 and 213,600 in 2016, as the table below shows. (These annual-average estimates are computed as the year-to-year change in the annual-average level of nonfarm payroll employment, converted to a monthly rate.)


U.S. Import Price Index fell 2.8% in January
Posted: February 13, 2015 at 08:30 AM (Friday)

U.S. import prices fell 2.8 percent in January, after declining 1.9 percent in December and 1.8 percent in November, the U.S. Bureau of Labor Statistics reported today. Decreasing fuel prices drove each of the monthly drops. The price index for U.S. exports decreased 2.0 percent in January, and has not recorded a monthly advance since July


Business Inventories up 0.1% in December
Posted: February 12, 2015 at 10:00 AM (Thursday)

The U.S. Census Bureau announced today that the combined value of distributive trade sales and manufacturers’ shipments for December, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,331.2 billion, down 0.9 percent (±0.2%) from November 2014, but were up 0.9 percent (±0.4%) from December 2013.

Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,764.4 billion, up 0.1 percent (±0.2%)* from November 2014 and up 3.9 percent (±0.5%) from December 2013.

The total business inventories/sales ratio based on seasonally adjusted data at the end of December was 1.33. The December 2013 ratio was 1.29.


DJ-BTMU U.S. Business Barometer picked up by 0.2%
Posted: February 12, 2015 at 10:00 AM (Thursday)

For the week ending January 31 2015, the DJ-BTMU U.S. Business Barometer picked up by 0.2 percent to 98.4, after declining for two weeks in a row. The recovery in this week’s barometer is chiefly driven by consumption indexes. Chain store sales rose by a solid 1.5 percent, reversing the weakening trend of the past few weeks. Freight car loadings also increased by 0.2 percent. As to the production side, almost all indexes except auto production declined. For instance, lumber and coal production fell by 1.5 and 3.8 percent, respectively.

On a year-over-year basis, the barometer showed a gain of 1.0 percent, which compares to an average -3.3 percent decline over the Great Recession (ended in June 2009 according to the NBER). After flat lining in 2006, and declining from 2007 through 2009, the barometer bounced back in 2010 to rise by 3.4 percent, which was the strongest increase since 1994 (+4.0 percent), but not so impressive when compared to an -8.0 percent drop in 2009. The rate of increase for the 2013 slowed to 0.7 percent following 1.5 percent in 2012.

The smoothed version of the barometer, which attempts to account for weekly volatility, remained at 98.4. Its year-over-year growth rate was 1.0 percent.


U.S. Retail Sales for January decrease 0.8%, Ex-Auto down 0.9%
Posted: February 12, 2015 at 08:30 AM (Thursday)

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for January, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $439.8 billion, a decrease of 0.8 percent (±0.5%) from the previous month, but up 3.3 percent (±0.9%) above January 2014. Total sales for the November 2014 through January 2015 period were up 3.8 percent (±0.7%) from the same period a year ago. The November to December 2014 percent change was unrevised from -0.9 percent (±0.3%).

Retail trade sales were down 1.0 percent (±0.5%) from December 2014, but up 2.4 percent (±0.7%) above last year. Food services and drinking places were up 11.3 percent (±3.5%) from January 2014 and auto and other motor vehicle dealers were up 10.7 percent (±3.0%) from last year. Gasoline stations were down 23.5 percent (±1.6%) from the previous year.


Weekly Initial Unemployment Claims Increase 25,000 to 304,000
Posted: February 12, 2015 at 08:30 AM (Thursday)

In the week ending February 7, the advance figure for seasonally adjusted initial claims was 304,000, an increase of 25,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 278,000 to 279,000. The 4-week moving average was 289,750, a decrease of 3,250 from the previous week's revised average. The previous week's average was revised up by 250 from 292,750 to 293,000. There were no special factors impacting this week's initial claims.

The advance seasonally adjusted insured unemployment rate was 1.8 percent for the week ending January 31, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 31 was 2,354,000, a decrease of 51,000 from the previous week's revised level. The previous week's level was revised up 5,000 from 2,400,000 to 2,405,000. The 4-week moving average was 2,404,000, a decrease of 18,500 from the previous week's revised average. The previous week's average was revised up by 1,250 from 2,421,250 to 2,422,500.


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: February 11, 2015 at 07:00 AM (Wednesday)

Mortgage applications decreased 9.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 6, 2015.

The Market Composite Index, a measure of mortgage loan application volume, decreased 9.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 7 percent compared with the previous week. The Refinance Index decreased 10 percent from the previous week. The seasonally adjusted Purchase Index decreased 7 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 1 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 69 percent of total applications from 71 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.7 percent of total applications.

The FHA share of total applications increased to 14.1 percent this week from 13.1 percent last week. The VA share of total applications decreased to 8.3 percent this week from 8.5 percent last week. The USDA share of total applications increased to 0.7 percent from 0.6 percent last week.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 3.84 percent, the highest level since January 9, 2015, from 3.79 percent, with points increasing to 0.31 from 0.29 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 3.90 percent from 3.82 percent, with points decreasing to 0.19 from 0.22 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.72 percent from 3.69 percent, with points increasing to 0.13 from 0.07 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.15 percent from 3.14 percent, with points decreasing to 0.29 from 0.31 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 5/1 ARMs increased to 3.07 percent from 3.03 percent, with points increasing to 0.44 from 0.39 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


Job Openings were 5.0 million in December
Posted: February 10, 2015 at 10:00 AM (Tuesday)

There were 5.0 million job openings on the last business day of December, little changed from 4.8 million in November, the U.S. Bureau of Labor Statistics reported today. Hires (5.1 million) and separations (4.9 million) were little changed in December. Within separations, the quits rate (1.9 percent) and the layoffs and discharges rate (1.2 percent) were unchanged. This release includes estimates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and by four geographic regions.

There were 5.0 million job openings on the last business day of December, little changed from November. This was the highest level of job openings since January 2001. The job openings rate for December was 3.5 percent. The number of job openings was little changed for total private and increased for government in December. Job openings increased for health care and social assistance and for state and local government. The number of job openings increased in the Northeast region.

The number of job openings (not seasonally adjusted) increased over the 12 months ending in December for total nonfarm, total private, and government. Job openings increased over the year for many industries including the professional and business services and the health care and social assistance industries. The number of openings increased over the year in all four regions.


Wholesale Inventories up 0.1% in December
Posted: February 10, 2015 at 10:00 AM (Tuesday)

The U.S. Census Bureau announced today that December 2014 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $449.8 billion, down 0.4 percent (+/-0.9%)* from the revised November level, but were up 1.4 percent (+/-0.9%) from the December 2013 level. The November preliminary estimate was revised downward $0.6 billion or 0.1 percent. December sales of durable goods were up 1.1 percent (+/-1.4%)* from last month and were up 7.3 percent (+/-1.8%) from a year ago. Sales of lumber and other construction materials were up 5.4 percent from last month. Sales of nondurable goods were down 1.7 percent (+/-1.1%) from November and were down 3.5 percent (+/-1.9%) from last December. Sales of petroleum and petroleum products were down 13.7 percent from last month.

Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $547.6 billion at the end of December, up 0.1 percent (+/-0.4%)* from the revised November level and were up 6.7 percent (+/-0.9%) from the December 2013 level. The November preliminary estimate was revised upward $0.1 billion. December inventories of durable goods were up 0.2 percent (+/-0.5%)* from last month and were up 7.8 percent (+/-1.4%) from a year ago. Inventories of computer and computer peripheral equipment and software were up 2.6 percent from last month. Inventories of nondurable goods were down 0.1 percent (+/-0.4%)* from November, but were up 4.9 percent (+/-1.2%) from last December. Inventories of petroleum and petroleum products were down 6.2 percent from last month, while inventories of chemicals and allied products were up 3.4 percent.

The December inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.22. The December 2013 ratio was 1.16.


NFIB Small Business Optimism Index fell 2.5 points to 97.9
Posted: February 10, 2015 at 09:26 AM (Tuesday)

The Small Business Optimism Index fell 2.5 points to 97.9, giving back the December gain that took the Index over 100. Still, the Index indicates that the small business sector is operating in a somewhat “normal” zone. Seven components fell, one was unchanged and 2 rose a bit. Most of the decline was accounted for by expected business conditions (43 percent of the decline), expected real sales (14 percent) and earnings (14 percent). The good news was the increase in the percent of owners reporting hard to fill openings and the drop of only 1 point in the net percent of owners planning job creation from December’s very good number.

In spite of the rather poor state of government economic policy, the private sector is managing to push ahead. GDP growth in Q4 was initially reported at 2.6 percent, revisions seem to be all positive these days. The data collection is running behind the economy. The revisions to November and December jobs numbers were absurdly large. Why investors pay attention is a mystery, the market just likes to bet on something.

The acceleration in growth follows the Federal Reserve’s termination of the quantitative easing buying sprees. The Fed has taken interest rates down far enough to be more than attractive, but growth prospects (cash flow, profits) are only mediocre. Money isn’t cheap if it can’t be deployed profitably. Buying a trillion dollars of bonds doesn’t produce jobs, the Fed has proved that. And the “wealth effect” from higher stock and bond prices did little to move the economy. Long term rates on Treasury securities will remain low as long as the Fed continues to hoard trillions of dollars in Treasury bonds and the deficit remains low (fewer bonds issued by the Treasury). There is a strong demand for low risk and risk free assets. Treasuries are the best, and so demand for them will keep interest rates low.

While the Administration wants to raise taxes and make it harder to exploit our energy assets (no Keystone, attempts to take Alaska out of the energy business), the private sector has pushed the economy forward, even delivering a nice reduction in energy costs. If gas is $1 lower in cost for a year, the improvement to disposable income is over $100 billion. However, the rapid decline in oil prices will create a lot of instability in employment and capital spending as drilling is down substantially in the U.S. And countries depending on oil revenue to run their governments are in serious trouble.

The average work week in manufacturing is over 40 hours now. Small manufacturers continue to do well with strong job creation plans and plentiful job openings. Apparently the IRS wants to be a job creator as well, asking for over 9,000 new positions in the budget to enforce Obamacare regulations. Their work will count as additional GDP, more workers working on taking something rather than producing a useful service or product. Overall, job creation plans were solid across the board, but especially in Construction, Professional Services, and Manufacturing with the help of strong car sales including the bestselling luxury car defined as $50,000 or higher in price, Ford’s F150 truck.

Currently, it appears that the level of cooperation between Congress and the President remains low, so prospects of addressing the top issues for small business owners are not good. The U.S. is about the only functioning major economy, so it’s good to be here even if prospects aren’t as rosy as they could be with a “normalization” of monetary, fiscal and regulatory policies. The small business sector is contributing more to growth now, but still far below its potential. Policy remains a growth deterrent.


Employment Trends Index increased in January to 127.86
Posted: February 9, 2015 at 10:00 AM (Monday)

The Conference Board Employment Trends Index™ (ETI) increased in January. The index now stands at 127.86, up from 127.17 (a downward revision) in December. This represents a 7.6 percent gain in the ETI compared to a year ago.

The Employment Trends Index suggests that strong job growth is likely to continue through the first half of the year. As a result, wage growth will accelerate, thereby increasing pressure on profitability which is already suffering from low productivity growth and the strong dollar.

January’s increase in the ETI was driven by positive contributions from six of the eight components. In order from the largest positive contributor to the smallest, these were: Percentage of Respondents Who Say They Find “Jobs Hard to Get,” Real Manufacturing and Trade Sales, Industrial Production, Percentage of Firms With Positions Not Able to Fill Right Now, Job Openings, and Ratio of Involuntarily Part-time to All Part-time Workers.


Consumer Credit Increased at an annual rate of 5.50%
Posted: February 6, 2015 at 03:00 PM (Friday)

Consumer credit increased at a seasonally adjusted annual rate of 5-1/2 percent during the fourth quarter. Revolving credit increased at an annual rate of 3 percent, while nonrevolving credit increased at an annual rate of 6-1/4 percent. In December, consumer credit increased at an annual rate of 5-1/2 percent.


January Employment increased by 257,000
Unemployment Rate rose to 5.7%

Posted: February 6, 2015 at 08:30 AM (Friday)

Total nonfarm payroll employment rose by 257,000 in January, and the unemployment rate was little changed at 5.7 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in retail trade, construction, health care, financial activities, and manufacturing.

The unemployment rate, at 5.7 percent, changed little in January and has shown no net change since October. The number of unemployed persons, at 9.0 million, was little changed in January.

Among the major worker groups, the unemployment rate for teenagers (18.8 percent) increased in January. The jobless rates for adult men (5.3 percent), adult women (5.1 percent), whites (4.9 percent), blacks (10.3 percent), Asians (4.0 percent), and Hispanics (6.7 percent) showed little or no change.

