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Category: Research - Topic: Economics


S&P/Case-Shiller Home Price Indices increase 0.1% in January
Posted: March 31, 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 January 2015 show that home prices continued their rise across the country over the last 12 months. However, monthly data reveal slowing increases and seasonal weakness.

Year-over-Year
Both the 10-City and 20-City Composites saw year-over-year increases in January compared to December. The 10-City Composite gained 4.4% year-over-year, up from 4.3% in December. The 20-City Composite gained 4.6% year-over-year, compared to a 4.4% increase in December. The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 4.5% annual gain in January 2015 versus a 4.6% increase in December 2014.

Denver and Miami reported the highest year-over-year gains, as prices increased by 8.4% and 8.3%, respectively, over the last 12 months. Fourteen cities reported higher price increases in the year ended January 2015 over the year ended December 2014. Chicago led the way with a reported increase of 2.5%, up 11 basis points from December. Six cities reported declines, with San Francisco leading the declining annual returns with a reported rate of 7.9%, down from 9.4% annually.

Month-over-Month
The National index declined for the fifth consecutive month in January, reporting a -0.1% change for the month. Both the 10- and 20-City Composites reported virtually flat month-over-month changes. Of the nine cities that reported increases, Charlotte, Miami, and San Diego led all cities in January with increases of 0.7%. San Francisco reported the largest decrease of all 20 cities, with a month-over-month decrease of -0.9%. Seattle and Washington D.C. reported decreases of -0.5%. Unusually cold and wet weather may have weakened activity in some cities.

Analysis
The combination of low interest rates and strong consumer confidence based on solid job growth, cheap oil and low inflation continue to support further increases in home prices. Regional patterns in recent months continue: strength in the west and southwest paced by Denver and Dallas with results ahead of the national index in the California cities, the Pacific Northwest and Las Vegas. The northeast and Midwest are mostly weaker than the national index.

Despite price gains, the housing market faces some difficulties. Home prices are rising roughly twice as fast as wages, putting pressure on potential homebuyers and heightening the risk that any uptick in interest rates could be a major setback. Moreover, the new home sector is weak; residential construction is still below its pre-crisis peak. Any time before 2008 that housing starts were as low as the current rate of one million, the economy was in a recession.

The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 4.5% annual gain in January 2015. The 10- and 20-City Composites reported year-over-year increases of 4.4% and 4.6%.

As of January 2015, 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 29.0%.


Paychex-IHS Small Business Jobs Index declined to 100.79 in March
Posted: March 31, 2015 at 08:30 AM (Tuesday)

The Paychex | IHS Small Business Jobs Index declined 0.05 percent during the past month, bringing the national index to 100.79 in March. The minor retreat, however, did not halt the positive momentum generated in January and February. The national index is up 0.23 percent for the first quarter of 2015, representing the best three-month gain since the index was publicly released last year. The West North Central region continued its strong showing and remains the top-ranked regional index. Indiana and Washington lead the state index ranking, with Texas falling to third. Dallas extends its streak to six consecutive months in the top spot among metro areas.

At 100.79, the Paychex | IHS Small Business Jobs Index matches levels seen last fall, indicating strong job gains, though not as strong as the gains seen during last spring and summer.

Even with the March growth rate slowing slightly, the first three months of 2015 were the best quarter of small business job growth that we've seen in the past year.

With the national index at 100.79, employment conditions in the U.S. remain strong despite a slowdown of 0.36 percent since last March. While the pace of job growth increased for a majority of the regions during the first quarter of 2015, the New England and Middle Atlantic regions declined further, possibly related to one of the harshest winters on record.

At 102.81, the West North Central increased its lead as the top-ranked regional index, spiking 0.41 percent in March and 1.55 percent in the past 12 months, despite weak overall jobs data per the BLS. The Pacific region had its best three-month growth rate in more than two years at 0.63 percent, boosting the national index in 2015. While most regions have rebounded in the first three months of 2015, New England has weakened further with the lowest regional index at 99.74.


Texas Manufacturing Activity Weakens
Posted: March 30, 2015 at 10:30 AM (Monday)

Texas factory activity declined in March, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell to -5.2, posting its first negative reading in nearly two years.

Other measures of current manufacturing activity also reflected contraction in March. The new orders index pushed further into negative territory, coming in at -16.1, and the growth rate of orders index remained negative for a fifth consecutive month but edged up to -15.3 in March. The shipments and capacity utilization indexes slipped to more negative readings, -8.7 and -6.4, respectively.

Perceptions of broader business conditions were rather pessimistic for a third month in a row. The general business activity index declined 6 points to -17.4 in March, while the company outlook index was largely unchanged at -4.

Labor market indicators reflected slight employment declines and shorter workweeks. The March employment index dipped to -1.8, its first negative reading since May 2013. Thirteen percent of firms reported net hiring, compared with 14 percent reporting net layoffs. The hours worked index has been gradually declining for six months and came in at -5.3 in March, down from -1.6 in February.

Prices declined in March, and upward pressure on wages continued to ease slightly. The raw materials prices index fell to -9.4, its lowest reading since May 2009. The finished goods prices index pushed further negative to -9.8, also reaching a low not seen since 2009. The wages and benefits index came in at 15.6, down from 16.8 in February.

Expectations regarding future business conditions remained fairly weak in March. The index of future general business activity edged down to 3, while the index of future company outlook inched up to 12.8. Both indexes remain well below the levels seen throughout 2014. Indexes for future manufacturing activity, however, improved markedly in March. The indexes of future production, capacity utilization and growth rate of orders posted double-digit gains from their February readings.


Pending Home Sales Index rose 3.1% in February
Posted: March 30, 2015 at 10:00 AM (Monday)

Pending home sales in February increased to their highest level since June 2013 as sizeable gains in the Midwest and West offset smaller declines in the Northeast and South, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, rose 3.1 percent to 106.9 in February from a slight downward revision of 103.7 in January and is now 12.0 percent above February 2014 (95.4). The index is at its highest level since June 2013 (109.4), has increased year-over-year for six consecutive months and is above 100 – considered an average level of activity – for the 10th consecutive month.

Demand appears to be strengthening as we head into the spring buying season. Pending sales showed solid gains last month, driven by a steadily-improving labor market, mortgage rates hovering around 4 percent and the likelihood of more renters looking to hedge against increasing rents. These factors bode well for the prospect of an uptick in sales in coming months. However, the underlying obstacle – especially for first-time buyers – continues to be the depressed level of homes available for sale.

According to NAR’s monthly Realtors® Confidence Index, the percent share of first-time buyers increased slightly for the first time in February since November 2014, up to 29 percent from 28 percent in January.

Several markets remain highly-competitive due to supply pressures, and Realtors® are reporting severe shortages of move-in ready and available properties in lower price ranges. The return of first-time buyers this year will depend on how quickly inventory shows up in the market.

The PHSI in the Northeast fell 2.3 percent to 81.7 in February, but is 4.1 percent above a year ago. In the Midwest the index leaped 11.6 percent to 110.4 in February, and is now 13.8 percent above February 2014.

Pending home sales in the South decreased 1.4 percent to an index of 120.2 in February, but is still 10.8 percent above last February. The index in the West climbed 6.6 percent in February to 102.1 (highest since June 2013 at 111.4) and is now 18.3 percent above a year ago.

Total existing-homes sales in 2015 are forecast to be around 5.25 million, an increase of 6.4 percent from 2014. The national median existing-home price for all of this year is expected to increase around 5.6 percent. In 2014, existing-home sales declined 2.9 percent and prices rose 5.7 percent.


Personal Income increased 0.4%, Spending increased 0.1%
Posted: March 30, 2015 at 08:30 AM (Monday)

Personal income increased $58.6 billion, or 0.4 percent, and disposable personal income (DPI) increased $54.2 billion, or 0.4 percent, in February, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $11.8 billion, or 0.1 percent. In January, personal income increased $61.8 billion, or 0.4 percent, DPI increased $61.5 billion, or 0.5 percent, and PCE decreased $28.5 billion, or 0.2 percent, based on revised estimates.

Real DPI increased 0.2 percent in February, compared with an increase of 0.9 percent in January. Real PCE decreased 0.1 percent, in contrast to an increase of 0.2 percent.


University of Michigan Consumer Confidence down in March to 93.0
Posted: March 27, 2015 at 10:00 AM (Friday)

Consumer optimism reached a ten-year peak of 95.5 in the 1st quarter of 2015—its highest level since the 3rd quarter of 2004. Although optimism has eased back slightly since the start of the year, January’s surge in confidence was largely due to falling gasoline prices and the small retreat since then was largely due to the unusually harsh winter. Most of the recent variation was among lower income households, whose budgets are more sensitive to higher utility costs and disruptions in work hours. Households with incomes in the middle and top thirds of the distribution, in contrast, recorded gains in confidence in the March survey. While consumer spending weakened in the 1st quarter of 2015, it is still likely to post a gain of 3.3% for the year as a whole.

Wage Gains Begin to Broaden
While the current finances of consumers were a little less positive in March than in January and February, they were still judged more favorably than anytime in the prior eight years. While the largest income gains were expected by those under age 45 and by households with incomes in the top third, the largest improvements during the past year were among middle income households and those aged 45 to 64. The broadening of positive income expectations is certainly a good indication for future spending.

Mortgage Rates Trump Prices
Views of home buying conditions remained very favorable in the March 2015 survey, although the reasons given by consumers have shifted from a reliance on low prices to being dependent on low mortgage rates. The smallest proportion of consumers since 2006 cited low home prices, and the highest proportion in the last ten years cited low mortgage rates in the surveys conducted in the 1st quarter of 2015.

The Consumer Sentiment Index was 93.0 in the March 2015 survey, just below February’s 95.4, but was significantly above last March’s 80.0. The Current Conditions Index retreated to 105.0 in March from 106.9 one month ago, and was well above last year’s 95.7. The Expectations Index fell to 85.3 in March from 88.0 in February, but posted a substantial gain from last March’s 70.0.

