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Thursday, September 12, 2019

Cleveland Fed: Key Measures Show Inflation Above 2% YoY in August, Core PCE below 2%

by Calculated Risk on 9/12/2019 11:08:00 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% (2.6% annualized rate) in August. The 16% trimmed-mean Consumer Price Index also rose 0.2% (2.3% 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% (0.7% annualized rate) in August. The CPI less food and energy rose 0.3% (3.1% annualized rate) on a seasonally adjusted basis.
Note: The Cleveland Fed released the median CPI details for August here. Motor fuel was down 34% annualized.

Inflation Measures 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 2.9%, the trimmed-mean CPI rose 2.2%, and the CPI less food and energy rose 2.4%. Core PCE is for July and increased 1.6% year-over-year.

On a monthly basis, median CPI was at 2.6% annualized, trimmed-mean CPI was at 2.3% annualized, and core CPI was at 3.1% annualized.

Overall, these measures are mostly above the Fed's 2% target (Core PCE is below 2%).

BLS: CPI increased 0.1% in August, Core CPI increased 0.3%

by Calculated Risk on 9/12/2019 08:35:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in August on a seasonally adjusted basis after rising 0.3 percent in July, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.7 percent before seasonal adjustment.
...
The index for all items less food and energy rose 0.3 percent in August, the same increase as in June and July.
...
The all items index increased 1.7 percent for the 12 months ending August; the 12-month increase has remained in the range of 1.5 to 2.0 percent since the period ending December 2018. The index for all items less food and energy rose 2.4 percent over the last 12 months, its largest 12-month increase since July 2018.
emphasis added
Core inflation was above expectations in August. I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.

Weekly Initial Unemployment Claims decreased to 204,000

by Calculated Risk on 9/12/2019 08:32:00 AM

The DOL reported:

In the week ending September 7, the advance figure for seasonally adjusted initial claims was 204,000, a decrease of 15,000 from the previous week's revised level. The previous week's level was revised up by 2,000 from 217,000 to 219,000. The 4-week moving average was 212,500, a decrease of 4,250 from the previous week's revised average. The previous week's average was revised up by 500 from 216,250 to 216,750.
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 decreased to 212,500.

This was lower than the consensus forecast.

Wednesday, September 11, 2019

Thursday: CPI, Unemployment Claims

by Calculated Risk on 9/11/2019 04:45:00 PM

Thursday:
• At 8:30 AM, The initial weekly unemployment claims report will be released. The consensus is for 215 thousand initial claims, down from 217 thousand the previous week.

• At 8:30 AM, The Consumer Price Index for August from the BLS. The consensus is for a 0.1% increase in CPI, and a 0.2% increase in core CPI.

Merrill on Retail "Consumer demand pulled back in August"

by Calculated Risk on 9/11/2019 02:19:00 PM

A few excerpts from two BofA Merrill Lynch research notes: Consumer demand pulled back in August

Based on the aggregated BAC credit and debit card data, retail sales ex-autos fell 0.5% month-over-month (mom) seasonally adjusted (sa). This reversed the 0.9% mom gain in July. As always, there were a number of "special factors" which we decipher in this note.

Amazon Prime Day and other retailers' summer promotions in mid-July provided a significant boost to spending, as we showed last month. In our view, these promotions effectively pulled forward demand into July and out of August.

Outside of the promotion distortions, we also think spending was dampened by weakening sentiment.
emphasis added
And on confidence: The uneasy consumer
The consumer is beginning to worry. Since our last update in mid-August, the BofAML US consumer confidence indicator (USCCI) declined by 3.8 points to 50.1 based on data through September 9. It briefly dipped below the 50 breakeven level during the survey period indicating that the consumer is growing increasingly pessimistic.
CR Note: Retail sales for August will be released on Friday, and the consensus is for a 0.3% increase in retail sales.

Houston Real Estate in August: Sales up 4% YoY, Inventory Up 8%

by Calculated Risk on 9/11/2019 12:19:00 PM

From the HAR: Houston Home Sales Sizzle in August

Temperatures weren’t the only thing soaring in August. Home sales registered another hot month, as low mortgage interest rates kept consumers in a buying mood. According to the latest monthly report from the Houston Association of Realtors (HAR), August sales of single-family homes throughout greater Houston totaled 8,679. That is up 3.9 percent year-over-year and marks the second largest one-month sales volume of all time; the record of 8,930 was set just last month. On a year-to-date basis, home sales are running 3.1 percent ahead of 2018’s record volume.
...
Housing inventory still remains ahead of 2018 levels. It reached a 4.2-months supply in August compared to 4.0 months a year earlier. So far in 2019, June and July marked the peak of inventory – a 4.3-months supply. Robust inventory and mortgage interest rates currently averaging 3.49 percent (according to Freddie Mac) have created a favorable climate for home buyers and paved the way for one of the strongest summers in Houston real estate history.