In January, the number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 2.8 million. These individuals accounted for 31.5 percent of the unemployed. Over the past 12 months, the number of long-term unemployed is down by 828,000.

After accounting for the annual adjustments to the population controls, the civilian labor force rose by 703,000 in January. The labor force participation rate rose by 0.2 percentage point to 62.9 percent, following a decline of equal magnitude in the prior month. Total employment, as measured by the household survey, increased by 435,000 in January, and the employment-population ratio was little changed at 59.3 percent.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged in January at 6.8 million. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job.

In January, 2.2 million persons were marginally attached to the labor force, down by 358,000 from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 682,000 discouraged workers in January, down by 155,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.6 million persons marginally attached to the labor force in January had not searched for work for reasons such as school attendance or family responsibilities.

Total nonfarm payroll employment rose by 257,000 in January. Job gains occurred in retail trade, construction, health care, financial activities, and manufacturing. After incorporating revisions for November and December (which include the impact of the annual benchmark process), monthly job gains averaged 336,000 over the past 3 months.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.6 hours in January. The manufacturing workweek edged up by 0.1 hour to 41.0 hours, and factory overtime edged down by 0.1 hour to 3.5 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged down by 0.1 hour to 33.8 hours.

In January, average hourly earnings for all employees on private nonfarm payrolls increased by 12 cents to $24.75, following a decrease of 5 cents in December. Over the year, average hourly earnings have risen by 2.2 percent. In January, average hourly earnings of private-sector production and nonsupervisory employees increased by 7 cents to $20.80.

The change in total nonfarm payroll employment for November was revised from +353,000 to +423,000, and the change for December was revised from +252,000 to +329,000. With these revisions, employment gains in November and December were 147,000 higher than previously reported. Monthly revisions result from additional reports received from businesses since the last published estimates and the monthly recalculation of seasonal factors. The annual benchmark process also contributed to these revisions.


DJ-BTMU U.S. Business Barometer fell by 0.4%
Posted: February 5, 2015 at 10:00 AM (Thursday)

For the week ending January 24 2015, the DJ-BTMU U.S. Business Barometer fell by 0.4 percent to 98.2, extending the weakening trend for two consecutive weeks, as almost all indexes recorded negative performances. Chain store sales dropped by 0.5 percent as onlineonly retailers, electronics, office furniture, and drug stores saw weaker business. MBA’s purchase index and freight car loadings also declined. As to the production side, electric output slipped by 5.9 percent, in line with other minor losses in lumber, steel and coal production.

On a year-over-year basis, the barometer showed a gain of 1.9 percent, which compares to an average -3.3 percent decline over the Great Recession (ended in June 2009 according to the NBER). After flat lining in 2006, and declining from 2007 through 2009, the barometer bounced back in 2010 to rise by 3.4 percent, which was the strongest increase since 1994 (+4.0 percent), but not so impressive when compared to an -8.0 percent drop in 2009. The rate of increase for the 2013 slowed to 0.7 percent following 1.5 percent in 2012.

The smoothed version of the barometer, which attempts to account for weekly volatility, declined by 0.1 percent to 98.5. Its year-over-year growth rate was 1.1 percent.


4Q2014 Productivity Growth Decreased 1.8%
Posted: February 5, 2015 at 08:30 AM (Thursday)

Nonfarm business sector labor productivity decreased at a 1.8 percent annual rate during the fourth quarter of 2014, the U.S. Bureau of Labor Statistics reported today, as output increased 3.2 percent and hours worked increased 5.1 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) The increase in hours worked is the largest increase in this series since a gain of 5.7 percent in the fourth quarter of 1998. From the fourth quarter of 2013 to the fourth quarter of 2014, productivity was unchanged as output and hours worked both increased 3.1 percent. Annual average productivity increased 0.8 percent from 2013 to 2014.

Unit labor costs in the nonfarm business sector increased 2.7 percent in the fourth quarter of 2014, reflecting a 0.9 percent increase in hourly compensation and a 1.8 percent decline in productivity. Unit labor costs increased 1.9 percent over the last four quarters.

Manufacturing sector productivity increased 1.3 percent in the fourth quarter of 2014, as output increased 5.7 percent and hours worked increased 4.3 percent. Productivity increased 1.5 percent in the durable manufacturing sector and increased 0.2 percent in the nondurable manufacturing sector. (See tables A, 3, 4, and 5.) Over the last four quarters, manufacturing productivity increased 2.8 percent, as output increased 4.8 percent and hours increased 1.9 percent. Unit labor costs in manufacturing increased 0.2 percent in the fourth quarter of 2014 and decreased 0.4 percent from the same quarter a year ago.

Nonfarm business sector productivity grew 0.8 percent in 2014, as output and hours increased 3.1 percent and 2.2 percent, respectively. This increase in productivity is similar to the increases of 0.9 percent in 2013 and 1.0 percent in 2012. These rates are slower than the long-term average annual rate of productivity growth since 1947 (2.2 percent), and reflect steady growth in both output and hours.

Unit labor costs rose 1.5 percent in 2014, as hourly compensation grew faster than productivity. Real hourly compensation, which takes into account changes in consumer prices, increased 0.7 percent in 2014.

In the manufacturing sector, productivity increased 2.5 percent from 2013 to 2014, and unit labor costs were unchanged. Real hourly compensation in manufacturing increased 0.8 percent--the first annual increase in the series since 2009 (3.8 percent).

In the third quarter of 2014, nonfarm business productivity was revised up 1.4 percentage points, to an increase of 3.7 percent; this is due solely to an upward revision to output, as hours worked were unrevised. Unit labor costs for the nonfarm business sector fell 2.3 percent in the third quarter--rather than falling 1.0 percent as previously reported--due solely to the upward revision to productivity


Weekly Initial Unemployment Claims Increase 11,000 to 278,000
Posted: February 5, 2015 at 08:30 AM (Thursday)

In the week ending January 31, the advance figure for seasonally adjusted initial claims was 278,000, an increase of 11,000 from the previous week's revised level. The previous week's level was revised up by 2,000 from 265,000 to 267,000. The 4-week moving average was 292,750, a decrease of 6,500 from the previous week's revised average. The previous week's average was revised up by 750 from 298,500 to 299,250. There were no special factors impacting this week's initial claims.

The advance seasonally adjusted insured unemployment rate was 1.8 percent for the week ending January 24, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 24 was 2,400,000, an increase of 6,000 from the previous week's revised level. The previous week's level was revised up 9,000 from 2,385,000 to 2,394,000. The 4-week moving average was 2,421,250, a decrease of 21,250 from the previous week's revised average. The previous week's average was revised up by 4,000 from 2,438,500 to 2,442,500.


Goods and Services Deficit Increased in December 2014
Posted: February 5, 2015 at 08:30 AM (Thursday)

The Nation’s international trade deficit in goods and services increased to $46.6 billion in December from $39.8 billion in November (revised), as imports increased and exports decreased.

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $46.6 billion in December, up $6.8 billion from $39.8 billion in November, revised. December exports were $194.9 billion, down $1.5 billion from November. December imports were $241.4 billion, up $5.3 billion from November.

The December increase in the goods and services deficit reflected an increase in the goods deficit of $6.9 billion to $66.0 billion and an increase in the services surplus of $0.1 billion to $19.5 billion.

For 2014, the goods and services deficit was $505.0 billion, up $28.7 billion or 6.0 percent from 2013. Exports were $2,345.4 billion, up $65.2 billion or 2.9 percent. Imports were $2,850.5 billion, up $93.9 billion or 3.4 percent.


ISM Non-Manufacturing Index grew at 56.7%
Posted: February 4, 2015 at 10:00 AM (Wednesday)

Economic activity in the non-manufacturing sector grew in January for the 60th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The NMI® registered 56.7 percent in January, 0.2 percentage point higher than the December reading of 56.5 percent. This represents continued growth in the non-manufacturing sector. The Non-Manufacturing Business Activity Index increased to 61.5 percent, which is 2.9 percentage points higher than the December reading of 58.6 percent, reflecting growth for the 66th consecutive month at a faster rate. The New Orders Index registered 59.5 percent, 0.3 percentage point higher than the reading of 59.2 percent registered in December. The Employment Index decreased 4.1 percentage points to 51.6 percent from the December reading of 55.7 percent and indicates growth for the eleventh consecutive month. The Prices Index decreased 4.3 percentage points from the December reading of 49.8 percent to 45.5 percent, indicating prices contracted in January when compared to December. According to the NMI®, eight non-manufacturing industries reported growth in January. Comments from respondents vary by industry and company; however, they are mostly positive and/or reflect stability about business conditions.

INDUSTRY PERFORMANCE
The eight non-manufacturing industries reporting growth in January — listed in order — are: Accommodation & Food Services; Finance & Insurance; Management of Companies & Support Services; Public Administration; Wholesale Trade; Information; Health Care & Social Assistance; and Retail Trade. The eight industries reporting contraction in January — listed in order — are: Mining; Arts, Entertainment & Recreation; Construction; Other Services; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Educational Services; and Transportation & Warehousing.


Help Wanted OnLine Labor Demand rose 150,400 to 5,267,100 in January
Posted: February 4, 2015 at 10:00 AM (Wednesday)

Online advertised vacancies rose 150,400 to 5,267,100 in January, according to The Conference Board Help Wanted OnLine® (HWOL) Data Series, released today. The December Supply/Demand rate stands at 1.70 unemployed for each advertised vacancy with a total of 3.6 million more unemployed workers than the number of advertised vacancies. The number of unemployed was 8.7 million in December.

Online labor demand begins 2015 with a large gain, suggesting that labor markets are continuing to improve. In January, all large States and MSAs showed solid growth with the increase spread across the major occupational categories.

In January, the Professional category saw strong gains in Management (14,000), Business and Finance (12,400) and Healthcare (11,800). The Services/Production category saw large gains in Sales (21,300), Office/Admin (29,200) and Transportation (27,200). Supply/Demand rates have also continued to show improvement.


ADP National Employment Report increased by 213,000 in January
Posted: February 4, 2015 at 08:15 AM (Wednesday)

Private sector employment increased by 213,000 jobs from December to January according to the January ADP National Employment Report®. Broadly distributed to the public each month, free of charge, the ADP National Employment Report is produced by ADP®, a leading global provider of Human Capital Management (HCM) solutions, in collaboration with Moody’s Analytics. The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis.

Payrolls for businesses with 49 or fewer employees increased by 78,000 jobs in January, down from 115,000 in December. Employment among companies with 50-499 employees was the only segment showing an increase in January. These businesses added 95,000 jobs, up from December’s increase of 78,000. Employment at large companies – those with 500 or more employees – decreased from 61,000 the previous month to 40,000 jobs added in January. Companies with 500-999 employees added 14,000 jobs, down from December’s 23,000. Companies with over 1,000 employees added 26,000 jobs, down from December’s 39,000.

Goods-producing employment rose by 31,000 jobs in January, down from 47,000 jobs gained in December. The construction industry added 18,000 jobs, down from last month’s gain of 26,000. Meanwhile, manufacturing added 14,000 jobs in January, below December’s 23,000.

Service-providing employment rose by 183,000 jobs in January, down from 207,000 in December. The ADP National Employment Report indicates that professional/business services contributed 42,000 jobs in January, a large drop-off from December’s 72,000. Expansion in trade/transportation/utilities grew by 54,000, a sharp increase from December’s 40,000. The 11,000 new jobs added in financial activities is down from last month’s 14,000, but still well above the average of the past twelve months.

January marks another month of solid job gains and is in line with the NER’s twelve-month average of over 200,000 jobs added per month.

Employment posted another solid gain in January, although the pace of growth is slower than in recent months. Businesses in the energy and supplying industries are already scaling back payrolls in reaction to the collapse in oil prices, while industries benefiting from the lower prices have been slower to increase their hiring. All indications are that the job market will continue to improve in 2015.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: February 4, 2015 at 07:00 AM (Wednesday)

Mortgage applications increased 1.3 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending January 30, 2015.

The Market Composite Index, a measure of mortgage loan application volume, increased 1.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 15 percent compared with the previous week. The Refinance Index increased 3 percent from the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index increased 16 percent compared with the previous week and was 3 percent higher than the same week one year ago.

Following several weeks of already elevated refinance activity due to falling interest rates, FHA refinance applications increased 76.5 percent in response to a reduction in annual mortgage insurance premiums which took effect January 26. Conventional refinance volume was up only 0.5 percent for the week while VA refinance volume was down 24.3 percent. FHA purchase applications were also up 12.4 percent over the week prior, despite a decrease in purchase applications in the rest of the market.

The refinance share of mortgage activity decreased to 71 percent of total applications from 72 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.3 percent of total applications.

