by Calculated Risk on 3/31/2017 09:58:00 AM

Chicago PMI: March Chicago Business Barometer at 57.7 vs 57.4 in February

The MNI Chicago Business Barometer was broadly stable at 57.7 in March, following a hefty rise of 7.1 points in February to 57.4.

Following a strong February, firms remained upbeat this month, with the increase led by four of the five components of the Barometer, as only Employment receded. March’s positive outturn left the Q1 calendar quarter average at 55.1, the highest level since Q4 2014.

Demand continued to grow, rising for the second month in a row. New orders rose by 1.2 points, to touch a fourmonth high. To keep pace with rising demand, Production also increased, up 1.4 points to a 14-month high of 61.7 in March. Order Backlogs rose for the third consecutive month, but remained just below the breakeven level, where it has sat for the previous three months. Suppliers took longer to deliver key inputs, with the respective indicator 1.6 points higher at 54.4 in March. Employment slipped back into contraction after rising above 50 briefly last month.
...
“The March Chicago report echoed last month’s upbeat tone of general business conditions. Though the Barometer was little changed, the underlying trend for many key indicators shows improvement, with a shift away from firms reporting worsening to that of remaining at the same level as last month,” said Shaily Mittal, senior economist at MNI Indicators.
emphasis added

This was above the consensus forecast of 57.1.

by Calculated Risk on 3/31/2017 08:49:00 AM

The BEA released the Personal Income and Outlays report for February:

Personal income increased $57.7 billion (0.4 percent) in February according to estimates released today by the Bureau of Economic Analysis. ... personal consumption expenditures (PCE) increased $7.4 billion (0.1 percent).
...
Real PCE decreased 0.1 percent. The PCE price index increased 0.1 percent. Excluding food and energy, the PCE price index increased 0.2 percent.

The February PCE price index increased 2.1 percent year-over-year and the February PCE price index, excluding food and energy, increased 1.8 percent year-over-year.

The following graph shows real Personal Consumption Expenditures (PCE) through February 2017 (2009 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

The increase in personal income was at expectations,  however the increase in PCE was below expectations.

Using the two-month method to estimate Q1 PCE growth, PCE was increasing at a 0.4% annual rate in Q1 2017. (using the mid-month method, PCE was increasing 1.0%). This suggests weak PCE growth in Q1.

by Calculated Risk on 3/30/2017 08:03:00 PM

Friday:
• At 8:30 Personal Income and Outlays for February. The consensus is for a 0.4% increase in personal income, and for a 0.2% increase in personal spending. And for the Core PCE price index to increase 0.2%.

• Also at 9:45 AM, Chicago Purchasing Managers Index for March. The consensus is for a reading of 57.1, down from 57.4 in February.

• At 10:00 AM, University of Michigan's Consumer sentiment index (final for March). The consensus is for a reading of 97.6, unchanged from the preliminary reading 95.7.

by Calculated Risk on 3/30/2017 04:46:00 PM

From the Census Bureau: More than one-third of the adult population in the United States has a bachelor’s degree or higher

More than one-third of the adult population in the United States has a bachelor’s degree or higher marking the first time in decades of data.

“The percentage rose to 33.4 percent in 2016, a significant milestone since the Current Population Survey began collecting educational attainment in 1940,” said Kurt Bauman, Chief of the Education and Social Stratification Branch. “In 1940, only 4.6 percent had reached that level of education.”

In 2010, less than 30 percent of those 25 and older had completed a bachelor’s degree or higher, and in 2006, 28 percent had reached that level of education.
emphasis added

This graph shows the percent of adults, 25 years and older, with a bachelor's degree or higher.

More education is one of the reasons I've argued the Future is Bright!

by Calculated Risk on 3/30/2017 11:23:00 AM

After some weakness early in the year, hotel occupancy has picked up in recent weeks and is now close to the record year (2015 was the record).

From HotelNewsNow.com: STR: US hotel results for week ending 25 March

U.S. hotels saw year-over-year performance increases for the week of 19-25 March. Occupancy rose 5% to 68.7%, ADR increased 2.9% to $127.68 and RevPAR jumped 7.9% to $87.75.

STR analysts note that performance growth was boosted by an Easter calendar shift (27 March 2016). In comparison with the week of 20-26 March 2016, the industry reported the following in year-over-year comparisons:

Occupancy: +5.0% to 68.7%
Average daily rate (ADR): +2.9% to US$127.68
Revenue per available room (RevPAR): +7.9% to US$87.75
emphasis added

The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

The red line is for 2017, dashed is 2015, blue is the median, and black is for 2009 - the worst year since the Great Depression for hotels.

