Economic Notes for the Week of March 18th

(+) The most heavily-looked at report last week, retail sales, registered a stronger-than-expected result for February, up +1.1% versus a consensus estimate of +0.5%.  The headline figure was aided by a +5.0% gain in gas station sales (in line with higher gasoline prices).  Auto sales and building materials, both cyclical and choppy month-to-month, were up +1.1% and helped the overall results.  The next level of ‘cleaned-up’ data, retail sales ex-autos, gained a still-respectable +1.0% that beat the expected +0.5%.  Lastly, the ‘core/control’ retail sales number (which excludes autos, gasoline and building materials, and represents the figure that corresponds most closely to the consumer spending segment of the quarterly GDP report) gained +0.4%, double the expected +0.2% increase.  In addition, increases were broad, with strong results in ‘general merchandise,’ food/beverage and online sales.  What this tells us is that purchasing activity continues to improve—despite some fears of slowing due to this year’s payroll tax increases.  While still fairly low, this remains a tailwind in our favor. Read more

Economic Notes for the Week of March 11th

(+) The ISM Non-Manufacturing Index for February came in better than the expected 55.0 level with a small increase to 56.0.  New orders and business activity were higher, while employment deteriorated a bit (although still in expansionary territory).  Inventory expansion was also slightly higher.  Interestingly, anecdotal comments in the survey responses were optimistic with a general theme that business was ‘picking up’ in several industries in a more diversified way.

(+) Factory orders for January fell -2.0%, which was a touch better than the forecasted decline of -2.2%.  A large decline in aircraft orders (defense and non-defense—both of which are a ‘choppy’ series) accounted for a good portion of the result.  While ‘core’ (non-defense, non-aircraft) capital goods shipments fell -1.1% during the month, on the positive side, forward-looking core orders came in at a strong +7.2%.  Read more

Economic Notes for the Week of February 25th

(0) The CPI inflation number for January was flat, which was a bit less than the slight increase of +0.1% expected.  However, the core inflation number—which excludes more volatile food and energy prices—gained +0.3% as opposed to an expected +0.2%.  The difference was mainly due to an energy price decline in the headline figure, as well as marginal gains in apparel, tuition/child care and tobacco in the core number.  Year-over-year, the headline inflation number was up +1.6% and core +1.9%.  Similarly, the Producer Price Index for January rose +0.2% which was a tick below the expected +0.3% increase (and a year-over-year result of +1.4%).  The core number rose by an identical amount, in line with expectations. Read more

Economic Notes for the Week of February 18th

(0) Retail sales on a headline level came in close to consensus, with a +0.1% gain for January.  When sales ex-automobiles were removed, the growth bumped to +0.2%, which was a tenth of a percent better than expected.  Lastly, the ‘core/control’ number (which attempts to normalize things by excluding cyclical autos, gasoline stations and building materials—per what the government uses in their GDP calculations) rose +0.1% for the month, which was lower than the forecast +0.3%.  In the core figure, ‘misc.’ retailers such as office supply were down over two percent, while department stores were stronger by roughly a percentage point.  Net-net, despite payroll tax hike effects, it appears this year has begun decently in the retail sales arena, albeit with relatively flat numbers.

Read more

Economic Notes for the Week of February 11th

It was a relatively light week from an economic standpoint.


(+) Non-manufacturing ISM for January was right at par with consensus, at a reading of 55.2 versus an expected 55.0.  The look-ahead components of new orders and current business activity were weaker than in December, but remained in growth mode.  The employment piece rose a bit as well.  Additionally, anecdotal comments from the survey were generally positive, which was a welcome change considering overall business sentiment at year-end.


(-) Factory orders for December were a bit weaker than expected, up +1.8% versus a forecast +2.3%.  Core capital goods were revised down slightly and inventory buildup was weaker than in prior months.

Read more

Economic Notes for the Week of January 28th

(-) Existing home sales for December fell by -1.0%, which ran contrary to an expected +1.2% gain, and obviously was a bit of a disappointment.  Single family home sales dropped by -1.4%, which were offset somewhat by condo sales, which gained +1.7%.  From a regional level, weakness in the Midwest (nearly -6%) and South overwhelmed gains in the Northeast and Western portions of the country.  Net-net, a choppy report, but not entirely surprisingly considering the time of year we’re in.

(0) The FHFA home price index, that takes into account prices of homes with Fannie Mae/Freddie Mac mortgages, gained +0.6% for November, which just fell short of consensus by a tenth of a percent.  The Pacific and Mountain regions experienced gains near two percent, and drove the broader upward movement.  The more critical measure, year-over-year price movement, registered a gain of +5.6%, making 2012 the first positive year in six years.

(-) New home sales for December were lower than expected in December, falling -7.3% month-over-month, which ran counter to an expected consensus gain of +2.1%.  Some of this difference was due to some revisions for November (the gain for which was boosted from +4.5% to over +9%), but the volatility is typical of this series and this time of year.  Year-over-year, sales are up +9%, which is positive.

The new home sales story has been a positive one, and may very well contribute meaningfully to U.S. GDP in 2013—inching further towards normal after plodding along at very low levels for years coincident with the financial crisis.  In fact, it could add up to a large percentage of the total GPP number—which, in the slow growth period we’re in, is meaningful.  There are other effects as well, such as indirect demand for household goods and a general improvement in the ‘wealth effect’ that helps consumers feel richer and better able to spend (since their homes are worth more). Read more