by Calculated Risk on 7/11/2024 08:50:00 AM

Here are a few measures of inflation:

The first graph is the one Fed Chair Powell had mentioned when services less rent of shelter was up around 8% year-over-year.  This declined, but has turned up recently, and is now up 4.8% YoY.

Click on graph for larger image.

This graph shows the YoY price change for Services and Services less rent of shelter through May 2024.

Services were up 5.0% YoY as of June 2024, down from 5.2% YoY in May.

Services less rent of shelter was up 4.8% YoY in June, down from 5.0% YoY in May.

The second graph shows that goods prices started to increase year-over-year (YoY) in 2020 and accelerated in 2021 due to both strong demand and supply chain disruptions.

Durables were at -4.1% YoY as of June 2024, down from -3.7% YoY in May.

Commodities less food and energy commodities were at -1.7% YoY in June, unchanged from -1.7% YoY in May.

Here is a graph of the year-over-year change in shelter from the CPI report (through June) and housing from the PCE report (through May)

Shelter was up 5.1% year-over-year in June, down from 5.4% in May. Housing (PCE) was up 5.5% YoY in May, down slightly from 5.6% in March.

This is still catching up with private data.

Core CPI ex-shelter was up 1.8% YoY in June, down from 1.9% in May.

by Calculated Risk on 7/11/2024 08:34:00 AM

The DOL reported:

In the week ending July 6, the advance figure for seasonally adjusted initial claims was 222,000, a decrease of 17,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 238,000 to 239,000. The 4-week moving average was 233,500, a decrease of 5,250 from the previous week's revised average. The previous week's average was revised up by 250 from 238,500 to 238,750.
emphasis added

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 233,500.

The previous week was revised up.

Weekly claims were lower than the consensus forecast.

by Calculated Risk on 7/11/2024 08:30:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.1 percent on a seasonally adjusted basis, after being unchanged in May, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.0 percent before seasonal adjustment.

The index for gasoline fell 3.8 percent in June, after declining 3.6 percent in May, more than offsetting an increase in shelter. The energy index fell 2.0 percent over the month, as it did the preceding month. The index for food increased 0.2 percent in June. The food away from home index rose 0.4 percent over the month, while the food at home index increased 0.1 percent.

The index for all items less food and energy rose 0.1 percent in June, after rising 0.2 percent the preceding month. Indexes which increased in June include shelter, motor vehicle insurance, household furnishings and operations, medical care, and personal care. The indexes for airline fares, used cars and trucks, and communication were among those that decreased over the month.

The all items index rose 3.0 percent for the 12 months ending June, a smaller increase than the 3.3-percent increase for the 12 months ending May. The all items less food and energy index rose 3.3 percent over the last 12 months and was the smallest 12-month increase in that index since April 2021. The energy index increased 1.0 percent for the 12 months ending June. The food index increased 2.2 percent over the last year.
emphasis added

The change in both CPI and core CPI were lower than expected. I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.

by Calculated Risk on 7/10/2024 06:58:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Thursday:
• At 8:30 AM: The Consumer Price Index for June from the BLS. The consensus is for a 0.1% increase in CPI, and a 0.2% increase in core CPI.  The consensus is for CPI to be up 3.1% year-over-year and core CPI to be up 3.4% YoY.

8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 242 thousand initial claims, up from 238 thousand last week.

by Calculated Risk on 7/10/2024 02:11:00 PM

From Dodge Data Analytics: Dodge Momentum Index Gained 10% in June

The Dodge Momentum Index (DMI), issued by Dodge Construction Network, increased 10.4% in June to 198.6 (2000=100) from the revised May reading of 179.9. Over the month, commercial planning increased 14.5% and institutional planning ticked up 0.2%.

“Data centers continued to dominate planning projects in June – fueling another strong month for commercial planning,” stated Sarah Martin, associate director of forecasting at Dodge Construction Network. “More momentum in planning, while not as strong as data centers, was seen across most segments and indicates confidence in 2025 market conditions. The DMI is up 43% from June 2019 levels, signaling strong construction spending in 2025.”

Data center planning continued to be the primary driver of commercial growth in June, alongside moderate growth in retail, hotels and warehouse projects. On the institutional side, weaker healthcare planning was offset by an improvement in education activity. Additionally, a large detention facility entered the queue last month and bolstered public planning as well.

In June, the DMI was 7% higher than in June of 2023. The commercial segment was up 25% from year-ago levels, while the institutional segment was down 25% over the same period.
...
The DMI is a monthly measure of the value of nonresidential building projects going into planning, shown to lead construction spending for nonresidential buildings by a full year.
emphasis added

Click on graph for larger image.

This graph shows the Dodge Momentum Index since 2002. The index was at 198.6 in June, up from 1179.9 the previous month.

