News & Events

Archive for September, 2014
 
Economic Advisor: September 24, 2014
September 24, 2014


 

Housing starts saw a significant drop, while first-time unemployment claims plummeted to a 14-year low, and consumer prices dropped to their lowest point in more than a year.

Housing Starts

After seeing a solid performance in July, new home construction news for August was not exactly stellar, with permits and housing starts both seeing drops, according to last week’s report from the Census Bureau and the Department of Housing and Urban Development.

Building permits issue in August for construction of residences of all types, fell to an annual rate of 998,000, marking a 5.6 percent drop from July’s revised rate of 1,057,000. Permits for single-family homes took a smaller hit, dropping only 0.8 percent to 626,000 in August from July’s 631,000. Overall, permits are still 5.3 percent higher than August 2013.

Starts on construction of private housing took a steep fall in August to an annual average of 956,000, marking a sizable 14.4 percent drop from July’s revised estimate of 1,117,000. Starts on single-family homes saw a much smaller drop, falling 2.4 percent to 643,000. Overall, constructions starts were still 8 percent higher than August 2013.

Meanwhile, completions of private housing in August hit an annual average of 892,000, which was 3.2 percent over July’s revised estimate of 864,000 and was 16.9 percent higher than August 2013’s average of 763,000.

But permits and starts are the key figures to watch as they indicate future real estate activity. Bearing that in mind, the wild swings between July’s gains and August’s losses should be taken with a grain of salt given that much of the fluctuation has been occurring in construction of multi-family dwellings, such as apartments, and because single-month performances aren’t indicative of trends.

“Overall, the weakness in this report reflects the expected giveback from the unexpected surge in activity the month before, and is not an indication of weakening underlying momentum in the sector,” Millan Mulraine, deputy head of U.S. research and strategy at TD Securities, noted in a public statement.

Initial Jobless Claims

New jobless claims saw another big swing. After initial jobless claims saw an increase of 11,000 claims in the week ending Sept. 6, first-time claims for unemployment benefits filed by the newly unemployed nose dived to 280,000 claims during the week ending Sept. 13, marking a massive 36,000-claim fall from the previous week’s revised level of 316,000, the Administration reported last week.

This brought initial jobless claims to their second-lowest level in 14 years.

“With the exception of the week of July 19, when claims were distorted by the automakers’ shutdowns, this is the lowest reading since May 2000,” Pantheon Macro’s Ian Shepherdson told Business Insider.

The four-week moving average, which is considered a more stable measure of near-term jobs activity, also saw a downward trend, dropping to 299,500 claims, a decline of 4,750 from the preceding week’s 304,250 claims.

Consumer Prices

Consumer prices dropped to their lowest point in a year and a half, with the Consumer Price Index for All Urban Consumers (CPI-U) declining 0.2 percent in August, the Bureau of Labor Statistics reported last week.

August’s big price mover was energy. While the food and shelter indexes both rose 0.2 percent in August, those gains were offset to a considerable degree by a 2.6 percent drop in energy prices, which was especially fueled by a 4.1 decline in gasoline prices.

For those watching inflation as an indicator as to whether or not the Fed will move interest rates, it appears that unless consumer prices see a major shift there will likely not be much interest rate movement in the near future.

“With inflation below target and no indication of an acceleration, the first increase in the fed funds rate, the central bank’s key short-term rate, will not come until July 2015,” PNC Financial Services Group chief economist Stuart Hoffman told the Wall Street Journal.

This week, we can expect:

  • Monday — Existing home sales for August from the National Association of Realtors.
  • Wednesday — New home sales for August from the Census Bureau.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration.
  • Friday — Second quarter GDP from the Bureau of Economic Analysis; and consumer sentiment for September fro the University of Michigan and Thompson-Reuters survey of consumers.

Posted in Economic Advisor



Economic Advisor: September 17, 2014
September 17, 2014


 

Consumer credit posted its biggest monthly gain since 2001; retail sales bucked predictions of a lull and posted a gain, instead; and initial jobless claims grew, but remained at healthy levels.

