by Calculated Risk on 6/19/2014 10:00:00 AM

From the Philly Fed: June Manufacturing Survey

The diffusion index of current general activity increased from a reading of 15.4 in May to 17.8 this month. The index has remained positive for four consecutive months and is at its highest reading since last September. The current new orders and shipments indexes also moved higher this month, increasing 6 points and 1 point, respectively.
...
Indicators also suggest improved labor market conditions this month. The employment index remained positive for the 12th consecutive month and increased 4 points. [to 11.9].
emphasis added

This was above the consensus forecast of a reading of 13.0 for June.

Click on graph for larger image.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index. The dashed green line is an average of the NY Fed (Empire State) and Philly Fed surveys through June. The ISM and total Fed surveys are through May.

The average of the Empire State and Philly Fed surveys is at the highest level since 2011, and this suggests stronger expansion in the ISM report for June.

by Calculated Risk on 6/19/2014 08:30:00 AM

The DOL reports:

n the week ending June 14, the advance figure for seasonally adjusted initial claims was 312,000, a decrease of 6,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 317,000 to 318,000. The 4-week moving average was 311,750, a decrease of 3,750 from the previous week's revised average. The previous week's average was revised up by 250 from 315,250 to 315,500.

There were no special factors impacting this week's initial claims.

The previous week was revised up from 317,000.

The following graph shows the 4-week moving average of weekly claims since January 1971.

Click on graph for larger image.


The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 311,750.

This was close to the consensus forecast of 313,000.  The 4-week average is now at normal levels for an expansion.

by Calculated Risk on 6/18/2014 10:03:00 PM

From Jon Hilsenrath at the WSJ: Fed Keeps Rates Unchanged, Sees Eventual Rise in 2015, 2016

The Fed also said it would reduce monthly purchases of mortgage and Treasury bonds by another $10 billion next month to $35 billion.  ....With the job market gradually improving, the Fed is taking away that support and slowly turning its attention to the timing and pace of short-term interest rate increases. It has kept short-term rates near zero since December 2008 and isn't planning to start raising them until next year.

From Robin Harding at the Financial Times: Fed sets the stage for lower volatility this summer

The most revealing bit of Fed analysis at the June meeting was the change that did not take place: there was almost no movement in the Fed’s expectations for inflation. Indeed, its forecasts for 2014, 2015 and 2016 were almost entirely unchanged – with inflation below target in every year.

That was something of a surprise given that the consumer price index – admittedly not the Fed’s preferred measure – is up by more than 2 per cent on a year ago. “The CPI index has been a bit on the high side,” said chairwoman Ms Yellen, “but I think the data that we’re seeing is noisy.”
excerpt with permission

From Goldman Sachs: FOMC Stays the Course

Today's FOMC meeting was a touch more dovish than we expected. ... Chair Yellen downplayed the recent firmer inflation data and signaled some willingness to let inflation overshoot the 2% target if the employment side of the mandate continues to disappoint.

Our forecast for the first hike in the funds rate remains early 2016, about six months later than the FOMC's own projections and the market consensus. ...

The risks relative to our forecast are, however, tilted towards an earlier hike. One reason is that recent inflation news has been firmer than expected. Another is that financial conditions no longer appear tighter than "appropriate."

Thursday:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 313 thousand from 317 thousand.

• At 10:00 AM, the Philly Fed manufacturing survey for June. The consensus is for a reading of 13.0, down from 15.0 last month (above zero indicates expansion).

by Calculated Risk on 6/18/2014 06:51:00 PM

Economist Tom Lawler sent me the updated table below of short sales, foreclosures and cash buyers for several selected cities in May.

Lawler notes that Orlando is one of a few markets in Florida where foreclosure share of sales up a decent amount from year ago.

On distressed: Total "distressed" share is down in all of these markets, mostly because of a sharp decline in short sales.

Short sales are down in all of these areas.

Foreclosures are down in most of these areas too, although foreclosures are up a little in a couple of areas.

The All Cash Share (last two columns) is mostly declining year-over-year.

As investors pull back, the share of all cash buyers will probably continue to decline.

