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Jun 29, 2020
Global business sentiment has improved since the darkest days of the pandemic, although businesses remain extraordinarily anxious. Responses to the nine questions posed in the survey are still net negative, with the weakest responses for sales, pricing and investment. Most encouraging is that respondents are becoming steadily less negative regarding the outlook towards the end of the year. Assessments of present conditions have also turned less dour, with more than one-fifth of respondents saying they feel present conditions are improving. This has historically signaled the global economy is expanding, although it is premature to call the end of the global recession.
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Jun 29, 2020
The easing of public health restrictions on construction projects, combined with the reopening of provincial economies, led to a surge in building permits in May. The value of permits totaled C$7.4 billion in May, a 20.2% increase from the prior month. However, following monthly declines of 13.4% in March and 15.4% in April, the measure was 13.6% below its year-ago level. Rising applications for new single-family dwellings in Ontario and a burst of nonresidential filings in Quebec and British Columbia drove the gain.
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Jun 10, 2020
The four-week moving average in our U.S. policy uncertainty index increased from 219.9 to 221 in the week ended June 5. COVID-19 could be boosting our estimate of policy uncertainty via the monetary and fiscal policy components. The Federal Reserve is doing everything it can to ensure markets are functioning reasonably well and to cushion the blow to the economy. Lawmakers have passed several rounds of fiscal stimulus, but more is needed.
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Jun 10, 2020
Mortgage applications increased by 9.3% over the week of June 5, after falling by 3.9% in the previous week. After weeks of volatility at the start of the COVID-19 pandemic, activity has been normalizing. The purchasing index is now above where it was in the week of March 6, when the pandemic began affecting the market, and higher than it was a year ago. Refinancing applications also increased, for the first time since April. Credit standards remain tight, however. Over the week of June 5, the purchasing index was up 5.3%, while the refinance index jumped by 11.4%. The contract rate on the 30-year fixed rate mortgage increased 1 basis point to 3.38%.
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Jun 04, 2020
The global semiconductor market is holding well and has shown early signs of resilience to the COVID-19 pandemic. Global semiconductor billings declined 1.2% in April compared with the previous month but were still 6.1% above their April 2019 total. The Asia-Pacific, Americas and Japan markets all suffered moderate declines on the month. Only Europe and Japan posted declining year-over-year sales, at 7.1% and 0.1%, respectively. Sales increased 24.5% year over year in the Americas and 3.3% in the Asia-Pacific region.
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Jun 03, 2020
The worst of manufacturing's decline has likely occurred, and a recovery should take hold now. U.S. factory orders dropped 13% in April following a revised 11% decline in March (previously 10.3%). Excluding transportation, orders were down 8.5% in April, the fourth consecutive monthly decline. Core capital goods orders fell 6.1% in April following a 1.3% decline in March. April was likely the apex of the recession, and we anticipate that manufacturing conditions have improved since as states have begun reopening their economies. Risks remain, including a second wave of COVID-19 and escalating tensions between the U.S. and China.
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Jun 02, 2020
The CoreLogic Home Price Index rose 1.4% in April from the previous month, the fastest pace since 2013. Year-over-year growth increased to 5.4%, the fastest pace since 2018. Extremely tight inventory and low mortgage rates supported house price growth despite the extraordinary economic disruptions that public health officials initiated to slow the spread of COVID-19.
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Jun 02, 2020
U.S. unit vehicle sales came back strong in May as states began to reopen following weeks of COVID-19-induced lockdown. Annualized seasonally adjusted units increased to 12.1 million, a monthly increase of 35.6%. Still, year-over-year sales decreased by 30.1%. Sales increased across all categories. Unit sales of light trucks and SUVs increased by 36.1% from the April crash, a 23.9% decrease year over year. Car sales were up 33.7% from April but down 45.2% year over year. The rebound in sales is a welcome sign as manufacturing has reopened in most North American factories. May marks the start of the long road back to the consistent sales numbers of the previous five years.
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Jun 01, 2020
The May ISM manufacturing index improved in May but remained comfortably below its neutral threshold of 50. The ISM index rose from 41.5 in April to 43.1 in May, which was below both our and consensus expectations. The data showed a small improvement with new orders, production and employment edging higher. Supplier deliveries fell from 76 to 68. When supplier deliveries are north of 50, it indicates slower deliveries. Elevated supplier deliveries are likely attributed to supply-chain disruptions. All told, the May ISM suggests that the breadth of the recession moderated a little.
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May 29, 2020
The free fall in consumer sentiment is over, but confidence is now at a level consistent with a recession, although maybe not one of the magnitude the U.S. economy is suffering. The final reading for May from the University of Michigan was 72.3, up from 71.8 in April but below the preliminary reading of 73.7. This implies confidence rose to about 70.2 in the second half of the month. Nonetheless, it is down 28.7 points from February. The present conditions index led the gain from April, rising 8 points. The expectations component dropped 4.2 points from April. Inflation expectations rose. Median 12-month inflation expectations jumped from 2.1% to 3.2%. Five-year expectations rose from 2.5% to 2.7%. Both were revised higher. Consumers likely fear a reversal in energy prices.
