The Federal Reserve Bank of Dallas Texas Manufacturing Outlook Survey: May 2016

Today, the Federal Reserve Bank of Dallas released their latest read on manufacturing in their region indicating that assessments of manufacturing activity remained in contraction in May with the current general business activity index falling to a recessionary level of -20.8 while the future general business activity index also worsened to a contraction level of -1.8.

These results are an indication (consistent with other regional and national manufacturing activity data-points) that the U.S. manufacturing sector has clearly slumped into recessionary levels as of late and provides yet another likely harbinger of what is to come in 2016 for the general economy.

S&P/Case-Shiller: March 2016

The latest release of the S&P/Case-Shiller (CSI) home price indices for March reported that the non-seasonally adjusted National index increased from February with prices rising 0.72% while the non-seasonally adjusted Composite-10 city index increased 0.79% and the Composite-20 city index increased 0.90% over the same period.

On an annual basis, the National index increased 5.15% above the level seen in March 2015 while the Composite-10 city index increased 4.72% and the Composite-20 city index increased 5.43% over the same period.

On a peak basis, all three indices still show significant peak declines slumping -4.18% for the National index, -12.20% for the Composite-10 city index and -10.66% for the Composite-20 city index on a peak comparison basis.

The Richmond Fed Survey of Manufacturing Activity: May 2016

Today, the Federal Reserve Bank of Richmond released their Survey of Manufacturing Activity for May showing that the composite index, the broadest measure of manufacturing activity, worsened notably falling to a level of -1 from a level of 14 the prior month.

The most notable component measures also showed similar results with Shipments falling to -8, New Orders falling to 0 and Backlog of Orders falling to -13.

New Home Sales: April 2016

Today, the U.S. Census Department released its monthly New Residential Home Sales Report for April showing a notable increase with sales jumping 16.6% from March climbing 23.8% above the level seen in April 2015 but still remaining near an historically low level with 619K SAAR units.

The monthly supply decreased to 4.7 months while the median selling price increased 9.7% and the average selling price increased 13.47% from the year ago level.

The following chart show the extent of sales decline to date (click for full-larger version).

The Chicago Fed National Activity Index: April 2016

The latest release of the Chicago Federal Reserve National Activity Index (CFNAI) indicated that national economic activity improved in April with the index falling to a contraction level of 0.10 from a level of -0.55 a month earlier while the three month moving average weakened to a level of -0.22.

The CFNAI is a weighted average of 85 indicators of national economic activity collected into four overall categories of “production and income”, “employment, unemployment and income”, “personal consumption and housing” and “sales, orders and inventories”.

The Chicago Fed regards a value of zero for the total index as indicating that the national economy is expanding at its historical trend rate while a negative value indicates below average growth.

A value at or below -0.70 for the three month moving average of the national activity index (CFNAI-MA3) indicates that the national economy has either just entered or continues in recession.

The Philly Fed Business Outlook Survey: May 2016

The May release of the Federal Reserve Bank of Philadelphia Business Outlook Survey (BOS) indicated a worsening of the regions manufacturing activity with the current activity index declining to a level of -1.8 while assessments the future activity also slipped to a level of 36.1.

The above chart shows the current and future activity indexes both with their corresponding 3-month moving averages. The red line marks the threshold between contraction and expansion for these diffusion indexes.

Weekly Unemployment Claims: Initial and Continued May19 2016

Today’s jobless claims report showed a decline to both initial and continued unemployment claims as seasonally adjusted initial claims remained below the 300K level.

Seasonally adjusted “initial” unemployment claims declined by 16,000 to 278,000 claims while seasonally adjusted "continued" unemployment claims declined by 13,000 to 2.152 million resulting in an “insured” unemployment rate of 1.6%.

Reading Rates: MBA Application Survey – May 19 2016

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as the volume of both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage (from FHA and conforming GSE data) went flat at 3.73% since last week while the purchase application volume declined 6% and the refinance application volume increased 1% over the same period.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).

