The Housing Chronicles Blog: 2018

Wednesday, June 20, 2018

May housing starts rebound to near 7-hear high, up 20.3 percent year-on-year

Privately-owned housing starts in May were at a seasonally adjusted annual rate of 1,350,000. This is 5.0 percent above the revised April estimate of 1,286,000 and is 20.3 percent above the May 2017
rate of 1,122,000.

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May existing home sales dip 0.4 percent from April, down 3.0 percent year-on-year

Total existing-home sales decreased 0.4 percent to a seasonally adjusted annual rate of 5.43 million in May from downwardly revised 5.45 million in April. With last month's decline, sales are now 3.0 percent below a year ago and have fallen year-over-year for three straight months.

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Tuesday, June 19, 2018

June builder confidence dips 2 points to 68 due to higher lumber prices

Builder confidence in the market for newly-built single-family homes fell two points to 68 in June, and was due in large part to sharply elevated lumber prices, adding nearly $9,000 to the price of a new single-family home since January 2017.The index measuring current sales conditions fell to 75, the component gauging expectations in the next six months dropped to 76, and the metric charting buyer traffic edged down to 50.

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May building permits down 4.6 percent from April but still up 8.0 percent year-on-year

Privately-owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 1,301,000. This is 4.6 percent below the revised April rate of 1,364,000, but is 8.0 percent above the May 2017 rate of 1,205,000.

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Friday, June 15, 2018

May industrial production edged down 0.1 percent but still up 3.5 percent year-on-year

Industrial production edged down 0.1 percent in May after rising 0.9 percent in April. At 107.3 percent of its 2012 average, total industrial production was 3.5 percent higher in May than it was a year earlier. Capacity utilization for the industrial sector decreased 0.2 percentage point in May to
77.9 percent, a rate that is 1.9 percentage points below its long-run (1972-2017) average.

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Consumer sentiment rises to 99.3 in mid-June reading, inflation becoming a concern

Consumer sentiment rose slightly in early June to 99.3 due to consumers' more favorable assessments of their current financial situation and more favorable views of current buying conditions for household durables. The Expectations Index, in contrast, declined to its lowest level since the start of the year due to less favorable prospects for the overall economy. The sharpest divide was between the record number of households who mentioned recent income gains and the highest expected year-ahead inflation rate since 2015.

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Thursday, June 14, 2018

Initial unemployment claims fall 4,000 in latest update

In the week ending June 9, initial unemployment claims were 218,000, a decrease of 4,000 from the previous week's unrevised level of 222,000. The 4-week moving average was 224,250, a decrease of 1,250 from the previous week's unrevised average of 225,500.

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Mortgage applications dip 1.5 percent, rates rise 8 basis points

The Market Composite Index decreased 1.5 percent on a seasonally adjusted basis from one week earlier, with both purchase loans and refinances dipping 2.0 percent. The average contract interest rate for 30-year fixed-rate mortgages increased to 4.83 percent from 4.75 percent.

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Bloomberg: Consumer comfort index rebounds to five-week high

U.S. consumer confidence advanced to a five-week high, rising one full point from 54.8 to 55.8, as resilient job growth boosted Americans' views of the economy.

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May retail sales up 0.8 percent, largest jump in six months

Retail sales jumped 0.8 percent in May, or the biggest advance since November 2017, suggesting stronger growth for 2Q 2018. Data for April was revised up to show sales rising 0.4 percent instead of the previously reported 0.2 percent gain.

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Wednesday, June 13, 2018

Fed hikes rate to highest rate since 2008, indicates two more increases in 2018

The Federal Reserve increased the target range for its benchmark interest rate by 0.25% to a range of 1.75%-2%, the highest since September 2008. In raising its benchmark interest rate, the Fed cited an economy that is growing at a "solid" rate and would likely include two more rate hikes in 2018.

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The Rise of the New Single-Family Rental Home: A Hedge Against Real Estate Cycles

In September of 2015, I wrote a column about the introduction of a new product type to the home building marketplace:  the single-family home for rent, otherwise known as build-to-rent (B2R).  At that time, just a few builders including Lennar and Toll Brothers had dipped their toes into these waters, but today it’s being seen as a clever hedge against the boom-and-bust real estate cycles which can test even the best-run companies.

To be sure, it’s not just home builders getting into this game. Wall Street-backed companies like Invitation Homes and AmericanHomes4Rent started the trend by buying up cheap, existing single-family homes in foreclosure back in 2012 when home prices were near their lowest, eventually assembling a portfolio of 200,000 units across the country.  Even with that rapid growth, their holdings still represent just 1.4 percent of the estimated 14 million single-family rental homes, with most owned by small, ‘Mom and Pop’ operators.

Today, with this business throwing off stable cash flow and maintaining low vacancy rates, more builders are entering this space, with some focused entirely on the B2R model.

According to a recent NAHB analysis of Census Bureau data, during the 12 months ending with the first quarter of 2018, there were 37,000 single-family homes started for rent, up from 33,000 during the previous four quarters. Of this total, 7,000 were started in the first quarter alone. While that annual market share of 4.3 percent is down from the 5.8 percent share of five years ago, it’s still significantly higher than the 2.7 percent average noted during the prior 20-year period of 1992-2012.

Not surprisingly, builders of new single-family homes for rent also enjoy some significant advantages over the typical corporate model of offering only existing homes. These benefits include fewer maintenance issues associated with newly built units, the ability to standardize features and amenities across a portfolio (and charge premiums for upgrades), and the higher management efficiencies which come with concentrating multiple units in the same location. Indeed, one of the most common complaints cited by tenants of these corporate rental home behemoths is that their widely dispersed maintenance operations depend on local contractors, often resulting in long delays for even essential issues.

Like builders of homes for sale, rental home builders also have divided product lines by quality of amenities and services.  In some cases, such as when a builder of both rental and for-sale homes include the two options scattered across the same neighborhood, community amenities might be more basic with no on-site management.

In other cases, such as in a neighborhood of only homes for rent, the leasing experience might be similar to that of a traditional for-sale community, with several model homes from which to choose and full-time leasing agents plus on-site maintenance and gardening services.  For those renters wanting to experience the benefits of a resort-style apartment community in a single-family home (and willing to pay more), community amenities could also include pool and spa areas, parks and gated entrances.

While it’s not easy to quantify the exact depth of demand for single-family rentals, a combination of economic and demographic factors do provide some considerable tailwinds for the foreseeable future.

On the economic side, high levels of student loan debt and the challenges of saving for a down payment versus a tight job market mean more young families are willing to test-drive living in single-family neighborhoods. According to the American Community Survey, 56 percent of gains in the nation’s rental housing stock between 2005 and 2015 were for single-family homes, while the number of households living in all rental properties grew from 33 to 36 percent, or more than an additional 544,000 per year.

On the demographic side, millennials are now increasingly reaching milestones delayed by the Great Recession, with more moving back to the suburbs they once avoided.  While partly due to bedroom count limitations in most apartments, it’s also due to changing lifestyle preferences.  In many cases, although many younger renters in their 30s have sufficient incomes to quality for mortgages, the ability to live in a single-family home without the commitment of a purchase is steadily gaining popularity.

Joining these younger renters are baby boomers looking to downsize not necessarily in space, but in the financial commitment required. By renting the same type of single-family home product they once owned, they can not only avoid spending down retirement savings into a down payment, but enjoy the freedom associated with a more transient lifestyle.

That’s a hedge from which both builder and renter can benefit.

Tuesday, June 12, 2018

Firms' inflation expectations for the year ahead remain flat at 2.1 percent

Despite rising inflation noted in May, firms' inflation expectations in June were roughly unchanged at 2.1 percent over the year ahead.

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May Small Business Optimism Index rose 3 points to near-record level

The Small Business Optimism Index increased in May by three points to 107.8, to the second-highest level in the NFIB survey's 45-year history. Respondents reported high numbers in several key areas including compensation, profits, and sales trends.

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PPI rose 0.5 percent in May, up 3.1 percent year-on-year

The Producer Price Index for final demand rose 0.5 percent in May, seasonally adjusted. On an unadjusted basis, the final demand index moved up 3.1 percent for the 12 months ended in May, the largest 12-month increase since climbing 3.1 percent in January 2012.