The harsh winter weather and the small rebound in gas prices caused some slippage in consumer confidence since the start of the year. Nonetheless, expanding job opportunities as well as more favorable wage gains have meant that consumer spending will strongly rebound during the balance of the year. The appeal of attractive pricing as a spending driving force has begun to fade, and has been increasingly replaced by more attractive credit conditions. The greater sensitivity of consumers to credit conditions will increase the power of the Fed’s actions, so that they can accomplish more with a smaller change than was true in the past.


4Q2014 GDP final estimate increased 2.2%
Posted: March 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 "third" 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 "second" estimate issued last month. In the second estimate, the increase in real GDP was also 2.2 percent. While increases in exports and in personal consumption expenditures (PCE) were larger than previously estimated and the change in private inventories was smaller, GDP growth is unrevised, and the general picture of the economy for the fourth quarter remains the same.

The increase in real GDP in the fourth quarter reflected positive contributions from PCE, nonresidential fixed investment, exports, state and local government spending, and residential fixed investment that were partly offset by negative contributions from federal government spending and private inventory investment. 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, a deceleration in nonresidential fixed investment, and a larger decrease in private inventory investment that were partly offset by accelerations in PCE and in state and local government spending.


Kansas City Fed Manufacturing Activity declined in March
Posted: March 26, 2015 at 11:00 AM (Thursday)

Tenth District manufacturing activity declined in March, and producers’ expectations moderated somewhat but remained slightly positive. Most price indexes continued to decrease, with several reaching their lowest level since 2009. In a special question about the West Coast port disruptions, 32 percent of firms said it had affected them negatively.

The month-over-month composite index was -4 in March, down from 1 in February and 3 in January. 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 plastics, food, and chemical production and continued weakness in metals and machinery. Looking across District states, the largest decline was in Oklahoma, with moderate slowdowns in Kansas and Nebraska. Other month-over-month indexes decreased from the previous month. The production and shipments indexes fell after rising last month, and the new orders and order backlog indexes dropped to their lowest levels in over two years. In contrast, the employment and new orders for exports indexes inched higher but remained negative. The finished goods inventory index eased from 3 to -2, and the raw materials inventory index also moved into negative territory.

Year-over-year factory indexes also decreased. The composite year-over-year index declined from 9 to -2, and the production, shipments, new orders, and employment indexes also moved into negative territory. The capital expenditures index eased from 9 to 3, and the order backlog index decreased further. Both inventory indexes moderated somewhat.

Most future factory indexes eased slightly but remained positive. The future composite index moved down from 11 to 4, and the future production, shipments, and new orders index also decreased moderately. The future employment index dropped from 14 to 7, its lowest level in over a year, and the future capital expenditures index fell to a five-year low. In contrast, the future order backlog index was unchanged, and the future new orders for exports index edged slightly higher. The future finished goods inventory index fell from 0 to -9, and the future raw materials inventory index also decreased.

Most price indexes continued to decrease in March. The month-over-month finished goods price index eased from -3 to -6, and the raw materials price index dropped from -6 to -12. The year-over-year raw materials price index fell from 29 to 22, and the finished goods price index inched lower. The future raw materials price index eased slightly, while the future finished goods price index rose somewhat, from 6 to 12.


DJ-BTMU U.S. Business Barometer dropped by 0.3%
Posted: March 26, 2015 at 10:00 AM (Thursday)

For the week ending March 14 2015, the DJ-BTMU U.S. Business Barometer dropped by 0.3 percent to 98.1. This week’s barometer was largely dragged down by weak performances in production indexes. Electric output, for instance, plummeted by a solid 14.4 percent following a 5.6 percent drop in the previous week. Lumber, steel and coal production also reported losses, albeit they were partially offset by gains in auto and truck production. As to the consumption side, chain store sales rose for two consecutive weeks; while MBA’s purchase index declined by 1.5 percent after growing by 1.9 percent last week.

On a year-over-year basis, the barometer showed a gain of 0.6 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 slightly by 0.1 percent to 98.3. Its year-over-year growth rate was 0.8 percent.


Weekly Initial Unemployment Claims Decrease 9,000 to 282,000
Posted: March 26, 2015 at 08:30 AM (Thursday)

In the week ending March 21, the advance figure for seasonally adjusted initial claims was 282,000, a decrease of 9,000 from the previous week's unrevised level of 291,000. The 4-week moving average was 297,000, a decrease of 7,750 from the previous week's unrevised average of 304,750. 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 March 14, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending March 14 was 2,416,000, a decrease of 6,000 from the previous week's revised level. The previous week's level was revised up 5,000 from 2,417,000 to 2,422,000. The 4-week moving average was 2,422,250, an increase of 3,000 from the previous week's revised average. The previous week's average was revised up by 1,250 from 2,418,000 to 2,419,250.


New Orders for Durable Goods Decreased 1.4%, Ex-Trans Down 0.4%
Posted: March 25, 2015 at 08:30 AM (Wednesday)

New orders for manufactured durable goods in February decreased $3.2 billion or 1.4 percent to $231.3 billion, the U.S. Census Bureau announced today. This decrease, down three of the last four months, followed a 2.0 percent January increase. Excluding transportation, new orders decreased 0.4 percent. Excluding defense, new orders decreased 1.0 percent. Transportation equipment, also down three of the last four months, led the decrease, $2.5 billion or 3.5 percent to $69.5 billion.

Shipments of manufactured durable goods in February, down four of the last five months, decreased $0.5 billion or 0.2 percent to $244.0 billion. This followed a 1.4 percent January decrease. Primary metals, down five consecutive months, led the decrease, $0.3 billion or 1.1 percent to $26.1 billion.

Unfilled orders for manufactured durable goods in February, down three consecutive months, decreased $5.6 billion or 0.5 percent to $1,156.9 billion. This followed a 0.3 percent January decrease. Transportation equipment, also down three consecutive months, led the decrease, $4.6 billion or 0.6 percent to $731.6 billion.

Inventories of manufactured durable goods in February, up twenty-two of the last twenty-three months, increased $1.1 billion or 0.3 percent to $413.0 billion. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 0.3 percent January increase. Transportation equipment, also up twenty-two of the last twenty-three months, drove the increase, $1.2 billion or 0.9 percent to $135.4 billion.

Nondefense new orders for capital goods in February decreased $2.1 billion or 2.6 percent to $77.3 billion. Shipments decreased slightly to $80.2 billion. Unfilled orders decreased $2.9 billion or 0.4 percent to $727.8 billion. Inventories increased $0.3 billion or 0.1 percent to $186.8 billion. Defense new orders for capital goods in February increased $0.8 billion or 10.2 percent to $8.3 billion. Shipments decreased $0.1 billion or 0.8 percent to $9.0 billion. Unfilled orders decreased $0.7 billion or 0.4 percent to $152.9 billion. Inventories increased $0.7 billion or 3.0 percent to $24.9 billion.

Revised seasonally adjusted January figures for all manufacturing industries were: new orders, $467.7 billion (revised from $470.0 billion); shipments, $477.8 billion (revised from $479.1 billion); unfilled orders, $1,162.5 billion (revised from $1,163.4 billion); and total inventories, $650.1 billion (revised from $650.5 billion).


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

Mortgage applications increased 9.5 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending March 20, 2015.

The Market Composite Index, a measure of mortgage loan application volume, increased 9.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 9 percent compared with the previous week. The Refinance Index increased 12 percent from the previous week. The seasonally adjusted Purchase Index increased 5 percent from one week earlier to its highest level since January 2015. The unadjusted Purchase Index increased 5 percent compared with the previous week and was 3 percent higher than the same week one year ago.

The refinance share of mortgage activity increased to 61 percent of total applications from 59 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.8 percent of total applications.The FHA share of total applications decreased to 13.3 percent this week from 14.3 percent last week. The VA share of total applications decreased to 10.1 percent this week from 10.3 percent last week. The USDA share of total applications decreased to 0.8 percent this week 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 3.90 percent, its lowest level since February 2015, from 3.99 percent, with points decreasing to 0.37 from 0.40 (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 3.89 percent, its lowest level since January 2015, from 3.94 percent, with points decreasing to 0.25 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 3.71 percent, its lowest level since January 2015, from 3.74 percent, with points increasing to 0.21 from 0.12 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.22 percent, its lowest level since February 2015, from 3.28 percent, with points decreasing to 0.28 from 0.34 (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 2.97 percent, its lowest level since January 2015, from 2.99 percent, with points decreasing to 0.38 from 0.43 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


New Home Sales in January at annual rate of 539,0000
Posted: March 24, 2015 at 10:00 AM (Tuesday)

Sales of new single-family houses in February 2015 were at a seasonally adjusted annual rate of 539,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 7.8 percent (±15.2%)* above the revised January rate of 500,000 and is 24.8 percent (±20.4%) above the February 2014 estimate of 432,000.

The median sales price of new houses sold in February 2015 was $275,500; the average sales price was $341,000. The seasonally adjusted estimate of new houses for sale at the end of February was 210,000. This represents a supply of 4.7 months at the current sales rate.


Philadelphia Nonmanufacturing Activity Continues to Expand in March
Posted: March 24, 2015 at 10:00 AM (Tuesday)

Responses to this month's Nonmanufacturing Business Outlook Survey suggest that local nonmanufacturing activity continued to expand in March. The survey's indicators for general activity, new orders, and sales or revenues decreased slightly but remained at elevated levels. Responding firms continue to be optimistic about activity over the next six months.

Nonmanufacturing Activity Continues to Expand
The diffusion index for current activity at the firm level decreased from 51.0 in February to 44.2 in March. More than 65 percent of the respondents reported increases in activity, up slightly from 61 percent last month. Firms perceived increasing activity for the region as well; as a result, the regional general activity index edged up to 48.8. The more than 55 percent of the respondents who indicated increasing activity in the region far exceeded the 7 percent who indicated decreasing activity.

New Orders and Sales or Revenues Were Positive
Demand for firms' services, as measured by the new orders and sales/revenues indexes, continued to grow this month. The new orders index edged down from 32.7 in February to 30.2 in March. The share of firms reporting increases in new orders this month (49 percent) exceeded the share of firms reporting decreases (19 percent). The sales/revenues index also decreased, falling 8 points to 34.9. The percentage of firms reporting decreases in sales or revenues grew to 23 percent from 14 percent last month; however, more than 58 percent of the firms reported increases.