The FHA share of total applications increased to 13.1 percent this week from 9.1 percent last week. The VA share of total applications decreased to 8.5 percent this week from 10.7 percent last week. The USDA share of total applications decreased to 0.6 percent from 0.7 percent last week.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.79 percent, the lowest level since May 2013, from 3.83 percent, with points increasing to 0.29 from 0.26 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 3.82 percent, the lowest level since May 2013, from 3.87 percent, with points decreasing to 0.22 from 0.33 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.69 percent from 3.71 percent, with points remaining unchanged at 0.07 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.14 percent from 3.15 percent, with points increasing to 0.31 from 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 5/1 ARMs increased to 3.03 percent from 2.96 percent, with points decreasing to 0.39 from 0.42 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


New orders for manufactured goods decreased 3.4%
Posted: February 3, 2015 at 10:00 AM (Tuesday)

New orders for manufactured goods in December, down five consecutive months, decreased $16.4 billion or 3.4 percent to $471.5 billion, the U.S. Census Bureau reported today. This followed a 1.7 percent November decrease. Excluding transportation, new orders decreased 2.3 percent.

Shipments, down four of the last five months, decreased $5.3 billion or 1.1 percent to $488.2 billion. This followed a 1.0 percent November decrease.

Unfilled orders, down following ten consecutive monthly increases, decreased $9.4 billion or 0.8 percent to $1,166.9 billion. This followed a 0.2 percent November increase. The unfilled orders-to-shipments ratio was 6.69, down from 6.81 in November.

Inventories, down following eighteen consecutive monthly increases, decreased $2.0 billion or 0.3 percent to $653.9 billion. This followed a slight November increase. The inventories-to-shipments ratio was 1.34, up from 1.33 in November.


Paychex-IHS Small Business Jobs Index rose to 100.65 in January
Posted: February 3, 2015 at 08:30 AM (Tuesday)

Following several months of slowing employment growth, the Paychex | IHS Small Business Jobs Index grew 0.09 percent in January, representing the strongest one-month gain since the national index peaked in April 2014. Year-over-year, however, the national index declined 0.38 percent. The West North Central region remained the top regional index despite having the worst one-month growth rate. Indiana jumped to the top-ranked state index and Dallas continued its hold on the top spot among metro areas.

The Paychex | IHS Small Business Jobs Index began 2015 on an upswing, gaining 0.09 percent during January. Though still below 2014 levels, at 100.65, small business employment growth remains robust.

Following several months of slower employment growth, it's encouraging to see small businesses start the New Year on a high note. We're hopeful that this will be a positive trend small businesses continue to see throughout 2015.


New York Purchasing Managers Business Activity fell to 44.5 in January
Posted: February 3, 2015 at 08:30 AM (Tuesday)

New York City business activity contracted for the first time in 19 months, according to the survey taken by the Institute for Supply Management-New York (ISM-NY).

Current Business Conditions fell to 44.5 in January, the first reading below breakeven since June 2013 and the weakest level in six years. This comes one month after December’s four-year high.

Future optimism cooled to a nine-month low. The Six-Month Outlook eased to 66.9 in January.

Job growth expanded moderately. Employment came in at 55.4 in January.

Purchase volume was a bright spot, rising to a five-year high following back-to-back neutral readings. Quantity of Purchases increased to 69.0 in January.

The top line and forward guidance both expanded solidly. Current Revenues were at 68.4 in January, and Expected Revenues were at 75.0 in January.

Price measures ran counter to oil and gasoline prices. Prices Paid rose to a four-year high of 67.5 in January, and Prices Received moved up to to 55.6 in January.

Potential Business Opportunities/Impediments: Cost of benefits and cost of labor were at/near the top of net impediments again, but weather was second and security concerns tied for fourth. Usual suspects – domestic demand, foreign demand, management skills – were top net opportunities, but working capital and energy costs were notably more positive.


Construction Spending increased 0.4% in December
Posted: February 2, 2015 at 10:00 AM (Monday)

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during December 2014 was estimated at a seasonally adjusted annual rate of $982.1 billion, 0.4 percent (±1.3%)* above the revised November estimate of $978.6 billion. The December figure is 2.2 percent (±1.6%) above the December 2013 estimate of $961.2 billion. The value of construction in 2014 was $961.4 billion, 5.6 percent (±1.2%) above the $910.8 billion spent in 2013.

PRIVATE CONSTRUCTION
Spending on private construction was at a seasonally adjusted annual rate of $698.6 billion, 0.1 percent (±1.0%)* above the revised November estimate of $698.2 billion. Residential construction was at a seasonally adjusted annual rate of $349.6 billion in December, 0.3 percent (±1.3%)* above the revised November estimate of $348.4 billion. Nonresidential construction was at a seasonally adjusted annual rate of $349.0 billion in December, 0.2 percent (±1.0%)* below the revised November estimate of $349.8 billion. The value of private construction in 2014 was $687.0 billion, 7.2 percent (±1.3%) above the $641.1 billion spent in 2013. Residential construction in 2014 was $350.0 billion, 4.1 percent (±2.1%) above the 2013 figure of $336.2 billion and nonresidential construction was $337.0 billion, 10.5 percent (±1.3%) above the $304.9 billion in 2013.

PUBLIC CONSTRUCTION
In December, the estimated seasonally adjusted annual rate of public construction spending was $283.5 billion, 1.1 percent (±2.1%)* above the revised November estimate of $280.4 billion. Educational construction was at a seasonally adjusted annual rate of $61.5 billion, 0.6 percent (±3.5%)* below the revised November estimate of $61.8 billion. Highway construction was at a seasonally adjusted annual rate of $90.3 billion, 2.1 percent (±4.9%)* above the revised November estimate of $88.4 billion. The value of public construction in 2014 was $274.4 billion, 1.8 percent (±1.8%)* above the $269.6 billion spent in 2013. Educational construction in 2014 was $62.0 billion, 1.2 percent (±3.6%)* above the 2013 figure of $61.3 billion and highway construction was $84.4 billion, 4.1 percent (±4.4%)* above the $81.1 billion in 2013.


January Manufacturing ISM expanded slower at 53.5
Posted: February 2, 2015 at 10:00 AM (Monday)

Economic activity in the manufacturing sector expanded in January for the 20th consecutive month, and the overall economy grew for the 68th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The January PMI® registered 53.5 percent, a decrease of 1.6 percentage points from December’s seasonally adjusted reading of 55.1 percent. The New Orders Index registered 52.9 percent, a decrease of 4.9 percentage points from the seasonally adjusted reading of 57.8 percent in December. The Production Index registered 56.5 percent, 1.2 percentage points below the seasonally adjusted December reading of 57.7 percent. The Employment Index registered 54.1 percent, a decrease of 1.9 percentage points below the seasonally adjusted December reading of 56 percent. Inventories of raw materials registered 51 percent, an increase of 5.5 percentage points above the December reading of 45.5 percent. The Prices Index registered 35 percent, down 3.5 percentage points from the December reading of 38.5 percent, indicating lower raw materials prices in January relative to December. Comments from the panel indicate that most industries, but not all, are experiencing strong demand as 2015 kicks off. The West Coast dock slowdown continues to be a problem, negatively impacting both exports and imports as well as inventories.

Of the 18 manufacturing industries, 14 are reporting growth in January in the following order: Primary Metals; Wood Products; Printing & Related Support Activities; Miscellaneous Manufacturing; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Paper Products; Transportation Equipment; Chemical Products; Machinery; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Furniture & Related Products. The two industries reporting contraction in January are: Textile Mills; and Nonmetallic Mineral Products.


Personal Income increased 0.3%, Spending decreased 0.3%
Posted: February 2, 2015 at 08:30 AM (Monday)

Personal income increased $41.3 billion, or 0.3 percent, and disposable personal income (DPI) increased $35.8 billion, or 0.3 percent, in December, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) decreased $40.0 billion, or 0.3 percent. In November, personal income increased $47.2 billion, or 0.3 percent, DPI increased $34.2 billion, or 0.3 percent, and PCE increased $58.8 billion, or 0.5 percent, based on revised estimates.

Real DPI increased 0.5 percent in December, compared with an increase of 0.4 percent in November. Real PCE decreased 0.1 percent, in contrast to an increase of 0.7 percent. The price index for PCE decreased 0.2 percent in December, the same decrease as in November.


Chicago Purchasing Managers Index edged up 0.6 point to 59.4 in January
Posted: January 30, 2015 at 10:00 AM (Friday)

The Chicago Business Barometer stabilised in January following two consecutive monthly declines, with continued firm growth in orders and output driving employment to a 14-month high. The Chicago Business Barometer edged up 0.6 point to 59.4 in January from a revised 58.8 in December, following the publication of new seasonal factors earlier in the month.

Business activity was led by a modest advance in New Orders while Order Backlogs was the second largest contributor to the Barometer’s faster expansion. Production also increased between December and January following two consecutive falls.

The survey has signposted a significant improvement in the jobs market over the past year. The start of 2015 saw the Employment Indicator rise sharply on the month to the highest since November 2013 and well above the levels seen in January 2014. Of the five components that comprise the Barometer, Supplier Deliveries was the only one that fell.

Inflationary pressures have eased gently in the previous three months, but the January decline was stronger as plummeting crude oil prices finally made their mark. The fourth consecutive monthly decline left Prices Paid in contraction, and at the lowest level since July 2009 when the US was in the middle of the financial crisis. 2015 also saw a sharp downward move in stockbuilding to the lowest since July 2013. Inventories of finished goods plunged over 15 points into contraction following very strong growth over the second half of 2014.

Commenting on the Chicago Report, Philip Uglow, Chief Economist of MNI Indicators said, “This was a solid start to 2015 with current growth in orders and output consistent with ongoing strength in US GDP. Encouragingly, the January survey showed that strength we saw in the second half of 2014 is having a significantly positive impact on employment.“

”The sharp fall in input costs due to the lower oil price, evidenced by the lowest level of Prices Paid for more than five years, will have a positive impact on business activity as well as consumer spending.“


University of Michigan Consumer Confidence increased in January to 98.1
Posted: January 30, 2015 at 10:00 AM (Friday)

Consumer optimism rose in the January 2015 survey to its highest level in the past decade. Most of the gains were recorded since mid 2014. Importantly, the gains during the past six months were as large among households with incomes under $75,000 as over that amount. Consumers anticipated that the economy would expand and create new jobs at the best rate in the past decade. Consumers are counting on rather modest wage gains during the years ahead to boost their spending plans. Overall, the more optimistic data indicate that total real personal consumption expenditures will grow at 3.3% during 2015.

Favorable Job Expectations
When asked about recent economic developments, more consumers volunteered positive news in the January survey than at any other time in the past thirty years. Net job gains as well as declines in gas prices dominated their replies. Two-thirds of all consumers thought the economy had recently improved, and just over half anticipated an uninterrupted economic expansion over the next five years; both were at the best levels in a decade. Moreover, few consumers feared a rising unemployment rate in the January survey. There was only one survey in the past thirty years in which fewer consumers expected a rising jobless rate.

Wage Gains Now Main Criteria
More consumers reported gains in their finances than anytime during the past decade, and four-in-ten consumers specifically cited income gains as the primary reason, the most in nearly fifteen years. Although consumers anticipatedwage gains during the year ahead that were nearly four-times as large as in last January’s survey, the typical consumer only expected a gain of 1.9%. While the highest since 2008, it remains at quite modest levels.

The Consumer Sentiment Index was 98.1 in the January 2015 survey, up from 93.6 in December and 81.2 last January. This was the highest level of the Sentiment Index since 103.8 was recorded in January 2004. The Current Conditions Index rose to 109.3 from 104.8 one month ago and 96.8 one year ago. The Expectations Index rose to 91.0 in January 2015 from 86.4 in December and 71.2 in January 2014.

Consumers expect the renewed economic strength to create more jobs, but the only boost to their discretionary incomes has been due to falling oil prices. Consumers have now turned to wages rather than jobs as the primary characteristic they use to judge the performance of the economy. Thus far, only younger and higher skilled workers anticipate wage gains that are appreciably higher than the low inflation rate. Without stronger growth, consumers will increasing condition their spending on price discounts, adding to disinflationary pressures. Moreover, renewed wage growth is needed to bolster credit usage amid rising interest rates.


4Q2014 GDP advance estimate increased 2.6%
Posted: January 30, 2015 at 08:30 AM (Friday)

Real gross domestic product -- the value of the production of goods and services in the United States, adjusted for price changes -- increased at an annual rate of 2.6 percent in the fourth quarter of 2014, according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 5.0 percent.

The increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, nonresidential fixedinvestment, state and local government spending, and residential fixed investment that were partly offset by a negative contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP growth in the fourth quarter primarily reflected an upturn in imports, a downturn in federal government spending, and decelerations in nonresidential fixed investment and in exports that were partly offset by an upturn in private inventory investment and an acceleration in PCE.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, decreased 0.3 percent in the fourth quarter, in contrast to an increase of 1.4 percent in the third. Excluding food and energy prices, the price index for gross domestic purchases increased 0.7 percent, compared with an increase of 1.6 percent.


Employment Cost Index up 0.6% in 4Q2014
Posted: January 30, 2015 at 08:30 AM (Friday)

Compensation costs for civilian workers increased 0.6 percent, seasonally adjusted, for the 3-month period ending December 2014, the U.S. Bureau of Labor Statistics reported today. Wages and salaries (which make up about 70 percent of compensation costs) increased 0.5 percent, and benefits (which make up the remaining 30 percent of compensation) increased 0.6 percent.


Pending Home Sales Index decreased 3.7% in December
Posted: January 29, 2015 at 10:00 AM (Thursday)

Despite interest rates being at their lowest level of 2014, pending home sales cooled in December but remained above year-over-year levels for the fourth consecutive month, according to the National Association of Realtors®. All major regions experienced declines in December.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, decreased 3.7 percent to 100.7 in December from a slightly downwardly revised 104.6 in November but is 6.1 percent above December 2013 (94.9). Despite last month’s decline (the largest since December 2013 at 5.8 percent), the index experienced its highest year-over-year gain since June 2013 (11.7 percent).

Fewer homes available for sale and a slight acceleration in prices likely led to December’s decline in contract signings. “Total inventory fell in December for the first time in 16 months, resulting in fewer choices for buyers and a modest uptick in price growth in markets throughout the country. With interest rates at lows not seen since early 2013, the strength in existing-sales in upcoming months will largely depend on the willingness of current homeowners to realize their equity gains from the past couple years and trade up.

More jobs, increasing consumer confidence, less expensive mortgage insurance and new low down payment programs coming into the marketplace will likely lead to more demand from first-time buyers.

The PHSI in the Northeast experienced the largest decline, dropping 7.5 percent to 82.1 in December, but is still 6.3 percent above a year ago. In the Midwest the index decreased 2.8 percent to 97.1in December, but is 1.9 percent above December 2013.

Pending home sales in the South declined 2.6 percent to an index of 116.6 in December, but are 8.6 percent above last December. The index in the West fell 4.6 percent in December to 94.0, but is 6.3 percent above a year ago.

Total existing-homes sales in 2015 are forecast to be around 5.26 million, an increase of 6.6 percent from 2014. The national median existing-home price for all of this year is expected to increase between 4 and 5 percent. In 2014, existing-home sales declined 3.1 percent and prices rose 5.8 percent.


DJ-BTMU U.S. Business Barometer dipped by 0.3%
Posted: January 29, 2015 at 10:00 AM (Thursday)

For the week ending January 17 2015, the DJ-BTMU U.S. Business Barometer dipped by 0.3 percent to 98.6 after a short-lived recovery in the prior week. This week’s barometer was mainly driven by weak performances in consumption indexes, in which chain store sales decreased by 1.1 percent, extending the falling trend for three consecutive weeks. As to the production side, auto, truck and lumber production reported moderate gains; although it was almost entirely offset by minor losses in electric output and coal production.

On a year-over-year basis, the barometer showed a gain of 1.9 percent, which compares to an average -3.3 percent decline over the Great Recession (ended in June 2009 according to the NBER). After flat lining in 2006, and declining from 2007 through 2009, the barometer bounced back in 2010 to rise by 3.4 percent, which was the strongest increase since 1994 (+4.0 percent), but not so impressive when compared to an -8.0 percent drop in 2009. The rate of increase for the 2013 slowed to 0.7 percent following 1.5 percent in 2012.

The smoothed version of the barometer, which attempts to account for weekly volatility, declined by 0.1 percent to 98.8. Its year-over-year growth rate was 1.1 percent.


Weekly Initial Unemployment Claims Decrease 43,000 to 265,000
Posted: January 29, 2015 at 08:30 AM (Thursday)

In the week ending January 24, the advance figure for seasonally adjusted initial claims was 265,000, a decrease of 43,000 from the previous week's revised level. This is the lowest level for initial claims since April 15, 2000 when it was 259,000. The previous week's level was revised up by 1,000 from 307,000 to 308,000. The 4-week moving average was 298,500, a decrease of 8,250 from the previous week's revised average. The previous week's average was revised up by 250 from 306,500 to 306,750. There were no special factors impacting this week's initial claims.

The advance seasonally adjusted insured unemployment rate was 1.8 percent for the week ending January 17, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 17 was 2,385,000, a decrease of 71,000 from the previous week's revised level. The previous week's level was revised up 13,000 from 2,443,000 to 2,456,000. The 4-week moving average was 2,438,500, an increase of 8,250 from the previous week's revised average. The previous week's average was revised up by 3,250 from 2,427,000 to 2,430,250.


FOMC target funds rate reaffirmed at 0 - 1/4%
Posted: January 28, 2015 at 02:00 PM (Wednesday)

Information received since the Federal Open Market Committee met in December suggests that economic activity has been expanding at a solid pace. Labor market conditions have improved further, with strong job gains and a lower unemployment rate. On balance, a range of labor market indicators suggests that underutilization of labor resources continues to diminish. Household spending is rising moderately; recent declines in energy prices have boosted household purchasing power. Business fixed investment is advancing, while the recovery in the housing sector remains slow. Inflation has declined further below the Committee’s longer-run objective, largely reflecting declines in energy prices. Market-based measures of inflation compensation have declined substantially in recent months; survey-based measures of longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate. The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced. Inflation is anticipated to decline further in the near term, but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of lower energy prices and other factors dissipate. The Committee continues to monitor inflation developments closely.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy. However, if incoming information indicates faster progress toward the Committee’s employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated. Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Jeffrey M. Lacker; Dennis P. Lockhart; Jerome H. Powell; Daniel K. Tarullo; and John C. Williams


Purchase Apps down, Refi's down in Latest MBA Weekly Survey
Posted: January 28, 2015 at 07:00 AM (Wednesday)

Mortgage applications decreased 3.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 23, 2015.This week’s results include an adjustment to account for the Martin Luther King holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 3.2 percent on a seasonally adjusted basis from one week earlier.On an unadjusted basis, the Index decreased 12 percent compared with the previous week.The Refinance Index decreased 5 percent from the previous week.The seasonally adjusted Purchase Index decreased 0.1 percent from one week earlier. The unadjusted Purchase Index decreased 4 percent compared with the previous week and was 1 percent higher than the same week one year ago. The seasonally adjusted Government Index increased 9.2 percent from the previous week to the highest level since July 2013.

The refinance share of mortgage activity decreased to 72 percent of total applications from 74 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.7 percent of total applications.

The FHA share of total applications increased to 9.1 percent this week from 8.0 percent last week. The VA share of total applications increased to 10.7 percent this week from 9.4 percent last week.The USDA share of total applications increased to 0.7 percent from 0.6 percent last week.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 3.83 percent from 3.80 percent, with points decreasing to 0.26 from 0.29 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 3.87 percent from 3.86 percent, with points increasing to 0.33 from 0.23 (including the origination fee) for 80 percent LTV loans.The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.71 percent from 3.66 percent, with points decreasing to 0.07 from 0.15 (including the origination fee) for 80 percent LTV loans.The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.15 percent from 3.10 percent, with points decreasing to 0.28 from 0.29 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to 2.96 percent from 2.87 percent, with points increasing to 0.42 from 0.41 (including the origination fee) for 80 percent LTV loans.The effective rate increased from last week.


New Home Sales in December at annual rate of 481,000
Posted: January 27, 2015 at 10:00 AM (Tuesday)

Sales of new single-family houses in December 2014 were at a seasonally adjusted annual rate of 481,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 11.6 percent (±16.5%) above the revised November rate of 431,000 and is 8.8 percent (±17.9%) above the December 2013 estimate of 442,000.

The median sales price of new houses sold in December 2014 was $298,100; the average sales price was $377,800. The seasonally adjusted estimate of new houses for sale at the end of December was 219,000. This represents a supply of 5.5 months at the current sales rate.

An estimated 435,000 new homes were sold in 2014. This is 1.2 percent (±2.9%) above the 2013 figure of 429,000.


Consumer Confidence rose sharply in January to 102.9
Posted: January 27, 2015 at 10:00 AM (Tuesday)

The Conference Board Consumer Confidence Index®, which had increased in December, rose sharply in January. The Index now stands at 102.9 (1985=100), up from 93.1 in December. The Present Situation Index rose to 112.6 from 99.9, while the Expectations Index increased to 96.4 from 88.5 in December.

Consumer confidence rose sharply in January, and is now at its highest level since August 2007 (Index, 105.6). A more positive assessment of current business and labor market conditions contributed to the improvement in consumers’ view of the present situation. Consumers also expressed a considerably higher degree of optimism regarding the short-term outlook for the economy and labor market, as well as their earnings.

Consumers’ assessment of present-day conditions was considerably more favorable in January than in December. Those saying business conditions are “good” increased from 24.7 percent to 28.1 percent, while those claiming business conditions are “bad” decreased from 18.9 percent to 16.8 percent. Consumers were also much more positive in their assessment of the job market. Those stating jobs are “plentiful” increased from 17.2 percent to 20.5 percent. Those claiming jobs are “hard to get” decreased from 27.3 percent to 25.7 percent.

Consumers’ optimism about the short-term outlook improved in January. The percentage of consumers expecting business conditions to improve over the next six months rose from 17.8 percent to 18.4 percent, while those expecting business conditions to worsen declined from 9.9 percent to 7.7 percent.

Consumers’ outlook for the labor market was also more optimistic. Those anticipating more jobs in the months ahead increased from 14.6 percent to 16.7 percent, while those anticipating fewer jobs declined from 16.5 percent to 15.0 percent. The proportion of consumers expecting growth in their incomes improved from 16.2 percent to 20.0 percent. However, the proportion expecting a decrease increased marginally, from 10.2 percent to 11.3 percent.


Richmond Fed's Current Activity Index lost 1 point to a reading of 6
Posted: January 27, 2015 at 10:00 AM (Tuesday)

Fifth District manufacturing activity expanded at a modest pace in January, according to the most recent survey by the Federal Reserve Bank of Richmond. Shipments increased at a faster pace this month, while the volume of new orders remained steady. Manufacturing employment and average wages grew at a slower pace this month. However, the average workweek grew more quickly.

Manufacturers were optimistic about future business conditions. Firms expected faster growth in shipments and new orders in the six months ahead. Additionally, survey participants expected order backlogs to increase and anticipated faster growth in capacity utilization. Expectations were for little change in vendor lead times.

Producers expected faster growth in hiring in the months ahead. They also expected solid growth in average wages and a pickup in the average workweek.

Prices of raw materials and finished goods rose at a slower pace compared to last month. Survey participants expected faster growth in prices paid and prices received over the next six months.

Overall, manufacturing activity increased at a modest pace. The January composite index for manufacturing moved down one point to a reading of 6. The index for shipments advanced five points to end at a reading of 10. The index for new orders grew at the same pace as a month ago, finishing at a reading of 4. Manufacturing employment grew at a slower pace this month, pulling the index down eight points to finish at 5.

Capacity utilization increased in January. The index gained 14 points from December's reading to finish at an index of 9. Vendor lead times lengthened compared to a month ago, moving the index up three points to a reading of 5. Backlogs dropped this month. The indicator lost four points to settle at −9. Finished goods inventories rose more quickly compared to a month ago. That index added three points to end at 25. Additionally, raw materials inventories growth remained solid this month. That gauge moved to 19 from 20.


S&P/Case-Shiller Home Price Indices decrease 0.2% in November
Posted: January 27, 2015 at 09:00 AM (Tuesday)

S&P Dow Jones Indices today released the latest results for the S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices. Data released today for November 2014 shows a continued slowdown in home prices nationwide, but with price increases in nine cities.

Year-over-Year
Both the 10-City and 20-City Composites saw year-over-year growth rates decline in November compared to October. The 10-City Composite gained 4.2% year-over-year, down from 4.4% in October. The 20-City Composite gained 4.3% year-over-year, compared to 4.5% in October. The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 4.7% annual gain in November 2014 versus 4.6% in October 2014.

Miami and San Francisco continue to lead all cities, posting gains of 8.6% and 8.9% over the last 12 months. Nine cities, including Tampa, Atlanta, Charlotte, and Portland, saw annual growth rates climb more than other cities in November. 12-month growth rates for Detroit and Miami dropped the most among all 20 cities.

