The MBA reports that mortgage applications rose a sharp 11.2% last week, with purchases up 3.0% and re-fis up 18.0%. As rates are starting generally to rise, last week’s 5 basis-point drop has everyone locking in the best rate they can.
A downward revision in July’s housing starts resulted in a nominal rise of 0.9% in August to a 0.891 million annual rate. Housing permits, an indicator of future activity, declined to a 0.918 million annual rate from July’s 0.943 million.
At today’s meeting of the Federal Open Markets Committee, the Fed surprised the markets by not tapering off its Quantitative Easing program. They fear that doing so will result in a fiscal drag on the economy. They also say that labor market conditions still are questionable. The Fed is predicting 2013 GDP growth at a below-trend 2.0% to 2.3%. The Fed also predicts a slow improvement to the unemployment rate, with it dropping below 7.0% sometime in 2014. Inflation is below the Fed’s long-term goal of 2 percent, and says downside risks to growth have eased. Chairman Bernanke indicated that increases in interest rates may not occur until the unemployment rate is substantially below 6.5 percent, which is expected in late 2014 or 2015.
The CPI rose 0.1% in August at both the headline and core rate. On a year-over-year basis, consumer prices rose 1.5%, and 1.8% ex-food and -energy.
The Housing Market Index lost a single point in September, coming in at 58, still a multi-year high.
Foreign demand for long-term U.S. Securities moved back into positive territory, with a net inflow of $31.1 billion in July.
Retail sales seem to be slowing, as Redbook reports a decline from last week’s 4.6% year-on-year sales increase to 3.4% this week. ICSC-Goldman Store Sales are mixed and hard to read, with a weekly sales drop of -1.6%, but a stronger 2.3% year-on-year sales increase.
Producer prices rose 03% in August, but ex-food and energy were unchanged. On a year-over-year basis, the PPI is up 1.4% and 1.2% at the core.
Retail sales rose 0.2% in August. Ex-autos, sales were up 0.1%, and ex-auto and gas were up 0.1%.
The Reuters/University of Michigan’s consumer sentiment index fell a sharp 5 points to 76.8 in August.
Business inventories rose 0.4 percent in July, while the stock to sales ratio leaned down a tick to 1.28 in July.
The Bloomberg Consumer Comfort Index rose 0.2 points to -32.1 in the latest week.
The Fed’s balance sheet rose $7.9 billion last week, with total assets of $3.662 trillion. Reserve Bank credit increased $8.9 billion.
Initial jobless claims fell a surprising 31,000 last week, to 292,000. This is apparently due to some computer issues which are believed to have led to an undercount. The 4-week moving average fell 7,500 to 321,250, Continuing claims fell 73,000 to 2.871million.
The Fed reports that M2 Money Supply increased by $11.8 billion last week.
Export prices fell -0.5% in August, while import prices were unchanged. On a year-over-year basis, export prices have fallen -1.1% while import prices fell -0.4%.
The Federal Government’s budget deficit for August was a heavy $-147.9 billion.
The MBA reports that mortgage applications fell -13.5% last week, with purchases down -3.0% and re-fis down -20.0%. Rising mortgage rates are the culprit. This implies eventual increases in Treasury yields, which, in turn, imply a higher cost of federal debt service, and higher deficit. Enjoy.
Wholesale inventories rose a slight 0.1% in July, with the stock-to-sales ratio steady at 1.17.
The NFIB Small Business Optimism Index fell 0.1 points to 94.0 in August.
ICSC-Goldman Store Sales are up 1.5% for the week, and 2.3% on a year-over-year basis. Redbook reports same-store sales are the strongest in 2 years, with the year-over-year sales increase at 4.6%.
The BLS reports that a sluggish 169,000 net new jobs were created in August, though unemployment rate fell -0.1% to 7.3%, as 312,000 people left the labor force. The labor force participation rate declined to 63.2%, the lowest since 1978. The average workweek rose a single tick to 34.5 hours, while average hourly earnings rose a nickel to $24.05. Using the average labor force participation rate prior to the 2009 recession, the real unemployment rate stands at 11.46%. There is nothing good in this report. The unemployment rate dropped only because a third of a million workers left the labor force. The rate of job creation is roughly 100,000 jobs less than the rate of creation we need just to keep up with population growth. The real rate of unemployment is essentially the same as it was all the way back to January of 2012, since we’ve been hovering within a tick or two of 11.5%. We have essentially gained no ground whatsoever in the labor market for 20 months.
Chain stores—at least the few who still report monthly sales—reported declining year-on-year sales rates for August.
The Challenger Job-Cut Report shows a surge in announced layoffs to 50,462 in August.
The ADP Employment Report indicates a weak 176,000 new private sector jobs were created in August, a sizable slowing from July.
Initial claims for unemployment fell 9,000 last week, to 323,000. The 4-week moving average fell 3,000 to 328,500. Continuing claims fell 43,000 to 2.951 million.
The Bloomberg Consumer Comfort Index fell 0.6 points to -32.3, the lowest level in 5 months.
The ISM’s non-manufacturing index rose 2.6 points to 58.6.
Factory orders fell -2.4% in August, mainly on aircraft order declines. Ex-transportation orders rose 1.2%.
The Fed reports that M2 Money Supply increased by $35.9 billion last week.
The Fed’s balance sheet rose $9.7 billion last week, with total assets of $3.654 trillion. Reserve Bank credit increased $5.5 billion.