by Calculated Risk on 6/14/2019 09:29:00 AM

From the Fed: Industrial Production and Capacity Utilization

Industrial production rose 0.4 percent in May after falling 0.4 percent in April. The indexes for manufacturing and mining gained 0.2 percent and 0.1 percent, respectively, in May; the index for utilities climbed 2.1 percent. At 109.6 percent of its 2012 average, total industrial production was 2.0 percent higher in May than it was a year earlier. Capacity utilization for the industrial sector moved up 0.2 percentage point in May to 78.1 percent, a rate that is 1.7 percentage points below its long-run (1972–2018) average.
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Click on graph for larger image.

This graph shows Capacity Utilization. This series is up 11.4 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 78.1% is 1.7% below the average from 1972 to 2017 and below the pre-recession level of 80.8% in December 2007.

Note: y-axis doesn't start at zero to better show the change.

The second graph shows industrial production since 1967.

Industrial production increased in May to 109.2. This is 26% above the recession low, and 4.0% above the pre-recession peak.

The increase in industrial production and increase in capacity utilization were above consensus.

by Calculated Risk on 6/14/2019 08:41:00 AM

On a monthly basis, retail sales increased 0.5 percent from April to May (seasonally adjusted), and sales were up 3.2 percent from May 2018.

From the Census Bureau report:

Advance estimates of U.S. retail and food services sales for May 2019, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $519.0 billion, an increase of 0.5 percent from the previous month, and 3.2 percent above May 2018. ... The March 2019 to April 2019 percent change was revised from down 0.2 percent to up 0.3 percent.
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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 0.6% in May.

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 3.0% on a YoY basis.

The increase in May was below expectations, however sales in March and April were revised up.  Overall a solid report.

by Calculated Risk on 6/13/2019 07:54:00 PM

Friday:
• At 8:30 AM, Retail sales for May is scheduled to be released.  The consensus is for 0.7% increase in retail sales.

• At 9:15 AM, The Fed will release Industrial Production and Capacity Utilization for May. The consensus is for a 0.2% increase in Industrial Production, and for Capacity Utilization to increase to 78.0%.

• At 10:00 AM, University of Michigan's Consumer sentiment index (Preliminary for June).

by Calculated Risk on 6/13/2019 03:09:00 PM

Every week I post a link to the DOL report on initial unemployment claims and include a graph of initial claims over time.  I'm frequently asked if small increases in weekly claims might indicate a recession (short answer: no).

I find this report useful for two purposes.

First, this report is one of the pieces of data I use in trying to forecast the monthly employment report. This has occasionally been helpful, especially when claims rise of fall during the BLS reference week (includes the 12th of the month).

Second, when I'm on recession watch (I haven't been on recession watch since 2007), I use this high frequency report to try to estimate the timing of the recession.  In December 2007, I started posting that the recession started that month by using weekly claims and other high frequency data - but NBER didn't determine the beginning of the recession until November 28, 2008 (even though the recession started in December 2007).

by Calculated Risk on 6/13/2019 10:31:00 AM

From HotelNewsNow.com: STR: US hotel results for week ending 8 June

The U.S. hotel industry reported mixed year-over-year results in the three key performance metrics during the week of 2-8 June 2019, according to data from STR.

In comparison with the week of 3-9 June 2018, the industry recorded the following:

• Occupancy: -1.3% to 72.0%
• Average daily rate (ADR): +0.5% to US$132.40
• Revenue per available room (RevPAR): -0.8% to US$95.36
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The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Click on graph for larger image.

The red line is for 2019, dash light blue is 2018 (record year), blue is the median, and black is for 2009 (the worst year probably since the Great Depression for hotels).

Occupancy has been solid in 2019, close - to-date - compared to the previous 4 years.

Seasonally, the occupancy rate will now increase during the Summer travel season.