2015 was the best year on record for hotels.

For hotels, occupancy will now move mostly sideways until the summer travel season.

Data Source: STR, Courtesy of HotelNewsNow.com

by Calculated Risk on 3/30/2017 08:40:00 AM

The DOL reported:

In the week ending March 25, the advance figure for seasonally adjusted initial claims was 258,000, a decrease of 3,000 from the previous week's unrevised level of 261,000. The 4-week moving average was 254,250, an increase of 7,750 from the previous week's unrevised average of 246,500.
emphasis added

The previous week was revised up.

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 254,250.

This was above the consensus forecast.

The low level of claims suggests relatively few layoffs.

by Calculated Risk on 3/29/2017 06:03:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Steady, Depending on Lender

Compared to yesterday, today's mortgage rates are a moving target depending on the lender.  Some are better.  Some are worse.  On average, rates are unchanged from yesterday's latest rate sheets.  The variability has to do with yesterday's fairly sharp losses in bond markets (which dictate rates).
...
4.25% remains the most prevalently-quoted conventional 30yr fixed rate for top tier scenarios. 
emphasis added

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for 247 thousand initial claims, down from 258 thousand the previous week.

• Also at 8:30 AM, Gross Domestic Product, 4th quarter 2016 (third estimate). The consensus is that real GDP increased 2.0% annualized in Q4, up from the second estimate of 1.9%.

by Calculated Risk on 3/29/2017 11:55:00 AM

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

From Zillow: February Case-Shiller Forecast: Year-Over-Year Price Gains to Continue

Annual gains in the S&P CoreLogic Case-Shiller home price indices are expected to maintain their smoking pace in February, while month-over-month gains are expected to slow, according to Zillow’s February Case-Shiller forecast.

The February Case-Shiller national index is forecast to grow 6 percent year-over-year and 0.5 percent from January, up from January’s 5.9 percent annual growth but down a bit from its 0.6 percent monthly growth. The smaller 10- and 20-city indices are expected to post annual growth of 5.4 percent and 5.7 percent, respectively, up from 5.1 percent for the 10-city index and even with the 20-city index’s performance in January.

The 10- and 20-city indices are projected to post seasonally adjusted, month-over-month gains of 0.8 percent and 0.6 percent, respectively. Both would represent slowing from the 0.9 percent growth they each saw between December and January.

Zillow’s February Case-Shiller forecast is shown below. These forecasts are based on today’s January Case-Shiller data release and the February 2017 Zillow Home Value Index. The February S&P CoreLogic Case-Shiller Indices will not be officially released until Tuesday, April 25.

The year-over-year change for the Case-Shiller national index will probably increase in February.

by Calculated Risk on 3/29/2017 10:06:00 AM

From the NAR: Pending Home Sales Leap 5.5% in February

The Pending Home Sales Index,* www.nar.realtor/topics/pending-home-sales, a forward-looking indicator based on contract signings, jumped 5.5 percent to 112.3 in February from 106.4 in January. Last month's index reading is 2.6 percent above a year ago, is the highest since last April (113.6) and the second highest since May 2006 (112.5).
...
The PHSI in the Northeast rose 3.4 percent to 102.1 in February, and is now 6.6 percent above a year ago. In the Midwest the index jumped 11.4 percent to 110.8 in February, but is still 0.6 percent lower than February 2016.

Pending home sales in the South climbed 4.3 percent to an index of 127.8 in February and are now 4.2 percent above last February. The index in the West increased 3.1 percent in February to 97.5, but is still 0.2 percent higher than a year ago.
emphasis added

This was well above expectations of a 1.8% increase for this index. The warm weather in February might have impacted this index.  Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in March and April.

by Calculated Risk on 3/29/2017 07:00:00 AM

From the MBA: Mortgage Applications Slightly Decrease in Latest MBA Weekly Survey

Mortgage applications decreased 0.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 24, 2017.

... The Refinance Index decreased 3 percent from the previous week. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 4 percent higher than the same week one year ago.
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to 4.33 percent from 4.46 percent, with points increasing to 0.43 from 0.41 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans
emphasis added

Click on graph for larger image.


The first graph shows the refinance index since 1990.

Refinance activity remains low - and would not increase significantly unless rates fall sharply.


The second graph shows the MBA mortgage purchase index.

Even with the increase in mortgage rates over the last few months, purchase activity is still holding up.

However refinance activity has declined significantly since rates increased.