Happy New Year! Sometimes I feel like life is like that song that never ends. It just goes on and on, my friends. (That’s now stuck in your head the rest of the day. You’re welcome!) Just when we think we’re getting through one situation with China, now everyone is talking about Iran.
More on that in a minute, but first, let’s run through the economic data that was released last week.
International Trade In Goods
The U.S. trade deficit in goods was down $3.6 billion to $63.2 billion in November. Exports were up $900 million to $136.4 billion, an uptick of 0.7%. Meanwhile, imports were down $2.7 billion to $199.6 billion, a fall of 1.3%.
Let’s take a look at some key categories on a seasonally-adjusted basis, starting with exports. Exports of food, feeds and beverages were up 2%, while capital goods exports were up 1.3%. Vehicle exports were up 3.4% and consumer goods exports were up 2.6%. Exports of industrial supplies fell 0.7% and exports of all other goods were down 7.3%.
On the import side, the only categories that saw an increase was automotive vehicles, where imports were up 3.7%. Other than that, consumer goods imports were down 2.2%. Capital goods imports fell 2%. Industrial supplies imports (oil mostly) were down 1.5%, while foods, feeds and beverages saw their imports fall 1.3%. Imports for all other goods were down 6.8%.
Pending Home Sales Index
The number of existing homes under contract for sale was up 1.2% in November to come in at 108.5. This is up 7.4% compared to the same time a year ago.
On a regional basis, all four major regions show yearly increases, with the West being up 14% followed by the South, up 7.7%. The Northeast and Midwest Trail, up 2.6% and 5% for the year, respectively.
FHFA House Price Index
Home prices were up 0.2% in October and 5% since October 2018. Home prices for September were up an additional 0.1% for a 0.7% rise in revised numbers.
Breaking down the data regionally, the East North Central region was down 0.5% and up 4% on the year on a seasonally-adjusted basis. The only other region to see a downturn on a seasonally-adjusted basis was the West North Central region, which was down 0.2%, but up 4.1% on the year.
The East South Central region was up 0.7% on the month and 5.8% on the year. Meanwhile, the middle Atlantic region was up 0.6% and 5% on the year. The Mountain region saw a 0.4% price increase and is up 6.7% annually. Prices in New England were flat for the month and up 3.5% since last October. Meanwhile, prices in the Pacific region were up 0.6% and 4.4% on the year. In the South Atlantic, prices were up 0.1% in October and 6.1% in the last 12 months. Finally, in the West South Central region, prices were up 0.7% and 4.6% annually.
S&P CoreLogic Case-Shiller HPI
The CoreLogic index is showing that home prices are growing a little slower than the FHFA index shows prices are. They’re up 3.3% nationwide and 2.2% across the 20-city index.
First, let’s go over decreasing values. The only city that saw value drop was San Francisco, which was down 0.2% in October. Values have fallen 0.4% on the year.
Home values in Phoenix were up 0.5% in October and 5.8% over the preceding 12-month period. Meanwhile, values in Los Angeles were up 0.7% and 2% on the year. Homes in San Diego are worth 0.2% more on a monthly basis and 2.9% annually. In Denver, prices rose 0.5% and 3.3% over the last 12 months. Meanwhile, values in Washington D.C. were up 0.5% and 3% since last October. Values in Miami were up 0.4% and 3.3% for the year. Tampa Bay, Florida values were up 0.6% and 4.9% over the last 12 months.
Atlanta values rose 0.7% and 4.2% for the year. Values in Chicago are up 0.3% for the month and 0.5% annually. Boston homeowners saw their property values rise 0.5% and 3.4% on the year. In Detroit, home values were flat in October and up 3.1% on the year. In Minneapolis, home values were up 0.3% and 4.2% annually. Meanwhile, Charlotte, North Carolina homeowners saw values rise 0.5% and 4.2% on an annual basis. Homeowners in Las Vegas saw values rise 0.2% and 2.3% over the last 12 months. Homeowners in the Big Apple saw value increases of 0.4% monthly and 0.8% annually. Cleveland homeowners saw values rise 0.2% and 3.3% annually. Portland, Oregon homeowners saw a 0.3% monthly value increase, up 2.8% over the last 12 months. Dallas homeowners saw values increase 0.2% in October and 2.9% on the year. Finally, values were up 0.7% for the month in Seattle, rising 2.5% since last October.
Overall consumer confidence was down 0.3 points in November to come in at 126.5. This metric looks at both current conditions and future outlook.
