Volume 23, Number 41
Reginald J. Smith, Community Development Manager – Bank of Kansas City
Economic Highlights for the Week
Ending November 17, 2017
MONDAY, November 13th
The National Federation of Independent Business’ small business optimism index rose nearly a point to 103.8 in October from 103.0 in September. Optimism continues to rise. The index remains nearly nine points higher than in October of last year. Last month, more small firms reported increased current job openings, were more upbeat about future sales and believe the economy will improve over the next six months. Small business owners were discouraged by earnings trends and credit conditions but were encouraged by surging consumer sentiment. The outlook is positive for small businesses as plans to increase capital outlays were unchanged at a strong level last month.
TUESDAY, November 14th
Trend growth in consumer prices hasn’t been overly impressive recently, but the immediate implications for monetary policy are not significant, as the Federal Reserve is looking through the recent softness. The consumer price index rose 0.1% in October, in line with consensus expectations. A 0.3% increase in the CPI for shelter was the main factor in the gain in the headline index. The energy CPI slid 1% because of a 2.4% decline in gasoline prices. Food prices remained unchanged last month. Excluding food and energy, the core CPI was up 0.2% on the month and 1.8% on the year.
WEDNESDAY, November 15th
The MBA mortgage applications index rose 3.1% for the week ending November 10. The gain was led by a 6.3% increase in the refinance index; the purchase index edged 0.4% higher on the week. Still, the purchase index remains up a sharp 17% from its year ago level. Contract mortgage interest rates held steady last week with the 30-year fixed rate for a conforming loan unchanged at 4.18%.
Retail sales rose 0.2% in October matching expectations and following a huge upwardly revised gain of 1.9% in September. Retail sales surged in September because of higher gas prices and strong motor vehicle sales as people in hurricane affected areas moved to replace damaged cars and trucks. Excluding both gasoline and vehicle sales in September, retail sales rose a tamer 0.6% and 0.3% in October. Retailers that posted gains last month included furniture, electronics and appliance stores as well as health and personal care stores. Sales fell at gas stations, building supply stores and non-store retailers. In October, sales were 4.6% above their year-ago level, down only modestly from September’s 4.8%, so a strong trend is in place as we head into the holiday shopping season.
THURSDAY, November 16th
Jobless claims rose 10k to 249k for the week ending November 11. Claims from Puerto Rico are still about three times as high as usual which did contribute to the week’s overall increase, one that lifts the 4-week average a sharp 6,500 higher to 237,750. Despite the bump higher in the latest week for initial claims, the data point to very tight conditions in the labor market.
Homebuilder sentiment increased in November with the NAHB housing market index gaining two points to a level of 70. This is the second highest on record since 2005, indicating the housing market is performing very well. Both current and future sales are very strong, each at 77, and traffic is improving, up 2 points to 50 for its best reading since May. Overall, the housing market is well-positioned for growth in the short term.
FRIDAY, November 17th
Regaining ground lost in August and September, housing starts surged 13.7% in October to an annual rate of 1.290 million. Despite the gain, housing starts remain 2.9% lower than their October 2016 pace. The monthly increase was led by a rebound in multifamily starts, though single-family starts also showed a solid gain. Single-family housing starts gained 5.3% last month to an annual rate of 877k while multifamily starts (5 or more units) jumped 37.4% to an annual rate of 393k. Single-family starts are up 0.7% while multifamily starts are down 12.1% from October 2016. Total permit issuance rose 5.9% last month to 1.297 million which suggests after a weak spring season and flat summer, housing starts should continue to trend moderately higher into the year end.
Stock Market Close for the Week
A Week Ago
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 Sources: IBC’ s Money Fund Report; Bank Rate Monitor; Federal Home, Loan Bank of San Francisco
Key Interest Rates
6 Mos Ago
1 Yr Ago
Sources: IBC’ s Money Fund Report; Bank Rate Monitor; Federal Home, Loan Bank of San Francisco