Friday June 24 2016
US Consumer Sentiment Revised Down to 93.5 in June
University of Michigan | Joana Taborda | joana.taborda@tradingeconomics.com

The University of Michigan's consumer sentiment for the United States came in at 93.5 in June 2016, down from a preliminary reading of 94.3 and a final of 94.7 in the previous month. Consumers were less optimistic about current conditions and future economic prospects.

The barometer of consumer expectations went down to 82.4 from a preliminary reading of 83.2 and a final of 84.9 in the previous month. The gauge of current economic conditions fell to 110.8 from a preliminary of 111.7 but still higher than a final of 109.9 in May.

Americans expect the inflation rate in the next year to be 2.4 percent, unchanged from earlier estimates and the previous month. Over the next 5 years, they expect consumer prices to increase at a slower 2.3 percent, in line with preliminary figures but down from 2.5 percent in May.




Friday June 24 2016
US Durable Goods Orders Fall More than Expected
US Census Bureau | Joana Taborda | joana.taborda@tradingeconomics.com

New orders for US manufactured durable goods shrank 2.2 percent in May from April of 2016, following a downwardly revised 3.3 percent rise in the previous period. Figures came worse than market expectations of a 0.5 percent decline, dragged down mainly by transport equipment. Core capital goods orders, a proxy for business spending fell 0.7 percent.

Excluding transportation, new orders decreased 0.3 percent and excluding defense, new orders fell 0.9 percent.

Transportation equipment, also down following two consecutive monthly increases, led the decrease, $4.8 billion or 5.6 percent to $81.9 billion. 

Shipments of manufactured durable goods in May, down three of the last four months, decreased $0.5 billion or 0.2 percent to $231.7 billion. This followed a 0.4 percent April increase. Transportation equipment, also down three of the last four months, led the decrease, $0.4 billion or 0.5 percent to $80.0 billion. 

Unfilled orders for manufactured durable goods in May, up four of the last five months, increased $2.0 billion or 0.2 percent to $1,139.4 billion. This followed a 0.6 percent April increase. Transportation equipment, up three consecutive months,led the increase, $1.9 billion or 0.2 percent to $785.2 billion. 

Inventories of manufactured durable goods in May, down ten of the last eleven months, decreased $1.1 billion or 0.3 percent to $382.5 billion. This followed a 0.4 percent April decrease. Machinery, down nine of the last ten months, led the decrease, $0.5 billion or 0.8 percent to $65.4 billion.

Nondefense new orders for capital goods in May decreased $0.6 billion or 0.8 percent to $73.8 billion. Shipments increased $0.8 billion or 1.2 percent to $72.8 billion. Unfilled orders increased $1.1 billion or 0.2 percent to $708.6 billion. Inventories decreased $0.6 billion or 0.3 percent to $171.3 billion.
Defense new orders for capital goods in May decreased $3.7 billion or 28.0 percent to $9.5 billion. Shipments increased $0.2 billion or 2.1 percent to $9.8 billion. Unfilled orders decreased $0.3 billion or 0.2 percent to $140.3 billion. Inventories decreased $0.1 billion or 0.3 percent to $20.8 billion. 




Thursday June 23 2016
US New Home Sales Slide From 8-Year High
US Census Bureau | Joana Taborda | joana.taborda@tradingeconomics.com

New US single-family home sales fell 6 percent to 551,000 in May of 2016 compared to market expectations of 560,000. The April's sales was downwardly revised to 586,000 units, but still remained the highest since February 2008. The pace points to a healthy growth in the housing sector helped by consistent employment gains and ultra-low mortgage rates.

Sales in the Northeast slumped 33.3 percent to 34,000; those in the West fell 15.6 percent to 124,000 and sales in the South declined 0.9 percent to 323,000. In contrast, sales in the Midwest went up 12.9 percent to 70,000.  

The median sales price of new houses sold in May declined to $290,400 from $320,200 in April but rose from $287,400 a year earlier. The average sales price also fell to $358,900 from $378,200 in the previous month but went up from $340,800 a year earlier. 

The stock of new houses for sale increased 1.2 percent to 244,000,  the highest since September of 2009.. This represents a supply of 5.3 months at the current sales rate. 

Year-on-year, new home sales grew 8.7 percent in May. 




Thursday June 23 2016
US Markit Manufacturing PMI Beats Expectations
Markit | Joana Taborda | joana.taborda@tradingeconomics.com

The flash Markit Manufacturing PMI in the United States came in at 51.4 in June of 2016, up from 50.7 in the previous month and beating market expectations of 50.8. It is the highest figure in three months. New business growth accelerated helped by fastest rise in export sales since September of 2014 and output levels increased.

Manufacturers indicated a modest rise in production volumes during June, which survey respondents mainly linked to signs of a rebound in customer demand and a corresponding upturn in new work. The latest increase in new business was the strongest since March, although subdued in comparison to the post-crisis average. New orders from abroad expanded at the fastest pace for almost two years, suggesting an additional boost to growth from greater export sales in June. 