Employment Indexes
Labor Market Indicators Grew
Survey results suggest generally positive labor market conditions this month. The full-time employment index rose to its highest reading for the year, increasing 7 points to 20.9. The percentage of firms reporting increases in full-time staff (28 percent) exceeded the percentage of firms reporting decreases (7 percent). The part-time employment index changed little, edging up to 25.6 in March from 24.5 in February. Firms also reported increases in hours, as the workweek index increased 7 points, to 23.3.

Firms Reported Increased Price Pressures
The prices of inputs rose for firms in March, on balance, as the index for prices paid rose for the third consecutive month, to 23.3. The percentage of respondents reporting increases in input prices (33 percent) exceeded the percentage of respondents reporting decreases (9 percent), and most respondents (49 percent) reported no change. Firms were nearly evenly split on changes in prices for their own goods. More than 23 percent of the respondents reported higher prices received, slightly exceeding the nearly 21 percent of the respondents who reported lower prices received. However, the prices received index decreased 18 points, to 2.3, as the share of respondents reporting lower prices this month (21 percent) increased from last month (6 percent).

Capital Expenditures Grew Slightly
Firms continued to report slight increases, on net, in capital expenditures this month, but both spending indexes decreased from last month's readings. The index for expenditures on physical plant fell 10 points, to 2.3. The percentage of respondents reporting increases (9 percent) narrowly exceeded the percentage reporting decreases (7 percent). The equipment and software expenditures index also decreased, from 24.5 last month to 18.6 this month. More than a quarter of the respondents reported increases in equipment and software spending.

Future Indicators Remain High
Responding firms continued to be optimistic about activity over the next six months; however, index readings for both future activity indicators decreased from last month. The firm-level future general activity index decreased nearly 10 points, to 72.1, nearing its December 2014 reading. More than 72 percent of the firms expect activity to increase over the next six months; none of the respondents expect activity six months from now to decrease. The future activity index for the region decreased slightly but also remained high, at 79.1.

Summary
The March Nonmanufacturing Business Outlook Survey results suggest continued increased activity in the region among nonmanufacturing firms. Indicators for general activity at both the company and regional levels, new orders, and sales/revenues remained high, and indicators for employment continued to show improvement. Firms remained optimistic about future growth.


Richmond Fed's Current Activity Index dropped 8 points to a reading of -8
Posted: March 24, 2015 at 10:00 AM (Tuesday)

Manufacturing activity declined in March, according to the most recent survey by the Federal Reserve Bank of Richmond. Shipments and the volume of new orders dropped. Order backlogs fell and capacity utilization declined. Hiring in the manufacturing sector was soft and the average workweek shortened. Wage growth remained modest.

Looking ahead six months, producers anticipated more favorable business conditions. Producers expected strength in shipments and new orders, and a jump in capacity utilization. Expectations were for a growing backlog of orders and a slight rise in vendor lead-times. Further, producers anticipated robust growth in hiring and wages, along with a modestly longer workweek.

Prices of raw materials and finished goods rose only slightly in March. Manufacturers anticipated mildly faster price growth over the next six months, compared with the current pace.

Manufacturing activity decelerated this month after flattening in February. The composite index fell to −8 in March from a reading of 0 a month earlier. The shipments index collapsed to −13, as did the index for the volume of new orders, compared to month-ago readings of −1 and −2, respectively. Capacity utilization also fell, with that index shrinking three points to −7.

The gauge for vendor lead-times dropped to −9 from 2. Finally, backlogs of new orders lost two points, settling at −12 in March.

As shipments declined, finished goods inventories rose, pulling the index to 25 from 20. Raw materials inventories also grew, with that indicator gaining nine points to end the survey period at 25.


Consumer Price Index increased 0.2% in February, Ex Fd & Engy rose 0.2%
Posted: March 24, 2015 at 08:30 AM (Tuesday)

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in February on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index was unchanged before seasonal adjustment.

The seasonally adjusted increase in the all items index was broad-based, with increases in shelter, energy, and food indexes all contributing. The energy index rose after a long series of declines, increasing 1.0 percent as the gasoline index turned up after falling in recent months. The food index, unchanged last month, also rose in February, though major grocery store food group indexes were mixed.

The index for all items less food and energy rose 0.2 percent in February, the same increase as in January. In addition to shelter, the indexes for used cars and trucks, apparel, new vehicles, tobacco, and airline fares were among those that increased. The medical care index was unchanged, while the personal care index declined.

The all items index was unchanged over the past 12 months, after showing a 0.1-percent decline for the 12 months ending January. Over the last 12 months the food index rose 3.0 percent and the index for all items less food and energy increased 1.7 percent. These increases were offset by an 18.8-percent decline in the energy index.


Real Average Hourly Earnings decreased 0.1% in February
Posted: March 24, 2015 at 08:30 AM (Tuesday)

Real average hourly earnings for all employees decreased 0.1 percent from January to February, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from a 0.1-percent increase in average hourly earnings being offset by a 0.2-percent increase in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings decreased by 0.1 percent over the month due to the decrease in real average hourly earnings combined with no change in the average workweek.

Real average hourly earnings increased by 2.1 percent, seasonally adjusted, from February 2014 to February 2015. This increase in real average hourly earnings, combined with a 0.6-percent increase in the average workweek, resulted in a 2.6-percent increase in real average weekly earnings over this period.


Existing-Home Sales rose 1.2% in February
Posted: March 23, 2015 at 10:00 AM (Monday)

Existing-home sales increased modestly in February, but constrained inventory levels pushed price growth to its fastest pace in a year, according to the National Association of Realtors®.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 1.2 percent to a seasonally adjusted annual rate of 4.88 million in February from 4.82 million in January. Sales are 4.7 percent higher than a year ago and above year-over-year totals for the fifth consecutive month.

The median existing-home price for all housing types in February was $202,600, which is 7.5 percent above February 2014. This marks the 36th consecutive month of year-over-year price gains and the largest since last February (8.8 percent).

Although February sales showed modest improvement, there’s been some stagnation in the market in recent months. Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices to near unsuitable levels. Stronger price growth is a boon for homeowners looking to build additional equity, but it continues to be an obstacle for current buyers looking to close before rates rise.

Severe below-freezing winter weather likely had an impact on sales as more moderate activity was observed in the Northeast and Midwest compared to other regions of the country.

Total housing inventory at the end of February increased 1.6 percent to 1.89 million existing homes available for sale, but remains 0.5 percent below a year ago (1.90 million). For the second straight month, unsold inventory is at a 4.6-month supply at the current sales pace.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage in February slightly rose to 3.71 percent from 3.67 percent in January, marking the first monthly increase since September 2014.

With all indications pointing to a rate increase from the Federal Reserve this year – perhaps as early as this summer – affordability concerns could heighten as home prices and rents both continue to exceed wages.

A NAR study released earlier this month found that the disparity between rent and income growth is widening in metro areas throughout the country and is making it harder for renters to become homeowners.

The percent share of first-time buyers was 29 percent in February, up from 28 percent in January and the first increase since November 2014. First-time buyers represented 28 percent of all buyers in February 2014.

All-cash sales were 26 percent of transactions in February, down from 27 percent in January and down considerably from a year ago (35 percent). Individual investors, who account for many cash sales, purchased 14 percent of homes in February, down from 17 percent last month and 21 percent in February 2014. Sixty-seven percent of investors paid cash in February.

Distressed sales – foreclosures and short sales – were 11 percent of sales in February, unchanged for the third consecutive month and down from 16 percent a year ago. Eight percent of February sales were foreclosures and 3 percent were short sales. Foreclosures sold for an average discount of 17 percent below market value in February (15 percent in January), while short sales were discounted 15 percent (12 percent in January).

Investor sales are trending downward due to the continued rise in prices and fewer bargains available from distressed properties coming onto the market. Furthermore, Realtors® in areas popular to foreign buyers, such as South Florida and the West Coast, are reporting tempered demand from international clients – who typically pay in cash – due to the strengthening U.S. dollar compared to foreign currencies.

Properties typically stayed on the market for 62 days in February, down from 69 days in January and unchanged from a year ago. Short sales were on the market the longest at a median of 120 days in February, while foreclosures sold in 58 days and non-distressed homes took 61 days. Thirty-four percent of homes sold in February were on the market for less than a month.

Single-family home sales increased 1.4 percent to a seasonally adjusted annual rate of 4.34 million in February from 4.28 million in January, and are 5.9 percent above the 4.10 million pace a year ago. The median existing single-family home price was $204,200 in February, up 8.2 percent from February 2014.

Existing condominium and co-op sales were at a seasonally adjusted annual rate of 540,000 units in February, unchanged from January, but 3.6 below February 2014 (560,000 units). The median existing condo price was $190,200 in February, which is 2.8 percent higher than a year ago.


Chicago Fed National Activity slightly below average in February
Posted: March 23, 2015 at 08:30 AM (Monday)

The Chicago Fed National Activity Index (CFNAI) edged lower to –0.11 in February from –0.10 in January. Two of the four broad categories of indicators that make up the index decreased from January, and two of the four categories made negative contributions to the index in February.

The index’s three-month moving average, CFNAI-MA3, declined to –0.08 in February from +0.26 in January. February’s CFNAI-MA3 suggests that growth in national economic activity was slightly below its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.

The CFNAI Diffusion Index, which is also a three-month moving average, decreased to a neutral reading in February from +0.10 in January. Forty-eight of the 85 individual indicators made positive contributions to the CFNAI in February, while 37 made negative contributions. Forty-six indicators improved from January to February, while 39 indicators deteriorated. Of the indicators that improved, ten made negative contributions.

Production-related indicators made a contribution of –0.07 to the CFNAI in February, up from –0.20 in January. Industrial production increased 0.1 percent in February after declining 0.3 percent in the previous month, and manufacturing production decreased 0.2 percent in February after declining 0.3 percent in January. The contribution of the sales, orders, and inventories category to the CFNAI ticked up to +0.02 in February from +0.01 in January.

Employment-related indicators contributed +0.11 to the CFNAI in February, down slightly from +0.16 in January. The unemployment rate decreased to 5.5 percent in February. However, civilian employment increased by 96,000 in February, following a gain of 759,000 in January; and average weekly initial unemployment insurance claims increased more in February than in the previous month.

