Taxation As A Severe Insult
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Washington, D.C. (CNN) - Congress passed a temporary spending measure on Thursday that will keep the federal government funded and open for business until December 16. The continuing resolution was necessary because the federal government is set to run out of money by midnight Friday.
New residential construction essentially held steady in October but homebuilders may be increasingly optimistic as housing permits jumped. Housing starts in October nudged back only 0.3 percent, after rebounding a sharp 7.7 percent the prior month. The October annualized pace of 0.628 million units beat analysts' estimate for 0.605 million units and is up 16.5 percent on a year-ago basis. The dip in October was led by an 8.3 percent decline in the multifamily component, following a 35.0 percent spike in September. The single-family component rebounded 3.9 percent after a 2.6 percent decrease the month before.
By region, the decrease in starts was due to a 16.5 percent drop in the West. Other regions gained with the Northeast up 17.2 percent; the Midwest up 9.7 percent; and the South up 1.6 percent.
It is not gangbusters but it certainly is an improvement for future construction as housing permits jumped 10.9 percent after declining 5.8 percent in September. But the optimism is mainly for multifamily construction. The October rate of 0.653 million units annualized posted notably higher than the consensus forecast for 0.605 million. Permits in October are up 17.7 percent on a year-ago basis.
For the latest month, multifamily permits gained 24.4 percent while single-family permits rose 5.1 percent. On a year-ago basis, multifamily permits are up 48.0 percent while single-family permits are up 6.6 percent. Homebuilders clearly are more optimistic about the multifamily sector than single-family. Apparently, excess supply is still somewhat an issue for the single-family sector, along with continued soft demand.
Jobless claims continued a recent, mild downtrend with a 5,000 decline in the November 12 week to 388,000. Initial claims have decreased three weeks in a row and in four of the last five. The four-week average dipped 4,000 to 396,750.
Continuing claims, in data for the November 5 week, dropped 57,000 to 3.608 million.
The insured unemployment rate was 2.9 percent for the week ending November 5, unchanged from the prior week's unrevised rate.
NEW YORK (CNNMoney) -- The U.S. Postal Service released its annual financial results on Tuesday, and they're nothing to write home about.
The agency reported an annual loss of $5.1 billion, as declining mail volumes and mounting benefit costs take their toll. The Postal Service said its losses would have been roughly $10.6 billion if not for the passage of legislation postponing a $5.5 billion payment required to fund retiree health benefits.
Mortgage application volume decreased about as sharply in the November 11 week as it increased in the prior week when rates, due to the crisis in Europe, dropped suddenly and substantially. Purchase volume fell 2.3 percent in the latest week with refinancing volume down 12.2 percent.
Rates were little changed in the latest week, at 4.23 percent for conforming loans ($417,500 or less) and at 4.56 percent for jumbo loans ($417,500 or more). The latest week includes Veteran's Day which blurs any conclusions from the data. At 10:00 a.m. ET this morning, home builders will post their housing market index.
Consumer price inflation finally softened in October at the headline level. The consumer price index in October declined 0.1 percent, following a 0.3 percent boost in September. The October figure came in lower than analysts' forecast for no change. Excluding food and energy, the CPI rose a modest 0.1 percent, matching September's gain and the consensus projection.
By major components, energy declined 2.0 percent, following a jump of 2.0 percent in September. Gasoline dropped 3.1 percent after spurting 2.9 percent higher in September. Food price inflation softened to a 0.1 percent rise after jumping 0.4 percent. Within the core, upward pressure was seen in medical care and apparel with declines in new vehicles and used cares partially offsetting.
Year-on-year, overall CPI inflation slowed to 3.6 percent from 3.9 percent in September (seasonally adjusted) in August. The core rate nudged up to 2.1 percent from 2.0 percent the month before on a year-ago basis. On an unadjusted year-ago basis, the headline number was up 3.5 percent in October, compared to 3.9 percent in September. The core was up 2.1 percent, compared to 2.0 percent the month before.
Today's numbers are consistent with the Fed's hope for an easing in inflation. However, the headline number will be under upward pressure in November from the rebound in crude oil prices.
Volatility in international financial markets made for a second straight month of increasing inflow into long-term US securities, at $68.6 billion in September following August's revised $58.0 billion. These follow inflows of only $9.1 billion and $4.1 billion in the two prior months. US investors, repatriating their funds, were small net sellers of foreign securities in September.
But increasing demand for US securities is narrowly based into Treasuries in contrast to outflows for corporate bonds and especially US equities which is no surprise given the general move into safety and away from risk. Net outflows from equities were a very steep $19.2 billion in September following August's $6.5 billion outflow.
When including short-term securities the story is the same with net inflows at $57.4 billion in September vs an $89.3 billion inflow in August that follows significant outflows in the relatively quiet months of July and June. Country data on US Treasury holdings shows increases for the three major holders -- China, Japan, UK.
In a convincing sign of economic strength, industrial production surged 0.7 percent in October reflecting a very strong 0.5 percent rise in manufacturing output and a 2.3 percent rebound in mining output. The rebound in mining follows a sharply downward revised 0.5 percent decline in September, a revision from an initial reading of plus 0.8 percent which is largely responsible for a downward revision to total September industrial production from plus 0.2 percent to minus 0.1 percent.
But the downward revision to September is a footnote compared to October's strength in the key manufacturing component where gains were led by a 3.1 percent surge in autos as the rebound from prior Japan-supply dislocations appears to be hitting a peak. Excluding autos, manufacturing still posted a second-straight and respectable 0.3 percent gain. Overall output of consumer goods shows a very strong 0.5 percent gain in the month with business equipment output extending its long run of strength, up 1.0 percent in the month.