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CPI rose 0.2 percent in May, up 2.8 percent year-on-year

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in May on a seasonally adjusted basis after rising 0.2 percent in April. Over the last 12 months, the all items index rose 2.8 percent before seasonal adjustment.

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CPI rose 0.2 percent in May, up 2.8 percent year-on-year

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in May on a seasonally adjusted basis after rising 0.2 percent in April. Over the last 12 months, the all items index rose 2.8 percent before seasonal adjustment.

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Monday, June 11, 2018

CoreLogic: Equity in mortgaged homes has more than doubled in past 5 years

The amount of equity in mortgaged real estate increased by $1 trillion in Q1 2018 from Q1 2017, an annual increase of 13.3 percent, and has more than doubled in five years. The nationwide negative equity share for Q1 2018 was 4.7 percent of all homes with a mortgage, more than 20 percentage points lower than the peak negative equity share - 26 percent - recorded in Q4 2009.

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April wholesale inventories rose 0.1 percent, sales up 0.8 percent

Wholesale inventories rose 0.1 percent in April, although it was still the weakest gain in six months.  Sales rose 0.8 percent, well above forecasts, and rising for the third straight month.

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Thursday, June 7, 2018

Initial unemployment claims fall 1,000 in weekly report

In the week ending June 2, initial unemployment claims were 222,000, a decrease of 1,000 from the previous week's revised level. The 4-week moving average was 225,500, an increase of 2,750 from the previous week's revised average.

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Bloomberg: Weekly consumer comfort index drops to five-month low of 54.8

Americans' sentiment cooled as a gauge of views on the economy fell to a five-month low, with the Bloomberg Consumer Comfort Index falling from 55.2 to 54.8 in weekly survey.

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1Q 2018 service sector revenue dipped 1.2 percent from previous quarter but still up 5.2 percent year-on-year

U.S. selected services total revenue for the first quarter of 2018 fell 1.2 percent from the fourth quarter of 2017 to $3,746 billion, but were up 5.2 percent year-on-year.

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April trade deficit fell to 7-month low as exports rose to record high

The U.S. trade deficit fell to a seven-month low in April, falling 2.1 percent from March to $46.2 billion. Exports rose to a record high, lifted by an increase in shipments of industrial materials and soybeans.

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Wednesday, June 6, 2018

May Service Sector Index rose 1.8 points to 58.6, but uncertainty remains

The NMI® registered 58.6 percent, which is 1.8 percentage points higher than the April reading of 56.8 percent. There continue to be concerns about the uncertainty surrounding tariffs, trade agreements and the impact on cost of goods sold.

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May Manufacturing Index rose 1.4 points to 58.7, but pricing pressure now increasing

The May PMI® registered 58.7 percent, an increase of 1.4 percentage points from the April reading of 57.3 percent. Demand remains robust, but the nation's employment resources and supply chains continue to struggle. Respondents say price pressure at their companies is causing price-increase discussions.

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Labor Productivity up 0.4 percent in 1Q 2018 and 1.3 percent year-on-year

Nonfarm business sector labor productivity increased 0.4 percent during the first quarter of 2018, as output increased 2.7 percent and hours worked increased 2.3 percent. From the first quarter of 2017 to the first quarter of 2018, productivity increased 1.3 percent, reflecting a 3.6-percent increase in output and a 2.3-percent increase in hours worked.

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Mortgage applications rise 4.1 percent in latest survey, rates dip 9 basis points

The Market Composite Index increased 4.1 percent on a seasonally adjusted basis from one week earlier, with both purchase loans and refinances up 4.0 percent. The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.75 percent.

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Tuesday, June 5, 2018

May job openings rose to 6.7 million, 302,000 more than number of job seekers

The number of open jobs in May rose by one percent from April to another series high of 6.7 million.  This number exceeds the number of jobless by over 300,000.  At the same time, hiring rose 1.7 percent to 5.6 million, and the quits rose 1.6 percent to 5.4 million.

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Monday, June 4, 2018

April factory goods orders dip 0.8 from March, but YTD orders up 8.3 percen

Factory goods orders decreased 0.8 percent from March to April, due largely to lower orders for aircraft. However, YTD through April, orders were up 8.3 percent.

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Friday, June 1, 2018

April construction spending up 7.6 percent year-on-year, supported largely by new homes

April spending on new home construction rise by its highest amount in 24 years (+4.5%), and overall construction spending rose to a record level of $1.31 trillion.  This new spending level was up 7.6% year-on-year and 1.8% from the previous month.

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May job growth rebounded sharply to 223,000, unemployment rate edged down to 3.8 percent

Total nonfarm payroll employment increased by 223,000 in May, and the unemployment rate edged down to 3.8 percent. Employment continued to trend up in several industries, including retail trade, health care, and construction.

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Thursday, May 31, 2018

Initial unemployment claims fall 13,000 in latest report

In the week ending May 26, initial unemployment claims were 221,000, a decrease of 13,000 from the previous week's unrevised level of 234,000. The 4-week moving average was 222,250, an increase of 2,500 from the previous week's unrevised average of 219,750.

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Mortgage applications dip 2.9 percent, interest rates down slightly

The Market Composite Index decreased 2.9 percent on a seasonally adjusted basis from one week earlier, with purchase loans down 2.0 percent and refinances falling 5.0 percent. The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.84 percent.

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Bloomberg: Consumer comfort unchanged in weekly reading at 55.2

The consumer comfort index held unchanged in the May 27 week at 55.2. Consumer confidence measures, supported by the strong labor market, remain very solid.

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April PCE price index up 0.2 percent from March and 2.0 percent year-on-year

The April PCE price index increased 0.2 percent from March and 2.0 percent year-on-year. Excluding food and energy, the PCE price index increased 2.0 percent and 1.8 year-on-year.

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April personal spending rose double the growth rate in income, savings rate dipped

In April, personal income rose 0.3 percent, disposable income rose 0.4 percent, and personal consumption expenditures (PCE) increased 0.6 percent, resulting in a decline in the savings rate from 3.0 to 2.8 percent.

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May planned job cuts down 12.6 percent from April, but YTD cuts still up 6.2 percent year-on-year

Job cuts announced by U.S.-based employers in May fell 12.6 percent from April, and were also down 4.8 percent year-on-year. So far this year, however, announced job cuts are up 6.2 percent year-on-year, with those in the retail sector rising by 24 percent.

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April pending home sales down 1.3 percent from March and 2.1 percent year-on-year

Due to tight inventory, the Pending Home Sales Index  declined 1.3 percent to 106.4 in April from an upwardly revised 107.8 in March. With last month's decrease, the index is down on an annualized basis (2.1 percent) for the fourth straight month.

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Wednesday, May 30, 2018

Federal Reserve beige book: moderate expansion with Dallas District speeding up


Economic activity expanded moderately in late April and early May with few shifts in the pattern of growth. The Dallas District was an exception, where overall economic activity sped up to a solid pace:
  • Manufacturing shifted into higher gear with more than half of the Districts reporting a pickup in industrial activity and a third of the Districts classifying activity as "strong." Fabricated metals, heavy industrial machinery, and electronics equipment were noted as areas of strength.  Rising goods production led to higher freight volumes for transportation firms.
  • By contrast, consumer spending was soft. Nonauto retail sales growth moderated somewhat and auto sales were flat, although there was considerable variation by District and vehicle type.
  • In banking, demand for loans ticked higher and banks reported that increased competition had led to higher deposit rates. Delinquency rates were mostly stable at low levels.
  • Homebuilding and home sales increased modestly, on net, and nonresidential construction continued at a moderate pace.
  • Contacts noted some concern about the uncertainty of international trade policy. Still, outlooks for near term growth were generally upbeat.


First quarter GDP growth revised down to 2.2 percent in second estimate

Real gross domestic product (GDP) increased at an annual rate of 2.2 percent in the first quarter of 2018 according to the "second" estimate released by the Bureau of Economic Analysis. In the advance estimate, the increase was 2.3 percent. In the fourth quarter of 2017, real GDP increased 2.9 percent.

