by Calculated Risk on 11/15/2018 09:37:00 AM

Earlier: From the NY Fed: Empire State Manufacturing Survey

Business activity continued to grow at a solid clip in New York State, according to firms responding to the November 2018 Empire State Manufacturing Survey. The headline general business conditions index edged up two points to 23.3.
…
The index for number of employees moved up five points to 14.1, and the average workweek index climbed nine points to 9.2, indicating increases in both employment levels and hours worked.
emphasis added

From the Philly Fed: November 2018 Manufacturing Business Outlook Survey

Growth in manufacturing activity slowed in November, according to results from this month’s Manufacturing Business Outlook Survey. The survey’s broad indicators for general activity, new orders, shipments, employment, and work hours remained positive but fell from their readings last month. The firms remained generally optimistic about future growth.

The diffusion index for current general activity decreased from 22.2 in October to 12.9 in November, its lowest reading since August … The firms continued to report overall higher employment. Almost 25 percent of the responding firms reported increases in employment this month, while 8 percent of the firms reported decreases in employment. The current employment index remained positive but declined 3 points to 16.3. The current workweek index fell nearly 15 points to 6.3, its lowest reading in two years.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Click on graph for larger image.

The New York and Philly Fed surveys are averaged together (yellow, through November), and five Fed surveys are averaged (blue, through October) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through October (right axis).

This suggests the ISM manufacturing index will show solid expansion again in November, but will likely be lower than in October.

by Calculated Risk on 11/15/2018 08:48:00 AM

On a monthly basis, retail sales increased 0.8 percent from September to October (seasonally adjusted), and sales were up 4.6 percent from October 2017.

From the Census Bureau report:

Advance estimates of U.S. retail and food services sales for October 2018, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $511.5 billion, an increase of 0.8 percent from the previous month, and 4.6 percent above October 2017.

Click on graph for larger image.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

Retail sales ex-gasoline were up 0.5% in October.

The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail and Food service sales, ex-gasoline, increased by 3.6% on a YoY basis.

The increase in October was above expectations, however sales in August and September were revised down.

by Calculated Risk on 11/15/2018 08:35:00 AM

The DOL reported:

In the week ending November 10, the advance figure for seasonally adjusted initial claims was 216,000, an increase of 2,000 from the previous week's unrevised level of 214,000. The 4-week moving average was 215,250, an increase of 1,500 from the previous week's unrevised average of 213,750.
emphasis added

The previous week was unrevised.

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 215,250.

This was slightly higher than the consensus forecast. The low level of claims suggest few layoffs.

by Calculated Risk on 11/14/2018 09:29:00 PM

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for 215 thousand initial claims, up from 214 thousand the previous week.

• Also at 8:30 AM, Retail sales for October will be released.  The consensus is for a 0.5% increase in retail sales.

• Also at 8:30 AM, The New York Fed Empire State manufacturing survey for November. The consensus is for a reading of 20.0, down from 21.1.

• Also at 8:30 AM, the Philly Fed manufacturing survey for November. The consensus is for a reading of 20.0, down from 22.2.

by Calculated Risk on 11/14/2018 07:27:00 PM

Container traffic gives us an idea about the volume of goods being exported and imported - and usually some hints about the trade report since LA area ports handle about 40% of the nation's container port traffic.

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.

Click on graph for larger image.

On a rolling 12 month basis, inbound traffic was up 1.5% compared in October to the rolling 12 months ending in September.   Outbound traffic was up 0.7% compared to the rolling 12 months ending in September.

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March depending on the timing of the Chinese New Year.

In general imports have been increasing, and exports have mostly moved sideways over the last 6 or 7 years.

by Calculated Risk on 11/14/2018 04:19:00 PM

From the HAR: There's Nothing Spooky About October Houston Home Sales

After a down month in September, directly influenced by the surge in post-Hurricane Harvey home sales exactly one year earlier, the Houston real estate market returned to more normalized conditions in October with gains in both sales volume and pricing.

According to the latest monthly report from the Houston Association of REALTORS® (HAR), 6,716 single-family homes sold in October compared to 6,417 a year earlier. That translates to a 4.7-percent increase. Year-to-date, home sales are 5.3 percent ahead of 2017’s record volume. Inventory grew slightly from a 3.7-months supply to 3.9 months.…
...
Sales of all property types totaled 8,127, up 6.0-percent over the same month last year.
...
Total active listings, or the total number of available properties, climbed 7.3 percent to 41,061. Single-family homes inventory remains tight, reaching a 3.9-months supply in October versus a 3.7-months supply a year earlier.
emphasis added

Another market with inventory up, but not a huge increase.

by Calculated Risk on 11/14/2018 03:11:00 PM

Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.