Month-over-Month
The National and Composite Indices were both marginally negative in November. The 10 and 20-City Composites reported declines of -0.3% and -0.2%, while the National Index posted a decline of -0.1% for the month. Tampa led all cities in November with an increase of 0.8%. Chicago and Detroit offset those gains by reporting decreases of -1.1% and -0.9% respectively.

With the spring home buying season, and spring training, still a month or two away, the housing recovery is barely on first base. Prospects for a home run in 2015 aren’t good. Strong price gains are limited to California, Florida, the Pacific Northwest, Denver, and Dallas. Most of the rest of the country is lagging the national index gains. Moreover, these price patterns have been in place since last spring. Existing home sales were lower in 2014 than 2013, confirming these trends.

Difficulties facing the housing recovery include continued low inventory levels and stiff mortgage qualification standards. Distressed sales and investor purchases for buy-to-rent declined somewhat in the fourth quarter. The best hope for housing is the rest of the economy where the news is better. 2014 was a good year for job creation and weekly unemployment claims – good short term indicators – which continue to provide upbeat reports. Consumer confidence, helped by cheap gasoline prices, is strong, and a good GDP number is expected this week.

The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 4.7% annual gain in November 2014. The 10- and 20-City Composites reported year-over-year increases of 4.2% and 4.3%.

As of November 2014, average home prices for the MSAs within the 10-City and 20-City Composites are back to their autumn 2004 levels. Measured from their June/July 2006 peaks, the peak-to-current decline for both Composites is approximately 16-17%. The recovery from the March 2012 lows is 28.2% and 29% for the 10-City and 20-City Composites.


New Orders for Durable Goods Decreased 3.4%, Ex-Trans Down 0.8%
Posted: January 27, 2015 at 08:30 AM (Tuesday)

New orders for manufactured durable goods in December decreased $8.1 billion or 3.4 percent to $230.5 billion, the U.S. Census Bureau announced today. This decrease, down four of the last five months, followed a 2.1 percent November decrease. Excluding transportation, new orders decreased 0.8 percent. Excluding defense, new orders decreased 3.2 percent. Transportation equipment, also down four of the last five months, led the decrease, $6.8 billion or 9.2 percent to $66.7 billion.

Shipments of manufactured durable goods in December, up following two consecutive monthly decreases, increased $2.6 billion or 1.1 percent to $246.8 billion. This followed a 0.7 percent November decrease. Transportation equipment, up three of the last four months, led the increase, $2.2 billion or 3.1 percent to $74.5 billion.

Unfilled orders for manufactured durable goods in December, down following ten consecutive monthly increases, decreased $8.9 billion or 0.8 percent to $1,167.6 billion. This followed a 0.2 percent November increase. Transportation equipment, also down following ten consecutive monthly increases, led the decrease, $7.8 billion or 1.0 percent to $740.0 billion.

Inventories of manufactured durable goods in December, up twenty of the last twenty-one months, increased $2.0 billion or 0.5 percent to $410.8 billion. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 0.5 percent November increase. Transportation equipment, also up twenty of the last twenty-one months, led the increase, $0.6 billion or 0.5 percent to $134.1 billion.

Nondefense new orders for capital goods in December decreased $7.9 billion or 9.7 percent to $73.3 billion. Shipments increased $0.1 billion or 0.2 percent to $78.9 billion. Unfilled orders decreased $5.7 billion or 0.8 percent to $732.4 billion. Inventories increased $1.0 billion or 0.5 percent to $187.5 billion. Defense new orders for capital goods in December decreased $0.5 billion or 5.3 percent to $8.7 billion. Shipments increased $0.2 billion or 2.2 percent to $10.2 billion. Unfilled orders decreased $1.5 billion or 0.9 percent to $156.2 billion. Inventories decreased $0.1 billion or 0.3 percent to $24.1 billion.

Revised seasonally adjusted November figures for all manufacturing industries were: new orders, $489.3 billion (revised from $492.7 billion); shipments, $494.9 billion (revised from $495.7 billion); unfilled orders, $1,176.5 billion (revised from $1,179.1 billion); and total inventories, $657.2 billion (revised from $656.3 billion).


Texas Manufacturing Activity Stalls and Outlook Worsens in January
Posted: January 26, 2015 at 10:30 AM (Monday)

Texas factory activity was flat in January, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, came in at 0.7, indicating output was essentially unchanged from December.

Other survey measures also reflected sluggish activity during the month. The capacity utilization index fell to 5.1, its lowest reading in five months. The shipments index plunged from 20.8 to 6, due to a much higher share of respondents noting a decline in shipments in January than in December. The new orders index moved down from 2.7 to -7.7, registering its first negative reading since April 2013.

Perceptions of broader business conditions worsened this month, with both the general business activity index and the company outlook index dropping below zero for the first time in 20 months. The general business activity index dropped to -4.4, and the company outlook index fell 13 points, coming in at -3.8.

Labor market indicators reflected unchanged workweeks but continued employment increases. The employment index was 9.0 in January, slightly below last month’s level but close to its average reading over the past two years. Twenty percent of firms reported net hiring compared with 11 percent reporting net layoffs. The hours worked index edged down from 0.7 to -0.1, indicating no change in hours worked in January.

Wage pressures eased, while input and selling prices declined in January. The raw materials price index came in at -1.7, its first negative reading in more than five years. The finished goods price index fell 11 points to -6.7, after posting positive readings during the past 17 months. Looking ahead, 29 percent of respondents anticipate increases in raw materials prices over the next six months, while 19 percent expect declines. The wages and benefits index receded from 25.2 to 19.1, suggesting some moderation in upward pressure on compensation costs.

Indexes reflecting future business conditions fell notably in January. The index of future general business activity plummeted from 13 to -6.4. The index of future company outlook plunged from 21.8 to 2.5, its lowest reading in more than two years. Indexes for future manufacturing activity also declined this month but remained in positive territory.


Existing-Home Sales rose 2.4% in December
Posted: January 23, 2015 at 10:00 AM (Friday)

Despite low inventory conditions, existing-home sales bounced back in December and climbed above an annual pace of 5 million sales for the sixth time in seven months, according to the National Association of Realtors®. Median home prices for 2014 rose to their highest level since 2007, but total sales fell 3.1 percent from 2013.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 2.4 percent to a seasonally adjusted annual rate of 5.04 million in December from a downwardly-revised 4.92 million in November. From a year ago, December sales were higher by 3.5 percent and are now above year-over-year levels for the third straight month.

For all of 2014, there were 4.93 million sales, a 3.1 percent decline from 2013 (5.09 million). The national median existing-home price was $208,500, the highest since 2007 ($219,000) and a 5.8 percent increase from 2013 ($197,100).

Sales picked up in December to close a 2014 that got off to a sluggish start but showed encouraging signs of activity the second half of the year. Home sales improved over the summer once inventory increased, prices moderated and economic growth accelerated. Sales were measurably better in the second half – up 8 percent compared to the first six months of the year.

Total housing inventory at the end of December dropped 11.1 percent to 1.85 million existing homes available for sale, which represents a 4.4-month supply at the current sales pace – down from 5.1 months in November. Unsold inventory is now 0.5 percent lower than a year ago (1.86 million).

A drop in housing supply in December raises some affordability concerns in the months ahead as minimal selection and the potential for faster price appreciation could offset the demand from buyers encouraged by a stronger economy and sub-4 percent interest rates. Housing costs – both rents and home prices – continue to outpace wages and are burdensome for potential buyers trying to save for a downpayment while looking for available homes in their price range.

The median existing-home price for all housing types in December was $209,500, which is 6.0 percent above December 2013. This marks the 34th consecutive month of year-over-year price gains.

The percent share of first-time buyers was 29 percent in December, down from 31 percent in November but up from a year ago (27 percent). First-time buyers in 2014 represented an average of 29 percent for the second straight year. A separate NAR survey released in late 2014 revealed that the annual share of first-time buyers fell to its lowest level in nearly three decades.

Realtors® are optimistic the Federal Housing Administration’s plan to reduce annual mortgage insurance premiums will have a positive impact on first-time buyers once it goes into effect on January 26. NAR is a strong supporter of the FHA and its vital role in the mortgage marketplace for homebuyers. Realtors® support responsible lending to qualified borrowers and the move to lower premiums will enable more buyers to enter the market while continuing to protect taxpayers from the risky lending practices that led to the housing crash.

All-cash sales were 26 percent of transactions in December, up from 25 percent in November and 32 percent in December of last year. Individual investors, who account for many cash sales, purchased 17 percent of homes in December, up from last month (15 percent) but down from December 2013 (21 percent). Sixty-three percent of investors paid cash in December.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage in December fell to 3.86 percent, its lowest level since May 2013 (3.54 percent), and down from 4.00 percent in November. The average annual rate was 4.17 percent in 2014.

Distressed sales – foreclosures and short sales – were up slightly in December (11 percent) from November (9 percent) but are down from 14 percent a year ago. Eight percent of December sales were foreclosures and 3 percent were short sales. Foreclosures sold for an average discount of 15 percent below market value in December (17 percent in November), while short sales were discounted 12 percent (13 percent in November).

Properties typically stayed on the market the same amount of time in December (66 days) as November (65 days) but for a slightly shorter time frame than a year ago (72 days). Short sales were on the market the longest at a median of 98 days in December, while foreclosures sold in 61 days and non-distressed homes took 66 days. Thirty-one percent of homes sold in December were on the market for less than a month.

Single-family and Condo/Co-op Sales

Single-family home sales increased 3.5 percent to a seasonally adjusted annual rate of 4.47 million in December from 4.32 million in November, and are 4.0 percent above the 4.30 million pace a year ago. The median existing single-family home price was $210,200 in December, up 6.3 percent from December 2013.

Existing condominium and co-op sales declined 5.0 percent to a seasonally adjusted annual rate of 570,000 units in December from 600,000 in November, and are unchanged from a year ago. The median existing condo price was $204,000 in December, which is 3.2 percent higher than a year ago.


U.S. Leading Economic Index increased 0.5%
Posted: January 23, 2015 at 10:00 AM (Friday)

The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.5 percent in December to 121.1 (2010 = 100), following a 0.4 percent increase in November, and a 0.6 percent increase October.

December’s gain in the LEI was driven by a majority of its components, suggesting the short-term outlook is getting brighter and the economy continues to build momentum. Still, a lack of growth in residential construction and average weekly hours in manufacturing remains a concern. Current economic conditions measured by the coincident indicators show employment and income gains are helping to keep the U.S. economy on a solid expansionary path despite some weakness in industrial production.

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.2 percent in December to 111.4 (2010 = 100), following a 0.5 percent increase in November, and a 0.3 percent increase in October.

The Conference Board Lagging Economic Index® (LAG) for the U.S. increased 0.3 percent in December to 115.0 (2010 = 100), following a 0.3 percent increase in November, and no change in October.


This month's release will incorporates annual benchmark revisions to the composite economic indexes, which bring them up-to-date with revisions in the source data. Also, with this benchmark revision, the base year of the composite indexes was changed to 2010 = 100 from 2004 = 100. These revisions do not change the cyclical properties of the indexes. The indexes are updated throughout the year, but only for the previous six months. Data revisions that fall outside of the moving six-month window are not incorporated until the benchmark revision is made and the entire histories of the indexes are recomputed. As a result, the revised indexes, in levels and month-on-month changes, will not be directly comparable to those issued prior to the benchmark revision.


Chicago Fed National Activity moderated in December
Posted: January 23, 2015 at 08:30 AM (Friday)

Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) fell to –0.05 in December from +0.92 in November. None of the four broad categories of indicators that make up the index increased from November, and two of the four categories made negative contributions to the index in December.

The index’s three-month moving average, CFNAI-MA3, moved down to +0.39 in December from +0.54 in November. December’s CFNAI-MA3 suggests that growth in national economic activity was above its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests modest inflationary pressure from economic activity over the coming year.

The CFNAI Diffusion Index, which is also a three-month moving average, decreased to +0.25 in December from +0.37 in November. Forty of the 85 individual indicators made positive contributions to the CFNAI in December, while 45 made negative contributions. Thirty-three indicators improved from November to December, while 52 indicators deteriorated. Of the indicators that improved, 14 made negative contributions.

Production-related indicators made a contribution of –0.12 to the CFNAI in December, down from +0.71 in November. Industrial production decreased 0.1 percent in December after moving up 1.3 percent in November, and manufacturing production increased 0.3 percent in December after a gain of 1.3 percent in November. However, manufacturing capacity utilization remained at 78.4 percent in December.