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ADP: May private job growth rose 9.4 percent from April to 178,000

Private-sector employment increased by 178,000 jobs in May, on a seasonally adjusted basis.  This compares to 163,000 jobs last month and 202,000 jobs the same month of 2017.

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Tuesday, May 29, 2018

Case-Shiller: March home prices up 6.5 percent year-on-year, unchanged from February


The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index reported a 6.5% annual gain in March, the same as the previous month.  After seasonal adjustment, the National Index recorded a 0.4% month-over-month increase in March.


Investor Confidence Index drops nearly 12 points in May due to higher perceived global risks

The Global Investor Confidence Index decreased to 103.5, down nearly 12 points from April’s revised reading of 115.3. After a strong consensus in risk-seeking appetite last month, global investors now have a more subdued willingness to allocate to risk. Although remaining above 100, the ICI reading for May reflects a range of factors weighing on investor sentiment, including growing inflationary pressures, higher interest rates and geopolitical concerns that have undoubtedly tempered enthusiasm.

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Consumer confidence rebounds in May, suggests Q2 growth may have risen from Q1


Consumer confidence increased in May after a modest decline in April. Consumers’ assessment of current conditions increased to a 17-year high, suggesting that the level of economic growth in Q2 is likely to have improved from Q1. Consumers’ short-term expectations improved modestly, suggesting that the pace of growth over the coming months is not likely to gain any significant momentum.


Friday, May 25, 2018

April durable goods orders dipped 1.7 percent due to decline in aviation

Although durable-goods orders fell 1.7% April, that decline was mostly due to falling orders for planes.  Orders minus transportation rose 0.9%, for the third consecutive monthly gain.

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May consumer sentiment slips to 98.0 on smaller expected income gains


Consumer sentiment slipped by less than an Index-point from last month. Since Trump's election, the Sentiment Index has meandered in a tight eight-point range from 93.4 to 101.4, with the small month-to-month variations indicating no emerging trend.

Consumers have remained focused on expected gains in jobs and incomes as well as anticipated increases in interest rates and inflation during the year ahead. As past expansions have shown, rising interest rates do not suppress spending gains as long as they are accompanied by more substantial increases in incomes.

The May survey, however, found that consumers anticipated smaller income gains than a month or year ago, even though they anticipate the unemployment rate to stabilize at its current eighteen year low. Importantly, references to discounted prices for durables, vehicles, and homes fell to decade lows.


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Thursday, May 24, 2018

Initial unemployment claims rise 11,000 in most recent week

In the week ending May 19, initial unemployment claims were 234,000, an increase of 11,000 from the previous week's revised level. The 4-week moving average was 219,750, an increase of 6,250 from the previous week's revised average.

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Mortgage applications fall 2.6 percent, rates rise to highest level since April 2011

The Market Composite Index decreased 2.6 percent on a seasonally adjusted basis from one week earlier, with purchase loans down 2.0 percent and refinances falling 4.0 percent. The average contract interest rate for 30-year fixed-rate mortgages increased to its highest level since April 2011, 4.86 percent.

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Bloomberg: Consumer comfort rebounds for first time in five weeks

U.S. household sentiment improved for the first time in five weeks on more upbeat views about personal finances and the economy, with the index rising from 54.6 to 55.2.

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FOMC meeting minutes indicate more interest rate hikes ahead in 2018

After assessing current conditions and the outlook for economic activity, the labor market, and inflation, members agreed to maintain the target range for the federal funds rate at 1-1/2 to 1-3/4 percent. They noted that the stance of monetary policy remained accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

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FHFA: First quarter 2018 home prices rose 1.7 percent, up 6.9 percent year-on-year

U.S. house prices rose 1.7 percent in the first quarter of 2018 according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI).   House prices rose 6.9 percent from the first quarter of 2017 to the first quarter of 2018. FHFA's seasonally adjusted monthly index for March was up 0.1 percent from February.

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April existing home sales slipped again year-on-year due to lack of supply

Total existing-home sales decreased 2.5 percent to a seasonally adjusted annual rate of 5.46 million in April from 5.60 million in March. With last month's decline, sales are now 1.4 percent below a year ago and have fallen year-over-year for two straight months.

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Wednesday, May 23, 2018

Gallup: Optimism about finding quality jobs hits 17-year high

Sixty-seven percent of Americans believe that now is a good time to find a quality job in the U.S., the highest percentage in 17 years of Gallup polling. Optimism about the availability of good jobs has grown by 25 percentage points since Donald Trump was elected president.

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May IHS Markit Composite Output Index rises to 55.7, highest in three months

At 55.7 in May, up from 54.9 in April, the seasonally adjusted IHS Markit Flash U.S. Composite PMI Output Index was the highest for three months and well above the crucial 50.0 no-change value. A faster rise in service sector output was the key factor behind the acceleration.

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April new home sales dipped 1.5 percent from March, up 11.6 percent year-on-year

Sales of new single-family houses in April 2018 were at a seasonally adjusted annual rate of 662,000. This is 1.5 percent below the revised March rate of 672,000, but is 11.6 percent above the April 2017 estimate of 593,000.

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Monday, May 21, 2018

May Philadelphia Fed Business Outlook Survey rose strongly from April

Results from the May Manufacturing Business Outlook Survey suggest a pickup in growth of the region's manufacturing sector, with the diffusion index for current general activity increasing 11 points, from 23.2 in April to 34.4 this month.

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May Empire State Manufacturing Survey suggests stronger growth from April

Business activity grew strongly in New York State in May, with the headline general business conditions index climbing four points to 20.1, indicating a faster pace of growth than in April.

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National Activity Index rose slightly in April

The Chicago Fed National Activity Index (CFNAI) ticked up to +0.34 in April from +0.32 in March. The index's three-month moving average, CFNAI-MA3, increased to +0.46 in April from +0.23 in March.

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Business inflation expectations dip to 2.0 percent in May update

Firms' inflation expectations decreased from 2.3 to 2.0 percent over the year ahead. Sales levels went unchanged, remaining "above normal," on average. Profit margins improved slightly, and year-over-year unit costs decreased to 1.9 percent, on average.

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April Non-Employment Index edged down 0.3 points year-on-year to 7.8 percent

The Hornstein-Kudlyak-Lange Non-Employment Index (NEI) was 7.8 percent in April 2018, edging down from March 2018. It has declined by 0.3 percentage points since April 2017. The NEI including workers who are part time for economic reasons (PTER) was 8.8 percent in March 2018, edging down compared to the previous month. That index has declined by 0.4 percentage points since April 2017.

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Friday, May 18, 2018

4-week average of unemployment claims at lowest level since December 1969

In the week ending May 12, initial unemployment claims were 222,000, an increase of 11,000 from the previous week's unrevised level of 211,000. The 4-week moving average was 213,250, a decrease of 2,750 from the previous week's unrevised average of 216,000. This is the lowest level for this average since December 13, 1969 when it was 210,750.

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Refinances dip to lowest level in nearly 10 years, rates slip slightly

The Market Composite Index decreased 2.7 percent on a seasonally adjusted basis from one week earlier, with purchase loans down 2.0 percent, and refinances falling 4.0 percent to lowest level since August 2008. The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.77 percent.

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Bloomberg: Consumer comfort fell for fourth straight week as gas prices continue to rise

Americans' sentiment fell for a fourth straight week to 54.6 - the lowest since early February -- as still-rising gasoline prices drove a measure of the buying climate down by the most in eight months.

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Thursday, May 17, 2018

April industrial production up 0.7 percent, its third consecutive increase

Industrial production rose 0.7 percent in April for its third consecutive monthly increase.  At 107.3 percent of its 2012 average, total industrial production in April was 3.5 percent higher than it was a year earlier. Capacity utilization for the industrial sector climbed 0.4 percentage point in April to 78.0 percent, a rate that is 1.8 percentage points below its long-run (1972-2017) average.

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First quarter 2017 e-commerce sales rose 3.7 times faster than overall retail year-on-year

Retail e-commerce sales for the first quarter of 2018 were up 3.9 percent from the fourth quarter of 2017 and up 16.4 percent year-on-year. E-commerce sales in the first quarter of 2018 accounted for 9.5 percent of total sales, up from 8.5 percent a year ago.