Industrial Production and Capacity Utilization: April 2016

Today, the Federal Reserve released their monthly read of industrial production and capacity utilization showing improving results in April with total industrial production increasing 0.66% from March but falling 1.07% below the level seen in April 2015.

Capacity utilization also improved rising 0.64% from March but declined 2.04% below the level seen in April 2015 to stand at 75.381%.

It's important to note that industrial production is still showing significant weakness which, if all past periods were to serve at least as a rough guide, now clearly indicates notable trouble for the macro-economy.

New Residential Construction Report: April 2016

Today’s New Residential Construction Report showed improvement with total permit activity rising 3.6% since March while total starts declined a notable 6.6% over the same period.

Single family housing permits, the most leading of indicators, rose 1.5% from March to 736K single family units (SAAR), rising 8.4% above the level seen a year earlier and still remained well below levels seen at the peak in September 2005.

Single family housing starts rose 3.3% from March to 778K units (SAAR) rising 4.3% above the level seen a year earlier but still remained well below the levels seen at the peak in September 2005.

The Empire State Manufacturing Survey: May 2016

The Empire State Manufacturing Survey consists of a series of diffusion indices distilled from a monthly survey of New York regional manufacturing executives and seeks to identify trends across 22 different current and future manufacturing related activities.

Today’s report showed an overall worsening for both current and future assessments of manufacturing activity with the current activity index falling to a level of -9.02 while future activity also fell declining to a level of 28.48.

Current prices paid declined to 16.67 while current new orders dropped to -5.54 and assessments of future new orders declined slightly to 22.43.

NAHB/Wells Fargo Home Builder Sentiment: May 2016

Today, the National Association of Home Builders (NAHB) released their latest Housing Market Index (HMI) showing that overall assessments of housing activity generally went flat for the fourth straight month in May with the composite HMI index remaining at 58 while the "buyer traffic" index went flat at a level of 44.

Retail Sales: April 2016

Today, the U.S. Census Bureau released its latest nominal read of retail sales showing improving activity in April with sales rising 1.3% from March and rising 3.0% on a year-over-year basis on an aggregate of all items including food, fuel and healthcare services.

Nominal "discretionary" retail sales including home furnishings, home garden and building materials, consumer electronics and department store sales declined 0.21% from March and rose 3.71% above the level seen in April 2015 while, adjusting for inflation, “real” discretionary retail sales declined 0.21% on the month and rose 2.96% since April 2015.

Weekly Unemployment Claims: Initial and Continued May12 2016

Today’s jobless claims report showed a notable increase to both initial and continued unemployment claims as seasonally adjusted initial claims remained just below the 300K level.

Seasonally adjusted “initial” unemployment claims jumped by a whopping 20,000 to 294,000 claims while seasonally adjusted "continued" unemployment claims increased by 37,000 to 2.161 million resulting in an “insured” unemployment rate of 1.6%.

Employment Situation: Nonfarm Payrolls and Civilian Unemployment April 2016

Today's Employment Situation Report indicated that in April, net non-farm payrolls increased by a 160,000 jobs overall with the private non-farm payrolls sub-component adding 171,000 jobs while the civilian unemployment remained flat at 5.0% over the same period.

Net private sector jobs increased 0.14% since last month climbing 2.17% above the level seen a year ago and climbing 5.06% above the peak level of employment seen in December 2007 prior to the Great Recession.

Employment Situation: Unemployment Duration April 2016

Today's employment situation report showed that conditions for the long term unemployed generally improved in April.

Workers unemployed 27 weeks or more decreased to 2.063 million or 25.7% of all unemployed workers while the median term of unemployment went flat at 11.4 weeks and the average stay on unemployment declined to 27.7 weeks.

Employment Situation: Total Unemployment April 2016

Today's Employment Situation report showed that in April “total unemployment” including all marginally attached workers declined to 9.7% while the traditionally reported unemployment rate went flat at 5.0%.

