Thursday March 23 2017
US New Home Sales At 7-Month High
US Census Bureau | Joana Taborda |

Sales of new single-family houses in the United States jumped 6.1 percent to a seasonally adjusted annual rate of 592,000 in February of 2017. It follows an upwardly revised 558,000 in the previous month, and well above market expectations of 565,000 as unusual warm weather boosted sales in the Midwest, West and the South. Meanwhile, sales of previously owned houses dropped 3.7 percent to 5480 thousand, down from a ten-year high of 5690 thousand in January.

Sales rose in the Midwest (30.9 percent to 89 thousand), the West (7.5 percent to 157 thousand) and the South (3.6 percent to 313 thousand) but slumped 21.4 percent to 33 thousand in the Northeast. 

The median sales price of new houses sold was $296,200, lower than $308,200 in the previous month. The average sales price was $390,400, above $355,300 in January.

The stock of new houses for sale went up to 261 thousand from 260 thousand in January. This represents a supply of 5.4 months at the current sales rate.

Year-on-year, new home sales rose 12.8 percent.

Thursday March 23 2017
US Initial Jobless Claims Rise To 7-Week High
DOL | Joana Taborda |

The number of Americans filing for unemployment benefits increased by 15 thousand to 258 thousand in the week ended March 18th 2017, above market expectations of 240 thousand. It is the highest reading in seven weeks. The 4-week moving average that removes week-to-week volatility increased by 1,000 to 240,000.

The previous week's level was revised up by 2,000 to 243,000. The 4-week moving average was revised up by 1,750 to 239,000.

The seasonally adjusted insured unemployment rate was 1.4 percent for the week ending March 11, a decrease of 0.1 percentage point from the previous week's unrevised rate. 

Continuing jobless claims fell by 39,000 to 2,000,000 during the week ending March 11. The previous week's level was revised up 9,000 to 2,039,000. The 4-week moving average was 2,026,750, a decrease of 32,000 from the previous week's revised (up by 4,500 to 2,058,750).

Friday March 17 2017
US Consumer Sentiment Remains Near 13 Year High
University of Michigan | Joana Taborda |

The preliminary reading of the University of Michigan's consumer sentiment for the United States rose to 97.6 in March of 2017 from 96.3 in the previous month and beating market forecasts of 97.

The barometer for current economic conditions jumped to 114.5 from 111.5 in February, reaching the highest level since November of 2000, largely due to improved in personal finances.

The gauge of future expectations increased to 86.7 from 86.5.

Americans expect the inflation rate to be 2.4 percent next year, below 2.8 percent in February and 2.2 percent over the next 5 years, lower than 2.5 percent the previous month.

Among Republicans, the expectations index was at 122.4, while it was 55.3 for Democrats, showing the divide in the outlook since Donald Trump’s election victory. Eighty-seven percent of Republicans expect continued gains in the economy over the next five years, compared with 22 percent of Democrats.

"The overall level of consumer sentiment remained quite favourable in early March due to renewed strength in current economic conditions as well as the extraordinary influence of partisanship on economic prospects", Surveys of Consumers chief economist Richard Curtin said.  "Overall, the sentiment data has been characterised by rising optimism as well as by rising uncertainty due to the partisan divide. Optimism promotes discretionary spending, and uncertainty makes consumers more cautious spenders. This combination will result in uneven spending gains over time and across products."

Friday March 17 2017
US Industrial Output Unchanged In February
Federal Reserve | Joana Taborda |

Industrial production in the United States stalled in February from January of 2017, following a downwardly revised 0.1 percent fall in the previous period and compared to market expectations of a 0.2 percent gain. Utilities shrank amid warm weather, offsetting rises in manufacturing and mining.

Manufacturing output rose 0.5 percent, its sixth consecutive monthly increase, compared to 0.5  percent rise in January.  The production of durables increased 0.6 percent. The gain was led by advances of more than 1 percent for nonmetallic mineral products, fabricated metal products, and machinery. The only substantial losses within durables, about 1.5 percent each were recorded for the electrical equipment, appliance, and component industry and the furniture and related products industry. The index for nondurables rose 0.4 percent; gains of more than 1 percent were recorded by paper and by plastics and rubber products, while the only losses were posted by textile and product mills and by chemicals. The output of other manufacturing (publishing and logging) fell 0.5 percent. 

The mining output jumped 2.7 percent in February after moving up 2.2 percent in January.