Employment-related indicators contributed +0.16 to the CFNAI in December, down somewhat from +0.21 in November. Nonfarm payrolls increased by 252,000 in December, down from a gain of 353,000 in the previous month. However, the unemployment rate decreased to 5.6 percent in December from 5.8 percent in November. The contribution of the sales, orders, and inventories category to the CFNAI remained at +0.03 in December.

The contribution of the consumption and housing category to the CFNAI decreased to –0.12 in December from –0.03 in November. Housing permits decreased to 1,032,000 annualized units in December from 1,052,000 in November. However, housing starts increased to 1,089,000 annualized units in December from 1,043,000 in the previous month.

The CFNAI was constructed using data available as of January 21, 2015. At that time, December data for 49 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index. The November monthly index was revised to +0.92 from an initial estimate of +0.73. Revisions to the monthly index can be attributed to two main factors: revisions in previously published data and differences between the estimates of previously unavailable data and subsequently published data. The revision to the November monthly index was due nearly equally to each factor.


Kansas City Fed Manufacturing Activity expanded at a slower pace in January
Posted: January 22, 2015 at 11:00 AM (Thursday)

Tenth District manufacturing activity expanded at a slower pace in January, but producers’ expectations for future activity remained at solid levels. Most price indexes were lower than last month, especially for finished goods prices.

The month-over-month composite index was 3 in January, down from 8 in December and 6 in November . The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The overall slower growth was mostly attributable to declines in some types of durable goods production, particularly electronics, machinery, and metal products, some of which is likely due to lower energy activity. Looking across District states, the weakest activity was in energy-dependent Oklahoma. In contrast, nondurable goods producers reported a slight increase in production, especially for food and plastics products. Most other month-over-month indexes were also down compared to last month. The production, shipments, and new orders indexes moved into negative territory for the first time in over a year, and the employment index posted a five-month low. The order backlog index plunged from 5 to -20, and the new orders for exports index decreased from 0 to -7. The finished goods inventory index continued to rise somewhat, and the raw materials inventory index moved up from 7 to 12.

Year-over-year factory indexes were lower than the previous month. The composite year-over-year index edged down from 11 to 9, and the production, new orders, shipments, and order backlog indexes all posted their lowest levels in over a year. The employment index moderated from 18 to 11, and the capital expenditures index eased further. The new orders for exports index fell into negative territory, while both inventory indexes increased slightly.

Future factory indexes continued to remain stable at mostly solid levels. The future composite index was unchanged at 19, while the future production, shipments, and new orders indexes inched higher. In contrast, the future order backlog index dropped from 17 to 3, and the future employment index eased from 30 to 24. The future capital expenditures index moderated from 25 to 16 after increasing last month. The future finished goods inventory index fell from 18 to 7, and the future raw materials inventory index also decreased slightly.

Most price indexes slowed modestly in January. The month-over-month finished goods price index declined from 1 to -3, its lowest level since July 2010, while the raw materials price index was basically unchanged. The year-over-year raw materials price index eased slightly, and the finished goods price index dropped from 34 to 19. The future raw materials price index moderated from 36 to 31, while the future finished goods price index was basically unchanged.


DJ-BTMU U.S. Business Barometer picked up by 0.4%
Posted: January 22, 2015 at 10:00 AM (Thursday)

For the week ending January 10 2015, the DJ-BTMU U.S. Business Barometer picked up by 0.4 percent to 98.9 after a sharp drop in the previous week. This week’s barometer was partially fueled by strong recovery in production indexes, in which electric output bounced back by 10.1 percent after falling in prior weeks; while truck production picked up by 25.3 percent. Good performances in consumption indexes were equally important. MBA’s purchase index skyrocketed by 23.6 percent, and freight car loadings increased by 4.4 percent.

On a year-over-year basis, the barometer showed a gain of 1.8 percent, which compares to an average -3.3 percent decline over the Great Recession (ended in June 2009 according to the NBER). After flat lining in 2006, and declining from 2007 through 2009, the barometer bounced back in 2010 to rise by 3.4 percent, which was the strongest increase since 1994 (+4.0 percent), but not so impressive when compared to an -8.0 percent drop in 2009. The rate of increase for the 2013 slowed to 0.7 percent following 1.5 percent in 2012.

The smoothed version of the barometer, which attempts to account for weekly volatility, declined by 0.2 percent to 99.1. Its year-over-year growth rate was 1.1 percent.


Weekly Initial Unemployment Claims Decrease 10,000 to 307,000
Posted: January 22, 2015 at 08:30 AM (Thursday)

In the week ending January 17, the advance figure for seasonally adjusted initial claims was 307,000, a decrease of 10,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 316,000 to 317,000. The 4-week moving average was 306,500, an increase of 6,500 from the previous week's revised average. The previous week's average was revised up by 2,000 from 298,000 to 300,000. There were no special factors impacting this week's initial claims.

The advance seasonally adjusted insured unemployment rate was 1.8 percent for the week ending January 10, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 10 was 2,443,000, an increase of 15,000 from the previous week's revised level. The previous week's level was revised up 4,000 from 2,424,000 to 2,428,000. The 4-week moving average was 2,427,000, an increase of 9,000 from the previous week's revised average. The previous week's average was revised up by 3,500 from 2,414,500 to 2,418,000.


December Housing Starts up 4.4%, Permits down 1.9%
Posted: January 21, 2015 at 08:30 AM (Wednesday)

BUILDING PERMITS
Privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 1,032,000. This is 1.9 percent (±1.3%) below the revised November rate of 1,052,000, but is 1.0 percent (±1.1%) above the December 2013 estimate of Single-family authorizations in December were at a rate of 667,000; this is 4.5 percent (±0.8%) above the revised November figure of 638,000. Authorizations of units in buildings with five units or more were at a rate of 338,000 in December. An estimated 1,032,900 housing units were authorized by building permits in 2014. This is 4.2 percent (±0.9%) above the 2013 figure of 990,800.

HOUSING STARTS
Privately-owned housing starts in December were at a seasonally adjusted annual rate of 1,089,000. This is 4.4 percent (±11.7%) above the revised November estimate of 1,043,000 and is 5.3 percent (±12.7%) above the December 2013 rate of 1,034,000. Single-family housing starts in December were at a rate of 728,000; this is 7.2 percent (±10.6%) above the revised November figure of 679,000. The December rate for units in buildings with five units or more was 339,000. An estimated 1,005,800 housing units were started in 2014. This is 8.8 percent (±2.9%) above the 2013 figure of 924,900.

HOUSING COMPLETIONS
Privately-owned housing completions in December were at a seasonally adjusted annual rate of 927,000. This is 6.3 percent (±12.9%) above the revised November estimate of 872,000 and is 19.6 percent (±14.2%) above the December 2013 rate of 775,000. Single-family housing completions in December were at a rate of 667,000; this is 9.5 percent (±12.0%) above the revised November rate of 609,000. The December rate for units in buildings with five units or more was 254,000. An estimated 883,000 housing units were completed in 2014. This is 15.5 percent (±3.2%) above the 2013 figure of 764,400.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: January 21, 2015 at 07:00 AM (Wednesday)

Mortgage applications increased 14.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 16, 2015.

The Market Composite Index, a measure of mortgage loan application volume, increased 14.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 17 percent compared with the previous week. The Refinance Index increased 22 percent from the previous week. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index increased 3 percent compared with the previous week and was 3 percent higher than the same week one year ago.

Mortgage application volume increased last week to its highest level since June 2013, led by a 22 percent increase in refinance application volume. This increase was largely due to mortgage rates dropping to their lowest level since May 2013. However, the recent reduction in FHA mortgage insurance premiums also played a role: FHA refinance applications increased 57 percent last week. Even with this increase, refinances made up only 48 percent of FHA volume, compared to 73 percent for VA, and 77 percent for conventional loans.

Conventional purchase applications were down about 3 percent for the week on a seasonally adjusted basis, but up 5 percent relative to last year at this time. FHA purchase applications were down 1 percent for the week on a seasonally adjusted basis.

MBA now provides additional data regarding the composition and level of application activity for government loan programs, including breakouts for FHA, VA, and USDA loans. Historical data for these new series are available to subscribers.

Conventional refinance applications increased 21 percent relative to the previous week, while government refinances increased 29 percent. The increase in government refinances was driven by a 57 percent surge in applications for FHA loans, which also boosted the FHA share of refinance applications to 5.2 percent from 4.1 percent the prior week.

The refinance share of mortgage activity increased to 74 percent of total applications, the highest level since May 2013, from 71 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.4 percent of total applications.

The FHA share of total applications increased to 8.0 percent this week from 7.5 percent last week. The VA share of total applications decreased to 9.4 percent this week from 9.7 percent last week. The USDA share of total applications decreased to 0.6 percent from 0.8 percent last week.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.80 percent, the lowest level since May 2013, from 3.89 percent, with points increasing to 0.29 from 0.23 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 3.86 percent, the lowest level since May 2013, from 3.88 percent, with points remaining unchanged at 0.23 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.66 percent, the lowest level since May 2013, from 3.71 percent, with points increasing to 0.15 from -0.05 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.10 percent, the lowest level since May 2013, from 3.16 percent, with points decreasing to 0.29 from 0.30 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 2.87 percent, the lowest level since June 2013, from 2.94 percent, with points decreasing to 0.41 from 0.46 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


Philadelphia Nonmanufacturing activity slowed in January
Posted: January 20, 2015 at 10:00 AM (Tuesday)

The pace of regional nonmanufacturing activity slowed in January, according to firms responding to this month's Nonmanufacturing Business Outlook Survey. The survey's indicators for general activity, new orders, and sales or revenues all decreased but remained positive. Responding firms continue to be optimistic about activity over the next six months.

Nonmanufacturing Activity Slowed
The diffusion index for current activity at the firm level decreased from 47.5 to 8.8 in January, its lowest reading since February 2014 (see Chart above). The percentage of respondents reporting increases in activity (44 percent) exceeded the percentage of respondents reporting decreases (35 percent). Responding firms had similar sentiments about activity in the region. About 41 percent of the respondents indicated increasing activity in the region compared with 32 percent that indicated decreasing activity, and the general activity index also fell to 8.8.

Demand for firms' services, as measured by the new orders and sales/revenues indexes, decreased but remained positive this month. The new orders index decreased from 25.0 in December to 14.7 in January. The percentage of firms reporting increases in new orders in January (41 percent) was little changed from last month; however, the percentage of firms reporting decreases rose from 18 percent last month to almost 27 percent this month. The sales/revenues index experienced a sharper drop, falling 24 points to 8.8, its lowest reading since February 2014, as fewer firms reported increases this month compared with last month.

Hiring Continued but Hours Fell
Survey results suggest mixed labor market conditions this month, on balance. The full-time employment index decreased 5 points, to 17.6. More than 29 percent of the respondents reported increases to full-time staff levels, down slightly from 33 percent last month. The part-time employment index increased from 15.0 in December to 20.6 in January. The workweek index decreased for the third consecutive month, to -5.9, and registered its lowest reading since January 2012.

Firms Reported Slight Increase in Input Prices
The prices of inputs rose for firms on net in January. The percentage of respondents reporting increases in input prices (21 percent) exceeded the percentage of respondents reporting decreases (6 percent). The prices paid index increased 10 points, to 14.7. The share of firms reporting no change in input prices decreased slightly from last month to 56 percent. Firms reported near steady prices for their own goods and services, as indicated by the prices received index decreasing 2 points to 2.9. Half of the responding firms also reported no change in prices, while the percentage of firms reporting increases (18 percent) edged out the percentage of firms reporting decreases (15 percent).

Capital Expenditures Growth Remained Positive
Firms continued to report increases, on net, in capital expenditures this month, particularly for equipment and software, though both indexes retreated from last month's readings. More than 32 percent of the respondents reported increases in equipment and software spending. The equipment and software expenditures index decreased 7 points, to 20.6, but remains near its average reading for 2014. The index for expenditures on physical plant remained positive but fell 7 points, to 2.9.

Future Indicators Remain High
Optimism about future activity over the next six months both at individual firms and in the region remained widespread despite decreases in both index readings. None of the respondents expect activity six months from now to decrease either at their own firms or in the region. Nearly 62 percent of the respondents expect activity to increase at their firms; however, the firm-level future general activity index decreased 11 points, to 61.8 (see Chart above). The future activity index for the region also decreased but remained high, at 82.4.

Firms Benefited from Lower Energy Prices
In this month's special question, respondents were asked about the effect of lower oil prices on their businesses (see Special Question). On net, lower oil prices have had a positive effect for local nonmanufacturing firms. Nearly 55 percent of the respondents reported a positive impact, compared with 9 percent of the respondents who reported a negative impact. More than 21 percent of the firms reported no impact because of the lower prices.

