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Archive for January, 2018
 
Economic Advisor: January 31, 2018
January 31, 2018


 

Existing home sales fell and new home sales tumbled. Meanwhile, lay-offs increased.

Existing Home Sales

Sales of existing single-family homes, townhomes, condominiums and co-ops fell 3.6 percent in December to an annual rate of 5.57 million, the National Association of Realtors reported last week. That said, sales were up 1.1 percent for the year, marking 2017 as the best year for existing home sales in 11 years.

“Existing sales concluded the year on a softer note, but they were guided higher these last 12 months by a multi-year streak of exceptional job growth, which ignited buyer demand,” noted NAR Chief Economist Lawrence Yun. “At the same time, market conditions were far from perfect. New listings struggled to keep up with what was sold very quickly, and buying became less affordable in a large swath of the country. These two factors ultimately muted what should have been a stronger sales pace.

“Closings scaled back in most areas last month for this same reason,” he continued. “Affordability pressures persisted, and the pool of interested buyers at the end of the year significantly outweighed what was available for sale.”

Looking at affordability, December’s median price for existing homes of all types grew to $246,800, which marked a 5.8 percent gain over December 2016’s $233,300. This was the 70th consecutive month of year-over-year increases.

In terms of supply, December’s pool of existing homes for sale fell 11.4 percent to 1.48 million units, amounting to a 3.2-month supply at December’s sales pace. This was 10.3 percent down from December 2016’s 1.65 million homes for sale, with unsold inventory at its lowest point since NAR began tracking it in 1999.

New Home Sales

Sales of new, single-family homes suffered their biggest fall since August 2016, tumbling 9.3 percent to an annual rate of 625,000, according to last week’s joint report from the Census Bureau and the Department of Housing and Urban Development. That said, compared to the same period last year, December’s performance was 14.1 percent over December 2016’s pace of 548,000.

Housing market watchers had anticipated a fall from November’s strong showing, but not this big (average forecasts put the projected rate at 679,000). They chalked up December’s unexpectedly poor performance to December’s unseasonably cold weather.

Looking at price, December’s average sales price for new homes was $398,900 and the median sales price was $335,400. In terms of inventory, the estimated number of new homes for sale at the end of December was 295,000, which represented a of 5.7-month supply at December’s sales rate.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed during the week ending Jan. 20 increased to 233,000 claims, a gain of 17,000 claims over the previous week’s total of 216,000, according to last week’s report from the Employment and Training Administration. While up, this was better than market expectations of 240,000 jobless claims for the week.

The four-week moving average, which is considered a more stable measure of jobless claims, ticked down to 240,000, which was 3,500 claims lower than the preceding week’s average of 243,500 claims.

This latest report marked the 151st straight week that initial claims have come in below the 300,000-claim level, which economists consider an indicator of a growing job market. The Administration added that it continues to experience hurricane-related reporting difficulties in Puerto Rico and the Virgin Islands.

This week, we can expect:

  • Monday — Personal incomes and spending for December from the Census Bureau.
  • Tuesday — Consumer confidence for January from The Conference Board.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; construction spending for December from the Census Bureau; car and truck sales for January from the auto manufacturers.
  • Friday —Payrolls, unemployment rate, average workweek and hourly earnings for January from the Bureau of Labor Statistics; consumer sentiment for January from the University of Michigan Surveys of Consumers; Factory orders for December from the Census Bureau.

Posted in Economic Advisor



Economic Advisor: January 24, 2018
January 24, 2018


 

Housing starts were down, while consumer sentiment fell slightly, and layoffs plummeted.

Housing Starts

Construction starts on new homes saw a tough decline in December, dropping 8.2 percent to an annual rate of 1,192,000 for the month, the Census Bureau reported last week. The reason for the drop? Starts on single-family homes plummeted 11.8 percent to an annual rate of 836,000.

“The pace of housing starts averaged just 1.2 million for the year, far short of the historical average of 1.5 million starts,” Nela Richardson, chief economist at the real estate company Redfin, told the New York Times. “Given the three-year drought in inventory and surging homebuyer demand, a pace of 2 to 3 million starts would be reasonable and appropriate.”

Compared to last year, December’s housing starts were 6 percent below December 2016’s pace of 1,268,000. The market had expected December’s annual rate to be 1,280,000. All told, construction starts for 2017 hit an estimated total of 1,202,100 units, which was 2.4 percent higher than 2016’s total of 1,173,800 units.

Building permits issued for construction of private housing in December ticked down 0.1 percent to 1,302,000. Permits issued for construction of single-family homes rose 1.8 percent to hit a rate of 881,000.

Consumer Sentiment

Consumer Sentiment for January fell to 94.4, down 1.6 percent from December’s 95.9, the University of Michigan’s Surveys of Consumers reported last week.

