by Calculated Risk on 3/01/2018 03:40:00 PM

Based on a preliminary estimate from AutoData, light vehicle sales were at a 17.08 million SAAR in February.

That is down 1.4% year-over-year from February 2017, and down slightly from last month.


Click on graph for larger image.

This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for February (red, light vehicle sales of 17.08 million SAAR  from AutoData).

This was at the consensus forecast for February.

Note that the increase in sales at the end of 2017 was due to buying following the hurricanes.

Sales will probably decline again in 2018 after setting a new sales records in both 2015 and 2016.

The second graph shows light vehicle sales since the BEA started keeping data in 1967.

Note: dashed line is current estimated sales rate.

by Calculated Risk on 3/01/2018 11:52:00 AM

Earlier today, the Census Bureau reported that overall construction spending was mostly unchanged in January:

Construction spending during January 2018 was estimated at a seasonally adjusted annual rate of $1,262.8 billion, nearly the same as the revised December estimate of $1,262.7 billion. The January figure is 3.2 percent above the January 2017 estimate of $1,223.5 billion.

Private spending decreased and public spending increased in January:

Spending on private construction was at a seasonally adjusted annual rate of $962.7 billion, 0.5 percent below the revised December estimate of $967.9 billion. ...

n January, the estimated seasonally adjusted annual rate of public construction spending was $300.1 billion, 1.8 percent above the revised December estimate of $294.8 billion.
emphasis added

Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Private residential spending has been increasing, but is still 23% below the bubble peak.

Non-residential spending is 6% above the previous peak in January 2008 (nominal dollars).

Public construction spending is now 8% below the peak in March 2009, and 14% above the austerity low in February 2014.

The second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is up 4%. Non-residential spending is down 1% year-over-year. Public spending is up 8% year-over-year.

This was below the consensus forecast of a 0.3% increase for January, however spending for the previous two months was revised up slightly.

by Calculated Risk on 3/01/2018 10:05:00 AM

The ISM manufacturing index indicated expansion in February. The PMI was at 60.8% in February, up from 59.1% in January. The employment index was at 59.7%, up from 54.2% last month, and the new orders index was at 64.2%, down from 65.4%.

From the Institute for Supply Management: February 2018 Manufacturing ISM® Report On Business®

Economic activity in the manufacturing sector expanded in February, and the overall economy grew for the 106th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee: “The February PMI® registered 60.8 percent, an increase of 1.7 percentage points from the January reading of 59.1 percent. The New Orders Index registered 64.2 percent, a decrease of 1.2 percentage points from the January reading of 65.4 percent. The Production Index registered 62 percent, a 2.5 percentage point decrease compared to the January reading of 64.5 percent. The Employment Index registered 59.7 percent, an increase of 5.5 percentage points from the January reading of 54.2 percent. The Supplier Deliveries Index registered 61.1 percent, a 2 percentage point increase from the January reading of 59.1 percent. The Inventories Index registered 56.7 percent, an increase of 4.4 percentage points from the January reading of 52.3 percent. The Prices Index registered 74.2 percent in February, a 1.5 percentage point increase from the January reading of 72.7 percent, indicating higher raw materials prices for the 24th consecutive month. Comments from the panel reflect expanding business conditions, with new orders and production maintaining high levels of expansion; employment expanding at a faster rate to support production; order backlogs expanding at a faster rate; and export orders and imports continuing to grow faster in February. Supplier deliveries continued to slow (improving) at a faster rate. Price increases occurred across most industry sectors. The Customers’ Inventories Index indicates levels remain too low. Capital expenditure lead times improved by five days while production material supplier lead times extended four days during the month of February.”
emphasis added

Click on graph for larger image.

Here is a long term graph of the ISM manufacturing index.

This was above expectations of 58.6%, and suggests manufacturing expanded at a faster pace in February than in January.

A solid report.

by Calculated Risk on 3/01/2018 08:42:00 AM

The BEA released the Personal Income and Outlays report for January:

Personal income increased $64.7 billion (0.4 percent) in January according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $134.8 billion (0.9 percent) and personal consumption expenditures (PCE) increased $31.2 billion (0.2 percent).

Real DPI increased 0.6 percent in January and Real PCE decreased 0.1 percent. The PCE price index increased 0.4 percent. Excluding food and energy, the PCE price index increased 0.3 percent.

The January PCE price index increased 1.7 percent year-over-year and the October PCE price index, excluding food and energy, increased 1.5 percent year-over-year.

The following graph shows real Personal Consumption Expenditures (PCE) through January 2018 (2009 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

The increase in personal income was slightly above expectations,  and the increase in PCE was at expectations.

by Calculated Risk on 3/01/2018 08:34:00 AM

The DOL reported:

In the week ending February 24, the advance figure for seasonally adjusted initial claims was 210,000, a decrease of 10,000 from the previous week's revised level. This is the lowest level for initial claims since December 6, 1969 when it was 202,000. The previous week's level was revised down by 2,000 from 222,000 to 220,000. The 4-week moving average was 220,500, a decrease of 5,000 from the previous week's revised average. This is the lowest level for this average since December 27, 1969 when it was 219,750. The previous week's average was revised down by 500 from 226,000 to 225,500.

Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.
emphasis added

The previous week was revised down.

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 220,500.

This was lower than the consensus forecast. The low level of claims suggest relatively few layoffs.

by Calculated Risk on 2/28/2018 08:19:00 PM

Plenty of data on Thursday:
• At 8:30 AM ET: The initial weekly unemployment claims report will be released.  The consensus is for 230 thousand initial claims, up from 222 thousand the previous week.

• Also at 8:30 AM: Personal Income and Outlays for January. The consensus is for a 0.3% increase in personal income, and for a 0.2% increase in personal spending. And for the Core PCE price index to increase 0.3%.

• At 10:00 AM, ISM Manufacturing Index for February. The consensus is for the ISM to be at 58.6, down from 59.1 in January. The ISM manufacturing index indicated expansion in December. The PMI was at 59.1% in January, the employment index was at 54.2%, and the new orders index was at 65.4%.

• Also at 10:00 AM, Construction Spending for January. The consensus is for a 0.3% increase in construction spending.

• Also at 10:00 AM, Fed Chair Jerome Powell Testimony, Semiannual Monetary Policy Report to the Congress, Before the Senate Banking Committee, Washington, D.C

• All day: Light vehicle sales for February. The consensus is for light vehicle sales to be 17.2 million SAAR in February, up from 17.1 million in January (Seasonally Adjusted Annual Rate).

by Calculated Risk on 2/28/2018 04:10:00 PM

Fannie Mae reported that the Single-Family Serious Delinquency rate decreased to 1.23% in January, down from 1.24% in December. The serious delinquency rate is up from 1.20% in January 2017.

These are mortgage loans that are "three monthly payments or more past due or in foreclosure". 

The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.

Click on graph for larger image

By vintage, for loans made in 2004 or earlier (3% of portfolio), 3.31% are seriously delinquent. For loans made in 2005 through 2008 (6% of portfolio), 6.54% are seriously delinquent, For recent loans, originated in 2009 through 2017 (91% of portfolio), only 0.54% are seriously delinquent. So Fannie is still working through poor performing loans from the bubble years.

The recent increase in the delinquency rate was due to the hurricanes - no worries about the overall market (These are serious delinquencies, so it took three months late to be counted).

After the hurricane bump, maybe the rate will decline to 0.5 to 0.7 percent or so to a cycle bottom.

Note: Freddie Mac reported earlier.

by Calculated Risk on 2/28/2018 12:22:00 PM

From the Chicago PMI: February Chicago Business Barometer Declines to 61.9

The MNI Chicago Business Barometer fell 3.8 points to 61.9 in February, down from 65.7 in January, to the lowest level since August 2017.

Business activity continued to expand in February, although at a softer pace than in January. All five of the Barometer components receded on the month, but despite a second straight monthly fall, the Barometer was still up 8% on last February and above the 2017 average of 60.8.
...
“Disruptive weather conditions this month and large promotions at the back-end of last year appear to have weighed on demand and output in February, but despite the Barometer’s broad-based decline activity remains upbeat,” said Jamie Satchi, Economist at MNI Indicators.

“That said, a large proportion of firms are anxious about the cost of input materials, and warn they could pass on these higher costs to consumers if inflationary pressures do not abate,” he added.
emphasis added

This was well below the consensus forecast of 65.0, but still a solid reading.

by Calculated Risk on 2/28/2018 10:06:00 AM

From the NAR: Pending Home Sales Stumble 4.7 Percent in January

After seeing a modest three-month rise in activity, pending home sales cooled considerably in January to their lowest level in over three years, according to the National Association of Realtors®. All major regions experienced monthly and annual declines in contract signings last month.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, fell 4.7 percent to 104.6 in January from a downwardly revised 109.8 in December 2017. After last month’s retreat, the index is now 3.8 percent below a year ago and at its lowest level since October 2014 (104.1).
...
The PHSI in the Northeast dropped 9.0 percent to 87.0 in January, and is now 12.1 percent below a year ago. In the Midwest the index fell 6.6 percent to 98.2 in January, and is now 4.1 percent lower than January 2017.

Pending home sales in the South declined 3.9 percent to an index of 121.9 in January, and are now 1.1 percent lower than last January. The index in the West decreased 1.2 percent in January to 97.9, and is 2.5 percent below a year ago.
emphasis added

This was well below expectations of a 0.5% increase for this index. Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in February and March.

by Calculated Risk on 2/28/2018 08:34:00 AM

From the BEA: Gross Domestic Product: Fourth Quarter and Annual 2017 (Second Estimate)

Real gross domestic product (GDP) increased at an annual rate of 2.5 percent in the fourth quarter of 2017, according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.2 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 2.6 percent. With this second estimate for the fourth quarter, the general picture of economic growth remains the same.
emphasis added

Here is a Comparison of Second and Advance Estimates. PCE growth was unrevised at 3.8%. Residential investment was revised up from 11.6% to 13.0%. Most revisions were small. This was at the consensus forecast.