The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for May 2016. In the past month, the indexes increased in 38 states, decreased in eight, and remained stable in four, for a one-month diffusion index of 60. Over the past three months, the indexes increased in 42 states, decreased in seven, and remained stable in one, for a three-month diffusion index of 70.
Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:
The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.
Philly Fed Number of States with Increasing ActivityClick on graph for larger image.
This is a graph is of the number of states with one month increasing activity according to the Philly Fed. This graph includes states with minor increases (the Philly Fed lists as unchanged).
In May, 40 states had increasing activity including minor increases.
Five states have seen declines over the last 6 months, in order they are Wyoming (worst), North Dakota, Louisiana, Alaska and Oklahoma - mostly due to the decline in oil prices.
Philly Fed State Conincident Map Here is a map of the three month change in the Philly Fed state coincident indicators. This map was all red during the worst of the recession, and is mostly green now.
Source: Philly Fed.
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Posted by Bill McBride on 6/24/2016 03:27:00 PM 115 Comments
Vehicle Sales Forecasts: Sales to be Over 17 Million SAAR again in June
by Bill McBride on 6/24/2016 12:15:00 PM
The automakers will report June vehicle sales on Friday, July 1st.
Note: There were 26 selling days in June, up from 25 in June 2015.
From WardsAuto: Forecast: June Sales to Reach 11-Year High
A WardsAuto forecast calls for U.S. automakers to deliver 1.57 million light vehicles this month.
The expected daily sales rate of 60,314 over 26 selling days represents a 2.5% improvement from like-2015 (25 days), with total volume for the month rising 6.6%.
The report puts the seasonally adjusted annual rate of sales for the month at 17.3 million units, shy of last month’s 17.37 million SAAR, but ahead of the current 3-month SAAR (17.0 million) and the year-to-date SAAR through May (17.2 million).
From TrueCar: June Auto Sales Likely to Rebound From May’s Shortfall on Buoyant Retail Demand
The seasonally adjusted annualized rate (SAAR) for total light vehicle sales in June is an estimated 17.2 million units, up from 17 million units a year ago.
Looks like another strong month for vehicle sales.
Posted by Bill McBride on 6/24/2016 12:15:00 PM 392 Comments
Consumer Sentiment at 93.5 in June
by Bill McBride on 6/24/2016 10:03:00 AM
The final University of Michigan consumer sentiment index for June was at 93.5, down from the preliminary reading of 94.3, and down from 94.7 in May:
"Consumers were a bit less optimistic in late June due to rising concerns about prospects for the national economy. While no recession is anticipated, consumers increasingly expect a slower pace of economic growth in the year ahead. Importantly, the persistent strength in personal finances will keep the level of consumer spending at relatively high levels and continue to support an uninterrupted economic expansion. Over the past 18 months, the Sentiment Index has shown only minor fluctuations about a very positive trend, with the June 2016 level a bit higher than the overall average (93.5 vs. 92.6). This relative stability stands in sharp contrast to the much more volatile path of GDP. The stability in the overall Sentiment Index reflects a gradual improvement in assessments of current conditions being offset by a downward drift in the economic prospects. The Current Conditions Index reached in the June survey its highest level since January of 2007, while the Expectations Index declined a modest 9.5% from its January 2015 peak. "
Click on graph for larger image.
Posted by Bill McBride on 6/24/2016 10:03:00 AM 264 Comments
Federal Reserve on Brexit
by Bill McBride on 6/24/2016 09:09:00 AM
From the Federal Reserve:
The Federal Reserve is carefully monitoring developments in global financial markets, in cooperation with other central banks, following the results of the U.K. referendum on membership in the European Union. The Federal Reserve is prepared to provide dollar liquidity through its existing swap lines with central banks, as necessary, to address pressures in global funding markets, which could have adverse implications for the U.S. economy.
The magnitude of the economic impact on the U.S. of Brexit is unclear, but it probably means the Fed will wait longer to raise rates (maybe December, maybe 2017). Here is an except from a Merrill Lynch note this morning on the impact:
1. Reducing real GDP growth by an average of 0.2pp over the next 6 quarters. This leaves 2016 annual growth of 1.8% but slices 0.2pp from growth next year, bringing it also to 1.8%
2.Fed will delay rate hikes. We expect the Fed to wait until December to hike ...