The contribution of the personal consumption and housing category to the CFNAI decreased to –0.17 in February from –0.07 in January. Housing starts declined to 897,000 annualized units in February from 1,081,000 in the previous month. However, housing permits edged up to 1,092,000 annualized units in February from 1,060,000 in January.

The CFNAI was constructed using data available as of March 19, 2015. At that time, February data for 51 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index. The January monthly index was revised to –0.10 from an initial estimate of +0.13. 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 January monthly index was due primarily to the former.


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

The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.2 percent in February to 121.4 (2010 = 100), following a 0.2 percent increase in January, and a 0.4 percent increase in December.

Widespread gains among the leading indicators continue to point to short-term growth. However, easing in the LEI’s six-month change suggests that we may be entering a period of more moderate expansion. With the February increase, the LEI remains in growth territory, but weakness in the industrial sector and business investment is holding economic growth back, despite improvements in labor markets and consumer confidence.

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.2 percent in February to 111.9 (2010 = 100), following a 0.2 percent increase in January, and a 0.3 percent increase in December.

The Conference Board Lagging Economic Index® (LAG) for the U.S. increased 0.3 percent in February to 115.8 (2010 = 100), following a 0.3 percent increase in January, and a 0.2 percent increase in December.


Philadelphia February Outlook Continues to Suggest Modest Growth
Posted: March 19, 2015 at 10:00 AM (Thursday)

Manufacturing activity in the region increased at a modest pace in March, according to firms responding to this month’s Manufacturing Business Outlook Survey. The survey’s current indicators for general activity and new orders were positive and remained near their low readings in February. Firms reported overall declines in shipments and in work hours, while overall employment increased only slightly. Firms reported more widespread price reductions in March, although most firms continued to report steady prices. The survey's indicators of future activity showed mixed results but continued to suggest that the manufacturing sector is expected to continue growing over the next six months.

Indicators Suggest Modest Growth
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, at 5.0, was virtually unchanged from its reading of 5.2 in February (see Chart 1). The demand for manufactured goods, as measured by the current new orders index, remained at a very low, albeit positive, reading of 3.9 and edged 2 points lower than in February. The current shipments index fell more dramatically (16 points) and returned the index to negative territory (its second negative reading in three months). Firms reported faster delivery times and a decrease in unfilled orders this month compared with February.

Firms’ responses suggest weaker labor market conditions compared with most of last year. Although the current employment index, at just 3.5, was virtually unchanged from last month, the index remains well below its average reading of about 14 over the second half of last year. The percentage of firms reporting an increase in employees in March (17 percent) narrowly exceeded the percentage reporting a decrease (14 percent). Firms also reported reductions in the workweek in March: The percentage of firms reporting a shorter workweek (24 percent) was greater than the percentage reporting a longer workweek (13 percent).

Share of Firms Reporting Price Reductions Has Increased
Input price pressures continued to moderate for reporting manufacturers: The prices paid index fell 8 points to -3.0 in March, its first negative reading since the summer of 2009 (see Chart 2). Although most firms (68 percent) reported that input prices were unchanged, the percentage of firms reporting price reductions (17 percent) exceeded those reporting increases (14 percent). With respect to prices received for manufactured goods, the percentage of firms reporting price reductions (17 percent) exceeded those reporting price increases (10 percent). The prices received index fell 6 points to -6.4, its third consecutive negative reading. The largest percentage of firms (71 percent) reported no change in manufactured goods prices.

Most Future Indicators Remain Positive but Are at Lower Levels Than Last Year
The diffusion index for future activity edged up from 29.7 to 32.0 but remained lower than readings over the past year (see Chart 1). The future indexes for new orders and shipments, however, moved in the opposite direction, falling 9 points and 6 points, respectively. The future employment index also was weaker this month. The future employment index decreased 12 points, to its lowest reading since April 2013. Although nearly 57 percent of the firms are expecting no change in their employment levels over the next six months, the percentage expecting increases in employment (25 percent) remained greater than the percentage expecting decreases (11 percent).

In this month’s special questions, firms were surveyed about capital spending plans for 2015 compared with actual levels in 2014. These questions were asked for the last four years.

Summary
The Manufacturing Business Outlook Survey suggests continued modest expansion of the region’s manufacturing sector in March. The indicators for general activity and new orders both continued to suggest modest growth. Firms reported an overall reduction in shipments and average labor hours for March. Respondents also indicated that downward price pressures continued for inputs. Also, for their own products, more firms reported price decreases than reported price increases. Firms remain optimistic about increases in overall business and employment over the next six months, although optimism was less widespread than just a few months ago.


DJ-BTMU U.S. Business Barometer unch%
Posted: March 19, 2015 at 10:00 AM (Thursday)

For the week ending March 7 2015, the DJ-BTMU U.S. Business Barometer remained at 98.5 as gains in consumption indexes were completely cancelled out by losses in production indexes. On one hand, chain store sales rose by 1.3 percent due to improvements in demand on department, drug, and electronics stores. In the same line, MBA’s purchase index picked up by 1.9 percent following 0.2 percent drop in the prior week. However, on the other hand, all production indexes except lumber production reported losses, especially auto and truck production, which dropped by 7.0 and 4.5 percent, respectively.

On a year-over-year basis, the barometer showed a gain of 1.1 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 98.5. Its year-over-year growth rate was 1.1 percent.


3Q2014 Current Account Deficit Increased
Posted: March 19, 2015 at 08:30 AM (Thursday)

The U.S. current-account deficit—a net measure of transactions between the United States and the rest of the world in goods, services, primary income (investment income and compensation), and secondary income (current transfers)—increased to $113.5 billion (preliminary) in the fourth quarter of 2014 from $98.9 billion (revised) in the third quarter. The deficit increased to 2.6 percent of current-dollar gross domestic product (GDP) from 2.2 percent in the third quarter. The increase in the current-account deficit was primarily accounted for by a decrease in the surplus on primary income. In addition, the deficits on goods and secondary income increased. These changes were partly offset by an increase in the surplus on services.


Weekly Initial Unemployment Claims Increase 1,000 to 291,000
Posted: March 19, 2015 at 08:30 AM (Thursday)

In the week ending March 14, the advance figure for seasonally adjusted initial claims was 291,000, an increase of 1,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 289,000 to 290,000. The 4-week moving average was 304,750, an increase of 2,250 from the previous week's revised average. The previous week's average was revised up by 250 from 302,250 to 302,500. 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 March 7, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending March 7 was 2,417,000, a decrease of 11,000 from the previous week's revised level. The previous week's level was revised up 10,000 from 2,418,000 to 2,428,000. The 4-week moving average was 2,418,000, a decrease of 1,250 from the previous week's revised average. The previous week's average was revised up by 2,500 from 2,416,750 to 2,419,250.


FOMC target funds rate reaffirmed at 0 - 1/4%
Posted: March 18, 2015 at 02:00 PM (Wednesday)

Information received since the Federal Open Market Committee met in January suggests that economic growth has moderated somewhat. Labor market conditions have improved further, with strong job gains and a lower unemployment rate. A range of labor market indicators suggests that underutilization of labor resources continues to diminish. Household spending is rising moderately; declines in energy prices have boosted household purchasing power. Business fixed investment is advancing, while the recovery in the housing sector remains slow and export growth has weakened. Inflation has declined further below the Committee's longer-run objective, largely reflecting declines in energy prices. Market-based measures of inflation compensation remain low; 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 remain near its recent low level 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 energy price declines 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. Consistent with its previous statement, the Committee judges that an increase in the target range for the federal funds rate remains unlikely at the April FOMC meeting. The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term. This change in the forward guidance does not indicate that the Committee has decided on the timing of the initial increase in the target range.

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: March 18, 2015 at 07:00 AM (Wednesday)

Mortgage applications decreased 3.9 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending March 13, 2015.

The Market Composite Index, a measure of mortgage loan application volume, decreased 3.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4 percent compared with the previous week. The Refinance Index decreased 5 percent from the previous week. The seasonally adjusted Purchase Index decreased 2 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 59 percent of total applications, the lowest level since October 2014, from 60 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.5 percent of total applications.

The FHA share of total applications increased to 14.3 percent this week from 14.0 percent last week. The VA share of total applications decreased to 10.3 percent this week from 10.8 percent last week. The USDA share of total applications increased to 0.9 percent this week 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 3.99 percent from 4.01 percent, with points increasing to 0.40 from 0.39 (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 3.94 percent from 4.02 percent, with points increasing to 0.33 from 0.27 (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 3.74 percent from 3.80 percent, with points decreasing to 0.12 from 0.20 (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 3.28 percent from 3.29 percent, with points increasing to 0.34 from 0.30 (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 decreased to 2.99 percent from 3.18 percent, with points increasing to 0.43 from 0.40 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


February Housing Starts down 17.0%, Permits up 3.0%
Posted: March 17, 2015 at 08:30 AM (Tuesday)

BUILDING PERMITS
Privately-owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 1,092,000. This is 3.0 percent (±1.7%) above the revised January rate of 1,060,000 and is 7.7 percent (±2.0%) above the February 2014 estimate of 1,014,000. Single-family authorizations in February were at a rate of 620,000; this is 6.2 percent (±0.9%) below the revised January figure of 661,000. Authorizations of units in buildings with five units or more were at a rate of 445,000 in February.

HOUSING STARTS
Privately-owned housing starts in February were at a seasonally adjusted annual rate of 897,000. This is 17.0 percent (±9.5%) below the revised January estimate of 1,081,000 and is 3.3 percent (±12.5%) below the February 2014 rate of 928,000. Single-family housing starts in February were at a rate of 593,000; this is 14.9 percent (±10.0%) below the revised January figure of 697,000. The February rate for units in buildings with five units or more was 297,000.

HOUSING COMPLETIONS
Privately-owned housing completions in February were at a seasonally adjusted annual rate of 850,000. This is 13.8 percent (±9.0%) below the revised January estimate of 986,000 and is 1.8 percent (±11.7%) below the February 2014 rate of 866,000. Single-family housing completions in February were at a rate of 595,000; this is 12.1 percent (±10.0%) below the revised January rate of 677,000. The February rate for units in buildings with five units or more was 236,000.


