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.

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.

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.

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.

E-commerce sales growth continued to outpace total retail sales growth in 1Q 2017

U.S. retail e-commerce sales for the first quarter of 2017 rose 4.1 percent from the fourth quarter of 2016.  At the same time, total retail sales for the first quarter of 2017 rose 1.0 percent.

Comparing year-on-year, the first quarter 2017 e-commerce estimate increased 14.7 percent from the first quarter of 2016 while total retail sales increased 5.1 percent in the same period.

E-commerce sales in the first quarter of 2017 accounted for 8.5 percent of total sales, up from 8.2 percent the previous quarter and 7.8 year-on-year.

April building permits fall 2.5 percent from March but up 5.7 percent year-on-year

Privately-owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 1,229,000. This is 2.5 percent below the revised March rate of 1,260,000, but is 5.7

percent above the April 2016 rate of 1,163,000.

April housing starts dip 2.6 percent from March but up 0.7 percent year-on-year

Privately-owned housing starts in April were at a seasonally adjusted annual rate of 1,172,000. This is 2.6 percent below the revised March estimate of 1,203,000, but is 0.7 percent above the April 2016 rate of 1,164,000.

NAHB Housing Market Index rises to 70 in May, second-highest rating since the recession

In a further sign that the housing market continues to strengthen, builder confidence in the market for newly-built single-family homes rose two points in May to a level of 70 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This is the second highest HMI reading since the downturn.

Two of the three HMI components registered gains in May. The index charting sales expectations in the next six months jumped four points to 79 while the index gauging current sales conditions increased two points to 76. Meanwhile, the component measuring buyer traffic edged one point down to 51.

Consumer sentiment rises to 97.7 in May while partisan divide narrows

Consumer sentiment remained on the high plateau established following Trump's election, with the early May figure nearly identical with the December to May average of 97.4.

The recent stability in consumer sentiment, however, masks two important underlying shifts in the components as well as in the partisan divide. More favorable income gains and low inflation meant that consumers held the most favorable real income expectations in a dozen years. Buying plans, however, were mixed: household durables rose to a decade peak, while vehicle buying conditions slipped to a three year low.

Home buying conditions were viewed less favorably, but were offset by the most favorable views about home selling in more than a decade.

The partisan difference in the Expectations Index is still huge, but the gap between Democrats and Republicans narrowed slightly to 55 Index points from 65 three months ago, mainly due to Democrats expressing diminished fears of an immediate recession and lessened concerns about personal financial setbacks.

Retail sales rebounded 0.4 percent in April, with online sales up 1.4 percent

Americans stepped up their spending at auto dealers, hardware stores and e-commerce outlets as retail sales rebounded from two sluggish months, with retail sales rising 0.4 percent in April.  Sales had ticked up just 0.1 percent in March and fell in February.

The rise also indicates that the struggles of large retail chains, such as Macy's and JC Penney's, reflect changes in consumer buying patterns rather than broader economic weakness. Sales at department stores fell 0.2 percent. Yet a category that includes online retailers reported sales growth of 1.4 percent, the strongest of any group.