Summary
The January Nonmanufacturing Business Outlook Survey results suggest slower expansion in the region among nonmanufacturing firms. Index readings for general activity at both the company and regional levels, new orders, and sales/revenues remained positive but decreased from December readings. Firms remained optimistic about future growth.


Builder Confidence declined 1 points in January to 57
Posted: January 20, 2015 at 10:00 AM (Tuesday)

Builder confidence in the market for newly-built single-family homes declined one point to 57, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index released today. This marks the third straight month that the index has hovered in the upper 50s range.

After seven months above the key 50 benchmark, builder sentiment is reflecting the gradual improvement that is occurring in many markets throughout the nation,.

January’s HMI reading is in line with our forecast as we head into the new year. Steady economic growth, rising consumer confidence and a growing labor market will help the housing market continue to move forward in 2015.

The HMI component gauging current sales conditions remained unchanged at 62 in January while the index measuring expectations for future sales dropped four points to 60 and the component gauging traffic of prospective buyers fell two points to 44.

Looking at the three-month moving averages for regional HMI scores, the West rose by four points to 66, the Midwest registered a three-point gain to 57 and the Northeast was up two points to 47. The South dropped two points to 58.


Treasury International Capital Data for November 2014
Posted: January 16, 2015 at 04:00 PM (Friday)

The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for November 2014. The sum total in November of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC outflow of $6.3 billion. Of this, net foreign private outflows were $2.9 billion, and net foreign official outflows were $3.4 billion.

Foreign residents increased their holdings of long-term U.S. securities in November; net purchases were $59.2 billion. Net purchases by private foreign investors were $53.0 billion, while net purchases by foreign official institutions were $6.2 billion. U.S. residents increased their holdings of long-term foreign securities, with net purchases of $25.7 billion.

Taking into account transactions in both foreign and U.S. securities, net foreign purchases of long-term securities were $33.5 billion. After including adjustments, such as estimates of unrecorded principal payments to foreigners on U.S. asset-backed securities, overall net foreign acquisitions of long-term securities are estimated to have been $21.0 billion in November.

Foreign residents increased their holdings of U.S. Treasury bills by $8.8 billion. Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities increased by $4.0 billion. Banks' own net dollar-denominated liabilities to foreign residents decreased by $31.3 billion.


Industrial Production decreased 0.1%
Capacity Utilization decreased 0.3% to 79.7%

Posted: January 16, 2015 at 09:15 AM (Friday)

Industrial production decreased 0.1 percent in December after rising 1.3 percent in November. The decrease in December reflected a sharp drop in the output of utilities, as warmer-than-usual temperatures reduced demand for heating; excluding utilities, industrial production rose 0.7 percent. Manufacturing posted a gain of 0.3 percent for its fourth consecutive monthly increase. The index for mining increased 2.2 percent after falling in the previous two months. At 106.5 percent of its 2007 average, total industrial production in December was 4.9 percent above its level of a year earlier. For the fourth quarter of 2014 as a whole, industrial production advanced at an annual rate of 5.6 percent, with widespread gains among the major market and industry groups. Capacity utilization for the industrial sector decreased 0.3 percentage point in December to 79.7 percent, a rate that is 0.4 percentage point below its long-run (1972–2013) average


Consumer Price Index declined 0.4% in December, Ex Fd & Engy unch%
Posted: January 16, 2015 at 08:30 AM (Friday)

The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.4 percent in December on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 0.8 percent before seasonal adjustment.

The gasoline index continued to fall sharply, declining 9.4 percent and leading to the decrease in the seasonally adjusted all items index. The fuel oil index also fell sharply, and the energy index posted its largest one-month decline since December 2008, although the indexes for natural gas and for electricity both increased. The food index, in contrast, rose 0.3 percent, its largest increase since September.

The index for all items less food and energy was unchanged in December, following a 0.2 percent increase in October and a 0.1 percent rise in November. This was only the second time since 2010 that it did not increase. The shelter index continued to rise, and the index for medical care posted its largest increase since August 2013. However, these increases were offset by declines in a broad array of indexes including apparel, airline fares, used cars and trucks, household furnishings and operations, and new vehicles.

The all items index increased 0.8 percent over the last 12 months. This is notably lower than the 1.3 percent change for the 12 months ending November. The energy index has declined 10.6 percent over the span. In contrast, the 3.4 percent increase in the food index is its largest 12-month increase since February 2012. The index for all items less food and energy has increased 1.6 percent over the last 12 months, its smallest 12-month change since the 12 months ending February 2014.


Real Average Hourly Earnings rose 0.1% in December
Posted: January 16, 2015 at 08:30 AM (Friday)

Real average hourly earnings for all employees rose 0.1 percent from November to December, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from a 0.2 percent decrease in average hourly earnings combined with a 0.4 percent decrease in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings increased by 0.2 percent over the month due to the increase in real average hourly earnings combined with no change in the average workweek.

Real average hourly earnings increased by 1.0 percent, seasonally adjusted, from December 2013 to December 2014. This increase in real average hourly earnings, combined with a 0.9 percent increase in the average workweek, resulted in a 1.9 percent increase in real average weekly earnings over this period.


Philadelphia January Outlook Suggest Slower Pace of Growth
Posted: January 15, 2015 at 10:00 AM (Thursday)

Manufacturing activity in the region increased modestly in January, according to firms responding to this month’s Manufacturing Business Outlook Survey. The survey’s current indicators for general activity and new orders fell from their readings in December, suggesting a slower pace of growth. Firms reported continued moderation in price pressures, attributable to lower energy costs. Overall, firms reported that lower energy prices were having overall net positive effects on manufacturing business. The survey’s indicators of future activity show continued optimism about continued growth over the next six months.

Indicators Suggest Slower Pace of Growth
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased 18 points, from a revised reading of 24.3 in December to 6.3 this month. Demand for manufactured goods, as measured by the current new orders index, decreased 5 points, from a revised reading of 13.6 last month to 8.5 this month. Shipments also fell, with its index falling 22 points to -6.9, its first negative reading since February 2014. Firms reported shorter delivery times and a decrease in unfilled orders this month, on balance.

Firms’ responses suggest weaker labor market conditions in January. The percentage of firms reporting a decrease in employees (15 percent) exceeded the percentage reporting an increase (13 percent) for the first time in 19 months. The current employment index fell 10 points, from 8.4 to -2.0. Firms also reported reductions in the workweek: The percentage of firms reporting a shorter workweek (23 percent) was greater than the percentage reporting a longer workweek (16 percent).

Firms Report Continued Moderation in Input Prices
Input price pressures continued to decline for reporting manufacturers: The prices paid index fell 5 points to 9.8 in January and has now declined 15 points over the past three months (see Chart 2). Most firms (68 percent) reported that input prices were unchanged. With respect to prices received for manufactured goods, nearly the same percentage of firms reported price reductions (8 percent) as reported price increases (8 percent). The prices received index fell 10 points to just below zero, its lowest reading in 21 months. The largest percentage of firms (84 percent) reported no change in manufactured good prices.

Most Future Indicators Remain at High Levels
The diffusion index for future activity edged up by less than 1 point, to 50.9, in January and has remained near its current level over the past five months (see Chart 1). The future index for new orders held steady, but the future shipments index fell 7 points. More than 52 percent of the firms are expecting no change in their employment levels over the next six months, while the percentage expecting increases (33 percent) was substantially greater than the percentage expecting employment decreases (8 percent). The future employment index decreased slightly, from a revised reading of 24.9 in December to 24.0 in January.

Energy Price Reductions Are Having a Net Positive Effect
In this month’s special questions, firms were asked about the effects of lower oil prices on manufacturing business (see Special Questions). The responses indicate that the effects have been positive for most firms. Nearly 63 percent of the firms reported positive effects, while 16 percent reported negative effects. The largest percentage (39 percent) characterized the effect as slightly positive. The most frequently cited impact was that falling energy prices were lowering the costs of production (57 percent of the firms). For 23 percent of the firms, energy cost reductions were increasing sales margins. On the negative side, nearly one-third of the firms indicated they had experienced declines in business from energy production-related customers, but 10 percent reported demand increases from nonenergy-related customers. With regard to the firms’ own expectations for energy prices over the next six months, firms were evenly divided about whether there would be an increase or decrease in future demand for their manufactured products.

Summary

The Manufacturing Business Outlook Survey suggests a slower pace of expansion of the region’s manufacturing sector in January. The indicators for general activity and new orders both suggest moderating growth. Firms reported an overall reduction in shipments and labor usage for January. Respondents also indicated that price pressures were reduced and that lower energy prices are having net beneficial effects. Firms remain optimistic about increases in overall business and employment over the next six months.


DJ-BTMU U.S. Business Barometer declined by 1.8%
Posted: January 15, 2015 at 10:00 AM (Thursday)

For the week ending January 3 2015, the DJ-BTMU U.S. Business Barometer declined by 1.8 percent to 98.5. This week’s barometer was driven by both consumption and production indexes. Chain store sales (inflation-adjusted basis) fell by 3.7 percent. As to the production side, electric output dropped by 6.3 percent. Auto and truck production also decreased.

On a year-over-year basis, the barometer showed a gain of 1.8 percent, which compares to an average -3.3 percent decline over the Great Recession (ended in June 2009 according to the NBER). After flat lining in 2006, and declining from 2007 through 2009, the barometer bounced back in 2010 to rise by 3.4 percent, which was the strongest increase since 1994 (+4.0 percent), but not so impressive when compared to an -8.0 percent drop in 2009. The rate of increase for the 2013 slowed to 0.7 percent following 1.5 percent in 2012.

The smoothed version of the barometer, which attempts to account for weekly volatility, fell by 0.3 percent to 99.4. Its year-over-year growth rate was 1.2 percent.


Weekly Initial Unemployment Claims Increase 19,000 to 316,000
Posted: January 15, 2015 at 08:30 AM (Thursday)

In the week ending January 10, the advance figure for seasonally adjusted initial claims was 316,000, an increase of 19,000 from the previous week's revised level. The previous week's level was revised up by 3,000 from 294,000 to 297,000. The 4-week moving average was 298,000, an increase of 6,750 from the previous week's revised average. The previous week's average was revised up by 750 from 290,500 to 291,250. There were no special factors impacting this week's initial claims.

The advance seasonally adjusted insured unemployment rate was 1.8 percent for the week ending January 3, a decrease of 0.1 percentage point from the previous week's revised rate. The previous week's rate was revised up by 0.1 from 1.8 to 1.9 percent. The advance number for seasonally adjusted insured unemployment during the week ending January 3 was 2,424,000, a decrease of 51,000 from the previous week's revised level. The previous week's level was revised up 23,000 from 2,452,000 to 2,475,000. The 4-week moving average was 2,414,500, an increase of 11,500 from the previous week's revised average. The previous week's average was revised up by 6,000 from 2,397,000 to 2,403,000.


Producer Price Index fell 0.3% in December, ex Fd & Engy up 0.2%
Posted: January 15, 2015 at 08:30 AM (Thursday)

The Producer Price Index for final demand fell 0.3 percent in December, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices decreased 0.2 percent in November and advanced 0.2 percent in October. On an unadjusted basis, the index for final demand increased 1.1 percent in 2014 after rising 1.2 percent in 2013.

In December, the 0.3-percent decline in the final demand index can be traced to a 1.2-percent drop in prices for final demand goods. In contrast, the index for final demand services moved up 0.2 percent.

Within intermediate demand, prices for processed goods fell 1.7 percent, the index for unprocessed goods moved down 5.0 percent, and prices for services were unchanged.


Empire State Manufacturing Survey Conditions expanded
Posted: January 15, 2015 at 08:30 AM (Thursday)

The January 2015 Empire State Manufacturing Survey indicates that business activity expanded for New York manufacturers. The headline general business conditions index climbed eleven points to 10.0. This month’s survey also showed modest growth in new orders and shipments. Labor market conditions were mixed, with the index for number of employees rising several points to 13.7, while the average workweek index remained negative at -8.4. Both the prices paid and prices received indexes came in at 12.6, indicating a continued modest increase in input prices and selling prices. As has been the case for much of the past year, indexes for the six-month outlook pointed to widespread optimism about future conditions.

Business Activity Expands
After falling slightly below zero last month, the general business conditions index bounced back in January, climbing eleven points to 10.0. Thirty-three percent of respondents reported that conditions had improved, while 23 percent reported that conditions had worsened. The new orders index rose six points to 6.1, signaling a modest increase in orders, and the shipments index rose seven points to 9.6, indicating a similarly modest rise in shipments. The unfilled orders index moved up after a sharp decline last month, but remained negative at -8.4. The delivery time index was -5.3, pointing to shorter delivery times, and the inventories index was -7.4, suggesting a decline in inventory levels.
Modest Price Increases Continue

The prices paid index was little changed at 12.6; for a fourth consecutive month, it showed a modest increase in input prices. The prices received index rose for a second month—a sign that selling prices were increasing at a faster pace. Labor market indicators were mixed. The index for number of employees climbed five points to 13.7, suggesting that employment levels continued to increase. The average workweek index, however, remained below zero and, at -8.4, pointed to a decline in hours worked for a fourth consecutive month.

