by Calculated Risk on 1/16/2020 07:20:00 PM

Friday:
• At 8:30 AM ET, Housing Starts for December. The consensus is for 1.378 million SAAR, up from 1.365 million SAAR.

• At 9:15 AM, The Fed will release Industrial Production and Capacity Utilization for December. The consensus is for a 0.1% decrease in Industrial Production, and for Capacity Utilization to be decrease to 77.1%.

• At 10:00 AM, University of Michigan's Consumer sentiment index (Preliminary for January). The consensus is for a reading of 99.3.

• At 10:00 AM, Job Openings and Labor Turnover Survey for November from the BLS.

by Calculated Risk on 1/16/2020 04:25:00 PM

From HotelNewsNow.com: STR: US hotel results for week ending 11 January

The U.S. hotel industry reported negative year-over-year results in the three key performance metrics during the week of 5-11 January 2020, according to data from STR.

In comparison with the week of 6-12 January 2019, the industry recorded the following:

• Occupancy: -3.1% to 51.7%
• Average daily rate (ADR): -4.7% to US$120.43
• Revenue per available room (RevPAR): -7.7% to US$62.30
emphasis added

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 2020, dash light blue is 2019, blue is the median, and black is for 2009 (the worst year probably since the Great Depression for hotels).

The early average occupancy rate in 2020 is tracking last year.

Seasonally, the 4-week average of the occupancy rate will increase over the next several months..

Data Source: STR, Courtesy of HotelNewsNow.com

by Calculated Risk on 1/16/2020 10:08:00 AM

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 75, down from 76 in December. Any number above 50 indicates that more builders view sales conditions as good than poor.

From NAHB: Builder Confidence Begins Year Strong as Single-Family Growth Continues

Builder confidence in the market for newly-built single-family homes edged one point lower to 75 in January, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The last two monthly readings mark the highest sentiment levels since July of 1999. Low interest rates and a healthy labor market combined with a need for additional inventory is setting the stage for further home building gains in 2020.
...
The HMI index charting traffic of prospective buyers increased one point to 58, the highest level since December 2017. The gauge measuring current sales conditions fell three points to 81 and the component measuring sales expectations in the next six months held steady at 79.

Looking at the three-month moving averages for regional HMI scores, the Northeast rose one point to 62, the Midwest increased three points to 66 and the West moved one point higher to 84. The South remained unchanged at 76.
emphasis added

Click on graph for larger image.

This graph show the NAHB index since Jan 1985.

This was above the consensus forecast and another very strong reading.

by Calculated Risk on 1/16/2020 09:19:00 AM

From the Philly Fed: Current Manufacturing Indicators Suggest Growth in January

Manufacturing activity in the region increased this month, according to results from the January Manufacturing Business Outlook Survey. The survey’s indicators for current activity, new orders, shipments, and employment were all positive and increased from their readings in December. The survey’s future activity indexes remained at relatively high readings, suggesting continued optimism about growth for the next six months.

The diffusion index for current general activity increased nearly 15 points this month, from a revised reading of 2.4 in December to 17.0 … Manufacturers continued to report expanding employment this month. The employment index increased 3 points to 19.3.
emphasis added

This was well above the consensus forecast. 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 January), and five Fed surveys are averaged (blue, through December) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through December (right axis).

These early reports suggest the ISM manufacturing index will likely rebound into positive territory in January.

by Calculated Risk on 1/16/2020 09:08:00 AM

On a monthly basis, retail sales increased 0.3 percent from November to December (seasonally adjusted), and sales were up 5.8 percent from December 2018.

From the Census Bureau report:

Advance estimates of U.S. retail and food services sales for December 2019, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $529.6 billion, an increase of 0.3 percent from the previous month, and 5.8 percent above December 2018. Total sales for the 12 months of 2019 were up 3.6 percent from 2018.
emphasis added

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 0.1% in December.

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 5.5% on a YoY basis.

The increase in December was at expectations, however sales in October and November were revised down.

by Calculated Risk on 1/16/2020 08:57:00 AM

The DOL reported:

In the week ending January 11, the advance figure for seasonally adjusted initial claims was 204,000, a decrease of 10,000 from the previous week's unrevised level of 214,000. The 4-week moving average was 216,250, a decrease of 7,750 from the previous week's unrevised average of 224,000.
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 decreased to 216,250.

