Friday July 25 2014
US Durable Goods Rebound in June
US Census Bureau | Joana Taborda | joana.taborda@tradingeconomics.com

New orders for manufactured durable goods increased 0.7 percent in June of 2014 after a revised 1 percent fall in May, driven by higher demand for machinery, transport, non-defense aircraft and parts and capital goods.

New orders for manufactured durable goods in June increased $1.8 billion to $239.9 billion.

Excluding transportation, new orders increased 0.8 percent in June, following a 0.1 percent fall in May and excluding defense, new orders rose 0.7 percent, accelerating from a 0.2 percent increase in the previous month.

Although orders for defense crafts and parts grew the most in June (15.3 percent), they increased at a slower pace than in May (17.6 percent). Orders for non-defense aircrafts surged 8.2 percent, following a 2.7 percent fall in May and orders for transportation equipment rose 0.6 percent.




Thursday July 24 2014
US New Home Sales Fall Sharply in June
U.S. Census Bureau | Joana Taborda | joana.taborda@tradingeconomics.com

Sales of new single-family houses in June 2014 were at a seasonally adjusted annual rate of 406,000, down 8.1 percent from the previous month, the largest decline in a year. May's sales were revised downwards to 442,000 units from an initially reported 504,000 units.

The median sales price of new houses sold in June 2014 was $273,500; the average sales price was $331,400. The seasonally adjusted estimate of new houses for sale at the end of June was 197,000. This represents a supply of 5.8 months at the current sales rate.

Sales in the Northeast dropped 20 percent from May and those in the South fell 9.5 percent. Sales in the Midwest contracted 8.2 percent and those in the West declined 1.9 percent. 

Year-on-year, new home sales fell 11.5 percent in June.




Thursday July 24 2014
US Markit Manufacturing PMI Falls in July
Markit | Joana Taborda | joana.taborda@tradingeconomics.com

The seasonally adjusted Markit Flash U.S. Manufacturing PMI came in at 56.3 in July, down from 57.3 in June, marking the slowest improvement for three months. Job creation was the weakest since September of 2013.

The latest survey indicated that manufacturing production growth eased in July, after reaching its strongest pace for over four years in June. Nonetheless, the output index reading in July (60.4) was well above the 50.0 no-change mark and still pointed to an historically strong rate of growth.

Companies that reported higher levels of production generally cited stronger demand from domestic markets and the launch of new products at their plants. July data signaled a steep pace of overall new business growth across the manufacturing sector, albeit a softer expansion than in the previous month. Meanwhile, new export order growth remained relatively subdued, with the latest index reading unchanged from June?s five-month low and only slightly above the neutral 50.0 value.

Manufacturers indicated a rise in payroll numbers for the thirteenth successive month in July. Anecdotal evidence cited increased new business inflows and greater backlogs of work. However, the rate of employment growth eased for the first time since April and was the least marked for 10 months. Reports from survey respondents suggested that slower payroll growth reflected a combination of natural wastage and more cautious hiring policies amid slower output growth in July. 

Meanwhile, the latest survey signaled a robust rise in input buying across the manufacturing sector, which extended the current period of expansion to nine months. This in turn contributed to an increase in stocks of purchases during July. Inventories of finished goods also accumulated, albeit only marginally, which ended a 12-month period of falling post-production stocks. Average cost burdens increased at a robust pace in July, with survey respondents widely reporting higher prices for raw materials (particularly metals). That said, the overall rate of input cost inflation eased from June?s five-month high. Latest data pointed to a solid rise in factory gate prices, driven by higher cost burdens, and the pace of inflation picked up to a seven-month high in July. 




Thursday July 24 2014
US Jobless Claims Down to Nearly 8-1/2 Year Low
DOL | Joana Taborda | joana.taborda@tradingeconomics.com

In the week ending July 19, the advance figure for seasonally adjusted initial claims was 284,000, a decrease of 19,000 from the previous week's revised level. This is the lowest level for initial claims since February 18, 2006 when they were 283,000.

There were no special factors impacting this week's initial claims. 

The previous week's level was revised up by 1,000 from 302,000 to 303,000. The 4-week moving average was 302,000, a decrease of 7,250 from the previous week's revised average. This is the lowest level for this average since May 19, 2007 when it was 302,000. The previous week's average was revised up by 250 from 309,000 to 309,250. 

The advance seasonally adjusted insured unemployment rate was 1.9 percent for the week ending July 12, unchanged from the previous week's unrevised rate.

The advance number for seasonally adjusted insured unemployment during the week ending July 12 was 2,500,000, a decrease of 8,000 from the previous week's revised level. This is the lowest level for insured unemployment since June 16, 2007 when it was 2,453,000. The previous week's level was revised up 1,000 from 2,507,000 to 2,508,000. The 4-week moving average was 2,542,250, a decrease of 17,000 from the previous week's revised average. This is the lowest level for this average since October 13, 2007 when it was 2,527,500. The previous week's average was revised up by 250 from 2,559,000 to 2,559,250.  




