by Calculated Risk on 7/31/2015 04:16:00 PM

Here is a minor indicator I follow from the National Restaurant Association: Dampened Outlook Causes Restaurant Performance Index Decline in June

As a result of a somewhat dampened outlook among restaurant operators, the National Restaurant Association’s Restaurant Performance Index (RPI) declined in June for the second consecutive month. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 102.0 in June, down 0.4 percent from May and its lowest level in nine months. Despite the decline, June represented the 28th consecutive month in which the RPI stood above 100, which signifies continued expansion in the index of key industry indicators.

“Although same-store sales and customer traffic levels remained positive in June, the overall RPI declined as a result of dampened optimism among restaurant operators,” said Hudson Riehle, Senior Vice President of the Research and Knowledge Group for the Association. “The proportion of restaurant operators expecting sales growth fell to its lowest level in nine months, while operators’ outlook for the economy turned negative for the first time in nearly two years.”
emphasis added

Click on graph for larger image.

The index decreased to 102.0 in June, down from 102.4 in May. (above 100 indicates expansion).

Restaurant spending is discretionary, so even though this is "D-list" data, I like to check it every month. Even with the decline in the index, this is a solid reading.

by Calculated Risk on 7/31/2015 01:24:00 PM

Freddie Mac reported that the Single-Family serious delinquency rate declined in June to 1.53%, down from 1.58% in May. Freddie's rate is down from 2.07% in June 2014, and the rate in June was the lowest level since November 2008.

Freddie's serious delinquency rate peaked in February 2010 at 4.20%.

These are mortgage loans that are "three monthly payments or more past due or in foreclosure". 

Note: Fannie Mae will report their Single-Family Serious Delinquency rate for May later today.

Click on graph for larger image

Although the rate is declining, the "normal" serious delinquency rate is under 1%. 

The serious delinquency rate has fallen 0.54 percentage points over the last year, and at that rate of improvement, the serious delinquency rate will not be below 1% until mid-2016.

So even though delinquencies and distressed sales are declining, I expect an above normal level of Fannie and Freddie distressed sales through 2016 (mostly in judicial foreclosure states).

by Calculated Risk on 7/31/2015 10:02:00 AM

Chicago PMI July 2015: July Chicago Business Barometer Up 5.3 Points to 54.7

The Chicago Business Barometer increased 5.3 points to 54.7 in July led by a double digit gain in Production and accompanied by gains in New Orders and the other three components.
...
Companies reported a strong revival in output in July after five months of relatively weak business activity. Production rose sharply by 12.0 points to 61.8 amid a bounceback in inventory growth to the highest since April underpinned by a solid gain in New Orders.
...
Chief Economist of MNI Indicators Philip Uglow said, “The recent weakness in the Chicago Business Barometer had sounded a few alarm bells over the resilience of the US economic recovery. The positive start to the third quarter, however, suggests that activity bounced back firmly as firms saw orders and output increase sharply.“
emphasis added

This was well above the consensus forecast of 50.0.


Click on graph for larger image.

The final University of Michigan consumer sentiment index for July was at 93.1, down from the preliminary reading of 93.3, and down from 96.1 in June.

This was below the consensus forecast of 94.1.

by Calculated Risk on 7/30/2015 08:46:00 PM

From Tim Duy: Fed Watch: GDP Report

The second quarter GDP report, while not a blockbuster by any measure, will nudge the Fed further in the direction of a September rate hike. At first blush this might seem preposterous - 2.3% growth is nothing to write home about in comparison to history. But history is deceiving in this case. It remains important to keep in mind that 2% is the new 4%.
...
Bottom Line: An unspectacular recovery, but sufficient to keep the Fed on track for raising rates this year. The case for September further strengthens.

Friday:
• At 8:30 AM ET, the Q2 Employment Cost Index

• At 9:45 AM, the Chicago Purchasing Managers Index for July. The consensus is for a reading of 50.0, up from 49.4 in May.

• At 10:00 AM, the University of Michigan's Consumer sentiment index (final for July). The consensus is for a reading of 94.1, up from the preliminary reading of 93.3.

by Calculated Risk on 7/30/2015 04:01:00 PM

The Case-Shiller house price indexes for May were released on Tuesday. Zillow forecasts Case-Shiller a month early, and I like to check the Zillow forecasts since they have been pretty close.

From Zillow: Case-Shiller Expected to Maintain Holding Pattern in June

The May S&P/Case-Shiller (SPCS) data published today showed home prices continuing to rise at an annual rate of five percent for the 20-city composite and 4.7 percent for the 10-city composite (seasonally adjusted). The national index has risen 4.4 percent since May 2014.

The non-seasonally adjusted (NSA) 10-City Index was up one percent month-over-month, while the 20-City index rose 0.8 percent (NSA) from April to May. We expect the change from May to June to show increases of 1 percent (NSA) for the 10-city index and 0.8 percent for both the 20-city and national indices.

All Case-Shiller forecasts are shown in the table below. These forecasts are based on today’s May SPCS data release and the June 2015 Zillow Home Value Index (ZHVI).The SPCS Composite Home Price Indices for June will not be officially released until Tuesday, August 25.

This suggests the year-over-year change for the June Case-Shiller National index will be about the same as in the May report.

Zillow Case-Shiller Forecast
	Case-Shiller Composite 10		Case-Shiller Composite 20		Case-Shiller National
	NSA	SA	NSA	SA	NSA	SA
May Actual YoY	4.7%	4.7%	4.9%	4.9%	4.4%	4.4%
June Forecast YoY	4.6%	4.6%	4.7%	4.7%	4.3%	4.3%
June Forecast MoM	1.0%	0.1%	0.8%	-0.1%	0.8%	0.0%