From the AIA: Architecture firm billings continue to slow, but remain positive in October

Architecture firm billings growth softened in October but remained positive for the thirteenth consecutive month, according to a new report today from The American Institute of Architects (AIA).

AIA’s Architecture Billings Index (ABI) score for October was 50.4 compared to 51.1 in September. With continued strength in new project inquiries, billings are expected to remain steady into the coming months.

"The effects of the 2018 hurricane season are the probable cause of the temporary contraction in billings in the Southern region,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “This decrease in demand for design services is limited, and the region should rebound over the next several months."
...
• Regional averages: Midwest (57.8), Northeast (51.8), South (48.4), West (46.9)

• Sector index breakdown: mixed practice (52.7), multi-family residential (52.3), institutional (52.0), commercial/industrial (48.9)
emphasis added

Click on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was at 50.4 in October, down from 51.1 in October. Anything above 50 indicates expansion in demand for architects' services.

Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.

According to the AIA, there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on non-residential construction.  This index has been positive for 12 consecutive months, suggesting a further increase in CRE investment into 2019.

by Calculated Risk on 11/14/2018 11:35:00 AM

The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning:

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.4% annualized rate) in October. The 16% trimmed-mean Consumer Price Index also rose 0.2% (2.7% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics' (BLS) monthly CPI report.

Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers rose 0.3% (4.0% annualized rate) in October. The CPI less food and energy rose 0.2% (2.3% annualized rate) on a seasonally adjusted basis.

Note: The Cleveland Fed released the median CPI details for October here. Motor fuel was up 43% annualized in October, but that will reverse in November.

Click on graph for larger image.

This graph shows the year-over-year change for these four key measures of inflation. On a year-over-year basis, the median CPI rose 2.7%, the trimmed-mean CPI rose 2.2%, and the CPI less food and energy rose 2.3%. Core PCE is for September and increased 1.96% year-over-year.

On a monthly basis, median CPI was at 2.4% annualized, trimmed-mean CPI was at 2.7% annualized, and core CPI was at 2.3% annualized.

Using these measures, inflation softened slightly on a year-over-year basis in October. Overall, these measures are at or above the Fed's 2% target (Core PCE is slightly below 2%).

by Calculated Risk on 11/14/2018 08:36:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in October on a seasonally adjusted basis after rising 0.1 percent in September, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.5 percent before seasonal adjustment.

An increase in the gasoline index was responsible for over one-third of the seasonally adjusted increase in the all items index; advances in the indexes for shelter, used cars and trucks, and electricity also contributed. The increases in the gasoline and electricity indexes led to a 2.4-percent rise in the energy index. The food index, in contrast, declined slightly in October.

The index for all items less food and energy rose 0.2 percent in October following a 0.1-percent increase in September. Along with the indexes for shelter and for used cars and trucks, the indexes for medical care, household furnishings and operations, motor vehicle insurance, and tobacco all increased in October. The indexes for communication, new vehicles, and recreation all declined.

The all items index rose 2.5 percent for the 12 months ending October, a larger increase than the 2.3-percent increase for the 12 months ending September. The index for all items less food and energy rose 2.1 percent for the 12 months ending October.
emphasis added

I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI. This was at the consensus forecast.

by Calculated Risk on 11/14/2018 07:56:00 AM

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

Mortgage applications decreased 3.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 9, 2018.

... The Refinance Index decreased 4.3 percent from the previous week reaching its lowest level since December 2000. The seasonally adjusted Purchase Index decreased 2.3 percent from one week earlier reaching its lowest level since February 2017. The unadjusted Purchase Index decreased 5 percent compared with the previous week and was 3 percent lower than the same week one year ago. ...

“Recent volatility in the financial markets and increasing rates continue to adversely impact mortgage application activity, even as the general economic outlook remains positive,” said Joel Kan, MBA’s AVP of Economic and Industry Forecasting. “Both home purchase and mortgage refinance applications decreased over the week, driven largely by declines in conventional applications. Mortgage rates increased over the week for most loan types, with the 30-year fixed rate mortgage increasing to 5.17 percent – the highest level since 2010.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to 5.17 percent from 5.15 percent, with points increasing to 0.55 from 0.51 (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 will not pick up significantly unless mortgage rates fall 50 bps or more from the recent level.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is down 3% year-over-year.