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April Leading Economic Index up another 0.4 percent

The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.4 percent in April to 109.4, following a 0.4 percent increase in March, and a 0.7 percent increase in February.  In April, stock prices and housing permits were the only negative contributors, whereas the labor market components, which made negative contributions in March, improved.

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Wednesday, May 16, 2018

March business inventories flat from February, up 3.8 percent year-on-year

March manufacturers' and trade inventories were flat from February 2018, and up 3.8 percent from March 2017. March shipments were up 0.5 percent from February and 6.4 percent from March 2017. The total business inventories/sales ratio based on seasonally adjusted data at the end of March was 1.34, down from 1.38 the previous month.

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April retail sales up 0.3 percent from March and 4.7 percent year-on-year

U.S. retail and food services sales for April 2018 rose 0.3 percent from the previous month, and 4.7 percent above April 2017.

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May builder confidence rebounds two points to 70

Builder confidence in the market for newly-built single-family homes rose two points to a level of 70 in May. This is the fourth time the HMI has reached 70 or higher this year.  The HMI chart gauging current sales conditions increased two points to 76 in May while the indexes measuring buyer traffic and expectations in the next six months remained unchanged at 51 and 77, respectively.

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April building permits dip 1.8 percent from revised March numbers but up 7.7 percent year-on-year

Privately-owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 1,352,000. This is 1.8 percent below the revised March rate of 1,377,000, but is 7.7 percent above the April 2017 rate of 1,255,000.

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April housing starts dip 3.7 percent from revised March numbers but up 10.5 percent year-on-year

Privately-owned housing starts in April were at a seasonally adjusted annual rate of 1,287,000. This is 3.7 percent below the revised March estimate of 1,336,000, but is 10.5 percent above the April 2017 rate of 1,165,000.

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Tuesday, May 15, 2018

March business inventories flat from February, up 3.8 percent year-on-year

March manufacturers' and trade inventories were flat from February 2018, and up 3.8 percent from March 2017. March shipments were up 0.5 percent from February and 6.4 percent from March 2017. The total business inventories/sales ratio based on seasonally adjusted data at the end of March was 1.34, down from 1.38 the previous month.

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April retail sales up 0.3 percent from March and 4.7 percent year-on-year

U.S. retail and food services sales for April 2018 rose 0.3 percent from the previous month, and 4.7 percent above April 2017.

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May builder confidence rebounds two points to 70

Builder confidence in the market for newly-built single-family homes rose two points to a level of 70 in May. This is the fourth time the HMI has reached 70 or higher this year.  The HMI chart gauging current sales conditions increased two points to 76 in May while the indexes measuring buyer traffic and expectations in the next six months remained unchanged at 51 and 77, respectively.

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Monday, May 14, 2018

February mortgage delinquency share dips to 4.8 percent, down 0.2 points year-on-year

In February, 4.8 percent of mortgages were in some stage of delinquency, down from 5.0 percent a year ago. The foreclosure inventory rate was 0.6 percent, down 0.2 percentage points year-on-year.  Since August 2017, the foreclosure inventory rate has been steady at 0.6 percent, the lowest level since June 2007, when it was also 0.6 percent.

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CoreLogic: March home prices up 1.4 percent from February and 7.0 percent year-on-year

CoreLogic HPI:  Home prices increased nationally by 7.0 percent year over year from March 2017 to March 2018, while on a month-over-month basis, prices increased by 1.4 percent in March 2018. The CoreLogic HPI Forecast is projected to continue to increase by 5.2 percent year-over-year by March 2019.

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Gallup: Americans hoping to buy a home in the next 5 years exceeds home sellers

Slightly less than half of U.S. non-homeowners, 45%, say they plan to buy a home within the next five years. But their ability to do so may be hampered by a limited supply of homes, as 22% of current homeowners plan to sell within that time frame. Similarly, 18% of all U.S. adults do not own a home and plan to buy one in the next five years. Meanwhile, 13% of U.S. adults own a home and plan to sell in the same time frame.

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Consumer sentiment remains flat in mid-May survey

Consumer sentiment remained unchanged in early May from the April survey. What is likely to capture attention, however, are the small uptick in near term inflation expectations, the downward slippage in income expectations, and the expected stabilization of the national unemployment rate at decade lows.

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Saturday, May 12, 2018

As Urban Home Prices Rise, Millennials Are Returning to the Suburbs: City-Like Amenities are Following


It wasn’t too long ago that many experts were eulogizing the suburbs as young millennials (and even many aging baby boomers) seemed to prefer the sights, sounds and amenities of urban environments.  However, as the millennials have grown older and been increasingly priced out of expensive downtown areas, they have been gradually returning to the suburbs in order to lay down roots and start families.

But they’re not really leaving the city behind.  Instead, they’re demanding and supporting the types of unique, city-like amenities which attracted them there in the first place. 

Yes, the suburbs are again becoming trendy.

Certainly part of this trend is due to simple math:  Given a reported 32 percent increase in births between 1978 and 1990, it stands to reason that many cities would be hosting a huge influx of residents born about 25 years ago.  Indeed, many cities may have reached “peak millennial” as the largest group of this generation passed the milestone age of 25 in 2015, and then moved further out as they settled into their careers and started planning for the next stages of life.  By that same year, nearly 73 percent of those aged 25 to 34 were already living in suburbs, versus the 21 percent living in cities.

According to U.S. Census Bureau data as analyzed by demographer William Frey at the Brookings Institution, since 2012 the growth of suburbs and rural areas has quadrupled, while that of urban areas has fallen by half. 

Using the same data sets, Demographia’s Wendell Cox found that between 2016 and 2017 nearly 440,000 residents moved away from counties with urban cores, while the outlying suburbs gained net 252,000 residents.  Although some large urban areas have added more people – such as in Dallas, Houston and Atlanta – they tend to have smaller downtown areas ringed by residential areas with a suburban feel.

Although we saw this kind of urban-to-suburban flight between the 1950s and the 1980s, in that case it was usually due to fear of rising crime as well as the evolution of more suburban employment centers.  Today, however, the same type of migration is due to the enormous success of the rebirth of many urban centers, which has been accompanied by soaring home prices and rents. Another difference today is that the amenities once considered specific to urban cores, such as craft breweries, fitness boot camps and gluten-free bakeries, are increasingly popping up in the suburbs.

One place in which developers can quickly jump on this emerging trend is with a more modern version of the master-planned community.  

Whereas yesterday’s behemoths were centered around golf courses designed by the sport’s biggest names and usually required car trips to the neighborhood shopping center, today’s master plans now include not just open space and walking trails, but also retail stores and event spaces more uniquely branded to the community.

And, instead of selling out home sites to merchant builders and then moving onto the next project, some enterprising developers are partnering with HOAs to host regular events ranging from movie nights and luaus to happy hours and cooking classes.

Another land use which could benefit from the urban-to-suburban trend is retail, especially as more old-style malls are increasingly being converted into spaces for offices, schools and homes.  Given that a 2017 Gallup survey showed that 43 percent of employed Americans work partly from home, local versions of the co-sharing office space company WeWork are increasingly sprouting up in suburbs.  For local millennial entrepreneurs, a flexible retail landlord could offer pop-up stores, galleries and incubator spaces to help test-market their ideas before a formal launch.

Of course perhaps the biggest challenge to the renaissance of the suburb will be how to pay for it.  In the early 2010s, there was a fortunate blending of demographics and the economic cycle in which most millennials were looking to rent apartments, and fewer barriers existed to new development in urban cores.  But as this group moves to the suburbs in search of quality schools, mass transit options and adequate infrastructure, how to provide these basic services at a time of rising public pension commitments for many state and local governments will require some new solutions.

Still, some cities are fighting back to retain their millennials by encouraging suburban-type projects (such as duplexes, row houses and townhomes) to address the “missing middle” of housing options.  By leveraging existing urban amenities with more family friendly homes, they aim to keep their millennials in town for as long as possible.

Friday, May 11, 2018

Initial unemployment claims flat from previous week

In the week ending May 5, initial unemployment claims were 211,000, unchanged from the previous week's unrevised level of 211,000. The 4-week moving average was 216,000, a decrease of 5,500 from the previous week's unrevised average of 221,500. This is the lowest level for this average since December 20, 1969 when it was 214,500.