In contrast, utilities fell 5.7 percent, as continued unseasonably warm weather further reduced demand for heating

At 104.7 percent of its 2012 average, total industrial production in February was 0.3 percent above its level of a year earlier. 

Capacity utilization for the industrial sector declined 0.1 percentage point in February to 75.4 percent, a rate that is 4.5 percentage points below its long-run (1972–2016) average. The rates for nondurables and for other manufacturing (publishing and logging), at 75.4 percent and 60.5 percent, respectively, remain significantly below their long-run averages. Utilization for mining jumped 2.1 percentage points to 80.5 percent but is still well below its long-run average. The operating rate for utilities fell 4.4 percentage points to 70.9 percent, its lowest recorded level. 

Thursday March 16 2017
US Housing Starts Rise More Than Expected
U.S. Census Bureau | Joana Taborda |

Housing starts in the United States rose 3 percent from the previous month to a seasonally adjusted annualized rate of 1288 thousand in February of 2017, following an upwardly revised 1251 thousand in the previous month and beating market expectations of a 1.4 percent rise. It is the biggest rate in four months as construction of single-family houses hit a near 9-1/2-year high.

Single-family housing starts, the largest segment of the market went up 6.5 percent to 872 thousand, the highest since October of 2007. In contrast, the volatile multi-family segment declined 7.7 percent to 396 thousand. Starts jumped 35.7 percent to 323 thousand in the West but declined in the Northeast (-9.8 percent to 119 thousand); the Midwest (-4.6 percent to 187 thousand) and the South (-3.8 percent to 659 thousand). 

Building permits fell 6.2 percent to a seasonally adjusted annual rate of 1213 thousand, more than market expectations of a 2.6 percent decline. Building permits for multi-family units shrank 26.9 percent to 334 thousand while single-family authorizations rose 3.1 percent to 832 thousand. Permits declined in the Northeast (-22.3 percent to 115 thousand), the South (-10.4 percent to 580 thousand) and in the West (-10 percent to 271 thousand) while increased in the Midwest (25.4 percent to 247 thousand). 

Year-on-year, housing starts went up 6.2 percent and building permits rose 4.4 percent. 

Thursday March 16 2017
Jobless Claims Drop to 241K
Anna |

The number of Americans filing for unemployment benefits went down by 2 thousand to 241 thousand in the week ended March 11th 2017, slightly below market expectations of 243 thousand. The four-week moving average increased to 237,250 last week from 236,500.

The initial claims have been below 300 thousand for 106 straight weeks, the longest streak since 1970. 

The number of people continuing to receive jobless benefits fell by 30,000 to 2.03 million in the week ended March 4th, the fewest since the period ended Dec. 3rd. 

The unemployment rate among people eligible for benefits held at 1.5 percent.  The advance number for seasonally adjusted insured unemployment was 2,030,000, a decrease of 30,000 from the previous week's revised level. The previous week's level was revised up 2,000 from 2,058,000 to 2,060,000. The 4-week moving average was 2,054,250, a decrease of 11,750 from the previous week's revised average. The previous week's average was revised up by 500 from 2,065,500 to 2,066,000. 

Wednesday March 15 2017
Fed Raises Key Rate To 1%
Federal Reserve | Joana Taborda |

The Federal Reserve raised the target range for its federal funds by 25bps to 0.75 percent to 1 percent during its March 2017 meeting. The decision came in line with market expectations as the labor market strengthened and economic activity continued to expand at a moderate pace, policymakers said. Interest rate forecasts point to another two rate hikes this year, the same as in the December projection.

The economy is expected to grow 2.1 percent this year (2.1 percent in the December projection), 2.1 percent in 2018 (2 percent in the December projection) and 1.9 percent in 2019 (1.9 percent in the December projection). Unemployment forecasts were left steady at 4.5 percent for 2017, 2018 and 2019 and PCE inflation was also left unchanged at 1.9 percent for 2017, 2 percent in 2018 and 2 percent in 2019.

FOMC Statement:

Information received since the Federal Open Market Committee met in February indicates that the labor market has continued to strengthen and that economic activity has continued to expand at a moderate pace. Job gains remained solid and the unemployment rate was little changed in recent months. Household spending has continued to rise moderately while business fixed investment appears to have firmed somewhat. Inflation has increased in recent quarters, moving close to the Committee's 2 percent longer-run objective; excluding energy and food prices, inflation was little changed and continued to run somewhat below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labor market conditions will strengthen somewhat further, and inflation will stabilize around 2 percent over the medium term. Near-term risks to the economic outlook appear roughly balanced. The Committee continues to closely monitor inflation indicators and global economic and financial developments.

