Thursday May 28 2015
Jobless Claims Rise in Latest Week
DOL | Joana Taborda | joana.taborda@tradingeconomics.com

The number of Americans filing new claims for unemployment benefits rose for the second straight time to 282,000 in the week ended May 23rd, an increase of 7,000 from the previous week’s revised level. It is the highest figure in five weeks.

The previous week's level was revised up by 1,000 from 274,000 to 275,000. 

The 4-week moving average was 271,500, an increase of 5,000 from the previous week's revised average. The previous week's average was revised up by 250 from 266,250 to 266,500.

The advance seasonally adjusted insured unemployment rate was 1.7 percent for the week ending May 16, an increase of 0.1 percentage point from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending May 16 was 2,222,000, an increase of 11,000 from the previous week's unrevised level of 2,211,000. The 4-week moving average was 2,221,250, a decrease of 8,500 from the previous week's unrevised average of 2,229,750. This is the lowest level for this average since November 25, 2000 when it was 2,211,250.




Tuesday May 26 2015
New Home Sales Beat Forecasts
U.S. Census Bureau | Joana Taborda | joana.taborda@tradingeconomics.com

Sales of new single-family houses in the US surged 6.8 percent to a seasonally adjusted annual rate of 517,000 units in April, boosted by sales in the South and the Midwest.

The March figure was revised up to 484,000 units from the previously reported 481,000 units.

In April, sales in the Midwest jumped 36.8 percent and those in the South increased 5.8 percent. In contrast, sales in the West shrank 2.3 percent and those in the Northeast fell 5.6 percent. 

The median sales price of new houses sold in April 2015 was $297,300; the average sales price was $341,500. The seasonally adjusted estimate of new houses for sale at the end of April was 205,000. This represents a supply of 4.8 months at the current sales rate.

Year-on-year, new home sales were 26.1 percent above the April 2014 estimate of 410,000.




Tuesday May 26 2015
Durable Goods Fall in April
US Census Bureau | Joana Taborda | joana.taborda@tradingeconomics.com

New orders for US manufactured goods shrank 0.5 percent in April, following an upwardly revised 5.1 percent rise in March. Excluding transportation, orders increased 0.5 percent, slightly slowing from a revised 0.6 percent increase in the previous month.

Excluding defense, new orders increased 0.2 percent (3.4 percent in March) Transportation equipment, also down two of the last three months, drove the decrease, $2.0 billion or 2.5 percent to $77.9 billion. 

Shipments of manufactured durable goods in April, down three of the last four months, decreased $0.1 billion or 0.1 percent to $240.5 billion. This followed a 1.5 percent March increase. Primary metals, down six of the last seven months, drove the decrease, $0.5 billion or 2.1 percent to $21.6 billion.

Unfilled orders for manufactured durable goods in April, down four of the last five months, decreased $0.3 billion, or virtually unchanged, to $1,203.1 billion. This followed a 0.1 percent March increase. Machinery, down six of the last seven months, drove the decrease, $0.9 billion or 0.7 percent to $115.7 billion.

Inventories of manufactured durable goods in April, up twenty-four of the last twenty-five months, increased $0.9 billion or 0.2 percent to $401.5 billion. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a virtually unchanged March increase. Transportation equipment, up sixteen of the last seventeen months, led the increase, $0.6 billion or 0.5 percent to $130.3 billion.

Nondefense new orders for capital goods in April increased $0.3 billion or 0.3 percent to $81.2 billion. Shipments increased $1.3 billion or 1.6 percent to $80.2 billion. Unfilled orders increased $1.1 billion or 0.1 percent to $763.3 billion. Inventories increased $0.3 billion or 0.2 percent to $177.4 billion.

Defense new orders for capital goods in April decreased $0.9 billion or 9.5 percent to $8.4 billion. Shipments decreased $0.3 billion or 2.8 percent to $9.5 billion. Unfilled orders decreased $1.0 billion or 0.7 percent to $151.4 billion. Inventories increased $0.5 billion or 2.5 percent to $21.7 billion




Friday May 22 2015
Fed Likely to Raise Rates in 2015
Fed | Joana Taborda | joana.taborda@tradingeconomics.com

The Federal Reserve is likely to start raising interest rates this year as the U.S. economy seems well positioned for continued growth, Fed Chair Janet Yellen said on Friday.

Excerpts from Speech by Chair Janet L. Yellen at the Providence Chamber of Commerce, Providence, Rhode Island:

Putting it all together, the economic projections of most members of the FOMC call for growth in real gross domestic product of roughly 2-1/2 percent per year over the next couple of years, a little faster than the pace of the recovery thus far, with the unemployment rate continuing to move down to near 5 percent by the end of this year. And for inflation, as I noted earlier, my colleagues and I expect inflation to move up toward our objective of 2 percent as the economy strengthens further and as transitory influences wane.

Of course, the outlook for the economy, as always, is highly uncertain. I am describing the outlook that I see as most likely, but based on many years of making economic projections, I can assure you that any specific projection I write down will turn out to be wrong, perhaps markedly so. For many reasons, output and job growth over the next few years could prove to be stronger, and inflation higher, than I expect; correspondingly, employment could grow more slowly, and inflation could remain undesirably low.

