by Calculated Risk on 7/01/2011 11:40:00 AM

Catching up ... this morning from the Census Bureau reported that overall construction spending decreased in May:

[C]onstruction spending during May 2011 was estimated at a seasonally adjusted annual rate of $753.5 billion, 0.6 percent (±1.6%)* below the revised April estimate of $757.9 billion. The May figure is 7.1 percent (±1.8%) below the May 2010 estimate of $811.2 billion.

Private construction spending also decreased in May:

Spending on private construction was at a seasonally adjusted annual rate of $477.2 billion, 0.4 percent (±1.4%)* below the revised April estimate of $479.3 billion. Residential construction was at a seasonally adjusted annual rate of $228.9 billion in May, 2.1 percent (±1.3%) below the revised April estimate of $233.8 billion. Nonresidential construction was at a seasonally adjusted annual rate of $248.3 billion in May, 1.2 percent (±1.4%)* above the revised April estimate of $245.4 billion.

Click on graph for larger image in graph gallery.

This graph shows private residential and nonresidential construction spending since 1993. Note: nominal dollars, not inflation adjusted.

Residential spending is 66% below the peak in early 2006, and non-residential spending is 40% below the peak in January 2008.

The small increase in non-residential in May was mostly due to power.

Construction spending is still mostly moving sideways (and a little down). I expect some pickup in residential construction spending as more multi-family units are started.

by Calculated Risk on 7/01/2011 10:15:00 AM

PMI was at 55.3% in June, up from 53.5% in May. The employment index was at 59.9%, up from 58.2% and new orders increased to 51.6%, up from 51.0%. All better than in May.

From the Institute for Supply Management: June 2011 Manufacturing ISM Report On Business®

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. “The PMI registered 55.3 percent, an increase of 1.8 percentage points from May, indicating expansion in the manufacturing sector for the 23rd consecutive month. New orders and production were both modestly up from last month, and employment showed continued strength with an increase of 1.7 percentage points to 59.9 percent. The rate of increase in prices slowed for the second consecutive month, dropping 8.5 percentage points in June to 68 percent. This follows a similar reduction of 9 percentage points in the Prices Index in May, and is the lowest figure since August 2010 when the index registered 61.5 percent. While the rate of price increases has slowed and the list of commodities up in price has shortened, commodity and input prices continue to be a concern across several industries.”

Click on graph for larger image in new window.

Here is a long term graph of the ISM manufacturing index.

This was above expectations of 51.7%. Earlier in the month it looked like the ISM was going to be weak, but recent regional reports indicated improvement towards the end of June.

by Calculated Risk on 7/01/2011 09:55:00 AM

The final June Reuters / University of Michigan consumer sentiment index decreased to 71.5 from the preliminary reading of 71.8. This is down from 74.3 in May.


Click on graph for larger image in graphic gallery.

In general consumer sentiment is a coincident indicator and is usually impacted by employment (and the unemployment rate) and gasoline prices. However, even with gasoline prices falling, consumer sentiment is mostly moving sideways at a low level.

This was below the consensus forecast of 72.0.

by Calculated Risk on 7/01/2011 08:31:00 AM

From the WSJ: Eurogroup to Approve Greek Aid on Saturday. The WSJ reports the euro zone Finance ministers will hold a conference call tomorrow and are expected to approve the disbursement of the next tranche of aid (€12 billion). They are also expected to discuss the next bailout.

The yield for Greek 2 year bonds is down to 26.4%, and the 10 year yield is down to 16.3%. Portuguese and Irish 10 year yields are down too (11.6% for Ireland, 10.8% for Portugal).

by Calculated Risk on 6/30/2011 11:09:00 PM

From Edmunds.com: Ford: Industry Car Sales to Rise after June

Ford Motor Co.’s chief sales analyst predicts June car sales will be level with or somewhat better than those in May, but after June, the sales rate will begin to rise through year-end. “There are some indications that May and June could be the slowest sales rates of the year,” George Pipas told media Wednesday. “There are positive signs in June’s results that suggest at some point in the second half, we’ll return to a sales rate of the first half or better.”
...
Pipas said July should be improved but it won’t be until at least August before the U.S. industry returns to a 13 million or more SAAR due to inventory shortages of Japanese automakers caused by the March 11 earthquake.

June sales will be announced tomorrow and no one expects a huge rebound. A few estimates:

• From Bloomberg: Auto Sales at 12 Million Rate Slowed by Missing Inventory: Cars

June light-vehicle deliveries, to be released tomorrow, may have run at a 12 million seasonally adjusted annual rate, the average estimate of 12 analysts surveyed by Bloomberg. That would be an increase from 11.8 million in May

• From Edmunds.com:

The estimated sales volume translates to a Seasonally Adjusted Annualized Rate (SAAR) of 11.9 million in June, according to Edmunds.com analysts

• From TrueCar.com:

The June 2011 forecast translates into a Seasonally Adjusted Annualized Rate (SAAR) of 12.17 million new car sales, up from 11.83 million in May 2011 and up from 11.16 million in June 2010

• From J.D. Power and Associates:

[The] forecast by J.D. Power would mean a seasonally adjusted annualized rate ... for total light vehicles of 12 million

The rebound - according to Ford - should show up in July and August.