Optimism Remains Widespread
Indexes assessing the six-month outlook conveyed considerable optimism about future business activity. The index for future general business conditions rose nine points to 48.4, with nearly 60 percent of respondents expecting conditions to improve. The future new orders and shipments indexes both advanced to levels just above 40. The index for expected number of employees rose eleven points to 31.6, its highest level in nearly three years, indicating that a significant expansion in employment is anticipated in the months ahead. The capital expenditures index was little changed at 14.7, while the technology spending index fell five points to 12.6.


Beige Book: Economic Activity Continues at a "modest" or "moderate" pace
Posted: January 14, 2015 at 02:00 PM (Wednesday)

Reports from the twelve Federal Reserve Districts suggest that national economic activity continued to expand during the reporting period of mid-November through late December, with most Districts reporting a "modest" or "moderate" pace of growth. In contrast, the Kansas City District reported only slight growth in December. However, most of their contacts, along with those of several other Districts, expect somewhat faster growth over the coming months. The Dallas District indicated that growth slowed slightly during the reporting period and that several contacts expressed concern about the effect of lower oil prices on the District economy. Consumer spending increased in most Districts, with generally modest year-over-year gains in retail sales. Auto sales showed moderate to strong growth. Travel and tourism picked up during the reporting period. The pace of growth of demand for nonfinancial services varied widely across Districts and across sectors, but appeared to be moderate on balance. Manufacturing activity expanded in most Districts. Single-family residential real estate sales and construction were largely flat on balance across the Districts, while commercial real estate activity expanded. Demand for business and consumer credit grew. Credit quality improved a bit further overall. Agricultural conditions were mixed. Overall demand for energy-related products and services weakened somewhat, while the output of energy-related products increased.

Payrolls in a variety of sectors expanded moderately during the reporting period. Significant wage pressures were largely limited to workers with specialized technical skills. Prices increased slightly, on balance, in most Districts.


Business Inventories up 0.2% in November
Posted: January 14, 2015 at 10:00 AM (Wednesday)

The U.S. Census Bureau announced today that the combined value of distributive trade sales and manufacturers’ shipments for November, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,345.8 billion, down 0.2 percent (±0.2%)* from October 2014, but were up 2.2 percent (±0.5%) from November 2013.

Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,763.6 billion, up 0.2 percent (±0.1%) from October 2014 and up 4.4 percent (±0.5%) from November 2013.

The total business inventories/sales ratio based on seasonally adjusted data at the end of November was 1.31. The November 2013 ratio was 1.28.


U.S. Import Price Index fell 2.5% in December
Posted: January 14, 2015 at 08:30 AM (Wednesday)

The price index for U.S. imports fell 2.5 percent in December following a 1.8-percent drop in November and a 1.4-percent decline in October, the U.S. Bureau of Labor Statistics reported today. Each of the monthly decreases was driven by lower fuel prices. U.S. export prices declined 1.2 percent in December, after decreasing 0.8 percent the previous month


U.S. Retail Sales for December decrease 0.9%, Ex-Auto down 1.0%
Posted: January 14, 2015 at 08:30 AM (Wednesday)

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for December, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $442.9 billion, a decrease of 0.9 percent (±0.5%) from the previous month, but up 3.2 percent (±0.9%) above December 2013. Total sales for the 12 months of 2014 were up 4.0 percent (±0.6%) from 2013. Total sales for the October through December 2014 period were up 4.1 percent (±0.7%) from the same period a year ago. The October to November 2014 percent change was revised from +0.7 percent (±0.5%) to +0.4 percent (±0.1%).

Retail trade sales were down 1.1 percent (±0.5%) from November 2014, but 2.6 percent (±0.7%) above last year. Auto and other motor vehicle dealers were up 9.8 percent (±3.0%) from December 2013 and food services and drinking places were up 8.2 percent (±3.3%) from last year.


Purchase Apps up, Refi's up in Latest MBA Weekly Survey
Posted: January 14, 2015 at 07:00 AM (Wednesday)

Mortgage applications increased 49.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 9, 2015.

The Market Composite Index, a measure of mortgage loan application volume, increased 49.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 119 percent compared with the previous week. The Refinance Index increased 66 percent from the previous week to the highest level since July 2013. The seasonally adjusted Purchase Index increased 24 percent from one week earlier to the highest level since September 2013. The unadjusted Purchase Index increased 83 percent compared with the previous week and was 2 percent higher than the same week one year ago.

The US economy and job market continued to show signs of strength, but weakness abroad and tumbling oil prices have led to further declines in longer-term interest rates.

Mortgage rates reached their lowest level since May of 2013, and refinance application volume soared, more than doubling on an unadjusted basis, and up 66 percent after adjusting for the fact that the previous week included the New Year’s holiday. Conventional refinance volume increased to a greater extent than government refinance volume. Applications for larger refinance loans increased more than 4 times relative to the previous week. The average conventional refinance application increased to $298,700 from $233,500 the prior week. Although there was a somewhat smaller increase for government refinance volume, VA refinance applications increased by 50 percent. VA loans tend to be larger than FHA and USDA loans, and hence are more responsive to a given rate change.

In addition to the drop in rates, and news of improvement in the job market, there was additional positive news for prospective homebuyers with evidence that credit availability has increased somewhat, and with FHA’s announcement of a decrease in their mortgage insurance premiums. Purchase application volume increased by almost 24 percent, with stronger growth for conventional applications than for government loans. Purchase application volume was at its highest level since September 2013, increased on a year over year basis in the aggregate, and notably increased across most loan size categories, particularly for the conforming, middle of the market loan segments that had been weak for much of the past year. FHA purchase application volume was up by 17 percent for the week on a seasonally adjusted basis.

The refinance share of mortgage activity increased to 71 percent of total applications from 65 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.9 percent of total applications.

The FHA share of total applications decreased to 7.5 percent this week from 9.3 percent last week. The VA share of total applications decreased to 9.7 percent this week from 10.7 percent last week. The USDA share of total applications decreased to 0.8 percent from 0.9 percent last week.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.89 percent, the lowest level since May 2013, from 4.01 percent, with points decreasing to 0.23 from 0.28 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 3.88 percent, the lowest level since May 2013, from 3.99 percent, with points decreasing to 0.23 from 0.24 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.71 percent, the lowest level since May 2013, from 3.81 percent, with points decreasing to -0.05 from -0.03 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.16 percent, the lowest level since May 2013, from 3.24 percent, with points remaining unchanged at 0.30 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 2.94 percent, the lowest level since October 2014, from 3.19 percent, with points decreasing to 0.46 from 0.51 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


Job Openings were 5.0 million in November
Posted: January 13, 2015 at 10:00 AM (Tuesday)

There were 5.0 million job openings on the last business day of November, little changed from 4.8 million in October, the U.S. Bureau of Labor Statistics reported today. Hires (5.0 million) were little changed and separations (4.6 million) declined in November. Within separations, the quits rate (1.9 percent) was unchanged and the layoffs and discharges rate (1.2 percent) was little changed. This release includes estimates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and by four geographic regions.

There were 5.0 million job openings on the last business day of November. The job openings rate was 3.4 percent. The number of job openings was little changed for total private and increased for government in November. Job openings increased for nondurable goods manufacturing and for state and local government. The number of job openings was little changed in all four regions.

The number of job openings (not seasonally adjusted) increased over the 12 months ending in November for total nonfarm, total private, and government. Job openings increased over the year for many industries, including professional and business services, health care and social assistance, and accommodation and food services. Job openings decreased in arts, entertainment, and recreation. The number of openings increased over the year in all four regions.


NFIB Small Business Optimism Index gained 2.3 points to 100.4
Posted: January 13, 2015 at 07:30 AM (Tuesday)

The Small Business Optimism Index gained 2.3 points to 100.4 in December, at long last taking the Index back to its pre-recession average and the highest reading since October 2006. While last month’s gain was accounted for just 2 of the 10 Index components (expected business conditions and real sales), the gain in December was broad-based, with 8 components advancing, one unchanged and one declining by just 1 percentage point. The single component posting a decline was expected business conditions 6 months out. Last month, this component posted a 16 point gain, so the 1 percentage point decline simply confirmed the very strong gain in November.

The BEA reported a blow-out economy in Q3 and Q4 appears to have been OK. But “low rates for too long” never produced the spending surge the Federal Reserve expected. As pointed out years ago in this report, the economy would heal itself in spite of the impediments and distortions government policy put in place, allowing the Federal Reserve to declare “victory” even if its policies were counterproductive as many observers and even some Federal Reserve officials believed. The cost of the QEs is far from clear and remain to be determined. Certainly QE1 was the right move, but only financial markets were the primary beneficiaries of subsequent actions, not the real economy. Fiscal and regulatory policy have provided no help, forcing firms to spend more of their scarce resources complying with record amounts of regulation and leaving the budget and tax policy floating without direction. The budget deficit has declined by a trillion dollars mostly without the benefit of major spending cuts or priority realignments.

So, it took 4½ years from the start of the recovery for the Index of Small Business Optimism to reach its pre-recession average, slogging along, and never once posting an above average reading. Assuming that non-member firms are similar to NFIB members as they are certainly subject to the same economic winds, half of the economy was not participating in the “recovery”, a bifurcated economy. Large firms profited, sending profits and the stock market to record levels, but that success was not shared on Main Street.

The recovery of Main Street which consists of about 5.5 million firms with fewer than 20 employees, can provide a good base for stronger economic growth. But any election euphoria that persists will soon be snuffed out if Congress cannot lay out a positive plan and make some progress on the top problems facing small business owners including: health insurance costs, uncertainty about economic policy, energy costs, the cost of regulations and red tape and the tax code which is too confiscatory, too complex, and changed too often. Prospects for progress are not that good with President Obama still holding his veto pen.


Employment Trends Index increased in December to 128.43
Posted: January 12, 2015 at 10:00 AM (Monday)

The Conference Board Employment Trends Index™ (ETI) increased in December. The index now stands at 128.43, up from 127.83 in November. This represents a 7.5 percent gain in the ETI compared to a year ago.

The Employment Trends Index increased in every single month of 2014, capping the year off with strong growth, 2.3 percent, in the final quarter. The strengthening in the ETI suggests that rapid job growth is likely to continue throughout the first half of 2015. And as the labor market tightens further, acceleration in wage growth is soon to follow.

December’s increase in the ETI was driven by positive contributions from six of the eight components. In order from the largest positive contributor to the smallest, these were: Percentage of Respondents Who Say They Find “Jobs Hard to Get”, Initial Claims for Unemployment Insurance, Industrial Production, Percentage of Firms With Positions Not Able to Fill Right Now, Number of Temporary Employees, and Real Manufacturing and Trade Sales.


Wholesale Inventories up 0.8% in November
Posted: January 9, 2015 at 10:00 AM (Friday)

The U.S. Census Bureau announced today that November 2014 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $452.2 billion, down 0.3 percent (+/-0.5%)* from the revised October level, but were up 2.4 percent (+/-1.2%) from the November 2013 level. The October preliminary estimate was revised downward $1.0 billion or 0.2 percent. November sales of durable goods were up 0.2 percent (+/-0.7%)* from last month and were up 6.3 percent (+/-1.4%) from a year ago. Sales of nondurable goods were down 0.8 percent (+/-0.5%) from October and were down 0.8 percent (+/-2.1%)* from last November. Sales of chemicals and allied products were down 4.1 percent from last month and sales of beer, wine, and distilled alcoholic beverages were down 2.1 percent.

Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $547.2 billion at the end of November, up 0.8 percent (+/-0.4%) from the revised October level and were up 7.1 percent (+/-0.9%) from the November 2013 level. The October preliminary estimate was revised upward $0.9 billion or 0.2 percent. November inventories of durable goods were up 0.8 percent (+/-0.5%) from last month and were up 8.9 percent (+/-1.2%) from a year ago. Inventories of computer and computer peripheral equipment and software were up 2.6 percent from last month and inventories of hardware and plumbing and heating equipment and supplies were up 1.7 percent. Inventories of nondurable goods were up 0.7 percent (+/-0.7%)* from October and were up 4.4 percent (+/-1.1%) from last November. Inventories of farm product raw materials were up 5.7 percent from last month and inventories of drugs and druggists' sundries were up 2.6 percent.

The November inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.21. The November 2013 ratio was 1.16.

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