The traditional unemployment rate is calculated from the monthly household survey results using a fairly explicit definition of “unemployed” (essentially unemployed and currently looking for full time employment) leaving many workers to be considered effectively “on the margin” either employed in part time work when full time is preferred or simply unemployed and no longer looking for work.

The Bureau of Labor Statistics considers “marginally attached” workers (including discouraged workers) and persons who have settled for part time employment to be “underutilized” labor.

The broadest view of unemployment would include both traditionally unemployed workers and all other underutilized workers.

To calculate the “total” rate of unemployment we would simply use this larger group rather than the smaller and more restrictive “unemployed” group used in the traditional unemployment rate calculation.

Weekly Unemployment Claims: Initial and Continued May 05 2016

Today’s jobless claims report showed an increase to initial unemployment claims and a decrease to continued unemployment claims as seasonally adjusted initial claims remained below the 300K level.

Seasonally adjusted “initial” unemployment claims increased by 17,000 to 274,000 claims while seasonally adjusted "continued" unemployment claims decreased by 8,000 to 2.121 million resulting in an “insured” unemployment rate of 1.5%.

ADP Manufacturing Meltdown

Looking a bit deeper at today's ADP Employment Report, one finds yet another clear signal that the current expansion may have topped-out making recession as a distinct possibility in 2016.

The ADP Total Manufacturing Payrolls series has continued to remain weak falling 0.02% on an annual basis.

Keep in mind that while manufacturing is clearly also showing strong secular weakness, this is a very sensitive series that should not be ignored.

Also, a revitalization of the nation's manufacturing sector was a important goal of the current administration's economic policy and a particularly key focus of 2009's American Recovery and Reinvestment Act.

ADP National Employment Report: April 2016

Today, private staffing and business services firm ADP released the latest installment of their National Employment Report indicating that the situation for private employment in the U.S. improved in April as private employers added 156,000 jobs in the month bringing the total employment level 2.04% above the level seen in April 2015.

Look for Friday’s BLS Employment Situation Report to likely show, more or less, similar trends.

ISM Non-Manufacturing Report on Business: April 2016

Today, the Institute for Supply Management released their latest Non-Manufacturing Report on Business indicating that service related business activity improved in April with the overall non-manufacturing index rising to 55.7 from last months reading of 54.5.

At 58.8 the business activity index weakened since last month falling 4.55% below the level seen a year earlier.

Reading Rates: MBA Application Survey – May 04 2016

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as the volume of both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage (from FHA and conforming GSE data) increased 2 basis points to 3.78% since last week while the purchase application volume declined 0.10% and the refinance application volume decreased 6% over the same period.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).

Construction Spending: March 2016

Today, the U.S. Census Bureau released their latest read of construction spending showing generally improving results in March with total private residential, private single family residential and private non-residential construction spending all increasing on the month.

On a month-to-month basis, total residential construction spending increased 1.6% on the month rising 7.8% above the level seen a year earlier but still remained well below the peak level seen in 2006.

Single family construction spending increased a slight 0.03% on the month rising 13.4% above the level seen a year earlier but still remained well below it's peak level reached in 2006.

Non-residential construction spending increased 0.7% on the month climbing 9.3% above the level seen a year earlier.

The following charts (click for larger dynamic versions) show private residential construction spending, private residential single family construction spending and private non-residential construction spending broken out and plotted since 1993 along with the year-over-year, month-to-month and peak percent change to each since 1994 and 2000 – 2005.

ISM Manufacturing Report on Business: April 2016

Today, the Institute for Supply Management released their latest Report on Business for the manufacturing sector indicating that manufacturing activity slowed in April staying just above the contraction level for a second straight month.

At 50.8 the purchasing manager’s composite index (PMI) declined 1.93% from March and fell 1.36% below the level seen a year earlier.