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Mortgage applications fall 0.4 percent, rates dip slightly

The Market Composite Index decreased 0.4 percent on a seasonally adjusted basis from one week earlier, with purchase loans down 0.2 percent and refinances falling 1.0 percent. The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.78 percent.

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Bloomberg: Consumer comfort drops as gas prices and low wage growth dim outlook

U.S. consumer comfort dropped last week to 55.8, the lowest level since early February, as views of the buying climate and personal finances dimmed, possibly reflecting higher fuel prices and unimpressive wage growth.  This is the largest drop since last September.

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April CPI up 0.2 percent, annual increase dipped to 2.5 percent

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in April; over last 12 months, the all items index rose 2.5 percent. The index for all items less food and energy rose 0.1 percent in April and was up 2.1 percent for the 12 months ending April.

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April new home mortgage applications up 7.5 from March, down 5.0 percent year-on-year

The Mortgage Bankers Association (MBA) Builder Applications Survey (BAS) data for April 2018 shows mortgage applications for new home purchases increased 7.5 percent compared to April 2017. Compared to March 2018, applications decreased by 5 percent. This change does not include any adjustment for typical seasonal patterns.

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Wednesday, May 9, 2018

Small Business Optimism Index rose to 104.8 in April, marking 17 months of increases

The Small Business Optimism Index sustained record-high levels for the 17th straight month, increasing to 104.8 in April and driven by reports of improved profits, the highest in the NFIB Small Business Economic Trends Survey's 45-year history.

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March consumer credit use grew at 3.6 percent, slowest gain since September

Consumer credit in March grew at a seasonally adjusted annual rate of 3.6 percent to mark the slowest gain since September. Nonrevolving credit such as student and auto loans grew 6 percent, while revolving credit, namely credit cards, fell 3 percent, marking the second drop in a row.

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March job openings rose 7.8 percent to 6.55 million, highest level since December 2000

The March update on job openings saw a 7.8 percent rise to 6.55 million.  This is the highest level since the BLS initiated its JOLTS (Job Openings and Labor Turnover Summary) report in December of 2000. At the same time, hires fell 1.6 percent while separations rose 2.3 percent.

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April Producer Price Index growth slipped to 0.1 percent, up 2.6 percent year-on-year

The Producer Price Index for final demand rose 0.1 percent in April, down from 0.3 percent in March and 0.2 percent in February, and was up 2.6 percent for the 12 months ended in April. The index for final demand less foods, energy, and trade services edged up 0.1 percent in April after increasing 0.4 percent in March, and was up 2.5 percent for the 12 months ended in April.

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Monday, May 7, 2018

Gallup: 1/3 of Americans consider real estate as best long-term investment vs. 1/4 for stocks

According to Gallup, more Americans name real estate over several other vehicles for growing wealth as the best long-term investment for the fifth year in a row. Just over a third cite real estate for this, while roughly a quarter name "stocks or mutual funds." Gold, mentioned by 17%, roughly ties "savings accounts or CDs" at 15%, while only a few Americans, 6%, name bonds.

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March U.S. trade deficit dropped 15.1 percent from February, but still up 18.5 percent YTD year-on-year

The goods and services deficit was $49.0 billion in March, down 15.1 percent from February. Year-to-date, the goods and services deficit increased $25.5 billion, or 18.5 percent, from the same period in 2017.

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Friday, May 4, 2018

Job growth rebounded to 164,000 in April, unemployment edged down to 3.9 percent

Total nonfarm payroll employment increased by 164,000 in April, and the unemployment rate edged down to 3.9 percent, due mostly to the labor force shrinking by 236,000 as Baby Boomers step up retirement. Job gains occurred in professional and business services, manufacturing, health care, and mining.

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Thursday, May 3, 2018

April manufacturing index fell 2.0 points to 57.3 due to high input prices, tariffs and tight labor market

The April PMI® registered 57.3 percent, a decrease of 2 percentage points from the March reading of 59.3 percent. Lead time extensions, steel and aluminum disruptions, supplier labor issues, and transportation difficulties continue. Demand remains robust, but the nation's employment resources and supply chains continue to struggle.

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March construction spending dipped 1.7 percent from February but still up 3.6 percent year-on-year

Construction spending during March 2018 was estimated at a seasonally adjusted annual rate of $1,284.7 billion, 1.7 percent below the revised February estimate but 3.6 percent above the March 2017 estimate. During the first three months of this year, construction spending was 5.5 percent above the same period in 2017.

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Initial unemployment claims rise 2,000 in weekly report

In the week ending April 28, initial unemployment claims were 211,000, an increase of 2,000 from the previous week's unrevised level of 209,000. The 4-week moving average was 221,500, a decrease of 7,750 from the previous week's unrevised average of 229,250. This is the lowest level for this average since March 3, 1973 when it was 221,250.

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Mortgage applications fall 2.5 percent as rates rise to highest level since September 2013

The Market Composite Index decreased 2.5 percent on a seasonally adjusted basis from one week earlier, with purchase loans down 2.0 percent and refinances falling 4.0 percent. The average contract interest rate for 30-year fixed-rate mortgages increased to its highest level since September 2013, 4.80 percent.

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Bloomberg: Consumer comfort drops to seven-week low as gas prices rise

Rising prices at the gas pump helped drive U.S. household sentiment to a seven-week low at the end of April, with the consumer comfort index falling 1.6 points to 56.5.  This is the largest drop since October.

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April service sector economy index dips 2.0 points due to concerns about tariffs and inflation

The April NMI® registered 56.8 percent, which is 2 percentage points lower than the March reading of 58.8 percent. There was a slowing in the rate of growth that was mostly attributed to the decline in the Employment and Supplier Deliveries indexes. The respondents have expressed concern regarding the uncertainty about tariffs and the effect on the cost of goods.

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1Q 2018 Labor productivity up 0.7 percent from previous quarter and 1.3 percent year-on-year

Nonfarm business sector labor productivity increased 0.7 percent during the first quarter of 2018, as output increased 2.8 percent and hours worked increased 2.1 percent. From the first quarter of 2017 to the first quarter of 2018, productivity increased 1.3 percent, reflecting a 3.6-percent increase in output and a 2.2-percent increase in hours worked.

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April planned job cuts plummeted 40.2 percent from March, down 1.4 percent year-on-year

Job cuts announced by U.S.-based employers fell 40.2 percent in April, and were also down 1.4 percent year-on-year.  So far this year, employers have announced 176,460 job cuts, 8.38 percent more than those announced through the first four months of 2017, with 36.5 percent of those in retail.

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Wednesday, May 2, 2018

Federal Reserve leaves interest rate unchanged in May meeting, suggests future increases will be slow

The Federal Reserve Open Market Committee (FOMC) has opted to keep its benchmark federal funds interest rate in the range of 1.50 to 1.75 percent. Although economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate, the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.

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Monday, April 30, 2018

March personal income up 0.3 percent, spending up 0.4 percent and personal savings rate dipped to 3.1 percent

Both personal income and disposable income increased 0.3 percent in March, while consumption expenditures (PCE) increased 0.4 percent. The personal savings rate slipped from 3.3 to 3.1 percent.

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March inflation tracker PCE Price Index flat from February, up 2.0 percent year-on-year

The March PCE Price Index was up 0.0 percent from February and 2.0 percent year-on-year.
Stripping out food and energy, it was up 0.2 percent from February and 1.9 percent year-on-year.

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March pending home sales index up 0.4 percent from February, but down 3.0 percent year-on-year

The Pending Home Sales Index inched up 0.4 percent to 107.6 in March from a downwardly revised 107.2 in February. Even with last month's increase in activity, the index declined on an annualized basis (3.0 percent) for the third straight month.

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Friday, April 27, 2018

April consumer sentiment bounces back but concerns remain about trade tariffs


Consumer sentiment improved slightly in the 2nd half of the month, shrinking the small overall decline for April. The final April figure was nearly identical to its 2018 average (98.9)-which was higher than any other yearly average since 107.6 was recorded in 2000 (which was, in turn, the highest yearly average in more than a half century).