Given this economic outlook and the attendant uncertainty, how is monetary policy likely to evolve over the next few years? Because of the substantial lags in the effects of monetary policy on the economy, we must make policy in a forward-looking manner. Delaying action to tighten monetary policy until employment and inflation are already back to our objectives would risk overheating the economy.

For this reason, if the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target and begin the process of normalizing monetary policy. To support taking this step, however, I will need to see continued improvement in labor market conditions, and I will need to be reasonably confident that inflation will move back to 2 percent over the medium term.

After we begin raising the federal funds rate, I anticipate that the pace of normalization is likely to be gradual. The various headwinds that are still restraining the economy, as I said, will likely take some time to fully abate, and the pace of that improvement is highly uncertain. If conditions develop as my colleagues and I expect, then the FOMC's objectives of maximum employment and price stability would best be achieved by proceeding cautiously, which I expect would mean that it will be several years before the federal funds rate would be back to its normal, longer-run level.

Having said that, I should stress that the actual course of policy will be determined by incoming data and what that reveals about the economy. We have no intention of embarking on a preset course of increases in the federal funds rate after the initial increase. Rather, we will adjust monetary policy in response to developments in economic activity and inflation as they occur. If conditions improve more rapidly than expected, it may be appropriate to raise interest rates more quickly; conversely, the pace of normalization may be slower if conditions turn out to be less favorable.




Friday May 22 2015
US Inflation Rate Falls Further
BLS | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in the United States went down 0.2 percent year-on-year in April, following a 0.1 percent drop in March due to falling energy cost. Yet, core inflation was unchanged at 1.8 percent, beating market forecasts.

The decline was driven by the energy index, which fell 19.4 percent over the last 12 months, with all the major components declining except electricity. The food index rose 2.0 percent over the last year, and the index for all items less food and energy rose 1.8 percent.

On a monthly basis, consumer prices increased 0.1 percent in April, down from 0.2 percent in March. The index for all items less food and energy rose 0.3 percent and led to the slight increase in the seasonally adjusted all items index. The index for shelter rose, as did the indexes for medical care, household furnishings and operations, used cars and trucks, and new vehicles. In contrast, the indexes for apparel and airline fares declined in April. The energy index declined in April, while the food index was unchanged. The indexes for gasoline, natural gas, and fuel oil all declined, while the electricity index was unchanged. The food at home index declined for the second month in a row, offsetting an increase in the index for food away from home. Major grocery store food group indexes were mixed.




Thursday May 21 2015
US Factory Activity at 16-Month Low
Markit | Joana Taborda | joana.taborda@tradingeconomics.com

The Markit Flash U.S. Manufacturing PMI decreased for the second consecutive month to 53.8 in May from 54.1 in April as slower new order growth offset faster job creation. Is the smallest figure since January of 2014.

Latest data indicated that overall new business growth softened for the second month running and was the weakest since January 2014. Moreover, new export sales decreased marginally in May, with a number of manufacturers noting that the strong dollar had a negative influence on competitiveness in external markets. In terms of domestic demand, survey respondents noted that energy sector investment spending remained a key area of weakness in May.

Manufacturing output growth eased further from March’s six-month high, which firms largely attributed to softer new business gains. The latest increase in output volumes was the slowest recorded so far in 2015, but still broadly in line with the post-recession average.

Meanwhile, latest data signalled the slowest pace of backlog accumulation across the manufacturing sector for four months. Lower pressure on operating capacity was linked to a combination of weaker new business gains and robust job creation.

Higher levels of manufacturing employment have been recorded in each month since July 2013. The latest upturn in payroll numbers was the fastest for six months, which firms attributed to the launch of new products, long-term investment plans and efforts to boost production volumes.

Suppliers’ delivery times lengthened in May, although the latest deterioration in vendor performance was much less marked than February’s recent low. There were reports that some supplier bottlenecks have persisted after the port strikes earlier in 2015. However, the latest survey indicated the slowest rise in pre-production inventories for 11 months, suggesting a lower propensity among manufacturers to build safety stocks in May.

On the prices front, manufacturers indicated an increase in their average cost burdens for the first time since December 2014. That said, the rate of inflation was only marginal, with survey respondents noting that low oil prices continued to help reduce cost pressures, while a number of firms commented on falling steel prices.

Meanwhile, factory gate charges rose at the most marked pace for six months, but the rate of inflation remained subdued in comparison to the average seen since the survey began in 2007.




Thursday May 21 2015
Jobless Claims at 4-Week High
DOL | Joana Taborda | joana.taborda@tradingeconomics.com

The number of Americans filing new claims for unemployment benefits was 274,000 in the week ended May 16th, an increase of 10,000 from the previous week’s unrevised level. The four-week moving average fell further to a fresh 2000 low.

The 4-week moving average was 266,250, a decrease of 5,500 from the previous week's unrevised average of 271,750. This is the lowest level for this average since April 15, 2000 when it was 266,250.