Consumer Credit

Consumer credit scored its biggest gain in nearly 13 years in July, with borrowing for the month growing by 9.7 percent to reach a total of $3.23 trillion, the Federal Reserve reported last week. This marked a $26 billion gain, which was well over the $17 billion the market had expected. Consumer credit hasn’t seen that big a monthly gain since a $28 billion spike in November 2001.

Non-revolving credit, such as car and student loans, posted the biggest increase, enjoying a 10.6 percent gain in July to hit $2.35 trillion. That said, revolving debt, such as credit cards, also posted a sizable 7.4 percent increase to hit $880.5 billion. The spike in non-revolving debt was driven by car loans, according to FTN Financial Chief Economist Chris Low.

“The only thing we have to worry about is there is excessive risk-taking in the auto sector,” Low told the Reuters news service. “But it’s still a good thing for the economy at least in the short term. Car sales are back to where they were before the financial crisis, which is remarkable.”

Retail Sale

If consumer spending was supposed to see a summer lull, someone forgot to tell the consumers. Retail and food service sales totaled $444.4 billion in August, an increase of 0.6 percent over July and a 5 percent increase from August 2013, according to data released by the Census Bureau last week.

In line with August’s consumer credit numbers, spending gained across a number of categories, including motor vehicles and parts, which grew by 1.5 percent; building materials, which were up 1.4 percent; sport goods, hobby, book and music stories, which grew 0.9 percent; and health and personal care retailers, which posed a 0.6 percent gain.

“Consumers are not going hog wild, but they are responding to the better labor market by gradually increasing their spending,” PNC Financial Services Group chief economist Stuart Hoffman told the Wall Street Journal.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed during the week ending Sept. 6 hit 315,000, a gain of 11,000 claims from the prior week’s revised level of 304,000, according to last week’s report from the Employment and Training Administration.

While the total was over the market expectation of a dip to 300,000 claims, initial jobless claims were still hovering around pre-recession levels. Moreover, because the totals fell over the Labor Day holiday, that could have influenced the results.

“Claims have been running around 300,000 for a couple of months now, so I would not regard this as a deterioration in labor demand,” RBS Securities Inc. U.S. economist Omair Sharif told Bloomberg. “It was during Labor Day holiday, so odds are that there are some seasonal adjustment problems. Underlying labor demand remains very firm, and certainly that is going to help consumer spending going forward.”

Bearing that in mind, the four-week moving average, which is considered a more stable measure of near-term employment activity, ticked up to 304,000, which was a slight, 750-claim increase over the preceding week’s revised average of 303,250.

This week, we can expect:

  • Monday — August industrial production and capacity utilization from the Federal Reserve.
  • Tuesday — August producer price index from the Bureau of Labor Statistics.
  • Wednesday — August consumer price index from the Bureau of Labor Statistics.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; August housing starts and construction permits from the Census Bureau.
  • Friday — Leading economic indicators for August from The Conference Board.

Posted in Economic Advisor



Economic Advisor: September 10, 2014
September 10, 2014


 

Hiring suffered an unexpected slow-down; new claims for unemployment benefits saw a slight increase, but remained on solid footing; and construction spending enjoyed a rebound.

Employment

The latest jobs figures showed the unemployment rate down, but weak job growth. While the unemployment rate ticked down to 6.1 percent in August, the economy added only 142,000 non-farm jobs, the Bureau of Labor Statistics reported last week.

August’s new jobs total ranked well under the more-than-200,000 jobs that has been the norm over several months. That said, economists warned not to panic at August’s weak job growth as statistically it did represent a trend, and because other aspects of the economy performed well during the month.

“I don’t believe the numbers,” TIAA-CREF chief economist Tim Hopper told the Washington Post. “Not only are they very weak, they just don’t match anything else that’s in the market right now.”

Looking at some deeper statistics, the number of long-term unemployed workers (those without jobs for 27 weeks or longer) dropped by 192,000 to 3 million in August. The long-term unemployed comprised 31.2 percent of all out-of-work Americans for the month, and compared to a year ago, the number of long-term unemployed has fallen by 1.3 million people.

August’s civilian labor force participation rate (the ratio between the number of people available for work and the population of employable individuals) hovered at 62.8 percent, essentially unchanged since April.