The spontaneous comments about the tax reform legislation had a positive balance of opinion, but the trade tariffs generated a negative balance of opinion. Aside from the offsetting impact of Trump’s tax and tariff policies, the best simple summary of the current state of consumer confidence is that the economy is "as good as it gets."

While consumers do not anticipate an economic downturn anytime soon, the long expansion has made consumers (and economists) somewhat apprehensive about future trends.


First quarter 2018 compensation costs up 0.8 percent and 2.7 percent year-on-year


Compensation costs for civilian workers increased 0.8 percent, seasonally adjusted, for the 3-month period ending in March 2018. Wages and salaries (which make up about 70 percent of compensation costs) increased 0.9 percent, and benefits (which make up the remaining 30 percent of compensation) increased 0.7 percent.  Year-on-year, compensation costs rose by 2.7 percent, with wages up 2.7 percent and benefits rising 2.6 percent.


First quarter 2018 GDP growth of 2.3 percent in first of three estimates


Real gross domestic product (GDP) increased at an annual rate of 2.3 percent in the first quarter of 2018 according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.9 percent.  The "second" estimate for the first quarter, based on more complete data, will be released on May 30, 2018.


Thursday, April 26, 2018

Initial unemployment claims dip to lowest level since December 1969

In the week ending April 21, initial unemployment claims were 209,000, a decrease of 24,000 from the previous week's revised level. This is the lowest level for initial claims since December 6, 1969 when it was 202,000 but the population was 38 percent lower. The 4-week moving average was 229,250, a decrease of 2,250 from the previous week's revised average.

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Mortgage applications dip 0.2 percent, rates rise to highest level since September 2013

The Market Composite Index decreased 0.2 percent on a seasonally adjusted basis from one week earlier, with purchase loans flat and refinances down 0.3 percent. The interest rate for 30-year fixed-rate mortgages increased to its highest level since September 2013, 4.73 percent.

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Bloomberg: Consumer comfort index slips along with higher gas prices

The U.S. consumer comfort index eased last week from a 17-year high, falling from 58.1 to 57.5, as Americans felt the pinch of higher gasoline prices.

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Durable goods orders up 2.6 percent in March, largely due to aviation

Orders for long-lasting or "durable" goods jumped 2.6% in March, riding a big increase in contracts for Boeing planes.  Still, orders were flat minus transportation, and business investment fell for the third time in four months.

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1Q 2018 vacancy rates were 7.0 percent for rental housing and 1.5 percent for homeowner housing

National vacancy rates in the first quarter 2018 were 7.0 percent for rental housing (flat year-over-year) and 1.5 percent (down 0.2 percentage points year-over-year) for homeowner housing. The homeownership rate in the first quarter 2018 was 64.2 percent, up .06 percentage points from 63.6 percent a year ago.

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February FHFA House Price Index up 0.6 percent from January and 7.2 percent year-on-year

The FHFA House Price Index (HPI) reported 0.6 percent increase in U.S. house prices in February from the previous month. From February 2017 to February 2018, house prices were up 7.2 percent.

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Wednesday, April 25, 2018

March Investor Confidence Index rose 3.0 points from February

The Global Investor Confidence Index increased to 114.5, up 3.0 points from March's revised reading of 111.5. Investors across all regions expressed an appetite for risk, with the North American ICI increasing from 109.1 to 112.3.

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March consumer confidence rebounded moderately from February

Consumer confidence increased moderately in April after a decline in March. Consumers' assessment of current conditions improved somewhat, with consumers rating both business and labor market conditions quite favorably. Consumers' short-term expectations also improved, with the percent of consumers expecting their incomes to decline over the coming months reaching its lowest level since December 2000.

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February Case-Shiller Index up 0.4 percent from January and 6.1 percent year-on-year

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index reported a 6.3% annual gain in February, up from 6.1% in the previous month.  Before seasonal adjustment, the National Index posted a month-over-month gain of 0.4% in February.

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March new home sales up 4.0 percent from February and 8.8 percent year-on-year

Sales of new single-family houses in March 2018 were at a seasonally adjusted annual rate of 694,000. This is 4.0 percent above the revised February rate of 667,000 and is 8.8 percent above the March 2017 estimate of 638,000.

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Tuesday, April 24, 2018

March Investor Confidence Index rose 3.0 points from February

The Global Investor Confidence Index increased to 114.5, up 3.0 points from March's revised reading of 111.5. Investors across all regions expressed an appetite for risk, with the North American ICI increasing from 109.1 to 112.3.

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March consumer confidence rebounded moderately from February

Consumer confidence increased moderately in April after a decline in March. Consumers' assessment of current conditions improved somewhat, with consumers rating both business and labor market conditions quite favorably. Consumers' short-term expectations also improved, with the percent of consumers expecting their incomes to decline over the coming months reaching its lowest level since December 2000.

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February Case-Shiller Index up 0.4 percent from January and 6.1 percent year-on-year

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index reported a 6.3% annual gain in February, up from 6.1% in the previous month.  Before seasonal adjustment, the National Index posted a month-over-month gain of 0.4% in February.

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February FHFA House Price Index up 0.6 percent from January and 7.2 percent year-on-year

The FHFA House Price Index (HPI) reported a 0.6-percent increase in U.S. house prices in February from the previous month. From February 2017 to February 2018, house prices were up 7.2 percent.

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March new home sales up 4.0 percent from February and 8.8 percent year-on-year

Sales of new single-family houses in March 2018 were at a seasonally adjusted annual rate of 694,000. This is 4.0 percent above the revised February rate of 667,000 and is 8.8 percent above the March 2017 estimate of 638,000.

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Monday, April 23, 2018

US private sector output rises solidly in April, underpinned by fastest new order growth since March 2015

US private sector output rises solidly in April, underpinned by fastest new order growth since March 2015. At 54.8 in April, up from 54.2 in March, the seasonally adjusted IHS Markit Flash U.S. Composite PMI Output Index indicated a faster upturn in business activity across the private sector.

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March Chicago Fed National Activity index fell due to slower growth

Led by slower growth in production- and employment-related indicators, the Chicago Fed National Activity Index (CFNAI) declined to +0.10 in March from +0.98 in February. The index's three-month moving average, CFNAI-MA3, decreased to +0.27 in March from +0.31 in February.

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March existing home sales up 1.1 percent from February but still down 1.2 percent year-on-year

Total existing-home  sales rose 1.1 percent to a seasonally adjusted annual rate of 5.60 million in March. Despite last month's increase, sales are still 1.2 percent below a year ago. The median existing-home price for all housing types in March was $250,400, up 5.8 percent from March 2017 ($236,600).

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Thursday, April 19, 2018

Initial unemployment claims dip 1,000 in weekly report

In the week ending April 14, initial unemployment claims were 232,000, a decrease of 1,000 from the previous week's unrevised level of 233,000. The 4-week moving average was 231,250, an increase of
1,250 from the previous week's unrevised average of 230,000.

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Mortgage applications rise 4.9 percent, rates flat

The Market Composite Index increased 4.9 percent on a seasonally adjusted basis from one week earlier, with purchase loans up 6.0 percent and refinances up 4.0 percent. The average contract interest rate for 30-year fixed-rate mortgages remained unchanged at 4.66 percent.

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April Philadelphia Fed's Business Outlook Survey positive, but prices rising

Results from the April Manufacturing Business Outlook Survey suggest continued growth for the region's manufacturing sector. The firms also reported higher prices for both inputs and their own manufactured goods this month. The survey's future indexes, measuring expectations for the next six months, reflected continued optimism.

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March Leading Economic Index up 0.3 percent, but labor market bears watching

The U.S. LEI increased 0.3 percent in March, and while the monthly gain is slower than in previous months, its six-month growth rate increased further and points to continued solid growth in the U.S. economy for the rest of the year.  However, labor market components made negative contributions in March and bear watching in the near future.

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First Quarter Economic Update: Green Shoots Everywhere, but Tariff Impacts Unknown

By almost all measures, the U.S. economy continues to strengthen, for the 3rd-longest recovery of 33 different business cycles since 1854.