Starting with an assessment of the short-term future, for income, business and conditions in the labor market was down almost three full points to 97.4. Fewer people expected more jobs in the months ahead – this went from 16.5% to 15.3%. Meanwhile, there was an increase in the number of people expecting job cuts from 13.4% to 14.9%. Fewer people also expected a raise in their income – this declined from 22.9% to 21.1%. More people expected an income decrease, up to 7.7% from 6.2%.
There were some positives in terms of expectations as the number of people expecting business conditions to improve went from 18.6% to 18.9%. The percentage expecting conditions to get worse was down to 9.3% from 11.4%.
In terms of current conditions, these were up 3.4 points to 170. A fairly flat number of people said business conditions were good at 38.7% and there was a decrease in the number of people who felt business conditions were bad to 11.1% from 13.6%. Meanwhile, labor market expectations were a bit mixed. 47% of people feel jobs are plentiful, but 13.1% feel that jobs are hard to get, up from 12.4% last month.
Initial jobless claims were down 2,000 for the week to come in at 222,000. Meanwhile, the 4-week moving average was up 4,750 to settle at 233,250.
On the continuing claims side, these were up 5,000 at 1.728 million. The 4-week moving average increased 7,250 to settle at about 1.712 million.
ISM Manufacturing Index
The U.S. manufacturing sector continues to slow at a quickening pace. The 47.2 figure reported in December is the lowest reading since June 2009. As a reminder, 50 represents a breakeven level. Anything higher or lower than that represents growth in the sector or shrinkage.
New orders came in down 0.4 points to 46.8%. Production was down 5.9% to come in at 43.2%. New export orders fell 0.6% to 47.3%. Employment was down 1.5% to 45.1%.
While inventories are still shrinking, they were up 1% to 46.5, indicating the trend is slowing. Meanwhile, imports were up 0.5% to 48.8%. Prices showed growth, up 5% to 51.7% overall. Supplier deliveries also increased, up 2.6% to 54.6%.
The fundamentals aren’t great in here. Demand is down, and the same goes for consumption and backlogs. If there’s not a backlog to get through, less people end up being hired because businesses are already keeping up with demand.
Fixed mortgage rates fell last week. They’re down quite a bit compared to a year ago. If you’re in the market for mortgage, it remains a great time to lock your rate.
The average rate on a 30-year fixed mortgage with 0.7 points paid in fees was down two basis points last week to settle at 3.72%. This is down from 4.51% a year ago.
Meanwhile, looking at shorter terms, the average rate on a 15-year fixed mortgage was down three basis points to 3.16% with 0.7 points paid. This has fallen from 3.99% last year.
The average rate on a 5-year treasury-indexed, hybrid adjustable rate mortgage was up a single basis point last week to 3.46% with 0.3 points paid. This has fallen from 3.98% at the same time last year.
A U.S. airstrike killed Iran’s top military general. Stocks dropped quite a bit in the immediate aftermath. Traders had concerns about inflamed tensions in the Middle East. There was also an immediate spike in the price of oil. Oil futures were up 3% Friday at $63.05 per barrel. This had domino effects as airline stocks also fell. In the longer term, if the price of gas were to rise for any significant length of time, Americans would have less disposable income in their pocketbooks.
The Dow Jones Industrial Average fell 233.92 points Friday to close at 28,634.88 points. This was down 0.04% on the week. The S&P 500 was down 0.16% on the week after falling 23 points Friday to close at 3,234.85. Finally, the Nasdaq was down 71.42 points to end the week at 9,020.77, still up 0.16% on the week.
The Week Ahead
Tuesday, January 7
International Trade (8:30 a.m. ET) – International trade is composed of merchandise (tangible goods) and services. It’s available by export, import and trade balance for six principal end-use commodity categories and for more than 100 principal Standard International Trade Classification system commodity groupings.
Wednesday, January 8
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. This report will cover the last two weeks.
Thursday, January 9
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 4-week moving average of new claims smooths out weekly volatility.
Friday, January 10
Employment Situation (8:30 a.m. ET) – The employment situation report measures unemployment in the labor force as well as the sentiments of workers about the job market.
There aren’t as many reports out this week, but the employment situation report is always important. We all have everything covered for you in next week’s Market Update!
This is tough reading at times, even if it is important. Not to worry. We’ve got plenty of home, money and lifestyle content to share with you if you subscribe to our mailing list below. This week, we’ve looked at how you can create a grocery budget that makes the most sense for you. Have a great week!
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