Treasury International Capital Data for January 2015
Posted: March 16, 2015 at 04:00 PM (Monday)

The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for January 2015. The sum total in January of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC inflow of $88.3 billion. Of this, net foreign private inflows were $60.7 billion, and net foreign official inflows were $27.6 billion.

Foreign residents decreased their holdings of long-term U.S. securities in January; net sales were $39.8 billion. Net sales by private foreign investors were $27.8 billion, while net sales by foreign official institutions were $12.0 billion. U.S. residents decreased their holdings of long-term foreign securities, with net sales of $12.6 billion.

Taking into account transactions in both foreign and U.S. securities, net foreign sales of long-term securities were $27.2 billion. After including adjustments, such as estimates of unrecorded principal payments to foreigners on U.S. asset-backed securities, overall net foreign sales of long-term securities are estimated to have been $39.3 billion in January.

Foreign residents decreased their holdings of U.S. Treasury bills by $10.8 billion. Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities decreased by $8.1 billion. Banks' own net dollar-denominated liabilities to foreign residents increased by $135.7 billion.


Builder Confidence Drops 2 Points in March to 53
Posted: March 16, 2015 at 10:00 AM (Monday)

Builder confidence in the market for newly built, single-family homes in March fell two points to a level of 53 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today.

Even with this slight slip, the HMI remains in positive territory and we expect the market to improve as we enter the spring buying season.

The drop in builder confidence is largely attributable to supply chain issues, such as lot and labor shortages as well as tight underwriting standards. These obstacles notwithstanding, we are expecting solid gains in the housing market this year, buoyed by sustained job growth, low mortgage interest rates and pent-up demand.

Two of the three HMI components posted losses in March. The component gauging current sales conditions fell three points to 58 while the component measuring buyer traffic dropped two points to 37. The gauge charting sales expectations in the next six months held steady at 59.

Looking at the three-month moving averages for regional HMI scores, the Northeast and South each posted a two-point drop to 43 and 55, respectively. The Midwest rose two points to 56, while the West fell seven points to 61.


Industrial Production increased 0.1%
Capacity Utilization decreased to 78.9%

Posted: March 16, 2015 at 09:15 AM (Monday)

Industrial production increased 0.1 percent in February after decreasing 0.3 percent in January. In February, manufacturing output moved down 0.2 percent, its third consecutive monthly decline. The rates of change for the total index in January and for manufacturing in both December and January are lower than previously reported. The index for mining fell 2.5 percent in February; drops in the indexes for coal mining and for oil and gas well drilling and servicing primarily accounted for the decrease. The output of utilities jumped 7.3 percent, as especially cold temperatures drove up demand for heating. At 105.8 percent of its 2007 average, total industrial production in February was 3.5 percent above its level of a year earlier. Capacity utilization for the industrial sector decreased to 78.9 percent in February, a rate that is 1.2 percentage points below its long-run (1972–2014) average.


Empire State Manufacturing Survey Conditions Continue to Improve Modestly
Posted: March 16, 2015 at 08:30 AM (Monday)

The March 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, at 6.9, remained close to last month’s level. The new orders index fell four points to -2.4, pointing to a small decline in orders, and the shipments index declined six points to 7.9. Labor market indicators pointed to a solid increase in employment levels and a lengthening in the average workweek. Pricing pressures remained subdued, with the prices paid index inching down two points to 12.4, and the prices received index at 8.3. As in February, indexes for the six-month outlook conveyed less optimism than in many of the preceding months, and the capital spending and technology spending indexes declined.

Business Conditions Continue to Improve Modestly
The general business conditions index was little changed at 6.9 in March, suggesting that conditions for New York manufacturers continued to improve modestly and at roughly the same pace as in the past several months. Twenty-six percent of respondents reported that conditions had improved, while 19 percent reported that conditions had worsened. The new orders index declined for a second consecutive month, falling four points to -2.4—evidence of a slight decline in orders. The shipments index fell six points to 7.9, and the unfilled orders index fell seven points to -13.4. The delivery time index dropped to -2.0, indicating slightly shorter delivery times, and the inventories index fell to -5.1, signaling that inventory levels were lower.

Solid Gains in Employment
Pricing pressures remained subdued. The prices paid index edged down two points to 12.4, signaling a moderate increase in input prices for a sixth consecutive month. The prices received index climbed five points to 8.3, indicating a modest increase in selling prices. The index for number of employees climbed eight points to 18.6, pointing to significant gains in employment, and the average workweek rose six points to 5.2, indicating a small increase in the average workweek.

Firms Remain Less Optimistic Than in Previous Months
As in February, indexes assessing the six-month outlook, though generally positive, conveyed more restrained optimism about future business activity than they had throughout much of the past year. After plunging last month, the index for future general business conditions rose five points to 30.7, remaining well below readings that were generally above 40 from May 2014 through January 2015. The future new orders and shipments indexes declined. The future prices paid and future prices received indexes edged higher, but remained subdued. A significant expansion in employment levels was anticipated, with the index for expect number of employees rising to 28.9. After reaching a multiyear high last month, the capital expenditures index fell back to 18.6, and the technology spending index dropped to 7.2.


Producer Price Index fell 0.5% in February, ex Fd & Engy down 0.1%
Posted: March 13, 2015 at 08:30 AM (Friday)

The Producer Price Index for final demand fell 0.5 percent in February, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices moved down 0.8 percent in January and 0.2 percent in December. On an unadjusted basis, the index for final demand decreased 0.6 percent for the 12 months ended in February.

In February, about 70 percent of the decline in final demand prices can be attributed to a 0.5-percent decrease in the index for final demand services. Prices for final demand goods moved down 0.4 percent.

Within intermediate demand, the index for processed goods fell 0.6 percent, the index for unprocessed goods dropped 3.9 percent, and prices for services edged up 0.1 percent.


Business Inventories unch% in January
Posted: March 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 January, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,302.5 billion, down 2.0 percent (±0.2%) from December 2014 and were down 0.3 percent (±0.3%)* from January 2014.

Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,761.7 billion, virtually unchanged (±0.1%)* from December 2014, but were up 3.4 percent (±0.5%) from January 2014.

The total business inventories/sales ratio based on seasonally adjusted data at the end of January was 1.35. The January 2014 ratio was 1.30.


DJ-BTMU U.S. Business Barometer declined slightly by 0.1%
Posted: March 12, 2015 at 10:00 AM (Thursday)

For the week ending February 28 2015, the DJ-BTMU U.S. Business Barometer declined slightly by 0.1 percent to 98.5. The biggest factor that contributed to the performance of this week’s barometer was steel production, which dipped by a solid 3.0 percent, extending the falling trend for three consecutive weeks. The drop in steel production, however, was partially offset by gains in electric output and auto production, which rose by 2.6 and 7.1 percent, respectively. As to the consumption side, MBA’s purchase index fell marginally by 0.2 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 98.5. Its year-over-year growth rate was 1.2 percent.


U.S. Import Price Index Increased 0.4% in February
Posted: March 12, 2015 at 08:30 AM (Thursday)

U.S. import prices increased 0.4 percent in February following declines of 3.1 percent in January and 2.5 percent in December, the U.S. Bureau of Labor Statistics reported today. An upturn in fuel prices led the February rise. Prices for U.S. exports edged down 0.1 percent in February, after a 1.9-percent drop the previous month.


U.S. Retail Sales for February decrease 0.6%, Ex-Auto down 0.1%
Posted: March 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 February, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $437.0 billion, a decrease of 0.6 percent (±0.5%) from the previous month, but up 1.7 percent (±0.9%) above February 2014. Total sales for the December 2014 through February 2015 period were up 2.9 percent (±0.7%) from the same period a year ago. The December 2014 to January 2015 percent change was unrevised from -0.8 percent (±0.3%).

Retail trade sales were down 0.6 (±0.5%) from January 2015, but up 1.0 percent (±0.9%) above last year. Nonstore retailers were up 8.6 (±2.1%) from February 2014 and food services and drinking places were up 7.7 percent (±3.5%) from last year. Gasoline stations were down 23.0 percent (±1.6%) from the previous year.


Weekly Initial Unemployment Claims Decrease 36,000 to 289,000
Posted: March 12, 2015 at 08:30 AM (Thursday)

In the week ending March 7, the advance figure for seasonally adjusted initial claims was 289,000, a decrease of 36,000 from the previous week's revised level. The previous week's level was revised up by 5,000 from 320,000 to 325,000. The 4-week moving average was 302,250, a decrease of 3,750 from the previous week's revised average. The previous week's average was revised up by 1,250 from 304,750 to 306,000. 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 28, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending February 28 was 2,418,000, a decrease of 5,000 from the previous week's revised level. The previous week's level was revised up 2,000 from 2,421,000 to 2,423,000. The 4-week moving average was 2,416,750, an increase of 12,750 from the previous week's revised average. The previous week's average was revised up by 500 from 2,403,500 to 2,404,000.


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

Mortgage applications decreased 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 March 6, 2015.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The Refinance Index decreased 3 percent from the previous week to the lowest level since January 2015. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index increased 3 percent compared with the previous week and was 2 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 60 percent of total applications from 62 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.6 percent of total applications. The average loan size for purchase applications increased to the highest level in the history of the survey at $294,900.

The FHA share of total applications decreased to 14.0 percent this week from 14.6 percent last week. The VA share of total applications increased to 10.8 percent this week from 9.8 percent last week. The USDA share of total applications remained unchanged from last week at 0.8 percent.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.01 percent, the highest level since the week ending January 2, 2015, from 3.96 percent, with points increasing to 0.39 from 0.30 (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 4.02 percent from 3.95 percent, with points remaining unchanged at 0.27 (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 3.80 percent from 3.76 percent, with points decreasing to 0.20 from 0.21 (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 3.29 percent, the highest level since the week ending December 26, 2014, from 3.27 percent, with points remaining unchanged at 0.30 (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 3.18 percent from 3.05 percent, with points decreasing to 0.40 from 0.50 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.


