August 18, 2017

Consumer Sentiment (August 2017)

- Sentiment Index   97.6. Previous was 93.4  

This is the University of Michigan's metric.  It is supposed to measure consumer spending 3-6 months into the future. These survey indices have become less useful because they to a large extent are measuring more political affiliation than actual spending intentions.


GDPNow (3rdQ2017)

- GDPNow +3.8%.

This is a metric revised each week by the Atlanta Fed and is an on-the-fly forecast of current quarter GDP.


August 17, 2017

Initial Jobless Claims (week ended 8/12/2017)

- New Claims seasonally adjusted  232,000. Previous was 240,000
- New Claims unadjusted, totaled 198,033  a decrease of 13,891 from  previous 
- 4-week Moving Average   240,500. Previous was 241,000

This is a time of year when there are auto retooling layoffs and getting the seasonal adjustment correct can be difficult.



Philadelphia Federal Reserve Business Outlook Survey  (August 2017)

- General Business Conditions Index  18.9. Previous was 19.5 




Industrial Production  (July 2017)

- Production month/month +0.2%. Previous was +0.4%
- Manufacturing month/month -0.1%. Previous was +0.2%
- Capacity Utilization Rate  76.7%. Previous was 76.7%

Manufacturing was partpcularly disappointing.




E-Commerce Retail Sales (2ndQ2017)

- E-Sales quarter/quarter seasonally adjusted, annualized +4.8 %. Previous was 4.1% 




Leading Indicators  (July 2017)

- Leading Indicators month/month +0.3%. Previous was +0.6%. 


August 16, 2017

MBA Mortgage Applications (week ended 8/11/2017)

- Purchase Index Week/Week -2.0%. Previous weeks were +1.0%, -2.0%, -2.0%, +1.0%, +3.0%, -3.0%, -4.0%, -1.0%, -3.0%, +10.0%, -1.0%, -1.0%, and -3.0%.
- Refinance Index Week/Week +2.0%. Previous weeks were +5.0%, -4.0%, +3.0%, +13.0%, -0.4%, -13.0%, -9.0%, +2.0%, +9.0%, +3.0%, -6.0%, +11.0%, and -6.0%.
- Composite Index Week/Week -1.0%. Previous weeks were +3.0%, -2.8%, +0.4%, +6.3%, +1.4%, -7.4%, -6.2%, -0.6%, +2.8%, +7.1%, -3.4%, +4.4%, and -4.1%.

The Purchase Index was +10.0% year/year.



Housing Starts (July 2017)  
  

- Starts seasonally adjusted, annualized rate  1,155,000. Previous was 1,213,000 
- Permits seasonally adjusted, annualized rate  1,223,000. Previous was 1,275,000 

Sadly, Housing Starts remain the one piece on macroeconomic data which has never recovered from the Great Recession and is not likely to recover any time in the near future. In order to keep up with population growth and scrappage of existing units we should have 1.5 million starts/year.  Housing Starts include include single family homes, a few 2-4 units buildings and apartment buildings 5+ units.  It looks like we are past the peak of apartment building and will see that component level off and perhaps fall.  While this data is national housing is a local thing.



Atlanta Federal Reserve Business Inflation Expectations  (August 2017)

- Business Inflation Expectations % year/year  +1.9%. Previous was +1.7%


August 15, 2017

Retail Sales (July 2017)

- Retail Sales month/month  +0.6%. Previous was +0.3% 
- Retail Sales less autos month/month  +0.5%. Previous was +0.1%
- Less Autos & Gas month/month  +0.5%. Previous was +0.3%

The +0.6% gain is the first healthy gain we have seen since January and will help 3rdQ GDP.






Empire State Manufacturing Survey  (August 2017)

- General Business Conditions Index   25.2. Previous was 9.8  




Import and Export Prices  (July 2017)

- Import Prices month/month  +0.1%. Previous was -0.2%
- Export Prices month/month  +0.4%. Previous was -0.2%
- Import Prices year/year  +1.5%. Previous was +1.5%
- Export Prices year/year  +0.8%. Previous was +0.6%

Import prices are largely about oil and export prices are largely about food.