Posted by Bill McBride on 6/24/2016 09:09:00 AM 144 Comments
THURSDAY, JUNE 23, 2016
Friday: Brexit Result, Durable Goods, Consumer Sentiment
by Bill McBride on 6/23/2016 08:52:00 PM
To track the Brexit vote, here is a great spreadsheet updated frequently from @britainelects
• At 8:30 AM ET, Durable Goods Orders for May from the Census Bureau. The consensus is for a 0.7% decrease in durable goods orders.
• At 10:00 AM, University of Michigan's Consumer sentiment index (final for June). The consensus is for a reading of 94.1, down from the preliminary reading 94.0, and down from 94.7 in May.
Posted by Bill McBride on 6/23/2016 08:52:00 PM 881 Comments
Hotels: Occupancy Rate Tracking just behind Record Year
by Bill McBride on 6/23/2016 05:11:00 PM
On occupancy from HotelNewsNow.com: STR: US hotel results for week ending 18 June
The U.S. hotel industry reported mostly positive results in the three key performance metrics during the week of 12-18 June 2016, according to data from STR.
In year-over-year comparisons, the industry’s occupancy was nearly flat (-0.1% to 74.6%). However, average daily rate increased 3.5% to US$126.89, and revenue per available room grew 3.3% to US$94.62.
The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.
Hotel Occupancy RateThe red line is for 2016, dashed orange is 2015, blue is the median, and black is for 2009 - the worst year since the Great Depression for hotels.
2015 was the best year on record for hotels.
So far 2016 is tracking just behind 2015, and well ahead of the median rate.
The occupancy rate should remain above 70% during the Summer travel period.
Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com
Posted by Bill McBride on 6/23/2016 05:11:00 PM 240 Comments
Lawler: Table of Distressed Sales and All Cash Sales for Selected Cities in May
by Bill McBride on 6/23/2016 02:09:00 PM
Economist Tom Lawler sent me the table below of short sales, foreclosures and all cash sales for selected cities in May.
On distressed: Total "distressed" share is down year-over-year in all of these markets.
Short sales and foreclosures are down in all of these areas.
The All Cash Share (last two columns) is mostly declining year-over-year. As investors continue to pull back, the share of all cash buyers continues to decline.
Short Sales Share Foreclosure Sales Share Total "Distressed" Share All Cash Share
Las Vegas 4.5% 7.3% 6.1% 8.0% 10.6% 15.3% 28.2% 29.1%
Reno** 3.0% 5.0% 3.0% 4.0% 6.0% 9.0%
Phoenix 1.6% 2.8% 2.1% 3.2% 3.7% 6.0% 21.6% 24.1%
Sacramento 3.5% 4.7% 3.2% 5.4% 6.7% 10.1% 16.7% 17.4%
Minneapolis 1.2% 2.4% 5.5% 6.7% 6.7% 9.1% 11.6% 12.0%
Mid-Atlantic 2.9% 3.4% 8.8% 10.4% 11.7% 13.8% 15.0% 16.1%
So. California* 2.2% 3.4% 3.4% 4.3% 5.6% 7.7% 19.3% 23.2%
Florida SF 2.3% 3.8% 9.4% 17.8% 11.7% 21.6% 29.1% 34.7%
Florida C/TH 1.5% 2.6% 7.7% 14.1% 9.3% 16.7% 57.0% 62.6%
Miami - Dade Co. SF 3.8% 8.8% 16.4% 18.2% 20.2% 27.0% 31.3% 33.0%
Miami - Dad Co. CTH 2.6% 4.0% 15.1% 19.0% 17.7% 23.0% 62.0% 62.7%
Broward Co. SF 4.7% 7.3% 13.8% 14.8% 18.5% 22.1% 26.3% 29.9%
Broward Co. CTH 1.8% 3.8% 11.2% 18.9% 13.0% 22.7% 61.0% 66.0%
Spokane 6.3% 12.8%
Chicago (city) 11.3% 16.2%
Northeast Florida 17.0% 26.6%
Tucson 22.6% 25.6%
Toledo 26.9% 28.5%
S.C. Wisconsin 14.6% 15.6%
Knoxville 20.7% 20.5%
Peoria 21.7% 17.9%
Georgia*** 20.8% 20.3%
Omaha 13.2% 15.9%
Pensacola 29.9% 31.3%
Rhode Island 9.5% 11.5%
Richmond VA 7.5% 8.5% 15.1% 14.9%
Memphis 11.0% 14.3%
*share of existing home sales, based on property records
**Single Family Only
Posted by Bill McBride on 6/23/2016 02:09:00 PM 164 Comments
Kansas City Fed: Regional Manufacturing Activity "Increased Slightly" in June
by Bill McBride on 6/23/2016 11:14:00 AM
From the Kansas City Fed: Tenth District Manufacturing Activity Increased Slightly
The Federal Reserve Bank of Kansas City released the June Manufacturing Survey today. According to Megan Williams, survey manager and associate economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity increased slightly.