Tuesday July 22 2014
US Inflation Rate Steady at 2.1%
BLS | Joana Taborda | joana.taborda@tradingeconomics.com

US consumer prices rose 2.1 percent year-on-year in June, the same rate recorded in May. On a monthly basis, prices increased 0.3 percent, following a 0.4 percent rise in the previous month, driven by higher gasoline cost.

In contrast to the broad-based increase last month, the June seasonally adjusted increase in the all items index was primarily driven by the gasoline index. It rose 3.3 percent and accounted for two-thirds of the all items increase. Other energy indexes were mixed, with the electricity index rising, but the indexes for natural gas and fuel oil declining. The food index decelerated in June, rising only slightly, with the food at home index flat after recent increases.

The index for all items less food and energy also decelerated in June, increasing 0.1 percent after a 0.3 percent increase in May. The indexes for shelter, apparel, medical care, and tobacco all increased in June, and the index for household furnishings and operations rose for the first time in a year. However, the index for new vehicles declined after recent increases, and the index for used cars and trucks also fell.

The all items index increased 2.1 percent over the last 12 months, the same figure as for the 12 months ending May. The index for all items less food and energy rose 1.9 percent over the last 12 months, a slight decline from the 2.0 percent figure last month. The index for energy increased 3.2 percent over the span, and the food index rose 2.3 percent.




Friday July 18 2014
US Consumer Sentiment Falls in July
The Thomson Reuters/University of Michigan | Joana Taborda | joana.taborda@tradingeconomics.com

The Thomson Reuters/University of Michigan's preliminary July reading on the overall index of consumer sentiment came in at 81.3, down from a final 82.5 in June. Consumer expectations fell for the third straight month.

The current economic conditions index increased to 97.1 from 96.6 in June. 

The survey's gauge of consumer expectations came in at 71.1, down from 73.5 in the previous month.

The survey's one-year inflation expectation increased to 3.3 percent from 3.1 percent in June, while the five-to-ten-year inflation outlook decreased to 2.6 percent (2.9 percent in the previous month).




Thursday July 17 2014
US Housing Starts Fall for Second Straight Month
U.S. Census Bureau | Joana Taborda | joana.taborda@tradingeconomics.com

Privately-owned housing starts in June were at a seasonally adjusted annual rate of 893 thousand, 9.3 percent below the revised May estimate of 985,000. Building permits fell 4.2 percent.

Single-family housing starts in June were at a rate of 575,000; this is 9.0 percent below the revised May figure of 632,000. The June rate for units in buildings with five units or more was 305,000. Year-on-year, housing starts rose 7.5 percent.

Privately-owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 963,000. This is 4.2 percent below the revised May rate of 1,005,000, but is 2.7 percent above the June 2013 estimate of 938,000.

Single-family authorizations in June were at a rate of 631,000; this is 2.6 percent (±1.4%) above the revised May figure of 615,000. Authorizations of units in buildings with five units or more were at a rate of 301,000 in June.




Thursday July 17 2014
US Jobless Claims Edge Down to 9-Week Low
DOL | Nuno Fontes | nuno@tradingeconomics.com

In the week ending July 12, the advance figure for seasonally adjusted initial claims was 302,000, a decrease of 3,000 from the previous week's revised level. The 4-week moving average fell to a 7-Year Low.

The 4-week moving average was 309,000, a decrease of 3,000 from the previous week's revised average. This is the lowest level for this average since June 2, 2007 when it was 307,500. The previous week's average was revised up by 500 from 311,500 to 312,000.

The previous week's initial claims level was revised up by 1,000 from 304,000 to 305,000. There were no special factors impacting this week's reading. 

The advance number for seasonally adjusted insured unemployment during the week ending July 5 was 2,507,000, a decrease of 79,000 from the previous week's revised level. This is the lowest level for insured unemployment since June 30, 2007 when it was 2,501,000.


Wednesday July 16 2014
US Industrial Production Slows in June
US Federal Reserve | Joana Taborda | joana.taborda@tradingeconomics.com

Industrial production increased 0.2 percent in June, following a revised 0.5 percent increase in May, as utilities output marked its fifth consecutive month of declines.

In June, manufacturing output edged up 0.1 percent for its fifth consecutive monthly gain.

The production of durable goods increased 0.4 percent in June and rose at an annual rate of 8.8 percent in the second quarter. In June, the gains were broad based among durable manufacturing industries, with increases of 1.0 percent or more in the indexes for nonmetallic mineral products, for primary metals, for fabricated metal products, for aerospace and miscellaneous transportation equipment, and for furniture and related products. Small declines were recorded in the indexes for machinery and for motor vehicles and parts. Capacity utilization for durable goods manufacturing increased 0.2 percentage point to 77.3 percent, a rate 0.3 percentage point above its long-run average.