As of mid-April, GDP growth is estimated to have risen by 2.0 percent during the first quarter of 2018, but was recently downgraded with concerns about potential trade wars.  This growth rate compares to 2.3 percent in 2017 and 1.5 percent in 2016.

So far this year, inflation is being tamed by regular, planned rate hikes by the Federal Reserve, although the March Producer Price Index showed an annual growth rate of 3.0 percent, which suggests that businesses are facing higher costs before passing them into consumers.

While job growth did dip to 103,000 positions in March, the first quarter’s average of 202,000 is still up by nearly 14 percent from the same period of 2017.

The tax cut taking effect as of January 1st, besides giving an extra boost to corporate spending, has also led to an increase in the personal savings rate of consumers, rising one full percentage point directly before and after the law took effect. 

Not surprisingly, this extra kick in paychecks has sent  consumer sentiment soaring to highs not seen since just after the turn of the 21st century.

This has been, in essence, a Goldilocks economy: Running just hot enough to warrant gradual interest rate hikes to keep it from overheating while still providing consumers both the spending power and the confidence for optional purchases including homes, autos, travel and entertainment.

If there is a concern on the immediate horizon for the building industry, it’s the impact of tariffs on the economy in general, and homebuilding in particular.  Prior to the tariffs of three to 24 percent assessed on Canadian software lumber, new home prices were based more on factors such as location, quality and competition than construction costs alone.

Since then, however, prices have risen sharply, with the pricing premium for new versus existing homes rising to 35 percent, when 10 to 20 percent has been closer to the historical norm.

The cost increase has also had an impact on home prices, as more existing homeowners looking to upgrade stay put until more new home options become available.  More recently, ‘panic buying’ of foreign steel and aluminum to beat additional tariffs was mentioned by an Institute of Supply Management Report, driving up short-term prices and causing inventory shortages for spot buyers.

For their part, home builders are doing everything they can to ramp up production, with March building permits and housing starts up 7.5 and 10.9 percent, respectively, compared to a year ago.

Yet most of these gains were for multi-family homes, pointing to continuing challenges including not just the Canadian tariffs, but also finding suitable land and construction labor. 

In addition, with a recent report noting that average pay in construction is now nearly ten percent higher than for all private employees, these extra costs must either be absorbed by the builder or passed along in the form of higher prices.

Even with higher prices, however, one area in which builders have the upper hand over most existing homes is with green building.  

According to a study by the global consultancy Booz Allen Hamilton, green building was projected to grow at over 15 percent year-over-year from 2015 through 2018, not only outpacing overall construction spending, but also showing a significant impact on GDP, employment and earnings over the previous three-year study period.

More specifically, this growth would support an additional 3.9 million jobs and generate over $303 billion to GDP.

Green building is also a great investment in the future.  According to a report to the California Sustainable Building Task Force, upfront spending of two percent of overall construction costs can, over a structure’s lifetime, yield savings of more than ten times the initial outlay.

For new homes, estimates during the first quarter of 2018 would indicate year-over-year sales activity up by about 0.5 percent, with prices rising by 4.6 percent.

In the larger, existing home sales market, with February’s pending home sales activity falling by just over four percent year-over-year, NAR is adjusting their estimates for 2018 accordingly.  The group is now calling for annual sales to be flat versus 2017, and for home prices to rise by 4.2 percent following a 5.8-percent increase in 2017.

Still, the 4.2 percent growth rate would imply that Americans continue to view owning a home as an important investment, even if tax reform removed some of the benefits.  The homeownership dream lives on.

Wednesday, April 18, 2018

February business inventories up 0.6 percent from January and 4.0 percent year-on-year

February manufacturers' and trade inventories were up 0.6 percent from January 2018 and 4.0 percent year-on-year.  February sales were up 0.4 percent from January 2018 and 5.8 percent year-on-year.

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March industrial production up 0.5 percent from February and 4.3 percent year-on-year

Industrial production rose 0.5 percent in March and is up 4.3 percent year-on-year. Capacity utilization for the industrial sector moved up 0.3 percentage point in March to 78.0 percent, a rate that is 1.8 percentage points below its long-run (1972-2017) average.

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March housing starts rebound 1.9 percent from February and 10.9 percent year-on-year

Privately-owned housing starts in March were at a seasonally adjusted annual rate of 1,319,000. This is 1.9 percent above the revised February estimate of 1,295,000 and is 10.9 percent above the March 2017 rate of 1,189,000.

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March building permits rebound 2.5 percent from February and 7.5 percent year-on-year

Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,354,000. This is 2.5 percent above the revised February rate of 1,321,000 and is 7.5 percent above the March 2017 rate of 1,260,000.

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Monday, April 16, 2018

February job openings fell 2.8 percent from January, hires and separations fell by a lesser amount

The number of job openings fell by 2.8 percent between the last days of January and February.  Over the month, hires and separations fell by 1.2 and 2.4 percent, respectively.

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Consumer sentiment slips in early April survey due to trade policy concerns

Consumer sentiment slipped in early April, largely reversing the gains recorded in the prior two months, mainly due to concerns about the potential impact of Trump's trade policies on the domestic economy. The small decline was widely shared by all age and income subgroups and across all regions of the country. The expectation of rising interest rates also slowed the anticipated pace of growth in the economy.

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March retail sales rebound 0.6 percent following three straight declines

U.S. retail sales rebounded in March by 0.6 percent after three straight monthly declines as households boosted purchases of motor vehicles and other big-ticket items.

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Builder confidence dips one point to 69 in April, still remains on firm ground

Builder confidence in the market for newly-built single-family homes edged down one point to a level of 69 in April.  The HMI index gauging buyer traffic held steady at 51, the chart measuring sales expectations in the next six months fell a single point to 77, and the component gauging current sales conditions dropped two points to 75.

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Friday, April 13, 2018

Initial unemployment claims decrease 9,000 in weekly report

In the week ending April 7, the advance figure for seasonally adjusted initial claims was 233,000, a decrease of 9,000 from the previous week's unrevised level of 242,000. The 4-week moving average was 230,000, an increase of 1,750 from the previous week's unrevised average of 228,250.

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Mortgage applications decline 1.9 percent in weekly report

The Market Composite Index decreased 1.9 percent on a seasonally adjusted basis from one week earlier, with both purchase and refinances down 2.0 percent. The average contract interest rate for 30-year fixed-rate mortgages with decreased to 4.66 percent from 4.69 percent.

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Bloomberg: Weekly Consumer Comfort Index rebounds to fresh 17-year high

Increased optimism about personal finances and the buying climate propelled the U.S. Consumer Comfort Index last week to a fresh 17-year high of 58.0 as a strong job market and more take-home pay boosted the outlook.

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Federal Reserve March meeting minutes show upward revisions to GDP estimates

Participants generally saw the news on spending and the labor market over the past few quarters as being consistent with continued above-trend growth and a further strengthening in labor. The FOMC unanimously voted to approve a quarter-point rate hike, bringing the target range to 1.5 percent to 1.75 percent. Along with the rate hike came upward revisions to the committee's expectations for GDP, which it now sees at 2.7 percent in 2018 and 2.4 percent in 2019.

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March new home purchase applications down 14 percent from February and 2.6 percent year-on-year

The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for March 2018 shows mortgage applications for new home purchases decreased 2.6 percent compared to March 2017. Compared to February 2018, applications increased by 14 percent. This change does not include any adjustment for typical seasonal patterns.

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Wednesday, April 11, 2018

Spring selling season is here! Tips for saving money and your sanity during a move.

Moving is stressful!

There’s no way around that fact. Adults, kids, and even pets feel the strain of packing up everything and hauling it to a new location.

For many people, just the thought of having to pack and then unpack their entire home is enough to trigger stress. Not to mention the added angst of paying for the move.

A move may be inevitable, but the anxiety doesn’t have to be. After conferring with the experts at Allied Van Lines it was clear there are a few things people can do to make a move less stressful.

Start Early

Life doesn’t stop because you’re moving. The #1 way to ease the stress of a move is to start early. The more time you give yourself the less rushed you’ll feel. You’ll have time to research everything and can take your time getting things packed up in an organized manner.

Planning a move well in advance also comes with another advantage - you’ll save money. When you have weeks or months before a move you can begin looking for deals on packing supplies and comparing service provider costs. There’s no pressure to simply use the first option you find.