According to Dodge, this index leads "construction spending for nonresidential buildings by a full year".  This index suggests a slowdown in 2024 and early 2025, but perhaps a pickup in mid-2025..  

Commercial construction is typically a lagging economic indicator.

by Calculated Risk on 7/10/2024 09:53:00 AM

From the Association of American Railroads (AAR) Rail Time Indicators. Graphs and excerpts reprinted with permission.

In terms of total carloads, we’re in a period when the changes are not positive. Total originated carloads on U.S. railroads in the second quarter of 2024 were down 4.8%, or 140,915 carloads, from the second quarter of 2023. That was the biggest year-over-year quarterly percentage decline for total carloads since Q4 2020. ... Total carloads are down due to a decrease in coal carloads. ... Excluding coal, carloads were much better: up 1.7% (11,254 carloads) in Q2 2024 over Q2 2023 and up 0.6% (26,398 carloads) in the first six months of this year over last year.
emphasis added

Click on graph for larger image.

This graph from the Rail Time Indicators report shows year-over-year change for Carloads and Intermodal:

U.S. intermodal volume had another good month in June — volume was up 8.7% over last year, the 10th straight year-over-year gain for intermodal.

Note that rail traffic was weak even before the pandemic. As AAR noted: "Trade tensions and declining mfrg. output lead to lower rail volumes".

by Calculated Risk on 7/10/2024 07:00:00 AM

From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey

Mortgage applications decreased 0.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending July 5, 2024. Last week’s results included an adjustment for the July 4th holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 0.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 20 percent compared with the previous week. The Refinance Index decreased 2 percent from the previous week and was 28 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index decreased 19 percent compared with the previous week and was 13 percent lower than the same week one year ago.

“The recent uptick in mortgage rates has slowed demand. Mortgage applications were essentially flat last week, as mortgage rates remained around 7 percent,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase activity picked up slightly, driven primarily by increases in FHA and VA applications. Refinance applications decreased for the fourth consecutive week, in line with higher rates. Although home equity gains have been significant in recent years, most borrowers do not have much of an incentive to refinance at current rates.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 7.00 percent from 7.03 percent, with points decreasing to 0.60 from 0.62 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.

The first graph shows the MBA mortgage purchase index.

According to the MBA, purchase activity is down 13% year-over-year unadjusted.  

Red is a four-week average (blue is weekly).  

Purchase application activity is up slightly from the lows in late October 2023, but still below the lowest levels during the housing bust.  

The second graph shows the refinance index since 1990.

With higher mortgage rates, the refinance index declined sharply in 2022, and mostly flat lined since then with a slight increase recently.

by Calculated Risk on 7/09/2024 07:33:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Wednesday:
• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 10:00 AM, Testimony, Fed Chair Jerome Powell, Semiannual Monetary Policy Report to Congress, Before the U.S. House Financial Services Committee

by Calculated Risk on 7/09/2024 02:22:00 PM

From Manheim Consulting today: Wholesale Used-Vehicle Prices Declined in June

Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) were down in June compared to May. The Manheim Used Vehicle Value Index (MUVVI) fell to 196.1, a decline of 8.9% from a year ago. The seasonal adjustment to the index mitigated the impact on the month, resulting in values that declined 0.6% month over month for the second time in a row. The non-adjusted price in June decreased by 2.2% compared to May, moving the unadjusted average price down 10.0% year over year.
emphasis added

Click on graph for larger image.

This index from Manheim Consulting is based on all completed sales transactions at Manheim’s U.S. auctions.

The Manheim index suggests used car prices declined in June (seasonally adjusted) and were down 8.9% year-over-year (YoY).

by Calculated Risk on 7/09/2024 11:19:00 AM

Today, in the Calculated Risk Real Estate Newsletter: 1st Look at Local Housing Markets in June

A brief excerpt:

NOTE: The tables for active listings, new listings and closed sales all include a comparison to June 2019 for each local market (some 2019 data is not available).

This is the first look at several early reporting local markets in June. I’m tracking over 40 local housing markets in the US. Some of the 40 markets are states, and some are metropolitan areas. I’ll update these tables throughout the month as additional data is released.

Closed sales in June were mostly for contracts signed in April and May when 30-year mortgage rates averaged 6.99% and 7.06%, respectively (Freddie Mac PMMS). May was the first month since last Fall with average 30-year mortgage rates over 7%
...
In June, sales in these markets were down 6.7% YoY. Last month, in May, these same markets were up 3.1% year-over-year Not Seasonally Adjusted (NSA).

Sales in all of these markets are down significantly compared to June 2019.
...
This is a year-over-year decrease NSA for these early reporting markets. However, there were two fewer working days in June 2024 compared to June 2023 (19 vs 21), so seasonally adjusted sales will be much higher than the NSA data suggests.
...
This was just a several early reporting markets. Many more local markets to come!

There is much more in the article.