Despite stronger new business growth, a number of manufacturers noted that heightened economic uncertainty had led to delayed decision making and greater risk aversion among clients in June. Moreover, concerns about the business outlook contributed to tighter inventory management across the manufacturing sector. Stocks of purchases fell at the fastest pace since January 2014, while postproduction inventories dropped at the secondfastest pace recorded so far this year. At the same time, supplier lead-times lengthened to the greatest extent since last September, which some firms linked to lower stocks among vendors. 

While manufacturers indicated sustained caution in terms of their stock policies, this contrasted with more positive trends for staff recruitment in June. Employment growth picked up further from the near three-year low record in April, in part reflecting a renewed increase in backlogs of work across the manufacturing sector. Volumes of work outstanding rose for the first time since the start of 2016, thereby suggesting greater capacity pressures among manufacturers in June. 

Meanwhile, input price inflation accelerated again in June. Although still subdued in comparison to the long-run survey average, the latest rise in average cost burdens was the fastest since November 2014. There were a number of reports citing higher raw material prices in June, especially for steel. Greater input prices in turn contributed to the strongest increase in factory gate charges since January.




Thursday June 23 2016
US Jobless Claims Fall to 2-Month Low
DOL | Joana Ferreira | joana.ferreira@tradingeconomics.com

The number of Americans filing for unemployment benefits decreased by 18,000 to 259,000 in the week ended June 18th compared with the previous period's unrevised reading of 277,000. The figure came in below market expectations of 270,000, hitting its lowest level in eight weeks.

This marks 68 consecutive weeks of initial claims below 300,000, the longest streak since 1973.

The 4-week moving average was 267,000, a decrease of 2,250 from the previous week's unrevised average of 269,250.

The advance seasonally adjusted insured unemployment rate was 1.6 percent for the week ending June 11, unchanged from the previous week's unrevised rate. 

The continuing claims drawn by workers for more than a week (the advance number for seasonally adjusted insured unemployment) during the week ending June 11 was 2,142,000, a decrease of 20,000 from the previous week's revised level. The previous week's level was revised up 5,000 from 2,157,000 to 2,162,000. The 4-week moving average was 2,147,000, a decrease of 4,500 from the previous week's revised average. The previous week's average was revised up by 1,250 from 2,150,250 to 2,151,500.




Tuesday June 21 2016
Fed To Remain Cautious in Hiking Rates
Federal Reserve | Joana Taborda | joana.taborda@tradingeconomics.com

A cautious approach to monetary policy remains appropriate amid a hiring slowdown and uncertain economic outlook, Fed Chair Yellen said in a testimony before the Senate Banking Committee.

Excerpts from the Chair Janet L. Yellen Testimony Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate:

Since my last appearance before this Committee in February, the economy has made further progress toward the Federal Reserve's objective of maximum employment. And while inflation has continued to run below our 2 percent objective, the Federal Open Market Committee (FOMC) expects inflation to rise to that level over the medium term. However, the pace of improvement in the labor market appears to have slowed more recently, suggesting that our cautious approach to adjusting monetary policy remains appropriate.

The Committee's actions reflect a careful assessment of the appropriate setting for monetary policy, taking into account continuing below-target inflation and the mixed readings on the labor market and economic growth seen this year. Proceeding cautiously in raising the federal funds rate will allow us to keep the monetary support to economic growth in place while we assess whether growth is returning to a moderate pace, whether the labor market will strengthen further, and whether inflation will continue to make progress toward our 2 percent objective. Another factor that supports taking a cautious approach in raising the federal funds rate is that the federal funds rate is still near its effective lower bound. If inflation were to remain persistently low or the labor market were to weaken, the Committee would have only limited room to reduce the target range for the federal funds rate. However, if the economy were to overheat and inflation seemed likely to move significantly or persistently above 2 percent, the FOMC could readily increase the target range for the federal funds rate.

The FOMC continues to anticipate that economic conditions will improve further and that the economy will evolve in a manner that will warrant only gradual increases in the federal funds rate. In addition, the Committee expects that the federal funds rate is likely to remain, for some time, below the levels that are expected to prevail in the longer run because headwinds--which include restraint on U.S. economic activity from economic and financial developments abroad, subdued household formation, and meager productivity growth--mean that the interest rate needed to keep the economy operating near its potential is low by historical standards. If these headwinds slowly fade over time, as the Committee expects, then gradual increases in the federal funds rate are likely to be needed. In line with that view, most FOMC participants, based on their projections prepared for the June meeting, anticipate that values for the federal funds rate of less than 1 percent at the end of this year and less than 2 percent at the end of next year will be consistent with their assessment of appropriate monetary policy.

Of course, the economic outlook is uncertain, so monetary policy is by no means on a preset course and FOMC participants' projections for the federal funds rate are not a predetermined plan for future policy. The actual path of the federal funds rate will depend on economic and financial developments and their implications for the outlook and associated risks. Stronger growth or a more rapid increase in inflation than the Committee currently anticipates would likely make it appropriate to raise the federal funds rate more quickly. Conversely, if the economy were to disappoint, a lower path of the federal funds rate would be appropriate. We are committed to our dual objectives, and we will adjust policy as appropriate to foster financial conditions consistent with their attainment over time.