The Current Economic Conditions Index, which measures how consumers feel about the current economy and their prospects in it, fell 4 percent to 109.2. However, the Index of Consumer Expectations grew slightly by 0.6 percent to hit 84.8

The upshot is that while American consumers might have some trepidations, they are engaged and willing to participate in the retail marketplace.

“Importantly, the survey recorded persistent strength in personal finances and buying plans, while favorable levels of buying conditions for household durables have receded to preholiday levels in early January, largely due to less attractive pricing,” said Surveys of Consumers Chief Economist Richard Curtin.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed during the week ending January 13, plummeted to 220,000, a considerable decline of 41,000 claims from the prior week’s total of 261,000, according to last week’s report from the Employment and Training Administration. This was the lowest weekly total since February 24, 1973’s total claims of 218,000.

The four-week moving average, which is considered a more stable measure of jobless claims, dropped to 244,500, a decrease of 6,250 claims from the preceding week’s average of 250,750 claims.

This latest report marked the 150th straight week that initial claims have come in below the 300,000-claim level, which economists consider an indicator of a growing job market. The Administration added that it continues to experience hurricane-related reporting difficulties in the Virgin Islands and Puerto Rico.

This week, we can expect:

  • Wednesday — Existing home sales for December from the National Association of Realtors.
  • Thursday — New home sales for December from the Census Bureau; leading economic indicators for December from The Conference Board; initial jobless claims for last week from the Employment and Training Administration.
  • Friday — Durable goods orders for December from the Census Bureau; Fourth Quarter GDP from the Bureau of Economic Analysis.

Posted in Economic Advisor



Economic Advisor: January 17, 2018
January 17, 2018


 

Retail sales saw healthy gains, while consumer credit enjoyed a major gain, and layoffs increased beyond forecasts.

Retail Sales

Retail sales ended 2017 in a good position thanks to healthy holiday spending. Retail and food service sales for December 2017 grew 0.4 percent to hit $495.4 billion, according to last week’s report from the Census Bureau. Compared to last year, sales were up 5.4 percent.

Retail categories that showed strong gains included non-store retailers, such as e-commerce sites and kiosks, which increased 1.2 percent; building material and garden supply stores, which also gained 1.2 percent; grocery stores, which were up 0.7 percent; and food and beverage services, which were up 0.7 percent. Notably, department stores were down 1.1 percent.

In related news, the National Retail Federation reported that this was the largest increase in holiday spending since the recession of 2008, with sales during November and December growing 5.5 percent over the same period in 2016 to $691.9 billion.

“We knew going in that retailers were going to have a good holiday season, but the results are even better than anything we could have hoped for, especially given the misleading headlines of the past year,” National Retail Federation President and CEO Matthew Shay wrote in a public statement.

Consumer Credit

Those consumers weren’t paying with cash, either, as evidenced by last week’s consumer credit report from the Federal Reserve. Overall, consumer borrowing grew 8.8 percent during November to hit a total of $3.827 trillion.

Of that, revolving debt, such as credit cards, grew a whopping 13.3 percent to hit $1.022 trillion. This was the largest monthly gain not only all year, but on record. Non-revolving debt, such as car loans or student loans, grew 7.2 percent, to reach $2.804 trillion.

That kind of credit card spending, even during the holidays, shows increased consumer confidence, and willingness to take on debt, and should reinforce optimism in the retail sector.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed during the week ending January 6, increased to 261,000 claims, a gain of 11,000 over the previous week’s total of 250,000, according to last week’s report from the Employment and Training Administration. This outpaced market expectations of 250,000 jobless claims.

The four-week moving average, which is considered a more stable measure of jobless claims, notched up to 250,750, which was 9,000 claims over the preceding week’s average of 241,750 claims.

This latest report marked the 149th straight week that initial claims have come in below the 300,000-claim level, which economists consider an indicator of a growing job market. The Administration added that it continues to experience hurricane-related reporting difficulties in Puerto Rico and the Virgin Islands.

This week, we can expect:

  • Wednesday — Industrial production and capacity utilization for December from the Federal Reserve.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; housing starts and building permits for December from the Census Bureau.
  • Friday — Consumer sentiment for January from the University of Michigan Surveys of Consumers.

Posted in Economic Advisor



Economic Advisor: January 10, 2018
January 10, 2018


 

Construction spending hit a new high, while unemployment was unchanged, and layoffs grew.

Construction Spending

Construction spending during November rose 0.8 percent to hit an annual rate of $1.257 trillion, the Census Bureau reported last week. This marked the fourth straight monthly gain, and an all-time monthly high.