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

There were 5.0 million job openings on the last business day of January, little changed from 4.9 million in December, the U.S. Bureau of Labor Statistics reported today. Hires decreased to 5.0 million in January and separations were little changed at 4.8 million. Within separations, the quits rate was little changed at 2.0 percent and the layoffs and discharges rate was unchanged at 1.2 percent. 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. The release also includes 2014 annual estimates for hires and separations. The annual number of hires, quits, layoffs and discharges, and other separations
increased in 2014.

There were 5.0 million job openings on the last business day of January, little changed from December. This was the highest level of job openings since January 2001. The job openings rate for January was 3.4 percent. The number of job openings was little changed for total private and government in January. Job openings increased for accommodation and food services and in the West region.

The number of job openings (not seasonally adjusted) increased over the 12 months ending in January 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 over the year in mining and logging. The number of openings increased over the year in all four regions.


Wholesale Inventories down 0.1% in January
Posted: March 10, 2015 at 10:00 AM (Tuesday)

The U.S. Census Bureau announced today that January 2015 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 $433.7 billion, down 3.1 percent (+/-0.5%) from the revised December level and were down 1.0 percent (+/-0.9%) from the January 2014 level. The December preliminary estimate was revised downward $2.4 billion or 0.5 percent. December sales of durable goods were down 1.4 percent (+/-0.9%) from last month, but were up 5.8 percent (+/-1.2%) from a year ago. Sales of electrical and electronic goods were down 4.4 percent from last month and sales of metals and minerals, except petroleum were down 4.1 percent. Sales of nondurable goods were down 4.6 percent (+/-0.9%) from December and were down 6.7 percent (+/-1.2%) from last January. Sales of petroleum and petroleum products were down 13.5 percent from last month and sales of drugs and druggists' sundries were down 3.6 percent.

Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $548.7 billion at the end of January, up 0.3 percent (+/-0.4%)* from the revised December level and were up 6.2 percent (+/-0.7%) from the January 2014 level. The December preliminary estimate was revised downward $0.7 billion or 0.1 percent. January inventories of durable goods were up 0.6 percent (+/-0.4%) from last month and were up 7.7 percent (+/-1.1%) from a year ago. Inventories of electrical and electronic goods were up 2.4 percent from last month and inventories of motor vehicle and motor vehicle parts and supplies were up 1.6 percent. Inventories of nondurable goods were down 0.1 percent (+/-0.4%)* from December, but were up 3.7 percent (+/-1.1%) from last January. Inventories of farm product raw materials were down 4.6 percent from last month, while inventories of paper and paper products were up 3.0 percent.

The January inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.27. The January 2014 ratio was 1.18.


NFIB Small Business Optimism Index gained 0.1 points to 98.0
Posted: March 10, 2015 at 07:30 AM (Tuesday)

The Index of Small Business Optimism gained 0.1 points to reach 98.0, the long-term average including the Great Recession and the third highest reading since early 2007. Only eclipsed by November and December 2014 which were a bit higher. Of the ten Index components, the largest gain was in the percent of owners reporting hard-to-fill openings (3 points). Changes were smaller in other components, 2 point increase for inventory investment plans, negative 2 points for job creation plans, and less for the other components. Overall, not a lot of movement in the overall Index or in the components.

The economy lost a lot of momentum in the fourth quarter, with GDP growth now estimated at 2.2 percent (up 2.4 percent for the year) after strong second and third quarter performances. Imports grew substantially, accompanying the huge decline in oil prices. The reduction in oil prices was a great tax cut for the economy, granted by the private sector. Gasoline prices plunged, although recently they have risen steadily, adversely impacting consumer sentiment, mostly due to problems with refining capacity. But gas prices remain much lower than year ago levels, continuing to feed consumer spending and saving.

Historically the small business sector produces about half the private GDP and employs half of the private sector workforce. During the recovery, this sector did not pull its historic weight, slowing the recovery in employment substantially. In the boom, not only were too many houses built but too many firms were started, and filled with inventories to satisfy consumer spending driven by a 2 percent saving rate. Huge numbers of firms and their jobs were lost in the recession, nearly 900,000 establishments in each of the years 2008 and 2009. The NFIB data suggest that the surviving firms are regaining stride and the BLS data now show more starts than terminations, supporting job growth.

NFIB indicators of job creation have anticipated the relatively more favorable numbers reported by BLS. Owners are finding reasons to hire even though the “macro” indicators are not showing a lot of growth. Labor markets are tightening as the percent of owners reporting unfilled openings (BLS) has risen significantly and is now the highest reading since 2001. And the percent of owners citing the availability of qualified workers as their top business problem is at the highest level since December 2007, just ahead of the peak in employment in that expansion. There are fundamental domestic economic currents leading owners to add workers and these should bubble up in the official statistics and support stronger growth in domestic output.


Employment Trends Index increased in February to 127.76
Posted: March 9, 2015 at 10:00 AM (Monday)

The Conference Board Employment Trends Index™ (ETI) increased in February. The index now stands at 127.76, up from 127.62 (a downward revision) in January. This represents a 6.7 percent gain in the ETI compared to a year ago.

“The Employment Trends Index increased for the 14th consecutive time, the longest positive stretch in 30 years,” said Gad Levanon, Managing Director of Macroeconomic and Labor Market Research at The Conference Board. “Strong job growth and the rapid decline in the unemployment rate are likely to continue, and acceleration in wage growth is just a matter of time.”

February’s increase in the ETI was driven by positive contributions from five of the eight components. In order from the largest positive contributor to the smallest, these were: Percentage of Firms with Positions Not Able to Fill Right Now, Ratio of Involuntarily Part-time to All Part-time Workers, Real Manufacturing and Trade Sales, Industrial Production, and Job Openings.


Consumer Credit Increased at an annual rate of 4.25%
Posted: March 6, 2015 at 03:00 PM (Friday)

In January, consumer credit increased at a seasonally adjusted annual rate of 4-1/4 percent. Revolving credit decreased at an annual rate of 1-1/2 percent, while nonrevolving credit increased at an annual rate of 6-1/4 percent.


Goods and Services Deficit Decreased in January 2015
Posted: March 6, 2015 at 10:00 AM (Friday)

The Nation’s international trade deficit in goods and services decreased to $41.8 billion in January from $45.6 billion in December (revised), as imports decreased more than exports.

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 $41.8 billion in January, down $3.8 billion from $45.6 billion in December, revised. January exports were $189.4 billion, down $5.6 billion from December. January imports were $231.2 billion, down $9.4 billion from December.

The January decrease in the goods and services deficit reflected a decrease in the goods deficit of $3.4 billion to $61.6 billion and an increase in the services surplus of $0.5 billion to $19.9 billion.

Year-over-year, the goods and services deficit increased $2.9 billion, or 7.5 percent, from January 2014. Exports decreased $3.3 billion or 1.7 percent. Imports decreased $0.4 billion or 0.2 percent.


December Employment increased by 295,000
Unemployment Rate edged down to 5.5%

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

Total nonfarm payroll employment increased by 295,000 in February, and the unemployment rate edged down to 5.5 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in food services and drinking places, professional and business services, construction, health care, and in transportation and warehousing. Employment in mining was down over the month.

Both the unemployment rate (5.5 percent) and the number of unemployed persons (8.7 million) edged down in February. Over the year, the unemployment rate and the number of unemployed persons were down by 1.2 percentage points and 1.7 million, respectively.

Among the major worker groups, the unemployment rate for teenagers decreased by 1.7 percentage points to 17.1 percent in February. The jobless rates for adult men (5.2 percent), adult women (4.9 percent), whites (4.7 percent), blacks (10.4 percent), Asians (4.0 percent), and Hispanics (6.6 percent) showed little or no change.

The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 2.7 million in February. These individuals accounted for 31.1 percent of the unemployed. Over the past 12 months, the number of long-term unemployed is down by 1.1 million.

The civilian labor force participation rate, at 62.8 percent, changed little in February and has remained within a narrow range of 62.7 to 62.9 percent since April 2014. The employment-population ratio was unchanged at 59.3 percent in February but is up by 0.5 percentage point over the year.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed in February at 6.6 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 February, 2.2 million persons were marginally attached to the labor force, little changed 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. (See table A-16.)

Among the marginally attached, there were 732,000 discouraged workers in February, little different 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 1.4 million persons marginally attached to the labor force in February had not searched for work for reasons such as school attendance or family responsibilities.

Total nonfarm payroll employment rose by 295,000 in February, compared with an average monthly gain of 266,000 over the prior 12 months. Job gains occurred in food services and drinking places, professional and business services, construction, health care, and in transportation and warehousing. Employment in mining declined over the month.

In February, the average workweek for all employees on private nonfarm payrolls was 34.6 hours for the fifth month in a row. The manufacturing workweek was unchanged at 41.0 hours in February, and factory overtime edged down by 0.1 hour to 3.4 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.8 hours.

In February, average hourly earnings for all employees on private nonfarm payrolls rose by 3 cents to $24.78. Over the year, average hourly earnings have risen by 2.0 percent. In February, average hourly earnings of private-sector production and nonsupervisory employees were unchanged at $20.80.

After revision, the change in total nonfarm payroll employment for December remained at +329,000, and the change for January was revised from +257,000 to +239,000. With these revisions, employment gains in December and January were 18,000 lower than previously reported. Over the past 3 months, job gains have averaged 288,000 per month.


New orders for manufactured goods decreased 3.4%
Posted: March 5, 2015 at 10:00 AM (Thursday)

New orders for manufactured goods in January, down six consecutive months, decreased $0.9 billion or 0.2 percent to $470.0 billion, the U.S. Census Bureaureported today. This followed a 3.5 percent December decrease. Excluding transportation, new orders decreased 1.8 percent.

Shipments, down five of the last six months, decreased $9.8 billion or 2.0 percent to $479.1 billion. This followed a 0.9 percent December decrease.

Unfilled orders, down two consecutive months, decreased $2.2 billion or 0.2 percent to $1,163.4 billion. This followed a 0.9 percent December decrease. The unfilled orders-to-shipments ratio was 6.68, up from 6.65 in December.

Inventories, down two consecutive months, decreased $2.5 billion or 0.4 percent to $650.5 billion. This followed a 0.4 percent December decrease. The inventories-to-shipments ratio was 1.36, up from 1.34 in December.


