by Calculated Risk on 7/16/2015 12:14:00 PM

From the Philly Fed: July Manufacturing Survey

Manufacturing activity in the region increased modestly in July, according to firms responding to this month’s Manufacturing Business Outlook Survey.
...
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from 15.2 in June to 5.7 this month. ...

Firms’ responses suggest steady employment in July. The percentage of firms reporting an increase in employees in July was equal to the percentage reporting a decrease (12 percent). The current employment index fell for the third consecutive month, from a reading of 3.8 in June to -0.4.
emphasis added

This was below the consensus forecast of a reading of 11.5 for July.

Click on graph for larger image.

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

The average of the Empire State and Philly Fed surveys decreased in July, and this suggests a reading similar to June for the ISM survey.

by Calculated Risk on 7/16/2015 10:06:00 AM

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 60 in July, unchanged from June (but June was revised up). Any number above 50 indicates that more builders view sales conditions as good than poor.

From the NAHB: Builder Confidence Hits Highest Level Since November 2005

Builder confidence in the market for newly built, single-family homes in July hit a level of 60 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today while the June reading was revised upward one point to 60 as well. The last time the HMI reached this level was in November 2005.
...
“This month’s reading is in line with recent data showing stronger sales in both the new and existing home markets as well as continued job growth,” said NAHB Chief Economist David Crowe. “However, builders still face a number of challenges, including shortages of lots and labor.”
...
Two of the three HMI components posted gains in July. The component gauging current sales conditions rose one point to 66 and the index charting sales expectations in the next six months increased two points to 71. Meanwhile, the component measuring buyer traffic dropped a single point to 43.

Looking at the three-month moving averages for regional HMI scores, the West and Northeast each rose three points to 60 and 47, respectively. The South and Midwest posted respective one-point gains to 61 and 55.
emphasis added

Click on graph for larger image.

This graph show the NAHB index since Jan 1985.

This was above the consensus forecast of 59.

by Calculated Risk on 7/16/2015 08:41:00 AM

The DOL reported:

In the week ending July 11, the advance figure for seasonally adjusted initial claims was 281,000, a decrease of 15,000 from the previous week's revised level. The previous week's level was revised down by 1,000 from 297,000 to 296,000. The 4-week moving average was 282,500, an increase of 3,250 from the previous week's revised average. The previous week's average was revised down by 250 from 279,500 to 279,250.

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

The previous week was revised down by 1,000.

The following graph shows the 4-week moving average of weekly claims since 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 282,500.

This was close to the consensus forecast of 282,000, and the low level of the 4-week average suggests few layoffs.

by Calculated Risk on 7/15/2015 07:45:00 PM

From Jon Hilsenrath and Kate Davidson at the WSJ: Fed’s Yellen Aims to Move Rates Up Soon, but on a Slow Path

Fed officials have indicated they could move rates as early as September, though many investors expect the Fed to wait until December. Ms. Yellen, testifying Wednesday before a House panel, avoided being pinned down on a date, but did yield some insight into her tactical thinking on the timing.

She was more inclined to move rates up soon and proceed slowly than to wait a long time and move aggressively to catch up if the Fed finds itself behind the curve in preventing the economy or markets from overheating, she told the House Financial Services Committee. Moving soon and slowly, she said, could give the central bank flexibility as it proceeds.

Goldman Sachs economist Kris Dawsey thinks the Fed will move in December:

Comments from Fed officials since the June meeting—including Chair Yellen's monetary policy testimony today—appear consistent with our forecast for a December rate hike. However, Fed officials are by no means "ruling out" September.
...
On balance, we believe that recent Fedspeak has been broadly consistent with our expectation for a hike in December. That said, many Fed officials themselves do not appear to have high conviction views about September vs. December at this time. Amongst two hikers, Williams said he was in "wait-and-see mode" and Powell indicated that the odds of September vs. later were "roughly 50/50." Meanwhile, amongst those we expect would be one-hikers, the possibility of a September hike seems very much alive. Overall, we think that risk management considerations, continued concern about global developments, a prudent desire for the first hike after seven years of zero interest rates to be almost fully anticipated by the market, and persistently subdued realizations on core inflation will ultimately carry the day and result in a December hike.

Thursday:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 282 thousand from 297 thousand.

• At 10:00 AM, the Philly Fed manufacturing survey for July. The consensus is for a reading of 11.5, down from 15.2 last month (above zero indicates expansion).

• Also at 10:00 AM, the July NAHB homebuilder survey. The consensus is for a reading of 59, unchanged from 59 last month. Any number above 50 indicates that more builders view sales conditions as good than poor.

• Also at 10:00 AM, Testimony by Fed Chair Janet Yellen, Semiannual Monetary Policy Report to the Congress, Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate

by Calculated Risk on 7/15/2015 05:13:00 PM

Here is a price index for commercial real estate that I follow. 

From CoStar: Commercial Property Price Indices Spring Forward In May

FOLLOWING SLOWDOWN IN APRIL, CRE PRICES REBOUNDED IN MAY WITH STRONG SHOWING ACROSS THE BOARD. The two broadest measures of aggregate pricing for commercial properties within the CCRSI—the value-weighted U.S. Composite Index and the equal-weighted U.S. Composite Index—gained 1.4% and 1.7%, respectively, in the month of May 2015. The value-weighted U.S. Composite Index advanced 12.2% in the trailing 12 months ended May 2015, and now stands 12% above its prior peak, reflecting the strong recovery of larger, higher-value properties. The equal-weighted U.S. Composite Index began its recovery later in the cycle but has increased at a faster rate of 14.1% in the trailing 12 months ended May 2015 as smaller commercial properties continued to gain favor with investors.
...
CRE SPACE ABSORPTION SOARED TO HIGHEST LEVEL YET IN RECOVERY. For the 12 months ended as of the second quarter of 2015, net absorption across the three major commercial property types — office, retail, and industrial — totaled 575.5 million square feet, a 39.3% increase over the 12-month period ended as of the second quarter of 2014, and the highest annual total on record since 2008.
emphasis added

Click on graph for larger image.

This graph from CoStar shows the the value-weighted U.S. Composite Index and the equal-weighted U.S. Composite Index indexes.

The value-weighted index declined 1.4% in May and is up 12.2% year-over-year.

The equal-weighted index declined 1.7% in May and up 14.1% year-over-year.

Note: These are repeat sales indexes - like Case-Shiller for residential - but this is based on far fewer pairs.