In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 3/4 to 1 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

Wednesday March 15 2017
US Retail Sales Rise The Least In 6 Months
US Census Bureau | Yekaterina Guchshina |

Retail sales in the United States increased by 0.1 percent month-over-month in February 2017, following an upwardly revised 0.6 percent rise in January and in line with market expectations. It was the smallest increase since August, due to lower purchases at motor vehicle and parts dealers and electronics and appliance stores. In contrast, sales rose for building material and garden equipment and nonstore retailers.

4 out of 13 major retail categories showed gains in February while 8 declined and 1 was unchanged.

The biggest increases were recorded at: building material and garden equipment (1.8 percent from 1.2 percent in January); nonstore retailers (1.2 percent from 0.5 percent); health and personal care stores (0.7 percent from 0.9 percent) and furniture stores (0.7 percent from 2.4 percent). 

By contrast, sales of motor vehicles dropped 0.2 percent (-1.3 percent in January) and at electronics and appliances stores fell 2.8 percent (1.1 percent in January), the biggest decline since December 2011. Also, sales declined for gasoline stations (-0.6 percent from 2.1 percent); clothing and clothing accessories (-0.5 percent from 1.2 percent); general merchandise stores (-0.2 percent from 0.5 percent); miscellaneous store retailers (-0.8 percent from -0.3 percent); food services and drinking places (-0.1 percent from 1.7 percent) and sporting goods, hobby, book and music stores (-0.4 percent from 1.4 percent).

Meanwhile, sales at food and beverage stores were flat.

The so-called core retail sales that exclude automobiles, gasoline, building materials and food services and correspond most closely with the consumer spending component of gross domestic product, rose 0.1 percent after an upwardly revised 0.8 percent gain in January.

Compared to February last year retail sales were up 5.7 percent. 

Wednesday March 15 2017
US Inflation Rate Rises To 2.7%, Highest Since March 2012
BLS | Joana Taborda |

Consumer prices in the United States increased 2.7 percent year-on-year in February of 2017, following a 2.5 percent rise in January and in line with market expectations. It was the highest inflation rate since March of 2012, boosted by a rise in gasoline prices.

Year-on-year, energy prices jumped 15.2 percent, following a 10.8 percent rise in January. In addition, inflation accelerated for transportation services (3.6 percent from 3.2 percent in January). In contrast, inflation was steady for shelter (3.5 percent) and eased for medical care (3.4 percent from 3.6 percent). Meanwhile, food prices were unchanged, following a 0.2 percent decline in January. 

Annual core inflation, which excludes food and energy eased to 2.2 percent from 2.3 percent in the previous month and matching market expectations. 

On a monthly basis, consumer prices edged up 0.1 percent, slowing from a 0.6 percent gain in January. It is the lowest monthly inflation since July of 2016 but in line with market forecasts. The gasoline index declined, partially offsetting increases in several indexes, including food, shelter, and recreation. The energy index fell 1 percent, with the decline in gasoline outweighing increases in the other energy component indexes. The food index increased 0.2 percent, its largest rise since September 2015.

Excluding food and energy, prices rose 0.2 percent in February. The indexes for shelter, recreation, apparel, airline fares, motor vehicle insurance, education, and medical care were among those that increased. In contrast, communication, used cars and trucks, new vehicles, and household furnishings and operations declined.  

Friday March 10 2017
US Budget Deficit Above Expectations In February
US Treasury | Joana Taborda |

The US government posted a USD 192 billion budget deficit in February of 2017, barely unchanged from a USD 192.6 billion gap a year earlier but above market expectations of USD 150 billion. Outlays increased 1 percent to USD 364 billion and receipts rose faster by 2 percent to USD 172 billion.

In February, social security accounted for USD 78 billion of total outlays, Medicare for USD 46 billion, defense for USD 46 billion, interest on debt for USD 21 billion and other expenses for the remaining USD 173 billion. Regarding receipts, social security and other payroll taxes accounted for USD 90 billion, individual income taxes for USD 61 billion, corporate income taxes for USD 2 billion and other taxes and duties for the remaining USD 18 billion.
When adjusting for calendar effects, the February 2017 deficit was USD 181 billion.
The fiscal 2017 year-to-date deficit narrowed slightly to USD 349 billion compared with USD 353 billion in the same period of fiscal 2016.