The number of Americans involuntarily employed part time for economic reasons, because either their hours had been cut or that was the only work they could find, totaled 7.3 million in August, seeing little change from July.

Initial Jobless Claims

In more recent employment activity, first-time claims for unemployment benefits filed by the newly unemployed during the week ending Aug. 30 notched up to 302,000, a gain of 4,000 claims from the prior week’s total of 298,000, according to last week’s numbers from the Employment and Training Administration.

To put things in perspective, initial jobless claims fell to 279,000, their lowest point of the year so far, in July, and have basically hovered around that point since. First-time unemployment claims haven’t been that low since 2006.

“This is an extraordinarily low pace of layoffs,” said Pierpont Securities economist Stephen Stanley told the Wall Street Journal.

The Administration’s four-week moving average, a more stable measure of near-term job activity, saw a similar bump up to 302,750 claims, a gain of 3,000 from the preceding week’s average of 299,750.

Construction Spending

Construction spending during July enjoyed a 1.8 percent boost to an annual rate of $981.3 billion, the Census Bureau reported last week. Compared to last year, July’s total as 8.2 percent higher than the July 2013 estimate of $906.6 billion.

July’s total spending marked its best performance in five-and-a-half years, and its percentile growth well outpaced the 1 percent economists had projected.

Spending on private construction grew 1.4 percent to an annual rate of $701.7 billion, and spending on residential construction grew by 0.7 percent to an annual rate of $358.1 billion.

This week, we can expect:

  • Monday — Consumer credit totals for July from the Federal Reserve.
  • Wednesday — July wholesale inventories from the Census Bureau.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; August budget from the Treasury Department.
  • Friday — August retail sales and July business inventories from the Census Bureau; August import and export prices from the Census Bureau and the Bureau of Economic Analysis.

Posted in Economic Advisor



Economic Advisor: September 3, 2014
September 3, 2014


 

New home sales continued to perform below expectations, and incomes and spending ticked up and down, respectively. Meanwhile, initial jobless claims saw a slight decline.

New Home Sales

While, as Economic Advisor reported last week, existing home sales enjoyed solid gains in July, sales of new homes in July were down for the third straight month, hitting their weakest pace since March.

Sales of new single-family homes during July 2014 dropped 2.4 percent to an annual rate of 412,000, marking, the Census Bureau and the Department of Housing and Urban Development reported last week. That said, on an annual basis, July’s new home sales came in 12.3 percent higher than July 2013’s estimated rate of 367,000.

Looking at price, the median sales price for new homes sold in July was $269,800, and the average price was $339,100. In terms of inventory, there were an estimated 205,000 new homes for sale at the end of July, representing a six-month supply at July’s sales rate.

“The new-home sales figures by now have that lived-in feeling, with few signs of a significant change, in either direction, over the near term,” Regions Financial Chief Economist Richard Moody wrote in a public statement. Moody went on to characterize the new-home market as “basically running in place.”

Incomes and Spending

Personal incomes grew $28.6 billion, or 0.2 percent, continuing an upward trend, but not as large as June’s gain of $67.1 billion (0.5 percent), according to last week’s report from the Bureau of Economic Analysis. Disposable income, which is income after taxes, saw similar performance in July, growing by $17.7 billion, or 0.1 percent.

Meanwhile, personal consumption expenditures (PCE) declined $13.6 billion, or 0.1 percent, a disappointing reversal of June’s PCE gain of $50.5 billion, or 0.4 percent. Both incomes and spending are key to economic performance, as consumer spending represents roughly 70 percent of the U.S. economy.

“Higher wages have been slow to appear and gains in the stock market are not enjoyed by all,” Global Insight economist Chris Christopher told the Wall Street Journal. “More widespread income gains are needed to get all consumers back on solid footing.”

July’s personal savings, which is DPI minus personal outlays, grew to $739.1 billion, compared with June’s $709.4 billion.  July’s personal savings rate, which is personal saving as a percentage of DPI, notched up to 5.7 percent, compared with June’s 5.4 percent.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed dropped for the second week in a row. Initial jobless claims filed during the week ending Aug. 23 notched down to 298,000, a decline of 1,000 claims from the prior week’s revised level of 299,000, the Employment and Training Administration reported.

