Wednesday, July 1, 2015

ISM Manufacturing Index Reports Solid Growth for June

The ISM Manufacturing Index rose to 53.5 points in June, tying the highest reading of the year. Index readings above 50 indicate expansion in the manufacturing economy. Of the 18 component industries, 11 reported growth, down from 14 in May. Some respondents noted that a downturn in oil and gas markets is impacting demand, while others noted that business is soft in Europe and declining in Asia.

The index for new orders increased 0.2 points to 56.0, while inventories rose 1.5 points to 53.0. The difference in these indices closed to 3 points, down from 4.3 points in May, indicating that inventories are beginning to close the gap with current demand.

The employment index rose to 55.5 from 51.7 in May. Of the 18 industries, 10 reported employment growth, down from 14 in May. Three industries – Apparel, Leather & Allied Products; Machinery; and Petroleum & Coal Products – reported decreases in employment.

Export orders for June registered 49.5 points, indicating that the volume of exports decreased for the month. The imports index registered 53.5 points in June, marking the 29th consecutive month of growth in imports.

The prices index registered 49.5, marking the 8th consecutive month of raw material prices decreasing.

Read the ISM release.

Construction Spending Increased in May

Construction spending increased 0.8% in May to a seasonally adjusted annual rate (SAAR) of $1,035.8 billion. April spending was revised up from $1,006.1 billion to $1,027.0 billion. Construction spending during the first five months of 2015 amounted to $382.1 billion, 5.9% higher than in the first 5 months of 2014.

Total private construction rose to $752.4 billion (SAAR), 0.9% higher than the revised April estimate of $745.6 billion.

Private residential construction rose to $359.5 billion (SAAR), 0.3% higher than April’s estimate, as construction of multi-family homes increased for the month.

Private non-residential construction rose to $392.8 billion (SAAR), up 1.5% on the month and 12.7% from a year ago. Growth in commercial construction declined for the month, slowing by 2.0%, while manufacturing construction grew 6.2%.

Public construction spending grew 0.7% to $283.4 billion (SAAR). Growth for educational construction fell 0.7% on the month, while highway spending rose 2.1% to an annual rate of $85.1 billion.

Read the Census release.

ADP: Private Sector Added 237,000 Jobs in June

According to the ADP National Employment report, the private sector added 237,000 jobs in June, as both the goods-producing and service-providing sectors experienced increased job growth. The June report upwardly revised the May and April headline numbers by 2,000 and 14,000 respectively.

Small businesses, companies with fewer than 49 employees, added 120,000 jobs, unchanged from May. Medium businesses, companies with 50 to 499 employees, added 86,000 jobs, up from 63,000 in May. Large businesses, companies with greater than 500 employees added 32,000 jobs, up from 19,000 in May.

Goods-producing employment rose by 12,000 jobs, up 1,000 jobs from the previous month. Manufacturing gained 7,000 jobs after losing 9,000 over the previous three months.

Service-providing sector employment rose by 225,000 jobs, up from 192,000 in May. Professional/business services contributed the largest gain, adding 61,000. Trade/transportation/utilities added 50,000 jobs, and financial activities added 19,000 jobs.

Read the ADP release.

Energy and Retail Sectors Cut Jobs in First Half of 2015

Employers announced plans to shed 44,842 workers from their payrolls in June, following the 41,034 planned job cuts announced in May, according to a report issued by Challenger, Gray & Christmas.

June’s job cuts were 43% higher than the planned layoffs announced in June 2014. In this first 6 months of 2015, employers have announced 287,682 job cuts—the highest midyear total in five years.

The report indicates that the surge in layoffs was largely due to declining oil prices, which drove 69,582 cuts during the first half of the year. The majority of those jobs were in the energy sector, which cut its workforce by 60,500.

Retailers also announced significant layoffs during the first 6 months of the year—45,230 to date, up 68% from a year ago.

“Retailers should be enjoying the benefits of falling oil prices, as consumers have the money they are saving at the gas pump to spend elsewhere. However, it appears that consumers were hording that cash, at least through the first half of the year. The most recent data suggests that consumers are finally starting to loosen up the purse strings,” said John A. Challenger, CEO of Challenger, Gray & Christmas.

Consumer spending increased to 0.9% in May, the largest monthly increase in nearly 6 years, suggesting that retail sales could increase in the second half of the year.

Read the Challenger, Gray & Christmas release.

Tuesday, June 30, 2015

Home Prices Increased in April

The 20-City Case-Schiller Composite gained 4.9% year-over-year in April, slightly lower than March’s gain of 5.0%. The 10-City Composite gained 4.6% in April from the previous year, down from the 4.7% year-over-year gain in March. The National index recorded a 4.2% gain on an annual basis in April, compared to a 4.1% annual gain in March.

On a monthly basis, all three indices posted increases as the 10-City Composite increased 1.0%, and the 20-City Composite and National Index rose 1.1%.

Of the cities reporting month-over month increases, Seattle and San Francisco posted gains of 2.3% and 2.0%.

Denver and San Francisco posted the highest year-over year gains, with respective price increases of 10.3% and 10.0%. Washington DC posted the slowest rate of growth, with prices increasing at an annual rate of 1.1%.

Read the S&P/Case-Schiller release.

Friday, June 26, 2015

OCC: Performing Mortgages Improve in First Quarter

The percentage of mortgages that were current and performing at the end of the first quarter reached 94.2, up from 93.2 percent at the end of 2014 and up from 93.1 percent a year before, according to the Mortgage Metrics Report released yesterday by the OCC.

Only 2.6 percent of mortgages were seriously delinquent at the end of the first quarter, 16.4 percent lower than a year earlier. The report also showed a decline in foreclosure activity, with 83,058 new foreclosures in the quarter — 8.6 percent lower than a year ago. “Improved economic conditions and foreclosure prevention assistance contributed to the decline in foreclosure activity,” the OCC said.

Read the OCC report.

Largest, Most Sustained Increase in Consumer Optimism Since 2004

Consumer sentiment rose to 96.1 in June, up 5.4 points from the previous month according to the University of Michigan Consumer Sentiment Index. The index is currently 15.6 points higher than in June of 2014.

The first half of 2015 marked “the largest and most sustained increase in consumer optimism since 2004,” according to Richard Curtin, chief economist of UM’s Surveys of Consumers. “Moreover, the recent surveys recorded those same records when consumers were asked to evaluate prospects for the national economy, their personal finances, and buying conditions. Consumer spending will remain the driving force of economic growth in 2015.”

The Current Economic Conditions index rose 8.1 points to 108.9, while the Index of Consumer Expectations rose 3.6 points to 87.8.