	Short Sales Share		Foreclosure Sales Share		Total "Distressed" Share		All Cash Share
	May-14	May-13	May-14	May-13	May-14	May-13	May-14	May-13
Las Vegas	7.9%	31.8%	9.1%	10.3%	17.0%	42.1%	40.2%	57.9%
Reno**	11.0%	27.0%	6.0%	7.0%	17.0%	34.0%
Phoenix	3.9%	12.3%	6.7%	9.7%	10.7%	22.0%	29.5%	38.9%
Sacramento	7.0%	22.5%	8.3%	7.5%	15.3%	30.0%	20.5%	33.6%
Minneapolis	3.9%	6.8%	12.1%	19.9%	16.0%	26.7%
Mid-Atlantic	5.2%	8.2%	8.1%	7.2%	13.3%	15.5%	17.2%	16.7%
Orlando	9.2%	22.1%	24.7%	19.0%	34.0%	41.2%	43.8%	53.9%
California *	6.0%	11.3%	6.9%	15.0%	12.9%	26.3%
Bay Area CA*	4.7%	10.4%	3.1%	6.5%	7.8%	16.9%	22.9%	27.6%
So. California*	6.6%	15.7%	5.8%	10.9%	12.4%	26.6%	25.8%	32.6%
Hampton Roads					21.3%	26.3%
Northeast Florida					36.5%	37.8%
Toledo							36.6%	33.8%
Wichita							24.3%	23.0%
Des Moines							17.5%	17.3%
Tucson							31.3%	32.8%
Omaha							19.4%	14.1%
Pensacola							32.6%	32.1%
Georgia***							26.0%	NA
Peoria							19.6%	21.7%
Georgia***							26.0%	NA
Spokane
Houston			4.5%	9.4%
Memphis*			15.9%	21.5%
Birmingham AL
*share of existing home sales, based on property records **Single Family Only ***GAMLS

by Calculated Risk on 6/18/2014 03:48:00 PM

From housing economist Tom Lawler:

Based on local realtor/MLS reports across the country, I estimate that US existing home sales as measured by the National Association of Realtors ran at a seasonally adjusted annual rate of 4.81 million in May, up 3.4% from April’s preliminary estimate (which I believe was too low – see below), but down 6.6% from last May’s pace. Folks who track local realtor reports and look at YOY declines in unadjusted data might be surprised by a May estimate showing a decent-sized monthly pickup in seasonally adjusted sales, as the YOY decline in unadjusted sales in May appears to be similar to (or even a tad larger) than that in April. However, (1) seasonally adjusted sales last May were 3.2% higher than last April; and (2) there was one fewer business day this May compared to last May, and business-day count affects the NAR’s seasonal adjustment factor.

Trying to use publicly-available realtor/MLS reports to project the NAR’s inventory estimate is very challenging in the spring. As I’ve written about before, the NAR inventory number from March to April always shows a substantially larger increase than realtor/MLS reports (or listings data) would suggest, while the April to May change is always lower than realtor/MLS reports (or listings data) would suggest. I’m not sure why, but I’m guessing it is related to differences in the “pull dates” of the NAR reports and the publicly-released reports. Realtor/MLS reports for May, however, clearly indicate that national listings showed a higher YOY increase in May than in April, and my “best guess” in that the NAR’s existing home inventory for May will be about 2.32 million, up 7.9% from last May.

Finally, I estimate that the NAR will estimate that the median existing SF home sales price in May was up by about 3% from last May.

Flipping back to April, local realtor/MLS reports strongly suggest that the NAR’s estimate for existing home sales in April – 4.65 million (SAAR) – was too low, with all of the understatement coming from the South region. I have local realtor/MLS reports from across the South region for April covering a total of over 108,000 sales, and these reports suggest that home sales in the South in April were unchanged from the previous April on an unadjusted basis. The NAR, in contrast, estimates that existing home sales in the South in April were down 4.9% YOY (NSA). I’ve been using local realtor/MLS reports to project NAR data (national and by region) for many years, and I’ve never seen such a huge “gap.” To be sure, some of the publicly-available realtor/MLS reports may be wrong. By the same token, some of the official “NAR” reports may be wrong. Also, I know that a few MLS in the South changed MLS vendors and delayed their release of home sales reports in April, which could have impacted NAR estimates (though probably not by that much). While I have no clue as to whether the NAR will revise its April estimate, I feel pretty confident that the NAR’s April estimate was too low, probably by 100,000 (SAAR) or so, and I would urge the NAR to “double-check” their April numbers.

CR Note: The NAR is scheduled to release the May existing home sales report on Monday, June 23rd.