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.




Tuesday July 15 2014
US Retail Sales Disappoint in June
U.S. Census Bureau | Joana Taborda | joana.taborda@tradingeconomics.com

Advance estimates of U.S. retail and food services sales for June were $439.9 billion, an increase of 0.2 percent from the previous month. Figures came below market expectations, due to a fall in auto sales.

The April to May 2014 percent change was revised from 0.3 percent to 0.5 percent. 

Retail sales in motor vehicles stores fell 0.3 percent in June from May. Sales in building material and garden suppliers shrank 1 percent and those in furniture stores fell 0.1 percent.

In contrast, sales in general merchandise stores rose 1.1 percent; sales in clothing departments increased 0.8 percent; sales in sporting stores went up 0.6 percent and those in retail and food stores rose 0.2 percent. 

Core sales, which strip out automobiles, gasoline, building materials and food services increased 0.6 percent in June. Retail sales excluding automobiles advanced 0.4 percent.

Year-on-year, sales rose 4.3 percent in June. Total sales for the April through June 2014 period were up 4.5 percent from the same period a year ago. 




Friday July 11 2014
US Budget Surplus Narrows in June
US Treasury | Joana Taborda | joana.taborda@tradingeconomics.com

The US budget surplus fell 39 percent year-on-year to USD 71 billion in June of 2014. A year earlier, the country’s surplus amounted to USD 117 billion.

In June, receipts reached USD 324 billion, up 13 percent year-on-year while the outlays surged 49 percent to USD 253 billion.

The year-to-date deficit was USD 366 billion at the end of June of 2014, down from a USD 510 billion gap a year earlier.




Thursday July 10 2014
US Jobless Claims Down to 6-Week Low
U.S. Department of Labor | Joana Taborda | joana.taborda@tradingeconomics.com

In the week ending July 5, the advance figure for seasonally adjusted initial claims was 304,000, a decrease of 11,000 from the previous week's unrevised level of 315,000. There were no special factors impacting this week's initial claims.

The 4-week moving average was 311,500, a decrease of 3,500 from the previous week's unrevised average of 315,000. 

The advance seasonally adjusted insured unemployment rate was 2.0 percent for the week ending June 28, unchanged from the previous week's unrevised rate.

The advance number for seasonally adjusted insured unemployment during the week ending June 28 was 2,584,000, an increase of 10,000 from the previous week's revised level. The previous week's level was revised down by 5,000 from 2,579,000 to 2,574,000. The 4-week moving average was 2,571,250, a decrease of 7,750 from the previous week's revised average. This is the lowest level for this average since October 27, 2007 when it was 2,561,750. The previous week's average was revised down by 1,250 from 2,580,250 to 2,579,000.


Wednesday July 09 2014
Fed Likely to End Stimulus in October
US Federal Reserve | Joana Taborda | joana.taborda@tradingeconomics.com

Minutes from its June meeting showed the Federal Reserve plans to end its bond-buying program in October, if the economy progresses as the central bank expects.

Excerpts from the Minutes of the Federal Open Market Committee June 17–18, 2014:

During their consideration of issues related to monetary policy over the medium term, participants generally supported the Committee’s current guidance about the likely path of its asset purchases and about its approach to determining the timing of the first increase in the federal funds rate and the path of the policy rate thereafter. Participants offered views on a range of issues related to policy communications. Some participants suggested that the Committee’s communications about its forward guidance should emphasize more strongly that its policy decisions would depend on its ongoing assessment across a range of indicators of economic activity, labor market conditions, inflation and inflation expectations, and financial market developments. In that regard, circumstances that might entail either a slower or a more rapid removal of policy accommodation were cited.

While the current asset purchase program is not on a preset course, participants generally agreed that if the economy evolved as they anticipated, the program would likely be completed later this year. Some committee members had been asked by members of the public whether, if tapering in the pace of purchases continues as expected, the final reduction would come in a single $15 billion per month reduction or in a $10 billion reduction followed by a $5 billion reduction. Most participants viewed this as a technical issue with no substantive macroeconomic consequences and no consequences for the eventual decision about the timing of the first increase in the federal funds rate—a decision that will depend on the Committee’s evolving assessments of actual and expected progress toward its objectives. In light of these considerations, participants generally agreed that if incoming information continued to support its expectation of improvement in labor market conditions and a return of inflation toward its longer-run objective, it would be appropriate to complete asset purchases with a $15 billion reduction in the pace of purchases in order to avoid having the small, remaining level of purchases receive undue focus among investors. If the economy progresses about as the Committee expects, warranting reductions in the pace of purchases at each upcoming meeting, this final reduction would occur following  the October meeting.