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May 29, 2020
Real consumer spending continued to tumble in April as closures of nonessential businesses and stay-at-home orders were at or near their peak. Real spending fell 13.2% after falling a revised 6.7% in March. The previous record decline was 2.5% in January 1987. Goods spending was weakest, falling 15.8%, with durable goods falling more modestly than nondurable. Service spending was down 12%, record shattering for a series that had not previously dropped more than 1% in a month before March. Prices fell 0.5%, so nominal spending fell 13.6% after rounding. The saving rate jumped to an unprecedented 33% in April as incomes were massively supported by fiscal stimulus.
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May 29, 2020
Wholesale inventories increased by 0.4% from March to April but were 2.6% lower than April 2019. This comes after March's 1% reduction. Retail inventories in April were down 3.6% from March's levels and 3.1% lower than a year ago.
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May 29, 2020
Prices for products manufactured in Canada, as measured by the Industrial Product Price Index, fell 2.3% in April, mostly because of lower prices for refined petroleum products. Prices for raw materials purchased by manufacturers operating in Canada, as measured by the Raw Materials Price Index, decreased 13.4%, primarily because of a drop in crude oil prices.
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May 28, 2020
The NAR pending home sales index plunged 21.8% to 69 in April, hitting an all-time low, as the COVID-19 crisis continued to keep homebuyers away from open houses. April's decline adds to the steep losses in March. All census regions had double-digit decreases in potential home sales, but the Northeast and West recorded the steepest losses because of their outsize exposure to the pandemic. National pending home sales are down 33.8% on a year-ago basis.
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May 26, 2020
Texas manufacturing is still contracting, though the pace of decline eased somewhat in the May survey. Virtually all current component indicators were negative, though the margins were less dire than in April. The uncertainty index also eased, though it remains elevated. A bigger positive swing was in the indicators of conditions six months from now, in which respondents believed that production and capacity utilization would be rising by that time.
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May 26, 2020
U.S. consumer confidence stabilized in May after posting a record monthly decline in April, according to the Conference Board. The Conference Board's index inched up from a revised 85.7 in April (previously 86.9) to 86.6 in May, in line with our expectations. Consumers' expectations led the improvement, increasing from 94.3 in April to 96.9 in May. Views of present conditions slipped, coming in at 71.1 compared with 73 in April. Expectations are still lower than they were prior to COVID-19, but the gap is very small. The labor market differential remains negative but improved from April.
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May 26, 2020
House price appreciation accelerated in March, as measured by the S&P CoreLogic Case-Shiller 20-City Composite Index. The not seasonally adjusted index posted a 1.1% increase and was up 3.9% from March 2019. Of the 20 metro areas in the index, Phoenix, Charlotte, Seattle and Tampa FL had the strongest year-over-year appreciation.
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Mar 24, 2020
The latest new-home sales report shows the housing market's strength before COVID-19 hit. New-home sales fell 4.4% in February to 765,000, but this was above the Moody's Analytics and consensus expectations. What is more, January's figure was revised higher to 800,000 (previously 764,000). Among the regional markets, the West recorded the steepest decline in February in percentage points. Sales in the Midwest also fell over the month, while sales rose in the Northeast and the South. The number of new homes listed for sale slipped between January and February, but the inventory-to-sales ratio increased from 4.8 to 5. The median price of a new home increased from $325,300 to $345,900.
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Mar 24, 2020
Manufacturing activity in the Richmond Federal Reserve District increased slightly this month. The Fifth District Manufacturing Index climbed 4 points, to 2. Shipments led the increase, while the volume of new orders was unchanged from February. Factories are beginning to lay off workers, and the number of new employees index fell by nearly 10 points. Six-month expectations have turned negative amid the COVID-19 pandemic, which has shuttered businesses across the nation and disrupted global supply chains.
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Mar 24, 2020
The Philadelphia Fed's Nonmanufacturing Business Outlook Survey indicates that business activity plummeted in March 2020. The diffusion index for general activity sank to -12.8 from 36.1 a month ago, reflecting COVID-19's heavy toll on the Third District's economy. Sales, new orders, and employment pull backed. More businesses are increasing investment spending than are not, but a plurality of firms reported no change in capital expenditures.
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Mar 20, 2020
Existing-home sales surged 6.5% in February, reversing the slight decline registered in January. Overall, year-over-year sales increased by 7.2%; single-family and condo/co-op sales both increased by 7.3% and 7.1%, respectively. Regionally, sales increased in the Midwest, South and West over the previous month, and increased in all four regions over the previous year. The findings, which are through February, reflect the state of the U.S. housing market prior to the extraordinary disruptions and shutdowns that U.S. officials have ordered in response to the COVID-19 outbreak.