November’s performance outpaced market expectations of just a 0.5 percent gain, and when compared to last year, construction spending for the month was 2.4 percent higher than November 2016’s rate of $1.227 trillion.

Spending on private construction grew one percent over October to hit an annual rate of $964.3 billion for November. Spending on residential construction similarly grew one percent to reach an annual rate of $530.8 billion in November.

The big driver for residential construction spending’s growth was single-family homes, which posted a 1.9 percent increase to a rate of $274 billion. Meanwhile, spending on building multi-family residences dropped 1.3 percent to $60.4 billion.

Employment

The economy added 148,000 jobs in December, the Bureau of Labor Statistics reported last week. Key job growth sectors included health care, construction, and manufacturing.

This kept the unemployment hovering at 4.1 percent for the third month with the population of unemployed Americans at 6.6 million, again, essentially unchanged from the previous month. Over the year, the unemployment rate has decreased by 0.6 percent and the unemployed population has been down by 926,000 people.

Average hourly earnings for all non-farm employees increased by 9 cents in December to $26.63. Over the past year, average hourly earnings have grown by 65 cents (2.5 percent). Average hourly earnings for private-sector production and nonsupervisory employees notched up seven cents to $22.30 in December.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed during the week ending December 30, grew to 250,000, an increase of 3,000 claims from the prior week’s total of 247,000, according to last week’s report from the Employment and Training Administration. This was off from forecasts of 240,000 jobless claims.

The four-week moving average, which is considered a more stable measure of jobless claims, notched up to 241,750, a gain of 3,500 claims from the preceding week’s average of 238,250 claims.

This latest report marked the 185th straight week that initial claims have come in below the 300,000-claim level, which economists consider an indicator of a growing job market. The Administration added that it continues to experience hurricane-related reporting difficulties in the Virgin Islands and Puerto Rico.

This week, we can expect:

  • Monday — Consumer credit for November from the Federal Reserve.
  • Wednesday — Import prices for December from the Bureau of Labor Statistics; wholesale inventories for November from the Census Bureau.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; Producer Price Index for December from the Bureau of Economic Analysis; December federal budget from the Treasury Department.
  • Friday — Consumer Price Index for December from the Bureau of Economic Analysis; retail sales for December and business inventories for November from the Census Bureau.

Posted in Economic Advisor



Economic Advisor: January 03, 2018
January 3, 2018


 

Hello and Happy New Year from Economic Advisor! Last week saw a light calendar of economic news releases due to most reporting agencies being closed for the holidays, but we did see layoffs hold steady, while consumer confidence took a slight dip.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed during the week ending December 23, held steady at 245,000 claims, unchanged from the previous week’s total of 245,000, according to last week’s report from the Employment and Training Administration. That said, this was off from forecasts of 239,000 jobless claims.

The four-week moving average, which is considered a more stable measure of jobless claims, notched up to 237,750, a slight increase of 1,750 claims from the preceding week’s average of 236,000 claims.

This latest report marked the 147th straight week that initial claims have come in below the 300,000-claim level, which economists consider an indicator of a growing job market. The Administration added that it continues to experience hurricane-related reporting difficulties in Puerto Rico and the Virgin Islands.

Consumer Confidence

Consumer confidence ticked down in December, with The Conference Board reporting last week that its Consumer Confidence Index dropped 122.1 for the month, down from November’s score of 128.6.

The Present Situation Index, which describes consumers’ view of their current economic circumstances, grew from 154.9 to 156.6, but the Expectations Index, which describes their short-term economic outlook, dropped from 111.0 last month to 99.1 for the month.

“Consumer confidence retreated in December after reaching a 17-year high in November,” The Conference Board’s Director of Economic Indicators Lynn Franco said in a public statement. “The decline in confidence was fueled by a somewhat less optimistic outlook for business and job prospects in the coming months. Consumers’ assessment of current conditions, however, improved moderately. Despite the decline in confidence, consumers’ expectations remain at historically strong levels, suggesting economic growth will continue well into 2018.”

Looking at the responses in more detail, the portion of consumers responding that business conditions were “good” saw a marginal gain from 35 percent to 35.2 percent, while those saying business conditions were “bad” slightly dropped, from 12.3 percent to 12.1 percent. Consumers stating that jobs were “plentiful” fell from 37.5 percent to 35.7 percent, while those claiming jobs are “hard to get” also dropped from 16.8 percent to 15.2 percent.

This week, we can expect:

  • Wednesday — Construction spending for November from the Census Bureau; car and truck sales for December from the auto manufacturers.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration.
  • Friday — Factory orders and the trade deficit for November from the Census Bureau; unemployment rate, payrolls, hourly earnings and average workweek for December from the Bureau of Labor Statistics.

Posted in Economic Advisor



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