The advance seasonally adjusted insured unemployment rate was 1.6 percent for the week ending May 9, a decrease of 0.1 percentage point from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending May 9 was 2,211,000, a decrease of 12,000 from the previous week's revised level. This is the lowest level for insured unemployment since November 11, 2000 when it was 2,161,000. The previous week's level was revised down by 6,000 from 2,229,000 to 2,223,000. The 4-week moving average was 2,229,750, a decrease of 29,000 from the previous week's revised average. This is the lowest level for this average since November 25, 2000 when it was 2,211,250. The previous week's average was revised down by 1,500 from 2,260,250 to 2,258,750.


Wednesday May 20 2015
Fed June Rate Rise Is Unlikely
Fed | anna@tradingeconomics.com

Some Fed officials believed it would be too early to raise interest rates in June even though a first quarter economic slowdown was unlikely to persist, minutes of the meeting held last month showed.

Extracts From the Minutes of the Federal Open Market Committee:

In their discussion of the economic situation and the outlook, meeting participants regarded the information received over the intermeeting period as suggesting that economic growth had slowed during the winter months, in part reflecting transitory factors. The pace of job gains had moderated, and the unemployment rate had remained steady, with a range of labor market indicators suggesting that underutilization of labor resources was little changed. Most participants expected that, following the slowdown in the first quarter, real economic activity would resume expansion at a moderate pace, and that labor market conditions would improve further. Inflation continued to run below the Committee's longer-run objective, partly reflecting earlier declines in energy prices and decreasing prices of non-energy imports. Market-based measures of inflation compensation remained low, while survey-based measures of longer-term inflation expectations had remained stable. Participants generally anticipated that inflation would rise gradually toward the Committee's 2 percent objective as the labor market improved further and the transitory effects of declines in energy prices and non-energy import prices dissipated. Participants judged that recent domestic economic developments had increased uncertainty regarding the economic outlook. While participants continued to see potential downside risks resulting from foreign economic and financial developments, most still viewed the risks to the outlook for economic growth and the labor market as nearly balanced.

Participants continued to judge that it would be appropriate to raise the target range for the federal funds rate when they had seen further improvement in the labor market and were reasonably confident that inflation would move back to its 2 percent objective over the medium term. Although participants expressed different views about the likely timing and pace of policy firming, they agreed that the Committee's decision to begin firming would appropriately depend on the incoming data and their implications for the economic outlook. A few anticipated that the information that would accrue by the time of the June meeting would likely indicate sufficient improvement in the economic outlook to lead the Committee to judge that its conditions for beginning policy firming had been met. Many participants, however, thought it unlikely that the data available in June would provide sufficient confirmation that the conditions for raising the target range for the federal funds rate had been satisfied, al-though they generally did not rule out this possibility. Participants discussed the merits of providing an explicit indication, in postmeeting statements released prior to the commencement of policy firming, that the target range for the federal funds rate would likely be raised in the near term. However, most participants felt that the timing of the first increase in the target range for the federal funds rate would appropriately be determined on a meeting-by-meeting basis and would depend on the evolution of economic conditions and the outlook. In keeping with this data-dependent approach, some participants further suggested that the postmeeting statement's description of the economic situation and outlook, and of progress toward the Committee's goals, provided the appropriate means by which the Committee could help the public assess the likely timing of the initial increase in the target range for the federal funds rate.


Tuesday May 19 2015
Housing Starts Surge to 7-1/2-Year High
U.S. Census Bureau | Joana Taborda | joana.taborda@tradingeconomics.com

Privately-owned housing starts jumped 20.2 percent to a seasonally adjusted annual rate of 1,135,000 in April. It is the highest rate since November of 2007 as starts for single-family homes reached a nearly seven-year high.

The March estimate was revised to 944,000 from 926,000.

Single-family housing starts rose 16.7 percent to 733,000 while starts of buildings with five units or more jumped 31.9 percent to 389,000.

Housing starts in the Northeast recorded the highest increase (85.9 percent), followed by the West (39 percent) and the Midwest (27.8 percent) while groundbreaking in the South fell 1.8 percent.

Building permits in April were at a seasonally adjusted annual rate of 1,143,000, 10.1 percent above the revised March rate of 1,038,000.

Single-family authorizations increased 3.7 percent while authorizations of units in buildings with five units or more rose 20 percent in April.

Year-on-year, housing starts rose 9.2 percent and building permits went up 6.4 percent.




Friday May 15 2015
US Consumer Sentiment at 7-Month Low
University of Michigan | Joana Taborda | joana.taborda@tradingeconomics.com

The University of Michigan's preliminary reading on the overall index of consumer sentiment came in at 88.6 in May, down from 95.9 in April and well below market expectations. Both current and future expectations declined while the inflation outlook rose.

The barometer of current economic conditions fell to 99.8 in May from 107 in April.

The gauge of consumer expectations dropped to 81.5 from 88.8 in the previous month.

Americans expect the inflation rate in the next year will be 2.9 percent, compared with 2.6 percent in April. Over the next 5 to 10 years, they expect consumer prices to accelerate to 2.8 percent, compared with 2.6 percent in April.