Ideally, you should give yourself at least a month to move. Some to-dos, like updating your address, must be done a few weeks in advance. However, if you’re moving during the busy summer months give yourself even more time. Top-rated movers tend to get booked early so you’ll need to make a reservation a month or more before the move date.

Choose the Right Movers

If you’ve ever read moving company reviews, then you already know there’s a lot of variation in services and quality. Most moving companies can handle a standard, local move, but there’s no guarantee beyond that.

If you’re moving long-distance or have odd items to move it’s best to hire a moving company that specializes in those services.

Making a long move and packing up items like a pool table requires a certain level of expertise. Hiring movers who are ill-equipped for the job will only add to the stress and expense.

One thing you’ll want to verify is that the moving company is licensed, bonded and insured. This will give you peace of mind that you’re working with a legitimate company that can cover the costs if anything is damaged in transit.  

Create a Personal Moving Plan

Projects seem to move more smoothly when a plan is in place. It’s tempting to hit the ground running after deciding to make a move, but you’ll save time and money by creating a personal moving plan.

Start by determining your timeline. It should begin with the present day and end on the moving day. 

Next, determine what outside services will be needed and when you’ll need them. Then come up with a schedule for packing up the house. It’s usually best to start as early as possible with items that aren’t used often, like seasonal sporting equipment and clothes.

Finally, add in all the other related to-dos such as updating financial account info and cleaning the house.

Hopefully, your moving company is willing to help with the process. It’s a standard part of the service provided by Allied Van Lines, but that doesn’t mean every mover will be on board during the planning phase.

Clear Out What You Don’t Plan to Keep

There’s one clear way you can make the most of a move. It’s the perfect time to clear out the clutter that’s just taking up space.

We all have items around the house that haven’t seen the light of day since the last move. Why waste time and money packing up things you’ll never actually use?

Before you begin packing, go through each room, closet, etc. and separate items into four piles: keep, give away/sell, donate and trash. If you have trouble getting rid of things ask a friend or family member to help during the purging process.

Take Breaks Throughout the Moving Process

It’s easy to get burned out during a move, especially if you’re working full-time or have small children to look after. Adding hours of work a day to your already busy schedule will quickly lead to burnout. And if you really run yourself ragged you increase your risk of getting sick.

You can ward off the effects of stress and fatigue by taking breaks. If you have the time, give yourself a full day to step away from the moving agenda. Focus on relaxing “me time” and taking care of yourself. It’s the perfect time to treat yourself to a massage or hit the gym for endorphin-releasing exercise.

With a little luck and a lot of preparation, you’ll get through the move without too much stress.

HomeSphere March report: Nearly 40 percent of builders reporting negative impact from higher interest rates

Highlights from HomeSphere/BTIG building industry report – March 2018

  • 39% of builders reported some negative impact to sales related to higher interest rates
  • 69% of builders raised some or all base prices month/month (with zero of 81 reporting decreases)
  • 29% reported that sales were better than internal expectations


CoreLogic: January delinquency rates dipped to 4.9 percent, foreclosed mortgages down to 0.6 percent

CoreLogic:  In January, 4.9 percent of mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure), down 0.2 percentage points year-on-year.   The foreclosure inventory rate - which measures the share of mortgages in some stage of the foreclosure process - was 0.6 percent, down 0.2 percentage points year-on-year.

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April business inflation expectations edge up to 2.3 percent, highest measure since October 2011

Firms' inflation expectations increased to 2.3 percent over the year ahead, the highest measure since the survey began in October 2011.

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CPI up 0.1 percent in March, 2.4 percent year-on-year

The Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.1 percent in March and was up 2.4 percent year-on-year, and notably higher than the 1.6-percent average annual rate over the past 10 years. The index for all items less food and energy increased 0.2 percent in March and 2.1 percent year-on-year, for its largest 12-month increase since the period ending February 2017.

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Tuesday, April 10, 2018

March small business optimism dips slightly from record highs

The small business optimism index reached its 16th consecutive month in the top five percent of 45 years of survey readings. The 104.7 March reading, down from 107.6 in February, remains among the highest in survey history and for the first time since 1982, taxes received the fewest number of votes as the number one problem.



Producer Price Index up 0.3 percent in March, 3.0 percent year-on-year

The Producer Price Index for final demand advanced 0.3 percent in March, as prices for both final demand services and final demand goods rose 0.3 percent. The final demand index increased 3.0 percent for the 12 months ended in March.

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Monday, April 9, 2018

February trade deficit widens to highest level since October 2008

The goods and services deficit was $57.6 billion in February, up $0.9 billion from $56.7 billion in January. This is the highest U.S. trade deficit since October 2008.

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February consumer credit use grew by sluggish rate, especially for credit cards

Consumer borrowing increased at a sluggish pace in February, increasing $10.6 billion in February vs. $15.1 expected, and posting an annual growth rate of 3.3%.

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Friday, April 6, 2018

March job growth dips to 103,000, unemployment rate unchanged at 4.1 percent

Total nonfarm payroll employment edged up by 103,000 in March, and the unemployment rate was unchanged at 4.1 percent.   This was the lowest rate of job growth since September 2017. Employment increased in manufacturing, health care, and mining.


The labor force participation rate, at 62.9 percent, changed little in March, and the employment-population ratio held at 60.4 percent.


Thursday, April 5, 2018

Initial unemployment claims rise 24,000 in weekly report

In the week ending March 31, initial unemployment claims were 242,000, an increase of 24,000 from the previous week's revised level. The 4-week moving average was 228,250, an increase of 3,000 from the previous week's revised average.

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Mortgage applications dip 3.3 percent, rates remain unchanged

The Market Composite Index decreased 3.3 percent on a seasonally adjusted basis from one week earlier, with purchase loans down by 2.0 percent and refinance activity falling 5.0 percent. The average contract interest rate for 30-year fixed-rate mortgages remained unchanged at 4.69 percent.

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Bloomberg: Consumer Comfort Index rebounds to 17-year high of 57.2

U.S. consumer comfort advanced last week to a fresh 17-year high of 57.2 as greater optimism about household finances and the buying climate more than offset a deterioration in views about the economy.

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March planned job cuts up 71 percent from February and 39 percent year-on-year

Job cuts announced by U.S.-based employers surged in March to 60,357, a 71 percent increase from February and 39 percent higher year-on-year. Last month's total is the highest monthly total since April 2016.

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Wednesday, April 4, 2018

March online advertised vacancies up 2.2 percent from February and 3.7 percent year-on-year

Online advertised vacancies were 4,819,700 in March, up 2.2 percent from February and 3.7 percent year-on-year. The February Supply/Demand rate stands at 1.42 unemployed for each advertised vacancy, with a total of 2.0 million more unemployed workers than the number of advertised vacancies.

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Service sector index dipped 0.7 points in March to 58.8, business conditions remain positive

The NMI® registered 58.8 percent, which is 0.7 percentage point lower than the February reading of 59.5 percent. The cooling off of the New Orders Index possibly prevented an even stronger reading for the overall index. The majority of respondents remain positive about business conditions.

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Factory goods orders rebounded 1.2 percent, nearly erasing January's decline

New orders for U.S.-made goods rebounded 1.2 percent in February, boosted by strong demand for transportation equipment and a range of other products.  This increase nearly matches January's revised decline of 1.3 percent.

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ADP: Private sector employment up 241,000 in March vs. 122,000 year-on-year

Private-sector employment increased by 241,000 from February to March, on a seasonally adjusted basis. This compares to 246,000 in February and 122,000 during the same month of 2017.

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Tuesday, April 3, 2018

March multi-family rents up 2.5 percent year-on-year while occupancy rates dip to 95.2 percent

The average multifamily rent in the U.S. rose $4 to $1,371 in March, a 2.5 percent year-over-year increase, according to a survey of 121 markets by Yardi Matrix. This uptick was the first increase since summer 2017, as rents had not moved more than $1 in either direction since July.


The next few months will be telling, however, as rent growth in the first quarter was weak compared to the first quarter of recent years.

National average occupancy rates remained mostly stable at about 95.2 percent.


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