ECONOMIC REVIEW1 • Headline Personal Consumption Expenditure (PCE) increased 0.7% on a month over month basis and 6.3% on a year over year basis. • Core PCE increased 0.4% month over month basis and 4.7% on a year over year basis. • The ISM manufacturing index decreased more than expected, with the index coming in at 53.0 compared to the expectation of 54.5. o The index during the previous month was at 56.1. o It is important to note that any number over 50 signals expansionary growth
ECONOMIC REVIEW1 • The labor market had another strong month of hiring as non-farm payrolls increased above economists’ expectations. o Actual payrolls increased by 390,000 compared to the estimate of 318,000. • Wages rose, though slightly below expectations for the month of May. Wages increased by 0.3% compared to the 0.4% expectation. o Wages are up 5.2% since this time last year.
ECONOMIC REVIEW1 • The Federal Reserve’s (Fed) preferred inflation measure, Personal Consumption Expenditure (PCE) Price Index, was released last week and confirmed a slight easing in “core” prices seen in the CPI reading earlier this month.
ECONOMIC REVIEW1 • A slew of housing data released last week illustrating generally strong demand despite continuing supply issues challenging builders and a sharp rise in mortgage rates pushing up median prices. o Existing home sales declined slightly in March, slowing to a 5.77 million annual rate only just exceeding expectations, though the median price rose to $375,300 and is up 15% since last year. • Housing starts and new building permits both increased last month, up 0.3% and 0.4% respectively, both easily beating consensus expectations. o March gains were entirely due to multi-family construction, which is up 26.2% in the past year. Single family construction is down 4.4% over the same period.
ECONOMIC REVIEW1 • Producer Price Index (PPI) data for the month of January was released on Tuesday, and both readings exceeded forecasts substantially. • New home sales fell 4.5% from the December’s 9-month high to 801,000 for January, which was also below forecasts of 806,000. o The drop was driven by pending home sales which fell -5.7% despite forecasts calling for a 1.0% increase. • Personal Consumption Expenditure (PCE), the Fed’s preferred measure of inflation, confirmed CPI data released earlier this month, rising 6.1% YoY in January – the highest since February 1982.
ECONOMIC REVIEW • The Consumer Confidence Index exceeded expectations of 111.8 with actual reading of 113.8, which dropped from the previous reading of 115.8. • Similarly, University of Michigan Consumer Sentiment Index dropped to 67.2, below previous reading of 68.8 and forecast of 68.5.
ECONOMIC REVIEW1 • Housing starts for the month of December increased 1.4% month-over-month, well above economists expectations of a -1.7% decrease. • Existing home sales for the month of December decreased -4.6% on a month-over-month basis which was well below the expectation of a -0.6% decrease. INSIGHT: Home construction ended 2021 on an overall upbeat note, rising for a third consecutive month to end the year. However, all of the gains for December were attributable to multi-family starts, which were up 10.6% for the month while single family starts dipped -2.3%. With interest rates set to increase, the demand for single family properties may start to slip. If this is the case, demand may begin shifting toward the rental sector, increasing demand for multi-family properties. Single-family starts were up 12.3% in 2021 while multi-family starts rose 20.0%. After posting three consecutive increases, existing home sales slipped in December. Although sales faded slightly late in the year, 2021 was very strong as over 6 million homes were sold, the highest mark since 2006. The median price of an existing home rose to $358,000 in December, up 15.8% compared to 2020.
ECONOMIC REVIEW • The ISM Manufacturing Index for the month of December fell to 58.7, lower than the expectation among economists of 60. • The ISM Services Index for the month of December decreased more than expected. The index fell to 62 while the expectation was for a decrease to 67. • Non-farm payrolls for the month of December missed sharply to the downside, the survey expectation was for the economy to add 450,000 jobs whereas the actual increase was 199,000.
Economic Review: The Producer Price Index (PPI) for the month of October increased by 0.6% on a month-over-month basis, which was in line with expectations. The year-over-year increase came in at 8.6%. / The Consumer Price Index (CPI) for the month of October increase by 0.9% on a month-over-month basis, which was above the expectation of a 0.6% increase . The year-over-year increase was 6.2%. / The University of Michigan Consumer Sentiment Index fell to 66.8 from 71.7, whereas the consensus estimate was an expected increase to 72.4.
Economic Review: The ISM Manufacturing Index decreased in the month of October to 60.8, however, it fell less than economists’ expectations of 60.5. / The ISM Services Index increased to 66.7 in October, beating economists’ expectations of 62. / Nonfarm payrolls for the month of October increased by 531,000, which was higher than economists’ expectations of 450,000.
Economic Review: The Conference Board Consumer Confidence Index rose from 109.3 to 113.8; economists expected the index to decrease to 108. / The preliminary reading of Gross Domestic Product (GP) for Q3 came in at 2.0%, below the consensus estimate of 2.6%. / Personal Income for the month of September decreased more than expected; the estimate called for a decrease of -0.3% whereas the actual decrease was -1.0%. / Personal Consumption Expenditures (PCE) for the month of September was in-line with estimates, increasing by 0.3%. The year-over-year reading also came in in-line with economists’ estimates, rising 4.4%.