Friday June 17 2016
US Housing Starts Drop 0.3% MoM in May
Anna | anna@tradingeconomics.com

U.S. housing starts slipped 0.3 percent in May to a seasonally adjusted annual rate of 1164 Thousand as groundbreaking for multi-family housing units declined 1.2 percent to a 400 Thousand and on single-family homes rose 0.3 percent to a 764 Thousand.

Groundbreaking on single-family homes, the largest segment of the market, rose 0.3 percent to a 764 thousand last month. Single-family starts in the South, where most home building takes place, rose 2.6 percent to 432 Thousand, the highest level since December 2007. Single-family starts in the Northeast surged 12.7 percent to 62 Thousand and in the West rose 1.9 percent to 160 Thouand. But single-family starts in the Midwest tumbled 14.7 percent to a six-month low of 110 thousand. Housing starts for the volatile multi-family segment fell 1.2 percent to a 400 thousand, follwoing an 11.9 percent jump in April.

In contrast, building permits rose 0.7 percent to a 1.14 million-unit rate last month. Permits for the construction of single-family homes fell 2.0 percent last month to a 726 Thousand, while multi-family building permits increased 5.9 percent to 412 thousand.





Thursday June 16 2016
US Initial Jobless Claims at 4-Week High
DOL | Yekaterina Guchshina | yekaterina@tradingeconomics.com

The number of Americans filing for unemployment benefits increased by 13,000 to 277,000 in the week ended June 11th 2016 from unrevised 264,000 in the previous period. It is the highest figure in four weeks and above market expectations of 270,000, marking the 67th consecutive week of initial claims below 300,000, the longest streak since 1973.

The 4-week moving average was 269,250, a decrease of 250 from the previous week's unrevised average of 269,500.

The advance seasonally adjusted insured unemployment rate was 1.6 percent for the week ending June 4, 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 June 4 was 2,157,000, an increase of 45,000 from the previous week's revised level. The previous week's level was revised up 17,000 from 2,095,000 to 2,112,000. The 4-week moving average was 2,150,250, an increase of 1,000 from the previous week's revised average. The previous week's average was revised up by 4,250 from 2,145,000 to 2,149,250. 



Thursday June 16 2016
US Inflation Rate Slows to 1%
BLS | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in the United States went up 1 percent year-on-year in May of 2016, slowing slightly from a 1.1 percent rise in April. Figures came below market expectations of 1.1 percent as inflation for food and transportation services slowed while energy cost fell at a faster pace. Yet, core inflation accelerated slightly to 2.2 percent.

Year-on-year, food inflation slowed (0.7 percent compared to 0.9 percent in April); prices of transportation services increased at a slower pace (3.2 percent from 3.3 percent in April) and energy cost fell more (-10.1 percent, following an 8.9 percent decrease in April). In contrast, prices increased at a faster pace for services less energy (3.2 percent compared to 3 percent in April); shelter (3.4 percent compared to 3.2 percent in April) and medical care (3.5 percent compared to 3.1 percent in April). 

Annual core inflation which excludes food and energy went up to 2.2 percent from 2.1 percent in the previous month. 

Monthly inflation slowed to 0.2 percent from 0.4 percent in April. The food index declined 0.2 percent but the index for energy increased 1.2 percent, as the gasoline index rose 2.3 percent and the indexes for fuel oil and natural gas also advanced.  

The index for all items less food and energy increased 0.2 percent, the same as in April. The shelter index rose 0.4 percent, and the indexes for medical care, apparel, motor vehicle insurance, and education were among indexes that also increased. These advances more than offset declines in an array of indexes including used cars and trucks, communications, household furnishings and operations, airline fares, and new vehicles.





Wednesday June 15 2016
Fed Leaves Rates on Hold
Federal Reserve | Joana Taborda | joana.taborda@tradingeconomics.com

The Federal Reserve left the target range for its federal funds rate unchanged at 0.25 percent to 0.5 percent for the fourth time during its June 2016 meeting. Yet, future rate assessment suggests policymakers still expect two interest-rate hikes this year. GDP growth forecasts were lowered for 2016 and 2017.

The Federal Reserve lowered its growth forecasts by 0.2 percent to 2 percent for this year and by 0.1 percent to 2 percent for 2017. PCE inflation is seen higher in 2016 (1.4 percent from 1.2 percent in the March projection) and 1.9 percent in 2017 (same as in the March projection).

Excerpts from FOMC Statement:

Information received since the Federal Open Market Committee met in April indicates that the pace of improvement in the labor market has slowed while growth in economic activity appears to have picked up. Although the unemployment rate has declined, job gains have diminished. Growth in household spending has strengthened. Since the beginning of the year, the housing sector has continued to improve and the drag from net exports appears to have lessened, but business fixed investment has been soft. Inflation has continued to run below the Committee's 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation declined; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will strengthen. Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further. The Committee continues to closely monitor inflation indicators and global economic and financial developments.

Against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a 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. In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only 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.