The four-week moving average, considered a more stable gauge of near-term employment, saw similar activity, coming in at 299,750 claims, a drop of 1,250 from the preceding week’s revised average of 301,000.

This week, we can expect:

  • Tuesday — Construction spending for July from the Census Bureau.
  • Wednesday — July factory orders from the Census Bureau; and August car and truck sales from the auto manufacturers.
  • Thursday — July trade balance from the Census Bureau; second quarter productivity from the Bureau of Labor Statistics; and initial jobless claims for last week from the Employment and Training Administration.
  • Friday — August unemployment, payrolls, hourly earnings and average workweek from the Bureau of Labor Statistics.

Posted in Economic Advisor



Economic Advisor: September 3, 2014
September 3, 2014


 

New home sales continued to perform below expectations, and incomes and spending ticked up and down, respectively. Meanwhile, initial jobless claims saw a slight decline.

New Home Sales

While, as Economic Advisor reported last week, existing home sales enjoyed solid gains in July, sales of new homes in July were down for the third straight month, hitting their weakest pace since March.

Sales of new single-family homes during July 2014 dropped 2.4 percent to an annual rate of 412,000, marking, the Census Bureau and the Department of Housing and Urban Development reported last week. That said, on an annual basis, July’s new home sales came in 12.3 percent higher than July 2013’s estimated rate of 367,000.

Looking at price, the median sales price for new homes sold in July was $269,800, and the average price was $339,100. In terms of inventory, there were an estimated 205,000 new homes for sale at the end of July, representing a six-month supply at July’s sales rate.

“The new-home sales figures by now have that lived-in feeling, with few signs of a significant change, in either direction, over the near term,” Regions Financial Chief Economist Richard Moody wrote in a public statement. Moody went on to characterize the new-home market as “basically running in place.”

Incomes and Spending

Personal incomes grew $28.6 billion, or 0.2 percent, continuing an upward trend, but not as large as June’s gain of $67.1 billion (0.5 percent), according to last week’s report from the Bureau of Economic Analysis. Disposable income, which is income after taxes, saw similar performance in July, growing by $17.7 billion, or 0.1 percent.

Meanwhile, personal consumption expenditures (PCE) declined $13.6 billion, or 0.1 percent, a disappointing reversal of June’s PCE gain of $50.5 billion, or 0.4 percent. Both incomes and spending are key to economic performance, as consumer spending represents roughly 70 percent of the U.S. economy.

“Higher wages have been slow to appear and gains in the stock market are not enjoyed by all,” Global Insight economist Chris Christopher told the Wall Street Journal. “More widespread income gains are needed to get all consumers back on solid footing.”

July’s personal savings, which is DPI minus personal outlays, grew to $739.1 billion, compared with June’s $709.4 billion.  July’s personal savings rate, which is personal saving as a percentage of DPI, notched up to 5.7 percent, compared with June’s 5.4 percent.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed dropped for the second week in a row. Initial jobless claims filed during the week ending Aug. 23 notched down to 298,000, a decline of 1,000 claims from the prior week’s revised level of 299,000, the Employment and Training Administration reported.

The four-week moving average, considered a more stable gauge of near-term employment, saw similar activity, coming in at 299,750 claims, a drop of 1,250 from the preceding week’s revised average of 301,000.

This week, we can expect:

  • Tuesday — Construction spending for July from the Census Bureau.
  • Wednesday — July factory orders from the Census Bureau; and August car and truck sales from the auto manufacturers.
  • Thursday — July trade balance from the Census Bureau; second quarter productivity from the Bureau of Labor Statistics; and initial jobless claims for last week from the Employment and Training Administration.
  • Friday — August unemployment, payrolls, hourly earnings and average workweek from the Bureau of Labor Statistics.

Posted in Economic Advisor



Search News & Events
News Categories
Monthly Archives
Get started now

Fill out an online application today. It's easy.

Checklist complete?

Get your documents in order and we'll handle the rest.

NADA Guides

Value your mobile, modular
or manufactured home.