Sales of all property types increased 4.1 percent in August, totaling 10,375 units. That marks the second highest one-month volume of all time. The record for total property sales in a single month was 10,444 set just last month, in July 201[9], which also was the first time that figure broke the 10,00[0] mark. Total dollar volume for the month climbed 6.6 percent to $3.1 billion.

“This has been one of the hottest summers in Houston history, both in terms of temperatures and home sales,” said HAR Chair Shannon Cobb Evans with Better Homes and Gardens Real Estate Gary Greene. “The Houston real estate market typically slows a bit once school starts and we get into fall, but with interest rates as low as they’ve been and a steadily growing supply of homes, it’s possible that sales don’t let up until closer to the holidays. The rental segment has also been extremely active and looks to remain that way a while longer.”
emphasis added
Total active inventory was up 8.2% YoY to 45,062 properties from 41,650 properties in August 2018. Sales are on pace for a record year.

Employment: August Diffusion Indexes

by Calculated Risk on 9/11/2019 10:01:00 AM

I haven't posted this in a few months.

The BLS diffusion index for total private employment was at 53.5 in August, down from 57.8 in July.

For manufacturing, the diffusion index was at 51.3, down from 53.9 in August.

Think of this as a measure of how widespread job gains are across industries. The further from 50 (above or below), the more widespread the job losses or gains reported by the BLS.  From the BLS:

Figures are the percent of industries with employment increasing plus one-half of the industries with unchanged employment, where 50 percent indicates an equal balance between industries with increasing and decreasing employment.
Employment Diffusion Index Overall both total private and manufacturing job growth were not widespread in August.

Both indexes have been trending down in 2019 - indicating job growth is becoming less widespread across industries.

MBA: Mortgage Applications Increased in Latest Weekly Survey

by Calculated Risk on 9/11/2019 07:00:00 AM

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

Mortgage applications increased 2.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 6, 2019. This week’s results include an adjustment for the Labor Day holiday.

... The Refinance Index increased 0.4 percent from the previous week and was 169 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index decreased 8 percent compared with the previous week and was 9 percent higher than the same week one year ago.
...
“Mortgages rates continued to decline over the holiday-shortened week, with the 30-year fixed rate decreasing five basis points and remaining near three-year lows,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Refinances were essentially unchanged, up just 0.4 percent, but August overall was the strongest month of activity so far in 2019. Purchase applications rose around 5 percent, with increases for both conventional and government applications.”

Added Kan, “Purchase activity was 9 percent higher than last year, continuing the trend seen most of the year of solid year-over-year gains.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 3.82 percent from 3.87 percent, with points increasing to 0.44 from 0.34 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added
Mortgage Refinance IndexClick on graph for larger image.


The first graph shows the refinance index since 1990.

Mortgage rates have declined from close to 5% late last year to under 4%.

With lower rates, we saw a recent sharp increase in refinance activity.

Mortgage Purchase Index The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is up 9% year-over-year.

Tuesday, September 10, 2019

Wednesday: PPI

by Calculated Risk on 9/10/2019 07:40:00 PM

Wednesday:
• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 8:30 AM, The Producer Price Index for August from the BLS. The consensus is for a 0.1% increase in PPI, and a 0.2% increase in core PPI.

Port of Los Angeles: Imports increased, Exports decreased in August

by Calculated Risk on 9/10/2019 04:37:00 PM

From the Port of Los Angeles: August Cargo Another Record Breaker at Port of Los Angeles

For the fifth consecutive month, the Port of Los Angeles has set a new single-month cargo record. In August, the Port moved 861,081 Twenty-Foot Equivalent Units (TEUs), the busiest August in the Port’s 112-year history and a 4.2% increase over the same period last year.

Eight months into 2019 overall volumes have increased 5.7% compared to 2018, when the Port set an all-time cargo record.

“The final months of 2018 ended with an extraordinary influx of imports to beat expected tariffs on China-origin goods,” Seroka added. “We don’t expect to see those kind of volumes in the months ahead. We need a negotiated settlement of the U.S.-China trade war to restore global trade stability.”

August 2019 imports increased 4.1% to 437,613 TEUs compared to the previous year. Exports decreased 10% to 146,284 TEUs, the 10th consecutive monthly decline of exports.
emphasis added