DJ-BTMU U.S. Business Barometer increased by 0.3%
Posted: March 5, 2015 at 10:00 AM (Thursday)

For the week ending February 21 2015, the DJ-BTMU U.S. Business Barometer rose by 0.3 percent to 98.6. This week’s barometer was driven by strong performances in both consumption and production indexes. MBA’s purchase index picked up by a solid 4.6 percent after declining for five consecutive weeks; while railroad freight car loadings increased by 1.2 percent. As to the production side, most indexes reported gains, especially electric output and coal production, which climbed by 7.8 and 4.7 percent, respectively.

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, remained at 98.4. Its year-over-year growth rate was 1.2 percent.


Weekly Initial Unemployment Claims Increase 7,000 to 320,000
Posted: March 5, 2015 at 08:30 AM (Thursday)

In the week ending February 28, the advance figure for seasonally adjusted initial claims was 320,000, an increase of 7,000 from the previous week's unrevised level of 313,000. The 4-week moving average was 304,750, an increase of 10,250 from the previous week's unrevised average of 294,500. 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 21, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending February 21 was 2,421,000, an increase of 17,000 from the previous week's revised level. The previous week's level was revised up 3,000 from 2,401,000 to 2,404,000. The 4-week moving average was 2,403,500, an increase of 3,750 from the previous week's revised average. The previous week's average was revised up by 750 from 2,399,000 to 2,399,750.


4Q2014 Productivity Growth Decreased 2.2%
Posted: March 5, 2015 at 08:30 AM (Thursday)

Nonfarm business sector labor productivity decreased at a 2.2 percent annual rate during the fourth quarter of 2014, the U.S. Bureau of Labor Statistics reported today, as output increased 2.6 percent and hours worked increased 4.9 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the fourth quarter of 2013 to the fourth quarter of 2014, productivity decreased 0.1 percent reflecting increases in output and hours worked of 2.9 percent and 3.0 percent, respectively. Annual average productivity increased 0.7 percent from 2013 to 2014.

Unit labor costs in the nonfarm business sector increased 4.1 percent in the fourth quarter of 2014, reflecting a 1.9 percent increase in hourly compensation and a 2.2 percent decline in productivity. Unit labor costs increased 2.6 percent over the last four quarters.

Manufacturing sector productivity decreased 0.1 percent in the fourth quarter of 2014, as output increased 4.3 percent and hours worked increased 4.4 percent. Productivity increased 0.5 percent in the durable manufacturing sector and decreased 1.5 percent in the nondurable manufacturing sector. Over the last four quarters, manufacturing productivity increased 2.4 percent, as output increased 4.5 percent and hours increased 2.0 percent. Unit labor costs in manufacturing increased 1.5 percent in the fourth quarter of 2014 and were unchanged from the same quarter a year ago.

In the fourth quarter of 2014, nonfarm business productivity decreased 2.2 percent rather than 1.8 percent as reported February 5. The revised figure reflects a 0.6 percentage point downward revision to output and a 0.2 percentage point downward revision to hours. The 4.9 percent increase in hours worked remains the largest increase in this series since a gain of 5.7 percent in the fourth quarter of 1998. Unit labor costs increased 4.1 percent, a larger increase than was previously reported.

Manufacturing productivity declined 0.1 percent rather than increasing 1.3 percent, a combination of a downward revision to output and a small upward revision to hours. This was the first decrease in the productivity measure since a 1.6 percent decrease in the fourth quarter of 2011. Because the downward revision to productivity was larger than a downward revision to hourly compensation, manufacturing unit labor costs increased 1.5 percent, rather than 0.2 percent as reported in the preliminary release.

In the third quarter of 2014, nonfarm business productivity growth was little changed, at 3.9 percent, reflecting a slight downward revision to hours. Unit labor costs decreased 1.0 percent, as revised, reflecting the small upward revision to productivity and a 1.5 percentage point upward revision to hourly compensation. In the manufacturing sector, productivity increased 3.5 percent rather than 3.2 percent as previously reported. The revision reflected a small upward revision to output and a small downward revision to hours. (See table B.) Nonfinancial corporate sector productivity increased 1.8 percent in the third quarter of 2014.

When the annual average indexes of output per hour are compared, nonfarm business sector productivity rose 0.7 percent from 2013 to 2014 reflecting increases of 3.0 percent in output and 2.3 percent in hours worked. The increase in hours in 2014 was the largest increase in the annual measure since 1997 (3.5 percent). Since 2010, productivity has increased at an average annual rate of 0.7 percent, reflecting average annual growth rates of 2.8 percent in output and 2.1 percent in hours worked. Output per hour has increased at an average annual rate of 2.1 percent since 1990 as output increased 2.8 percent and hours increased 0.7 percent. Unit labor costs rose 1.8 percent from 2013 to 2014 in the nonfarm business sector.

In the manufacturing sector, annual average productivity growth was revised down to 2.2 percent in 2014. Productivity growth over the last four years of 1.5 percent per year on average reflects annual average rates of growth in output and hours of 3.2 percent and 1.7 percent, respectively. Manufacturing unit labor costs increased 0.1 percent in 2014 as the 2.2 percent increase in productivity was outpaced by the 2.3 percent increase in compensation per hour. Real hourly compensation increased 0.6 percent in 2014, after four consecutive years of decreases in the measure.


Challenger Layoffs totaling 50,579 in February
Posted: March 5, 2015 at 08:00 AM (Thursday)

Planned job cuts declined slightly in February, as US-based employers announced workforce reductions totaling 50,579, five percent fewer than the 53,041 in January, according to the report on monthly job cuts released Thursday by global outplacement consultancy Challenger, Gray & Christmas, Inc.

The February total was up 21 percent from a year ago, when employers announced 41,835 job cuts during the month. This marks the third consecutive monthly job-cut total that exceeded the comparable year-ago figure.

Employers announced 103,620 planned layoffs through the first two months of 2015, which is up 19 percent from the 86,942 job cuts recorded during the same period in 2014.

Once again, the energy sector saw the heaviest job cutting in February, with these firms announcing 16,339 job cuts, due primarily to oil prices.

Falling oil prices have been responsible for 39,621 job cuts, to date. That represents 38 percent of all recorded workforce reductions announced in the first two months of 2015. In February, 36 percent of all job cuts (18,299) were blamed on oil prices.

Oil exploration and extraction companies, as well as the companies that supply them, are definitely feeling the impact of the lowest oil prices since 2009. These companies, while reluctant to completely shutter operations, are being forced to trim payrolls to contain costs.

While oil-related companies will see profits slide, the net impact of falling oil prices will likely be positive for the economy, as a whole. Some economists are estimating that GDP could see a 0.5 percentage point boost from low oil prices, due mostly to the extra spending power among consumers. Meanwhile, companies that are big users of oil, such as transportation firms, airlines, and manufacturers of plastic and paint products will see higher profits thanks to cheap oil.

Indeed, in a January survey by the National Association for Business Economics, 50 percent of in-house corporate economists said that falling oil prices have already had a positive impact on their firms.

Cheap oil does not yet appear to be helping stem the tide of job cuts in the retail sector, which saw the second highest number of job cuts in February with 9,163. Employers in the sector have announced 15,862 job cuts, so far this year. That is little changed from the 15,242 retail job cuts announced in the first two months of 2014.

So far, falling oil prices have not resulted in higher retail spending. However, that is not necessarily the cause behind ongoing job cuts in retail. Falling oil prices might stave off job cuts for some retailers but, the fact is, some retailers are beyond the point where cheap oil will help turn things around. For example, the heaviest retail job cuts last month were the result of RadioShack’s long decline, which culminated in bankruptcy and liquidation.

While retail has not yet been lifted by falling oil prices, recent hiring announcements indicate that automotive and transportation firms are starting to see the benefits. Last month, transportation firms announced plans to hire 5,236, while automotive firms plan to add 3,185.

These reports probably represent just a small fraction of actual job creation, since most employers do not formally announce hiring plans.

In all, announced hiring plans totaled 14,574 in February, up 66 percent from 8,774 in January.


Beige Book: Economic Activity continued to expand across most regions
Posted: March 4, 2015 at 02:00 PM (Wednesday)

Reports from the twelve Federal Reserve Districts indicate that economic activity continued to expand across most regions and sectors from early January through mid-February. Six Districts noted that the local economy expanded at a moderate pace since the prior reporting period. Activity rose modestly in Philadelphia and Cleveland, while it increased slightly in Kansas City. Dallas noted a similar pace of growth as in the previous period, while Richmond reported that activity slowed from the modest pace seen in the prior period. Boston noted that business contacts were fairly upbeat this period, notwithstanding the severe weather.

Consumer spending rose in most Districts, and contacts were generally optimistic about near-term sales. Travel and tourism also increased in the reporting Districts. Manufacturing generally posted gains across the Districts, although at varying rates. The demand for nonfinancial services also grew moderately on balance. Home sales increased in most Districts, while reports on residential construction were mixed. Commercial real estate market conditions remained stable or improved across the Districts. Banking conditions generally improved, and credit quality remained largely unchanged. Agricultural conditions generally worsened, and oil and natural gas drilling declined.

Payrolls remained stable or expanded across the Districts, and contacts noted employment gains in a broad range of sectors. Wage pressures remained moderate and were limited largely to workers in skilled occupations. Most District contacts cited only flat to slightly increasing prices


ISM Non-Manufacturing Index grew at 56.98%
Posted: March 4, 2015 at 10:00 AM (Wednesday)

Economic activity in the non-manufacturing sector grew in February for the 61st consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The NMI® registered 56.9 percent in February, 0.2 percentage point higher than the January reading of 56.7 percent. This represents continued growth in the non-manufacturing sector. The Non-Manufacturing Business Activity Index decreased to 59.4 percent, which is 2.1 percentage points lower than the January reading of 61.5 percent, reflecting growth for the 67th consecutive month at a slower rate. The New Orders Index registered 56.7 percent, 2.8 percentage points lower than the reading of 59.5 percent registered in January. The Employment Index increased 4.8 percentage points to 56.4 percent from the January reading of 51.6 percent and indicates growth for the 12th consecutive month. The Prices Index increased 4.2 percentage points from the January reading of 45.5 percent to 49.7 percent, indicating prices contracted in February for the third consecutive month. According to the NMI®, 14 non-manufacturing industries reported growth in February. Comments from respondents have increased in regards to the affects of the reduction in fuel costs and the impact of the West Coast port labor issues on the continuity of supply. Overall, supply managers feel mostly positive about the direction of the economy.