“Regional factory activity posted a positive reading for the first time since January 2015, as energy prices have stabilized somewhat and orders have increased,” said Williams. “Additionally, firms continue to expect further improvements for the months ahead.”
The month-over-month composite index was 2 in June, up from -5 in May and -4 in April ... The employment index edged up from -13 to -4, its highest level in over a year
The Kansas City region was hit hard by lower oil prices. Now that "energy prices have stabilized somewhat", manufacturing has stopped contracting (at least for one month).
Posted by Bill McBride on 6/23/2016 11:14:00 AM 119 Comments
New Home Sales decreased to 551,000 Annual Rate in May
by Bill McBride on 6/23/2016 10:13:00 AM
The Census Bureau reports New Home Sales in May were at a seasonally adjusted annual rate (SAAR) of 551 thousand.
The previous three months were revised down by a total of 55 thousand (SAAR).
"Sales of new single-family houses in May 2016 were at a seasonally adjusted annual rate of 551,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 6.0 percent below the revised April rate of 586,000, but is 8.7 percent above the May 2015 estimate of 507,000."
New Home SalesClick on graph for larger image.
The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.
Even with the increase in sales since the bottom, new home sales are still fairly low historically.
The second graph shows New Home Months of Supply.
New Home Sales, Months of SupplyThe months of supply increased in May to 5.3 months.
The all time record was 12.1 months of supply in January 2009.
This is now in the normal range (less than 6 months supply is normal).
"The seasonally adjusted estimate of new houses for sale at the end of May was 244,000. This represents a supply of 5.3 months at the current sales rate."
New Home Sales, InventoryOn inventory, according to the Census Bureau:
"A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted."
Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.
The third graph shows the three categories of inventory starting in 1973.
The inventory of completed homes for sale is still low, and the combined total of completed and under construction is also low.
New Home Sales, NSAThe last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).
In May 2016 (red column), 51 thousand new homes were sold (NSA). Last year 47 thousand homes were sold in May.
The all time high for May was 120 thousand in 2005, and the all time low for May was 26 thousand in 2010.
This was below expectations of 565,000 sales SAAR in May, and prior months were revised down. I'll have more later today.
Posted by Bill McBride on 6/23/2016 10:13:00 AM 59 Comments
Weekly Initial Unemployment Claims decrease to 259,000
by Bill McBride on 6/23/2016 08:33:00 AM
The DOL reported:
In the week ending June 18, the advance figure for seasonally adjusted initial claims was 259,000, a decrease of 18,000 from the previous week's unrevised level of 277,000. The 4-week moving average was 267,000, a decrease of 2,250 from the previous week's unrevised average of 269,250.
There were no special factors impacting this week's initial claims. This marks 68 consecutive weeks of initial claims below 300,000, the longest streak since 1973.
The previous week was unrevised.
The following graph shows the 4-week moving average of weekly claims since 1971.
Click on graph for larger image.
The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 267,000.
This was lower than the consensus forecast. The low level of claims suggests relatively few layoffs.
Posted by Bill McBride on 6/23/2016 08:33:00 AM 66 Comments
LA Times CR
LA Times: Blogger keeps finger on pulse of housing market.
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Last 10 Posts
Jun 24 at 3:27 PM Philly Fed: State Coincident Indexes increased in 38 states in May
Jun 24 at 12:15 PM Vehicle Sales Forecasts: Sales to be Over 17 Million SAAR again in June
Jun 24 at 10:03 AM Consumer Sentiment at 93.5 in June
Jun 24 at 9:09 AM Federal Reserve on Brexit
Jun 23 at 8:52 PM Friday: Brexit Result, Durable Goods, Consumer Sentiment
Jun 23 at 5:11 PM Hotels: Occupancy Rate Tracking just behind Record Year
Jun 23 at 2:09 PM Lawler: Table of Distressed Sales and All Cash Sales for Selected Cities in May
Jun 23 at 11:14 AM Kansas City Fed: Regional Manufacturing Activity "Increased Slightly" in June
Jun 23 at 10:13 AM New Home Sales decreased to 551,000 Annual Rate in May
Jun 23 at 8:33 AM Weekly Initial Unemployment Claims decrease to 259,000
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