Friday, May 26, 2017

May consumer sentiment continued high plateau but partisan divide remains

According to the University of Michigan's monthly survey, consumer sentiment has continued to move along the high plateau established following Trump’s election. The May 2017 figure was virtually unchanged from the April reading, and nearly identical with the December to May average of 97.3.

Moreover, the partisan divide between Democrats and Republicans has also remained largely unchanged, with the first expecting a recession and the other more robust economic growth.
Despite the expected bounce back in spending in the current quarter, personal consumption is expected to advance by 2.3% in 2017, although this is based on averages across the political divide, which has never been as extreme as it is currently.

First quarter GDP growth revised up from 0.7 to 1.2 percent in second estimate

Real gross domestic product (GDP) increased at an annual rate of 1.2 percent in the first quarter of 2017 according to the "second" estimate released by the Bureau of Economic Analysis. In the advance estimate, the increase in real GDP was 0.7 percent.  In the fourth quarter, real GDP increased 2.1 percent.

The GDP estimate released today is based on more complete source data than were available for the
"advance" estimate issued last month.

With this second estimate for the first quarter, the general picture of economic growth remains the same; increases in nonresidential fixed investment and in personal consumption expenditures (PCE) were larger and the decrease in state and local government spending was smaller than previously estimated. These revisions were partly offset by a larger decrease in private inventory investment.

Mortgage applications rise 4.4 percent in latest survey as rates drop to lowest level since November 2016

The Market Composite Index increased 4.4 percent on a seasonally adjusted basis from one week earlier, with purchase loans falling 1 percent and refinances rising 11 percent.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to its lowest level since November 2016, 4.17 percent.

Federal Reserve meeting minutes suggest another rate hike possible in June

Federal Reserve officials expected at their policy meeting this month that it would "soon be appropriate" to raise short-term interest rates, a signal the U.S. central bank could move in June at its next gathering.

The Fed also moved toward a consensus on a proposal to start gradually shrinking its $4.5 trillion in holdings of Treasury and mortgage securities later in the year.

Thursday, May 25, 2017

Initial unemployment claims rise 1,000 in latest report but 4-week average down to lowest level since April 1973

In the week ending May 20, initial unemployment claims were 234,000, an increase of 1,000 from the previous week's revised level.

The 4-week moving average was 235,250, a decrease of 5,750 from the previous week's revised average. This is the lowest level for this average since April 14, 1973 when it was 232,750. 

FHFA: House prices up 1.4 percent in 1Q2017 and 6.0 percent year-on-year

U.S. house prices rose 1.4 percent in the first quarter of 2017 according to the Federal Housing Finance Agency (FHFA) House Price Index.

House prices rose 6.0 percent from the first quarter of 2016 to the first quarter of 2017.

FHFA's seasonally adjusted monthly index for March was up 0.6 percent from February.

Tuesday, May 23, 2017

Richmond Fed's Survey of Manufacturing Activity slips in May

Manufacturers in the Fifth District were somewhat less upbeat in May than in the prior three months, according to the latest survey by the Federal Reserve Bank of Richmond.

The index for shipments and the index for new orders decreased notably, with the shipments index falling to slightly below 0. The index for employment was relatively flat, but the decline in the other two indexes resulted in a decline in the composite index from 20 in April to 1 in May. The majority of firms continued to report higher wages, but more firms reported a decline in the average workweek than reported an increase.


Looking six months ahead, manufacturing executives remained generally optimistic, although the only index to increase was expected capital expenditures.

Flash U.S. Composite Output Index rebounds modestly in May

The seasonally adjusted IHS Markit Flash U.S. Composite PMI Output Index revealed a modest rebound in private sector business activity growth in May.

At 53.9, up from 53.2 in April, the headline index pointed to the strongest upturn in U.S. private sector output since February. Faster business activity growth was driven by the service sector (‘flash’ index at 54.0 in May), which more than offset the weakest rise in manufacturing production since September 2016 (‘flash’ output index at 53.3).


April new home sales dipped 11.4 percent from March's 10-year high but still slightly above year-ago levels

New Home Sales

Sales of new single-family houses in April 2017 were at a seasonally adjusted annual rate of 569,000. This is 11.4 percent below the revised March rate of 642,000, but is 0.5 percent above the April 2016 estimate of 566,000.

Sales Price

The median sales price of new houses sold in April 2017 was $309,200. The average sales price was $368,300.

For Sale Inventory and Months’ Supply

The seasonally-adjusted estimate of new houses for sale at the end of April was 268,000. This represents a supply of 5.7 months at the current sales rate.

Monday, May 22, 2017

Philadelphia Fed Manufacturing Business Outlook Survey rebounded sharply in May

Results from the May Manufacturing Business Outlook Survey suggest that regional manufacturing activity continued to expand this month, rising from 22.0 to 38.8 Although most of the survey's future indicators fell this month, the readings suggest that most firms still expect growth to continue over the next six months.

Chicago Fed National Activity Index rose to 0.49 in April, highest since 2014

Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) rose to +0.49 in April from +0.07 in March. Two of the four broad categories of indicators that make up the index increased from March, and only one category made a negative contribution to the index in April. The index’s three-month moving average, CFNAI-MA3, increased to +0.23 in April from a neutral reading in March.

Thursday, May 18, 2017

Initial unemployment claims fall 4,000 in latest report

In the week ending May 13, initial unemployment claims were 232,000, a decrease of 4,000 from the previous week's unrevised level of 236,000.

The 4-week moving average was 240,750, a decrease of 2,750 from the previous week's unrevised average of 243,500.

Mortgage applications fall 4.1 percent in latest survey, rates remain flat

The Market Composite Index decreased 4.1 percent on a seasonally adjusted basis from one week earlier, with purchase loans falling 3 percent and refinances dipping 4 percent.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances remained unchanged at 4.23 percent.

Leading Economic Index rose again in April

The Leading Economic Index for the U.S. increased 0.3 percent in April to 126.9 (2010 = 100), following a 0.3 percent increase in March, and a 0.5 percent increase in February.

While the majority of leading indicators have been contributing positively in recent months, housing permits followed by average workweek in manufacturing have been the sources of weakness among the U.S. LEI components.

Tuesday, May 16, 2017

April industrial production rose for third straight month across all major industries

Industrial production advanced 1.0 percent in April for its third consecutive monthly increase and its largest gain since February 2014, largely as a result of widespread increases among its major industries.

At 105.1 percent of its 2012 average, total industrial production in April was 2.2 percent above its year-earlier level. Capacity utilization for the industrial sector increased 0.6 percentage point in April to 76.7 percent, a rate that is 3.2 percentage points below its long-run (1972–2016) average.