Redbook Chain Store Sales (week ended 8/12/2017)

- Store Sales year/year +2.5%. Previous was +2.7% 




Business Inventories  (June 2017)

- Inventories  0.5%. Previous was +0.3% 






Housing Market Index (August 2017)


- Housing Market Index  68. Previous was 64  





August 11, 2017

Consumer Price Index  (July 2017)

- CPI month/month  +0.1%. Previous was +0.0 
- CPI year/year  +1.7%. Previous was +1.6%
- CPI core (less food & energy) month/month  +0.1%. Previous was +0.1%
- CPI core (less food & energy) year/year  +1.7%. Previous was +1.7%

Inflation remains well-contained.


August 10, 2017

Initial Jobless Claims (week ended 8/5/2017)

- New Claims  seasonally adjusted 244,000. Previous was 241,000 
- New Claims  unadjusted, totaled 211,733 in the week  an increase of 12,957 from previous
- 4-week Moving Average   241,000. Previous was 242,000 

The story remains the same.  The numeric demand for labor is strong. Nevertheless the Federal Reserve has given up on the notion that such low unemployment will cause wage increases. The issue is that many of the recent job gains have been low wage jobs. Also, the nature of employment has changed.  95% of the jobs added from 1995-2005 were something other than full time W2 jobs.




PPI-FD  (July 2017)

- PPI-FD month/month -0.1%. Previous was +0.1%
- PPI-FD year/year  +1.9%. Previous was +2.0%
- PPI-FD less food & energy month/month  -0.1%. Previous was +0.1%
- PPI-FD less food & energy year/year   +1.8%. Previous was +1.9%
- PPI-FD less food, energy & trade services month/month 0.0%. Previous was +0.2%
- PPI-FD less food, energy & trade services year/year   +1.9%. Previous was +2.0%

If this keeps up we will start hearing about disinflation and even deflation.  

Today's two reports tell a story of more people working but people collectively not having enough disposable income to increase spending and drive up prices. Part of the problem is that too many of the jobs created in recent years are low paying.

 





August 9, 2017

 

MBA Mortgage Applications (week ended 8/4/2017)

- Purchase Index Week/Week +1.0%. Previous weeks were -2.0%, -2.0%, +1.0%, +3.0%, -3.0%, -4.0%, -1.0%, -3.0%, +10.0%, -1.0%, -1.0%, -3.0%, and +2.0%.
- Refinance Index Week/Week +5.0%. Previous weeks were -4.0%, +3.0%, +13.0%, -0.4%, -13.0%, -9.0%, +2.0%, +9.0%, +3.0%, -6.0%, +11.0%, -6.0%, and +3.0%.
- Composite Index Week/Week +3.0%. Previous weeks were -2.8%, +0.4%, +6.3%, +1.4%, -7.4%, -6.2%, -0.6%, +2.8%, +7.1%, -3.4%, +4.4%, -4.1%, and +2.4%.

Considering how low interest rates are and how low the unemployment rate is one might concluded that we continue to add many jobs with income insufficient for homeownership.

 

Productivity and Costs (2ndQ2017)

- Nonfarm productivity quarter/quarter seasonally adjusted, annualized +0.9%. Previous was +0.1%
- Unit labor costs quarter/quarter seasonally adjusted, annualized  0.6%. Previous was 5.4%

Low productivity (GDP/hour worked) has been a feature of the economy since the Great Recession.

Wholesale Trade (June 2017)

- Inventories month/month +0.7%. Previous was +0.6%

This is a component of GDP.

August 8, 2017

NFIB Small Business Optimism Index (July 2017)

- level 105.2. Previous was 103.6 

Small business plans for hiring are very positive.  Their plans for capital investments are weak.  This could be due to uncertainty about tax policy. I believe that it could be indicative of a serious issue if capital markets and bank lending is not available to this important segment of the economy.


Redbook Chain Store Sales (week ended 8/5/2017)

- Store Sales year/year  2.7%. Previous was 2.8% 




JOLTS (June 2017)

- Job Openings  6,163,000. Previous was 5,702,000 

It's hard to tell what is going on here.  One issue is that there are a lot of job openings and an insufficient number of people available to fill those jobs. This may be related to the Fed's ditching the Labor Market Conditions Index because of the loose correlation between low unemployment and wage increases.  The issue is that too many of the jobs added are low paying. 

That has two implications:  1) wage growth remains stunted 2) people don't have the skills for the higher paying jobs which are available.





August 7, 2017

Labor Market Conditions Index (July 2017)

Killed by the Fed: "We decided to stop updating the LMCI because we believe it no longer provides a good summary of changes in U.S. labor market conditions. Specifically, model estimates turned out to be more sensitive to the detrending procedure than we had expected, the measurement of some indicators in recent years has changed in ways that significantly degraded their signal content, and including average hourly earnings as an indicator did not provide a meaningful link between labor market conditions and wage growth."