Data Source: STR, Courtesy of HotelNewsNow.com

by Calculated Risk on 6/13/2019 08:32:00 AM

The DOL reported:

In the week ending June 8, the advance figure for seasonally adjusted initial claims was 222,000, an increase of 3,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 218,000 to 219,000. The 4-week moving average was 217,750, an increase of 2,500 from the previous week's revised average. The previous week's average was revised up by 250 from 215,000 to 215,250.
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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 217,750.

This was above the consensus forecast.

by Calculated Risk on 6/12/2019 05:52:00 PM

From CoreLogic: Homeowner Equity Insights, 1st Quarter 2019

In the first quarter 2019, the total number of mortgaged residential properties with negative equity decreased 1% percent from the fourth quarter 2018 to 2.2 million homes, or 4.1% of all mortgaged properties. On a year-over-year basis, negative equity fell 11% from 2.5 million homes, or 4.7% of all mortgaged properties, in the first quarter of 2018.

The national aggregate value of negative equity was approximately $304.4 billion at the end of the first quarter of 2019. This is up quarter over quarter by approximately $2.5 billion, from $301.9 billion in the fourth quarter of 2018.

Negative equity peaked at 26 percent of mortgaged residential properties in the fourth quarter of 2009, based on the CoreLogic equity data analysis which began in the third quarter of 2009.
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Click on graph for larger image.

This graph from CoreLogic shows the percent negative equity by states.

On a year-over-year basis, the number of homeowners with negative equity has declined from 2.5 million to 2.2 million.

by Calculated Risk on 6/12/2019 01:28:00 PM

From the HAR: Houston Home Sales and Prices Gain Momentum in May

Encouraged by continued low interest rates and a growing selection of housing options, home buyers kept the greater Houston real estate market in positive territory for a fourth straight month in May. As it did in April, the luxury segment (homes priced at $750,000 and above) led the way in sales volume, and rental properties moved briskly. Housing inventory grew to its largest level since August 2017, meeting consumer demand as the market prepares to segue into summer.

Sales of single-family homes increased 2.8 percent in May, according to the latest monthly report from the Houston Association of Realtors® (HAR), with 8,346 homes sold compared to 8,117 in May 2018. On a year-to-date basis, home sales are running 2.7 percent ahead of 2018’s record pace.
...
May sales of all property types totaled 9,948, up 3.1 percent compared to the same month last year. Total dollar volume for the month jumped 7.8 percent to slightly more than $3 billion.

“We are seeing signs of a healthy and sustainable housing market throughout greater Houston, and that is due to a more plentiful supply of homes, continued low interest rates and a strong local economy,” said HAR Chair Shannon Cobb Evans with Heritage Texas Properties. “In addition to solid home sales, consumers are still snapping up rental properties, and that is also driving the local housing market.”
...
Total active listings, or the total number of available properties, went up 10.1 percent to 43,624. ...
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On pace for record sales in Houston.

by Calculated Risk on 6/12/2019 11:13:00 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% (2.3% annualized rate) in May. The 16% trimmed-mean Consumer Price Index also rose 0.1% (1.3% 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 0.1% (0.9% annualized rate) in May. The CPI less food and energy rose 0.1% (1.4% annualized rate) on a seasonally adjusted basis.

Note: The Cleveland Fed released the median CPI details for May here.

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 2.0%. Core PCE is for March and increased 1.6% year-over-year.

On a monthly basis, median CPI was at 2.3% annualized, trimmed-mean CPI was at 1.3% annualized, and core CPI was at 1.4% annualized.

Using these measures, inflation was about the lower in May than in April on a year-over-year basis. Overall, these measures are at or above the Fed's 2% target (Core PCE is below 2%).

by Calculated Risk on 6/12/2019 08:32:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in May on a seasonally adjusted basis after rising 0.3 percent in April, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.8 percent before seasonal adjustment.
...
The index for all items less food and energy increased 0.1 percent for the fourth consecutive month.
...
The all items index increased 1.8 percent for the 12 months ending May. The index for all items less food and energy rose 2.0 percent over the last 12 months, and the food index also rose 2.0 percent. The energy index decreased 0.5 percent over the past year.
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I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.