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July 2019

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Economic Notes for the Week of February 11th

by Karl Schroeder for Finance

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.


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Economic Notes for the Week of January 28th

by Karl Schroeder for Finance

(-) 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).
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Economic Notes for the Week of January 21st

by Karl Schroeder for Finance

(+) Housing starts for December were dramatically higher, with a gain of +12.1% relative to an expected +3.3% improvement.  By way of differentiation, single-family starts were up +8.1% while mufti family continued its trend higher, growing over +20%, and the growth was seen in all areas of the country.  December building permits, on the other hand, were ‘disappointing’ to the extent that the gain was +0.3% lagged the consensus +0.5% figure.  These were led by gains in single-family permits, as opposed to multi-family.

(+) Retail sales numbers were better than anticipated, with a gain of +0.5% for December versus an expected +0.2% result.  As usual, the embedded sub-categories added more color, but didn’t change the result much.  The sales ‘ex-autos’ figure was a similar +0.3%, a shade above expected, while the ‘core/control’ group that excludes volatile autos, gasoline and building materials gained +0.6%—double what was expected (partially due to a gasoline price drop).  What we can take from all this is that more substantive elements like health and personal care components performed well, when all cyclical components removed.

(-) Business inventories rose a bit for November, but largely in line with expectations, at +0.3%.  This was a slower rate of accumulation than in the prior quarter, so a small negative in terms of overall growth measurement prospects.
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Economic Notes for January 2nd 2013

by The Editor for Finance

The last week of the year is traditionally one of the lightest, so we’re featuring an abbreviated economic report this week.

(+) New home sales gained +4.4% for November to 377k units, which beat analyst predictions of +3.3% growth.  Over the year, this metric is up +15%, which is in line with other positive housing metrics.

(+) Pending home sales jumped +1.7% for November month-over-month, which beat the estimate of +1.0%.   The Northeast and West regions were responsible for the majority of the gains, while the South and Midwest ended up with flat results.  These figures are right in line with a trend of positive housing data.

(+) The Case-Shiller home price index for October rose +0.7%, which bested the forecasted +0.5% gain and moved to a +4.3% gain year-over-year (the index has risen almost every month this year).  This index keeps beating expectations—led by over +1% showings in Las Vegas, San Diego and Atlanta during the month, while Chicago and Boston posted slight declines.  The only negative is that it’s old news—over a month old by the time we see the results. 
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Economic Notes for the Week of December 24th

by Karl Schroeder for Finance, Real Estate

Manufacturing related news:

(-) Superstorm Sandy’s impact is still being felt in the manufacturing sector.  The December Empire State Manufacturing Survey came in at -8.1, weaker than the expected -1.0.  The general business conditions for New York manufacturers have been declining at a modest pace for five consecutive months.  The new orders index dropped to -3.7 from November’s +3.08.  The shipments index decreased six points from the prior month to 8.83.  Manufacturers in the New York City metro area reported roughly 7% lower revenues in October and about 5% revenue loss in November because of Sandy.  Indexes for the six-month outlook remained weaker than their levels earlier this year, though most future indexes were higher than in November.

(+) The Philadelphia Fed released its December 2012 business outlook survey.  The district’s manufacturing conditions beat market expectations.  The current activity index was up 8.1%, reversing the downward trend of -10.7% in October due to Sandy’s impact.  New orders, shipments and employment activities all improved.  The survey’s future indexes predict increased activity over the first half of next year.

Real estate related news:

(+) The National Association of Home Builders Housing Market Index rose by one point to reach 47 in December, marking its eighth consecutive rising month.  Yet the index trails the median forecast.  Meanwhile, builder confidence in the market for newly built, single-family homes grew to the highest level since April of 2006.

(-) Housing starts in November declined by 4.1% to an annual rate of 565,000 in the single-family category, lower than the October figure of 589,000.  In the multi-family category, November had an annual rate of 861,000 housing starts, 3% below October’s estimate of 888,000 but up 21.6% since November 2011.  The decline in starts was felt mostly in the West and to a lesser extent in the Midwest.  Data on housing starts were a little disappointing from month-over-month comparison but continued improving in terms of year-over-year reading.

(+) Overall building permits exceeded investors’ expectations.  Multi-family permits posted a solid 3.6% month-over-month gain with an annual rate of 899,000.  Single-family permits were at a rate of 565,000, 0.2% weaker than the October figure.

(+) Existing home sales for November rose 5.9% to an annual rate of 5.04 million, exceeding expectations by 3.8%.  Sales were 14.5% higher than last November’s 4.4 million-unit pace.  The South saw sales rise the most with a 7.9% increase and the West gained the least with a 0.8% increase.  Not only did the number of completed sales transactions pick up, but home prices also recovered due to the low supply in inventory.  The total housing inventory at the end of November fell 3.8% to 2.03 million, which represents a 4.8-month supply. This is the lowest inventory level since September 2005.  As a result, the national median existing home price was up 10.1% year-over year in November, marking the ninth consecutive monthly price increase.
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Economic Notes for the Week of December 10th

by Karl Schroeder for Finance

Some of the more important manufacturing indexes were released this week, and offered mixed results—on par with recent consensus expectations as we get close to closing out the year.

The ISM Manufacturing Index for November was weaker than anticipated in November, declining to 49.5 versus an expected 51.4 figure.  Details and rationale for these types of surveys are sometimes difficult to quantify, but it appears the hurricane played a negative role in results, as did uncertainty about the upcoming fiscal cliff.  Upcoming new orders declined, as did employment; however, the production and inventory components improved.  This is not a major disappointment, but is a little soft for a variety of well-discussed reasons.
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