The last phrase is the entire content. Despite the low unemployment rate, wages are not growing. I have been talking about this for at least a year. Continuing to add minimum wage jobs is not having a significant effect on wages. That's the signal.   



August 4, 2017

BLS Employment Situation Report (July 2017)

- Nonfarm Payrolls month/month  209,000. Previous was  231,000  
- Unemployment Rate  4.3%. Previous was 4.4%
- Private Payrolls month/month   205,000. Previous was 194,000 
- Manufacturing Payrolls month/month  16,000. Previous was 12,000 
- Participation Rate    62.9%. Previous was 62.8% 
- Average Hourly Earnings month/month  +0.3%. Previous was +0.2%
- Average Hourly Earnings year/year 2.5%. Previous was 2.5%
- Average Workweek - All Employees  34.5 hours. Previous was 34.5 hours

My monthly detailed analysis of this report will be in Monday's RateWatch  Newsletter.



Trade Deficit (June 2017)

- Trade Balance Level  $43.6 billion. Previous was $46.4 billion 

One pattern we have seen is increased exports since December 2016.  This is after about 2 years of declining exports.

August 3, 2017

Challenger Job-Cut Report (July 2017)

- Announced Layoffs   28,307. Previous was  31,105




Initial Jobless Claims (week ended 7/29/2017)

- New Claims seasonally adjusted  240,000. Previous was 245,000 
- New Claims unadjusted, totaled 198,028 a decrease of 22,549  from  previous
- 4-week Moving Average  241,750. Previous was 244,250 

These number remain historically low when measured as a percentage of the labor force. Wages have not increased in the manner that a low unemployment rate usually causes because so many of the jobs added are low skill, low wage jobs.




PMI Services Index (July 2017)

- Level  54.7. Previous was 54.2   




Factory Orders (June 2017)

- Factory Orders month/month 3.0 %. Previous was -0.3 % 




ISM Non-Manufacturing Index (July 2017)

- Composite Index  53.9. Previous was 57.4.  


August 2, 2017

MBA Mortgage Applications (week ended 7/28/2017)


- Purchase Index Week/Week -2.0%. Previous weeks were -2.0%, +1.0%, +3.0%, -3.0%, -4.0%, -1.0%, -3.0%, +10.0%, -1.0%, -1.0%, -3.0%, +2.0%, and +4.0%.
- Refinance Index Week/Week -4.0%. Previous weeks were +3.0%, +13.0%, -0.4%, -13.0%, -9.0%, +2.0%, +9.0%, +3.0%, -6.0%, +11.0%, -6.0%, +3.0%, and -5.0%.
- Composite Index Week/Week -2.8%. Previous weeks were +0.4%, +6.3%, +1.4%, -7.4%, -6.2%, -0.6%, +2.8%, +7.1%, -3.4%, +4.4%, -4.1%, +2.4%, and -0.1%.

The Purchase Index while showing signs of weakening is +9.0% year-over-year.


ADP Private Jobs Employment Report  (July 2017)

- ADP Private Jobs  178,000. Previous was 191,000.


August 1, 2017

Personal Income and Outlays  (June 2017)

- Personal Income month/month  0.0%. Previous was +0.3% 
- Consumer Spending month/month  +0.1%. Previous was +0.2%
- PCE Price Index month/month  % +0.0%. Previous was +0.0%
- Core PCE price index month/month +0.1%. Previous was +0.1%
- PCE Price Index year/year  +1.4%. Previous was +1.5%
- Core PCE price index year/year +1.5%. Previous was +1.5%

The economy remains flat and inflation remains well-contained.



Redbook Chain Store Sales (week ended 7/28/2017)

- Store Sales year/year +2.8%. Previous was +2.1%

As chain store outlets close this number becomes less meaningful since closed store are not counted in this.  



PMI Manufacturing Index  (July 2017)

- Level    53.3. Previous was 52.0  




ISM Manufacturing Index (July 2017)

-  Index   56.3. Previous was 57.8  


Construction Spending (June 2017)

- Construction Spending month/month  -1.3%. Previous was +0.3%
- Construction Spending year/year    +1.6%. Previous was +3.8% 

If you see anything positive there let me know.


 

 






  Archive of commentary from previous months is here.