This was lower than the consensus forecast.

by Calculated Risk on 1/15/2020 06:16:00 PM

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released. The consensus is for 216,000 initial claims, up from 214,000 last week.

• Also at 8:30 AM, Retail sales for December is scheduled to be released.  The consensus is for a 0.3% increase in retail sales.

• Also at 8:30 AM, the Philly Fed manufacturing survey for January. The consensus is for a reading of 3.4, up from 2.4.

• At 10:00 AM, The January NAHB homebuilder survey. The consensus is for a reading of  74, down from 76. Any number above 50 indicates that more builders view sales conditions as good than poor.

• At 10:00 AM, Speech by Fed Governor Michelle Bowman, The Outlook for Housing, At the Home Builders Association of Greater Kansas City: 2020 Economic Forecast Breakfast, Kansas City, Mo.

by Calculated Risk on 1/15/2020 02:03:00 PM

Fed's Beige Book "This report was prepared at the Federal Reserve Bank of New York based on information collected on or before January 6, 2020."

Economic activity generally continued to expand modestly in the final six weeks of 2019. The Dallas and Richmond Districts noted above-average growth, while Philadelphia, St. Louis, and Kansas City reported sub-par growth. Consumer spending grew at a modest to moderate pace, with a number of Districts noting some pickup from the prior reporting period. On balance, holiday sales were said to be solid, with several Districts noting the growing importance of online shopping. Vehicle sales generally expanded moderately, though a handful of Districts reported flat sales. Tourism was mixed, with growth reported in the eastern seaboard Districts but activity little changed in the Midwest and West. Manufacturing activity was essentially flat in most Districts, as in the previous report. Business in nonfinancial services was mixed but, on balance, growing modestly. Transportation activity was also mixed across Districts, with a majority reporting flat to weaker activity. Banks mostly characterized loan volume as steady to expanding moderately. Home sales trends varied widely across Districts but were flat overall, while residential rental markets strengthened. Some Districts pointed to low inventories as restraining home sales. New residential construction expanded modestly. Commercial real estate activity varied substantially across Districts. Agricultural conditions were little changed, as was activity in the energy sector. In many Districts, tariffs and trade uncertainty continued to weigh on some businesses. Expectations for the near-term outlook remained modestly favorable across the nation.
...
Employment was steady to rising modestly in most Districts, while labor markets remained tight throughout the nation. Most Districts cited widespread labor shortages as a factor constraining job growth, and, in a few cases, business expansion. A few Districts noted brisk demand for professional, technical, and managerial workers. A number of Districts reported job cuts or reduced hiring among manufacturers, and there were scattered reports of job cuts in the transportation and energy sectors. Wage growth was characterized as modest or moderate in most Districts—similar to the prior reporting period—and there were scattered reports of wage increases from year-end hikes in minimum wages. A few Districts also noted the use of benefits, incentives, training programs, and automation to reduce vacancies.
emphasis added

by Calculated Risk on 1/15/2020 11:15:00 AM

CR Note: This was released yesterday. Most of this survey is noise, but there is some information, especially on the labor market and the "Single Most Important Problem".

From the National Federation of Independent Business (NFIB): December 2019 Report: Small Business Optimism Dips in December

Small business optimism ended the year historically strong, with a reading of 102.7, down 2 points from November.
..
Net job creation had faded from February’s 0.52 workers per firm to September’s 0.10, but is back in strong territory. Finding qualified workers remains the top issue for 23 percent reporting this as their number one problem, 4 points below August’s record high.
emphasis added

Click on graph for larger image.

This graph shows the small business optimism index since 1986.

The index decreased to 102.7 in December.

Note: Usually small business owners complain about taxes and regulations (currently 2nd and 3rd on the "Single Most Important Problem" list). However, during the recession, "poor sales" was the top problem. Now the difficulty of finding qualified workers is the top problem.

by Calculated Risk on 1/15/2020 08:38:00 AM

From the NY Fed: Empire State Manufacturing Survey

Business activity grew to a small degree in New York State, according to firms responding to the January 2020 Empire State Manufacturing Survey. The headline general business conditions index was little changed at 4.8.
...
The index for number of employees held steady at 9.0, indicating that employment expanded for the fifth consecutive month. The average workweek index came in at 1.3, a sign that the average workweek was essentially unchanged
…
Indexes assessing the six-month outlook suggested that optimism about future conditions remained restrained.
emphasis added

This was slightly higher than the consensus forecast.