INDUSTRY PERFORMANCE
The 14 non-manufacturing industries reporting growth in February — listed in order — are: Accommodation & Food Services; Wholesale Trade; Real Estate, Rental & Leasing; Transportation & Warehousing; Agriculture, Forestry, Fishing & Hunting; Utilities; Management of Companies & Support Services; Finance & Insurance; Public Administration; Educational Services; Retail Trade; Professional, Scientific & Technical Services; Health Care & Social Assistance; and Information. The four industries reporting contraction in February are: Mining; Construction; Other Services; and Arts, Entertainment & Recreation.


Help Wanted OnLine Labor Demand rose 184,100 to 5,451,300 in February
Posted: March 4, 2015 at 10:00 AM (Wednesday)

Online advertised vacancies rose 184,100 to 5,451,300 in February, according to The Conference Board Help Wanted OnLine® (HWOL) Data Series, released today. The January Supply/Demand rate stands at 1.70 unemployed for each advertised vacancy with a total of 3.7 million more unemployed workers than the number of advertised vacancies. The number of unemployed was 9.0 million in January.

“Online labor demand has shown a very strong start in 2015, with demand increasing 334,500 across the first two months of the year,” said Gad Levanon, Managing Director, Macroeconomic and Labor Market Research. “These increases are a positive sign for continued growth in the labor markets.”

In February, the Services/Production category saw most of the gains with Transportation (53,200), Food (16,500), and Sales (16,200). The Professional category showed strength in Management (11,700), Business and Finance (8,800), and Healthcare (16,000).


ADP National Employment Report increased by 212,000 in February
Posted: March 4, 2015 at 08:15 AM (Wednesday)

Private sector employment increased by 212,000 jobs from January
to February according to the February 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 94,000 jobs in February, down slightly from 97,000 in January. Employment among companies with 50-499 employees increased by 63,000 jobs, down from 106,000 the previous month. Employment at large companies – those with 500 or more employees – increased from January adding 56,000 jobs, up from 47,000. Companies with 500-999 employees added 18,000 jobs, up from January’s 16,000. Companies with over 1,000 employees added 38,000 jobs, up from 30,000 the previous month.

Goods-producing employment rose by 31,000 jobs in February, down from 45,000 jobs gained in January. The construction industry added 31,000 jobs, the same number as last month. Meanwhile, manufacturing added 3,000 jobs in February, well below January’s 15,000.

Service-providing employment rose by 181,000 jobs in February, down from 206,000 in January. The ADP National Employment Report indicates that professional/business services contributed 34,000 jobs in February, a drop-off from January’s 49,000. Expansion in trade/transportation/utilities grew by 31,000, a sharp decline from January’s 50,000. The 20,000 new jobs added in financial activities is an increase from last month’s 15,000 and marks the largest gain in that sector since March 2006.

While February’s job gains came in slightly lower than recent months, the trend of solid growth above 200,000 jobs per month continued. What is also encouraging is that job gains are broad-based across all key industries.

Job growth is strong, but slowing from the torrid pace of recent months. Job gains remain broad-based, although the collapse in oil prices has begun to weigh on energy-related employment. At the current pace of growth, the economy will return to full employment by mid-2016.


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

Mortgage applications increased 0.1 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending February 27, 2015.

The Market Composite Index, a measure of mortgage loan application volume, increased 0.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 12 percent compared with the previous week. The Refinance Index increased 1 percent from the previous week. The seasonally adjusted Purchase Index decreased 0.2 percent from one week earlier. The unadjusted Purchase Index increased 14 percent compared with the previous week and was 0.2 percent lower than the same week one year ago. The seasonally adjusted conventional Refinance Index increased 2.2 percent to the highest level since the week ending February 13, 2015.

The refinance share of mortgage activity remained unchanged at 62 percent of total applications from the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.4 percent of total applications.

The FHA share of total applications decreased to 14.6 percent this week from 15.3 percent last week. The VA share of total applications increased to 9.8 percent this week from 9.6 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 3.96 percent from 3.99 percent, with points decreasing to 0.30 from 0.33 (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 3.95 percent from 4.09 percent, with points increasing to 0.27 from 0.21 (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 3.76 percent from 3.82 percent, with points increasing to 0.21 from 0.15 (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 3.27 percent from 3.28 percent, with points remaining unchanged at 0.30 (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 decreased to 3.05 percent from 3.28 percent, with points increasing to 0.50 from 0.31 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.


Paychex-IHS Small Business Jobs Index rose to 100.84 in February
Posted: March 3, 2015 at 08:30 AM (Tuesday)

The Paychex IHS Small Business Jobs Index grew 0.19 percent in February to 100.84. Advancing for the second consecutive month, small business employment regained the steam lost during the fall and early winter and is again growing near the same pace recorded at the end of summer 2014. Year over year, however, the national index declined 0.31 percent. The West North Central region continues to be the top-performing regional index. Despite the largest decline from January to February, 0.68 percent, Indiana remains the top-ranked state index. Meanwhile, Dallas posted its fifth consecutive month in the top spot among metro areas.

Small business job gains have accelerated in the New Year as the U.S. economy continues to improve.

Small businesses are off to a solid start in 2015 when it comes to job growth. While it's still early in the year, the first two months have seen consistent positive improvement.


New York Purchasing Managers Business Activity rose to 63.1 in February
Posted: March 3, 2015 at 08:30 AM (Tuesday)

New York City business activity rebounded into expansion territory, according to the survey taken by the Institute for Supply Management-New York (ISM-NY).

Current Business Conditions rose to 63.1 in February after a brief stay below the breakeven 50 mark.

Future optimism also improved. The Six-Month Outlook increased to 71.7 in February.

Job growth took pause. Employment came in at 49.3 in February.

Purchase volume cooled from a five-year high. Quantity of Purchases moderated to 54.8 in February.

The top line and forward guidance both expanded at healthy rates. Current Revenues were at 63.2 in February, and Expected Revenues were at 76.3 in February.

Price measures suggested a margin squeeze. Prices Paid came in at 61.4 in February, and Prices Received fell to 50.0 in February.

otential Business Opportunities/Impediments: Weather and taxes were at the top of net impediments, and the exchange rate was a notable negative. Cost of benefits and inflation registered the smallest net impediment readings since we expanded this part of the Report on Business in July 2013.


Construction Spending decreased 1.1% in January
Posted: March 2, 2015 at 10:00 AM (Monday)

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during January 2015 was estimated at a seasonally adjusted annual rate of $971.4 billion, 1.1 percent (±1.2%) below the revised December estimate of $982.0 billion. The January figure is 1.8 percent (±1.6%) above the January 2014 estimate of $954.6 billion.

PRIVATE CONSTRUCTION
Spending on private construction was at a seasonally adjusted annual rate of $697.6 billion, 0.5 percent (±1.0%) below the revised December estimate of $700.9 billion. Residential construction was at a seasonally adjusted annual rate of $351.7 billion in January, 0.6 percent (±1.3%) above the revised December estimate of $349.5 billion. Nonresidential construction was at a seasonally adjusted annual rate of $345.9 billion in January, 1.6 percent (±1.0%) below the revised December estimate of $351.5 billion.

PUBLIC CONSTRUCTION
In January, the estimated seasonally adjusted annual rate of public construction spending was $273.8 billion, 2.6 percent (±2.0%) below the revised December estimate of $281.1 billion. Educational construction was at a seasonally adjusted annual rate of $58.9 billion, 3.4 percent (±4.1%) below the revised December estimate of $60.9 billion. Highway construction was at a seasonally adjusted annual rate of $88.3 billion, 0.6 percent (±4.8%) above the revised December estimate of $87.8 billion.


January Manufacturing ISM expanded slower at 52.9
Posted: March 2, 2015 at 10:00 AM (Monday)

Economic activity in the manufacturing sector expanded in February for the 26th consecutive month, and the overall economy grew for the 69th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The February PMI® registered 52.9 percent, a decrease of 0.6 percentage point from January’s reading of 53.5 percent. The New Orders Index registered 52.5 percent, a decrease of 0.4 percentage point from the reading of 52.9 percent in January. The Production Index registered 53.7 percent, 2.8 percentage points below the January reading of 56.5 percent. The Employment Index registered 51.4 percent, 2.7 percentage points below the January reading of 54.1 percent. Inventories of raw materials registered 52.5 percent, an increase of 1.5 percentage points above the January reading of 51 percent. The Prices Index registered 35 percent, the same percentage as in January, indicating lower raw materials prices for the fourth consecutive month. Comments from the panel express a growing level of concern over the West Coast dock slowdown, negatively impacting exports and imports and requiring workarounds and added costs.

Of the 18 manufacturing industries, 12 are reporting growth in February in the following order: Paper Products; Printing & Related Support Activities; Furniture & Related Products; Primary Metals; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Fabricated Metal Products; Machinery; Transportation Equipment; Electrical Equipment, Appliances & Components; and Chemical Products. The three industries reporting contraction in February are: Textile Mills; Apparel, Leather & Allied Products; and Computer & Electronic Products.


Personal Income increased 0.3%, Spending decreased 0.2%
Posted: March 2, 2015 at 08:30 AM (Monday)

Personal income increased $50.8 billion, or 0.3 percent, and disposable personal income (DPI) increased $52.6 billion, or 0.4 percent, in January, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) decreased $18.9 billion, or 0.2 percent. In December, personal income increased $45.3 billion, or 0.3 percent, DPI increased $37.3 billion, or 0.3 percent, and PCE decreased $35.7 billion, or 0.3 percent, based on revised estimates.

Real DPI increased 0.9 percent in January, compared with an increase of 0.5 percent in December. Real PCE increased 0.3 percent, in contrast to a decrease of 0.1 percent. The price index for PCE decreased 0.5 percent, compared with a decrease of 0.2 percent.


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.

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