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Week In Review – August 3, 2018

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Week In Review

Volume 24, Number 27

Reginald J. Smith, Community Development Manager – Bank of Kansas CityReginald J. Smith

Economic Highlights for Week Ending August 3, 2018

 

MONDAY, July 30th

The NAR’s pending home sales index which tracks the number of signed sales contracts, rose 0.9% in June to 106.9 up mildly from a level of 105.9 in May.  All areas tracked by this index registered gains in June. Nevertheless, the index is trending lower and remains down 2.5% on the year.  The current level of the index suggests that existing home sales are leveling off and probably will not be either sharply higher or lower over the next couple of months.

 

TUESDAY, July 31st

The S&P CoreLogic Case-Shiller 20-city home price index rose 0.7% in May from April and is now up 6.4% from May 2017 unchanged from the annual gain in April.   Seattle, Las Vegas, and San Francisco continued to report the highest year-over-year gains among the 20 cities.  In May, Seattle led the way with a 13.6% year-over-year price increase, followed by Las Vegas with a 12.6% increase and San Francisco with a 10.9% increase.  Home prices have appreciated 5% or more every month since August 2016 with consistent price gains across the 20 cities being tracked.

Personal income rose 0.4% in June supported by the same increase in the wages and salaries component.  Personal outlays or spending also rose 0.4% on the month while the savings rate held steady at a healthy 6.8%.  The consumer is in good shape.  A closely watched inflation gauge contained in this data series called the core PCE price deflator was up 0.1% on the month and 1.9% on the year, near the Fed’s 2.0% target for inflation.

The Conference Board’s consumer confidence index increased to 127.4 in July from 127.1 in June.  Consumers gave higher ratings for the present situation while the expectations component declined.  The index remains at 20-year highs with strength concentrated in labor market assessments.  Weakness appeared in home buying plans, which is consistent with other housing market indicators and less favorable ratings of the stock market.

UFSC Week In Review

WEDNESDAY, August 1st

As widely expected the Fed kept the target for the federal funds rate steady at 1.75% to 2.0 % at its policy setting session today.  There were few changes to the statement; an upgrade in their view of economic growth from solid to rising at a strong rate with continued strength in the labor market, household spending and business investment.  Given firming inflation and economic strengthening expectation continue to center on two more rate hikes this year, one in September and the other in December.

 

THURSDAY, August 2nd

Jobless claims rose 1k to 218k for the week ending July 28. Initial claims remain incredibly low as the four-week moving average, down 3500 last week to 214,500.  Claims data indicate continued strength in labor market conditions.

The ISM composite index dropped from 59.1 in June to 55.7 in July, the lowest since August 2017.  The index has swung wildly over the past year but remains comfortably above its neutral threshold of 50.  The details were mixed as new orders dropped below 60 for the first time since March. However, the employment index rose to 56.1 last month from 53.6 in June.

 

FRIDAY, August 3rd

Employers added 157k new jobs in July which was a bit below expectations but revisions in prior months tacked on an additional 59k jobs to the aggregate.  Payroll gains were led by a 37k jump in manufacturing jobs, a 28k jump in temporary help services and construction jobs which were up 19k.  Average hourly earnings rose 0.3% last month to remain at an annual pace of 2.7%.  Separately, the unemployment rate fell to 3.9% of the workforce in July from 4.0% previously and the participation rate was unchanged at 62.9%.  Though payrolls were softer than expected, this is yet another positive employment report that speaks to the ongoing strength of the labor market.

Stock Market Close for the Week


Index

Latest

A Week Ago

Change



DJIA
25,462.58
25,451.06
+11.52 or +0.05%


NASDAQ
7,812.02
7,737.42
+74.60 or +0.96%


WEEK IN ADVANCE

After a week of mostly housing market related data, reports in the coming week wrap up the sector for the month. Watch for new home sales and pending home sales, both on next week’s calendar.


Key Interest Rates

Latest

6 Mos Ago

1 Yr Ago



Prime Rate
5.00%
4.50%
4.25%


Fed Discount
2.50%
2.00%
1.75%


Fed Funds
1.90%
1.42%
1.15%


11th District COF
0.885%
0.746%
0.648%


10-Year Note
2.95%
2.75%
2.27%


30-Year Treasury Bond
3.09%
2.99%
2.85%


30 -Yr Fixed (FHLMC)
4.60%
4.22%
3.93%


15 -Yr Fixed (FHLMC)
4.08%
3.68%
3.18%

6-Mo Libor (FNMA)
2.50125%
1.83707%
1.44767%

 

Sources: IBC’ s Money Fund Report; Bank Rate Monitor; Federal Home Loan Bank of San Francisco