The production of nondurable goods moved down 0.3 percent in June but increased at an annual rate of 5.0 percent in the second quarter. In June, the output of petroleum and coal products fell 2.7 percent, in part because of a disruption at a major refinery; the production of apparel and leather declined 1.3 percent, and the index for food, beverage, and tobacco products moved down 0.6 percent. The other categories of nondurables posted gains, with the largest increase, 1.2 percent, recorded for plastics and rubber products. The operating rate for nondurable manufacturing declined 0.3 percentage point to 78.4 percent, a rate 2.3 percentage points below its long-run average.

The output of non-NAICS manufacturing industries (publishing and logging) advanced 1.0 percent in June following a decrease of 0.8 percent in May. The index decreased at an annual rate of 0.4 percent in the second quarter.

Mining output advanced 0.8 percent in June; the output of mines was 9.7 percent above its level of a year earlier. Capacity utilization at mines edged up 0.1 percentage point in June to 90.0 percent, a rate 2.7 percentage points above its long-run average. The output of utilities decreased 0.3 percent, marking its fifth consecutive month of declines. The operating rate for utilities decreased 0.3 percentage point in June to 78.7 percent, a rate 7.4 percentage points below its long-run average.

For the second quarter as a whole, manufacturing production rose at an annual rate of 6.7 percent, while mining output increased at an annual rate of 18.8 percent because of gains in the extraction of oil and gas; by contrast, the output of utilities fell at an annual rate of 21.4 percent following a weather-related increase of 15.6 percent in the first quarter. 

At 103.9 percent of its 2007 average, total industrial production in June was 4.3 percent above its level of a year earlier. The capacity utilization rate for total industry was unchanged in June at 79.1 percent, a rate that is 1.0 percentage point below its long-run (1972–2013) average.




Tuesday July 15 2014
Yellen Warns on Uncertain Economic Outlook
US Federal Reserve | Joana Taborda | joana.taborda@tradingeconomics.com

During semi-annual monetary policy report to Congress, Fed Chairman Yellen signaled that interest rates can rise earlier or later than anticipated as considerable uncertainty surrounds projections for growth, unemployment and inflation.

Extracts from Chair Janet L. Yellen Semiannual Monetary Policy Report to the Congress:

Current Economic Situation and Outlook

Although the economy continues to improve, the recovery is not yet complete. Even with the recent declines, the unemployment rate remains above Federal Open Market Committee (FOMC) participants' estimates of its longer-run normal level.

Inflation has moved up in recent months but remains below the FOMC's 2 percent objective for inflation over the longer run. 

Although the decline in GDP in the first quarter led to some downgrading of our growth projections for this year, I and other FOMC participants continue to anticipate that economic activity will expand at a moderate pace over the next several years, supported by accommodative monetary policy, a waning drag from fiscal policy, the lagged effects of higher home prices and equity values, and strengthening foreign growth. The Committee sees the projected pace of economic growth as sufficient to support ongoing improvement in the labor market with further job gains, and the unemployment rate is anticipated to continue to decline toward its longer-run sustainable level. Consistent with the anticipated further recovery in the labor market, and given that longer-term inflation expectations appear to be well anchored, we expect inflation to move back toward our 2 percent objective over coming years.

Monetary Policy

If incoming data continue to support our expectation of ongoing improvement in labor market conditions and inflation moving back toward 2 percent, the Committee likely will make further measured reductions in the pace of asset purchases at upcoming meetings, with purchases concluding after the October meeting. Even after the Committee ends these purchases, the Federal Reserve's sizable holdings of longer-term securities will help maintain accommodative financial conditions, thus supporting further progress in returning employment and inflation to mandate-consistent levels.

Of course, the outlook for the economy and financial markets is never certain, and now is no exception. Therefore, the Committee's decisions about the path of the federal funds rate remain dependent on our assessment of incoming information and the implications for the economic outlook.

Financial Stability

The Committee recognizes that low interest rates may provide incentives for some investors to "reach for yield," and those actions could increase vulnerabilities in the financial system to adverse events. While prices of real estate, equities, and corporate bonds have risen appreciably and valuation metrics have increased, they remain generally in line with historical norms. In some sectors, such as lower-rated corporate debt, valuations appear stretched and issuance has been brisk. Accordingly, we are closely monitoring developments in the leveraged loan market and are working to enhance the effectiveness of our supervisory guidance. More broadly, the financial sector has continued to become more resilient, as banks have continued to boost their capital and liquidity positions, and growth in wholesale short-term funding in financial markets has been modest.