Other readings in today's report include a five tenths surge in total capacity utilization to 77.8 percent which is the highest reading of the recovery (prior month revised to 77.3 percent). Output at utilities had little bearing on October's results, slipping 0.1 percent in the month.
It's important to note that today's report includes only shipments which are coincident data. Government data on factory orders and unfilled orders for September, which are leading data, were mixed though ISM data on October, released at the outset of this month, point to increasing levels of orders. Despite all the troubles in the domestic job sector and questions over European demand for US goods, the manufacturing sector is once again the focal piece of economic strength.
The traditional non-NAICS numbers for industrial production may differ marginally from the NAICS basis figures.
Weaker energy costs turned producer price inflation negative-at least temporarily in October. Producer prices fell 0.3 percent in October after jumping 0.8 percent in September. The October number came in lower than the consensus forecast for a 0.2 percent dip.
By major components, energy fell 1.4 percent after rebounding 2.3 percent in September. Gasoline dropped 2.4 percent, following an increase of 4.2 percent. Food costs decelerated to a 0.1 percent rise, following a 0.6 percent boost in September. At the core level, the PPI was unchanged in October, following a 0.2 percent rise the month before. Analysts expected an increase of 0.1 percent. Declines in prices for prices of passenger cars and light trucks played a key role in keeping the core flat.
For the overall PPI, the year-ago rate in October was 6.1 percent, compared to September's 7.0 percent (seasonally adjusted). The core rate in October firmed to 2.8 percent from 2.5 percent in September. On a not seasonally adjusted basis for October, the year-ago headline PPI was up 5.9 percent, compared to 6.9 percent the prior month. Meanwhile the core was up 2.8 percent on an NSA year-ago basis, compared to 2.5 percent in September.
In October, retail sales continued to gain--not at September's rapid pace but still quite healthy. Overall retail sales in October advanced 0.5 percent, following a 1.1 percent jump in September (originally up 1.1 percent). The rise in October well beat analysts' forecast for a 0.2 percent increase. Excluding autos, retail sales increased a strong 0.6 percent in October after increasing a robust 0.5 percent in September (originally up 0.6 percent). The median forecast was for no change. Gasoline sales tugged down on the core, dipping 0.4 percent, following a 0.7 percent jump the month before. Sales excluding autos and gasoline in October jumped 0.7 percent, following a 0.5 percent gain in September. Component gains were widespread.
Component gains were broad based. The strongest component was for electronics & appliance stores which surged 3.7 percent in October, followed by building materials & gardening equipment (up 1.5 percent) and nonstore retailers (up 1.5 percent). Also seeing gains were motor vehicles, food & beverage, health & personal care, sporting goods & hobby, miscellaneous store retailers, and food services & drinking places.
The largest decline was in clothing & accessory stores, down 0.7 percent, and furniture & home furnishing, also down 0.7 percent. Gasoline station sales also slipped. General merchandise store sales were unchanged in October.
Retail sales on a year-ago basis in October posted at 7.2 percent, compared to 7.9 percent in September. Excluding motor vehicles, sales were up 7.3 percent on a year-on-year basis, compared to 7.7 percent the month before.
Today's retail sales report shows a consumer much more willing to spend than sentiment surveys suggest. This is a good start for putting together estimates for fourth quarter GDP growth. On the news, equity futures improved.
Optimism is appearing in the New York region's manufacturing sector where the assessment of general business conditions, at plus 0.61, is in positive ground for the first time since May. Really improving is the six-month outlook for general conditions which is at plus 39.02 from October's unusually low 6.74. Business sentiment, like consumer sentiment, may finally be picking up after the debt limit debacle in August.
Sentiment is lagging actual order levels with new orders, at minus 2.07, showing a monthly contraction and unfilled orders, at minus 7.32, showing a slightly deeper contraction. But manufacturers in the region see this contraction as temporary with their six-month outlooks pointing to growth for each especially for new orders.
Other data in today's report include a second month of growth for shipments but a contraction in the sample's workforce. Yet if optimism is realized, the gain for orders should trip gains for hiring. National shipment data on the manufacturing sector for October will be posted with the industrial production report on Wednesday. On Thursday, the Philadelphia Fed will post its November report.
Discover Pass doesn't raise the cash expected
TACOMA — Sales of a new Washington state park parking pass — the Discover Pass — is not raising the cash officials expected.
Lawmakers have mostly cut off parks from taxpayers’ help, whether or not the new $30 annual parking fee can fill the gap.
If the program fails, the parks agency would have to find new money or close most of the state’s 116 parks, The News Tribune reported in Sunday’s newspaper.
Some officials hope sales of the pass will improve during its first spring. But they worry people will continue to dislike the parking pass because it can’t be transferred from one car to another. That issue should come before the Legislature this winter.
“I heard from dozens of people personally that just said, ‘I’m not buying it,”’ said state Sen. Kevin Ranker, who is writing a proposed update to the law he sponsored that created the pass.
Other factors could pull Discover Pass sales numbers down or up: weather, more aggressive marketing, and an option for drivers to buy the pass when renewing their license tabs, which they have been able to do only since late August when notices went out to drivers whose tabs expired in October.
The passes brought in $6.5 million from July 1 to Sept. 30, with parks taking the biggest share at 84 percent and the rest divided equally between the Department of Natural Resources and the Department of Fish and Wildlife.
The state hopes to raise at least $64 million in the first two years. State parks officials concluded from surveys that’s how much visitors would pay.