I went to the movies this weekend. I’m probably exactly who the summer blockbuster season is aimed at because I watch the previews and start doing the mental math in my head as to how much a ticket will cost me for the five movies I want to see in the next month. Somebody has to keep the economy going, right?
Maybe my movie tickets helped just a little bit with last month’s retail sales numbers. It turns out they were up, but let’s jump into the data.
Retail sales were up 0.3% in April, according to the U.S. Commerce Department. Gains in March were also revised up to 0.8% from 0.6% in initial estimates.
There were big gains at clothing stores. Price cuts on clothing helped lift sales 1.4%. Home and garden store sales were also up 0.4% with the weather warming. There was a 0.6% rise in sales at non-store retailers, which includes online and catalog sales.
Price increases in gas led to higher gas station sales, which were up 0.8% last month. The average price of a gallon was $2.88, up 17 cents from March, according to AAA.
Unemployment is down to 3.9% nationwide, and this optimism is reflected in consumer spending, which has been up in recent months, helping retail sales.
Housing Market Index
Home builder confidence was up two points and came in at 70 this month, according to the National Association of Home Builders. For context, any reading over 50 indicates growth in the housing market.
A big reason for this was a rise in current sales numbers while traffic of home buyers in new homes and future sales expectations both remained the same.
MBA Mortgage Applications
Overall mortgage applications were down 2.7% last week, according to the Mortgage Bankers Association. Part of the reason for this was an eight basis point increase in the average rate on a conforming 30-year-fixed mortgage to 4.73%.
Refinances were down 4.0%, while purchases were down 2.0%. Purchase applications made up most of the volume, making up 64.1% of applications.
Housing starts were down 3.7% to 1.29 million in April. However, it’s important to look at this in context because 1.34 million in March was the highest rate since mid-2007.
Although starts fell in all regions except the South, which is the nation’s biggest region for new housing. The good news is that single-family starts barely changed. Part of the reason for the decline in starts is being blamed on a shortage of skilled labor.
Permits were down 1.8% to 1.35 million.
Industrial production was up 0.7% in April, matching the increase for March. Manufacturing and mining were a big part of the increase.
Manufacturing was up 0.5%. There was a 2.3% increase in machinery production that helped cover up a drop in primary and fabricated metal products. Mining production was also up 1.1% and utilities were up 1.9%.
Industrial capacity utilization was up 0.4% to 78.0% as factories are utilizing more of their space. It’s the highest it’s been since March 2015. It’s still 1.8% below where it would normally be in the long run.
Initial jobless claims were up 11,000 last week to come in at 222,000. The four-week moving average was indeed down 2,750 to 213,250. Puerto Rico and the Virgin Islands aren’t returned to normal in terms of claims reporting.
Continuing claims were down 87,000 to 1.707 million. The four-week moving average was down 39,750 to about 1.774 million.
According to Freddie Mac, mortgage rates are at the highest level in seven years. I want to take a minute to put that in context because the average mortgage rate is still well below even 5%. If you’re looking to buy a home or take cash or of your current one, it’s still a great market. Nevertheless, rates are trending up. If you see a rate you like, don’t hesitate to lock.
The average rate on a 30-year-fixed mortgage with 0.4 points in fees was up six basis points to 4.61%. It’s up from 4.02% at this time last year.
Looking at shorter terms, the average rate on a 15-year fixed mortgage was up seven basis points to 4.08% with 0.4 points. A year ago, the average rate was 3.27%.
Finally, a 5-year treasury-indexed adjustable rate mortgage (ARM) was 3.82% with 0.3 points, up five basis points and rising from 3.13% last year.
The S&P 500 and NASDAQ were both down slightly on Friday as the markets are worried about increased trade tensions with China. Back and forth from volleys over tariffs continue.
The Dow Jones industrial average was up 1.11 points to close at 24,715.09, which is down 0.47% on the week. On the S&P index, stocks were down 0.54% on the week after closing at 2,712.97, down 7.16 points Friday. Finally, the Nasdaq closed at 7,354.34, down 28.13 points on the day and 0.66% on the week.
The Week Ahead
Wednesday, May 23
MBA Mortgage Applications (7:00 a.m. ET) – The mortgage applications index measures applications to mortgage lenders. This is a leading indicator for single-family home sales and housing construction.
New Home Sales (10:00 a.m. ET) – This measures the number of newly constructed homes with a committed sale during the month.
Thursday, May 24
Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to show the number of individuals filing for unemployment insurance for the first time. An increasing trend suggests a deteriorating labor market. The four-week moving average of new claims smooths out weekly volatility.
FHFA House Price Index (9:00 a.m. ET) – The Federal Housing Finance Agency (FHFA) House Price Index (HPI) covers single-family housing using data provided by Fannie Mae and Freddie Mac. The HPI is derived from transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac.
Existing Home Sales (10:00 a.m. ET) – Existing Home Sales tallies the number of previously constructed homes, condominiums and co-ops in which a sale closed during the month. Existing homes (also known as home resales) account for a larger share of the market than new homes and indicate housing market trends.
Friday, May 25
Durable Goods Orders (8:30 a.m. ET) – These are based on new orders placed with domestic manufacturers for factory hard goods.
Consumer Sentiment (10:00 a.m. ET) – The University of Michigan’s Consumer Survey Center questions 500 households each month on their financial conditions and attitudes about the economy. Consumer sentiment is directly related to the strength of consumer spending.
It’s Memorial Day next week, so there’s plenty of data coming up before everyone goes on the long weekend. We’ll have it all covered for you in the next Market Update, which is due to publish on Tuesday since we’re closed Monday.
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