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Mar 20, 2020
Canadian retail trade notched a modest gain in January, as the effects of COVID-19 have yet to surface. Sales were up 0.4% to C$52 billion. Higher sales in motor vehicles and parts dealers drove the headline numbers with a 1.8% gain. Gasoline station sales rose 1.5%. Sales increased in only four of the 11 subsectors, representing 48% of trade.
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Mar 20, 2020
The Moody's Delinquency Tacker total delinquency rate edged down 4 basis points to 2.56% in February. Retail contributed the most to this month's decline. Out of the six property types, three declined, two increased, and one remained the same. All regional delinquency rates fell in February except for the West. The total balance of CMBS conduit loans outstanding decreased thanks to payoffs and dispositions outweighing new issuance.
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Mar 19, 2020
Leading economic indicators, yet to capture current COVID-19-induced conditions, point to a fading U.S. expansion. The Conference Board's Leading Economic Index increased 0.1% in February to 112.1. This follows a 0.7% increase (revised from 0.8%) in January and a 0.3% dip in December. The slight gain in February was driven by the manufacturing optimism preceding the larger virus outbreak.
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Mar 19, 2020
The last employment report prior to the COVID-19 outbreak was weak but still positive. The ADP Canada National Employment Report estimates about 7,200 jobs were added in February.
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Mar 19, 2020
The Philadelphia Fed survey showed a pronounced pullback in manufacturing for March. The general activity diffusion index dropped to -12.7 from 36.7 a month ago and 14.9 a year ago. This month-to-month decline marks one of the sharpest decreases in the series' history. While the COVID-19 outbreak is taking a toll on business activity, so far, employment and workweek length have remained in decent shape.
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Mar 16, 2020
The employment figures for state and regional economies for January confirm what is already known, namely that the country's labor market was solid heading into the current period of stress. In January, nonfarm employment rose in 12 states, up from three in December, though fewer states reported lower unemployment rates. In January, Florida, New York and Illinois reported the largest absolute job gains, while the fastest over-the-month job growth occurred in New Hampshire and Kentucky. Utah, Arizona and Idaho were the top three in year-ago percentage gains. North Dakota had the lowest jobless rate, at 2.3%, while Alaska had the highest, at 6%. Six states—Alaska, Illinois, Nevada, New York, Oregon and Washington—set series lows for unemployment dating back to 1976.
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Mar 12, 2020
Nonfinancial corporate business wealth increased by $43 billion to $16.9 trillion during the fourth quarter behind an increase in the value of financial assets. The value of real estate assets, which had contributed solidly to a rise in net worth in the first three quarters of the year, fell by $243 billion in the fourth quarter. Year-over-year growth slowed to 2.5% from 9.4% in the third quarter.
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Mar 12, 2020
Household wealth rose strongly in the fourth quarter as the stock market continued to rise, before the spread of the coronavirus caused markets to plunge this year. Wealth increased by $3.1 trillion to $118.4 trillion, following a revised $800 billion increase in the third quarter. Year-over-year growth surged to 10.4%, as wealth fell sharply in the fourth quarter of 2018. Housing wealth shrank slightly as growth in debt outpaced growth in housing assets while components of wealth tied to the stock market rose strongly. Household liability growth was the largest in a little over a year. Wealth has since dropped sharply, as the stock market has fallen, so this release is out of date.
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Mar 03, 2020
The Federal Open Market Committee lowered the target fed funds rate by 50 basis points to 1% to 1.25% because of the heighten downside risks COVID-19 poses to the U.S. economy. But there is only so much monetary policy can do; the central bank will need help from fiscal policy. The intra-meeting decision is rare and risky, since it could be viewed as the central bank panicking, and financial market conditions may not respond as well as the central bank anticipates. In other words, some could see this as the Fed knowing something we don't, since policymakers have suggested recently that they wanted to see hard evidence that COVID-19 was impacting the U.S. economy before deciding if policy needed to be re-calibrated. Odds are the Fed isn't done.
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Feb 14, 2020
Boeing's decision to halt production of the 737 MAX contributed to the 0.3% drop in industrial production in January, near our and consensus expectations. Manufacturing output slipped 0.1%, but excluding production of civilian aircraft it was up 0.3%. Utilities output dropped 4%; coupled with the month's control retail sales, real consumer spending appears to have struggled. Mining output rose 1.2%, but given the recent slide in global oil prices this increase is unlikely to stick. Capacity utilization fell 0.3 percentage point to 76.8%. Manufacturing capacity utilization slipped from 75.2% to 75.1%. All told, Boeing is distorting the message from industrial production.
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Feb 13, 2020
U.S. household borrowing increased in January, up $34 billion from December. The total outstanding balance of retail credit topped $13.6 trillion last month, which stands 4.1% above its level in January 2019. There was growth in balances across all asset classes, with the most growth in terms of volume coming from the residential segment. In terms of percentage increase, consumer finance was by far the fastest-growing segment of retail credit, expanding at about a 9% annualized rate while the rest of the asset classes grew at an approximately 4% annualized rate.
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