by Calculated Risk on 5/02/2011 11:39:00 AM

The Census Bureau reported this morning that overall construction spending increased in March compared to February (seasonally adjusted).

[C]onstruction spending during March 2011 was estimated at a seasonally adjusted annual rate of $768.9 billion, 1.4 percent (±1.6%)* above the revised February estimate of $758.6 billion. The March figure is 6.7 percent (±1.8%) below the March 2010 estimate of $824.0 billion.

Private construction spending also increased in March:

Spending on private construction was at a seasonally adjusted annual rate of $476.1 billion, 2.2 percent (±1.4%) above the revised February estimate of $466.0 billion. Residential construction was at a seasonally adjusted annual rate of $229.1 billion in March, 2.6 percent (±1.3%) above the revised February estimate of $223.2 billion. Nonresidential construction was at a seasonally adjusted annual rate of $247.0 billion in March, 1.8 percent (±1.4%) above the revised February estimate of $242.7 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.

I expect residential spending to pick up a little this year (mostly multifamily) - and residential will probably be above non-residential spending by the end of the year.

by Calculated Risk on 5/02/2011 10:00:00 AM

PMI at 60.4% in April, down from 61.2% in March. The employment index was at 62.7 and new orders at 61.7. All slightly slower than in March, but still very strong.

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

The report was issued today by Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The recent trend of rapid growth in the manufacturing sector continued in April as the PMI registered above 60 percent for the fourth consecutive month. The New Orders and Production Indexes continue to drive the PMI, as they have both exceeded 60 percent for five consecutive months. Manufacturing employment appears to have developed significant momentum, as the Employment Index readings for the first four months of 2011 are the highest readings in the last 38 years. Inventory growth also took place in April after two months of destocking; however, the inventory restocking would appear to be necessitated by the strong performance in new orders. While the manufacturing sector is definitely performing above most expectations so far in 2011, manufacturers are experiencing significant cost pressures from commodities and other inputs."

Click on graph for larger image in new window.

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

This was a strong report and above expectations of 59.5%.

by Calculated Risk on 5/02/2011 08:40:00 AM

From the NY Times: Survey Says Small-Business Lending Is Surging (ht Sebastian)

In the third quarter of 2010, five percent of the small companies surveyed [by Greenwich Associates] applied for a loan, a share that tripled in the last three months of the year. In the first three months of 2011, the figure leaped to 29 percent. Loan demand is typically highest at the end of the year, according to Marc Bernstein, the head of small-business banking for Wells Fargo. That would make the jump in applicants in the first months of 2011 especially notable.

The Federal Reserve is expected to release the April 2011 Senior Loan Officer Opinion Survey on Bank Lending Practices later today. The January survey indicated some slight easing of standards and more demand for commercial and industrial (C&I), but not for other businesses. It will be interesting to see if the Fed survey for April saw any increase in demand from small firms.

Weekend:
• Summary for Week ending April 29th
• Goldman estimates 3.5 million Excess Vacant Housing Units.
• Schedule for Week of May 1st

by Calculated Risk on 5/01/2011 11:50:00 PM

By request, a discussion thread.

The Asian markets are mixed tonight with the Nikkei up 1%.

From CNBC: Pre-Market Data shows the S&P 500 up about 11 points, and the Dow futures up about 100 points.

Weekend:
• Summary for Week ending April 29th
• Goldman estimates 3.5 million Excess Vacant Housing Units.
• Schedule for Week of May 1st

Best to all.

by Calculated Risk on 5/01/2011 08:44:00 PM

Three weeks ago there were a couple of articles in the WSJ about lower prices for steel and copper. Here is another more general article: Commodity Surprise: Some Are Now Heading Down

Cotton has pulled back 17% from the all-time record set in early March, and sugar is down 34% from its multidecade high in February. Lead and zinc have tumbled in recent weeks after shooting up in the second half of 2010. Copper has shed 6% this year.

The declines came amid a wild April in which other raw materials continued to climb. U.S. oil prices rose 7% for the month, while gold set fresh records in nominal terms 13 times and silver neared its all-time high.

Lower commodity prices would definitely help, but unfortunately the one that matters the most for the U.S. economy - oil prices - are still high (WTI futures are at $113.56 per barrel, and Brent Crude is at $125.56). High oil and gasoline prices are one of the key downside risks for the economy.

Weekend:
• Summary for Week ending April 29th
• Goldman estimates 3.5 million Excess Vacant Housing Units.
• Schedule for Week of May 1st

by Calculated Risk on 5/01/2011 02:16:00 PM

Catching up - this was released last week at the same time as several other releases. Note: This is a composite index based on a number of economic releases.

From the Chicago Fed: Economic Activity Improved in March

Led by gains in production indicators, the Chicago Fed National Activity Index increased to +0.26 in March from +0.16 in February. March marked the fourth consecutive positive reading of the index and the sixth consecutive positive contribution from employment-related indicators. Neither has exhibited such patterns since April 2006.

The index’s three-month moving average, CFNAI-MA3, edged down to +0.20 in March from +0.27 in February, but remained positive for the third consecutive month for the first time since May 2010. March’s CFNAI-MA3 suggests that growth in national economic activity was somewhat above its historical trend. With regard to inflation, the CFNAI-MA3 suggests limited inflationary pressure from economic activity over the coming year.

Click on graph for larger image in graph gallery.

This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967. According to the Chicago Fed:

A zero value for the index indicates that the national economy is expanding at its historical trend rate of growth; negative values indicate below-average growth; and positive values indicate above-average growth.

Not a robust recovery, but this index suggests the economy was growing somewhat above trend in March.

Weekend:
• Summary for Week ending April 29th
• Goldman estimates 3.5 million Excess Vacant Housing Units.
• Schedule for Week of May 1st