by Calculated Risk on 1/16/2015 10:01:00 AM

Click on graph for larger image.

The preliminary Reuters / University of Michigan consumer sentiment index for January was at 98.2, up from 93.6 in December.

This was above the consensus forecast of 94. Lower gasoline prices and a stronger economy are probably the reasons for the sharp increase.

by Calculated Risk on 1/16/2015 09:15:00 AM

From the Fed: Industrial production and Capacity Utilization

Industrial production decreased 0.1 percent in December after rising 1.3 percent in November. The decrease in December reflected a sharp drop in the output of utilities, as warmer-than-usual temperatures reduced demand for heating; excluding utilities, industrial production rose 0.7 percent. Manufacturing posted a gain of 0.3 percent for its fourth consecutive monthly increase. The index for mining increased 2.2 percent after falling in the previous two months. At 106.5 percent of its 2007 average, total industrial production in December was 4.9 percent above its level of a year earlier. For the fourth quarter of 2014 as a whole, industrial production advanced at an annual rate of 5.6 percent, with widespread gains among the major market and industry groups. Capacity utilization for the industrial sector decreased 0.3 percentage point in December to 79.7 percent, a rate that is 0.4 percentage point below its long-run (1972–2013) average.
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Click on graph for larger image.

This graph shows Capacity Utilization. This series is up 12.7 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 79.7% is 0.4% below the average from 1972 to 2012 and below the pre-recession level of 80.8% in December 2007.

Note: y-axis doesn't start at zero to better show the change.

The second graph shows industrial production since 1967.

Industrial production decreased 0.1% in December to 106.5. This is 27.2% above the recession low, and 5.7% above the pre-recession peak.

This was slightly below expectations.

by Calculated Risk on 1/16/2015 08:30:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.4 percent in December on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 0.8 percent before seasonal adjustment.

The gasoline index continued to fall sharply, declining 9.4 percent and leading to the decrease in the seasonally adjusted all items index. The fuel oil index also fell sharply, and the energy index posted its largest one-month decline since December 2008, although the indexes for natural gas and for electricity both increased. The food index, in contrast, rose 0.3 percent, its largest increase since September.

The index for all items less food and energy was unchanged in December, following a 0.2 percent increase in October and a 0.1 percent rise in November. This was only the second time since 2010 that it did not increase.
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I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI. This was at the consensus forecast of a 0.4% decrease for CPI, and below the forecast of a 0.1% increase in core CPI.

by Calculated Risk on 1/15/2015 08:33:00 PM

From Freddie Mac: Mortgage Rates Decline for Third Consecutive Week

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates falling for the third consecutive week as bond yields continued to drop despite a strong employment report. Averaging 3.66 percent, the 30-year fixed-rate mortgage is at its lowest level since the week ending May 23, 2013 when it averaged 3.59 percent. This also marks the first time the 15-year fixed rate mortgage has fallen below 3 percent since the week ending May 30, 2013.

30-year fixed-rate mortgage (FRM) averaged 3.66 percent with an average 0.6 point for the week ending January 15, 2014, down from last week when it averaged 3.73 percent. A year ago at this time, the 30-year FRM averaged 4.41 percent.
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Friday:
• At 8:30 AM ET, the Consumer Price Index for December. The consensus is for a 0.4% decrease in CPI, and for core CPI to increase 0.1%.

• At 9:15 AM, the The Fed will release Industrial Production and Capacity Utilization for December. The consensus is for no change in Industrial Production, and for Capacity Utilization to decrease to 80.0%.

• At 9:55 AM, the University of Michigan's Consumer sentiment index (preliminary for January). The consensus is for a reading of 94.1, up from 93.6 in December.

by Calculated Risk on 1/15/2015 06:31:00 PM

From the National Multi Housing Council (NMHC): Apartment Markets Moderate Slightly in January NMHC Quarterly Survey

Apartment markets expanded in three of four areas in the January National Multifamily Housing Council (NMHC) Quarterly Survey of Apartment Market Conditions, indicating a slight moderation of the pace of improvement. Only the sales volume index (44) dropped below 50, with market tightness (51), equity financing (55) and debt financing (71) showing continued expansion.

“The apartment markets continue to show strength in most areas,” said Mark Obrinsky, NMHC’s SVP of Research and Chief Economist. “Last year’s ramp-up in new construction finally signaled complete recovery on the supply side. Even so, demand for apartment residences remains strong enough to absorb the increase in deliveries—and then some, as occupancy rates edged up a bit more.”

The Market Tightness Index fell from 52 to 51. More than half (58 percent) of respondents reported unchanged conditions, and slightly over one-fifth (22 percent) saw conditions as tighter than three months ago. Looser conditions were reported by 20 percent of respondents. This is the fourth consecutive quarter where the index has indicated overall improving conditions.
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Click on graph for larger image.

This graph shows the quarterly Apartment Tightness Index. Any reading above 50 indicates tighter conditions from the previous quarter. This indicates market conditions were mostly unchanged over the last quarter.

As I've mentioned before, this index helped me call the bottom for effective rents (and the top for the vacancy rate) early in 2010.