Retail Sales: Retail sales were up 0.2% for August. A big part of this was production in the auto sector, with sales increases of 0.7%. Taking out vehicles, sales were up just 0.1%. In good news for consumers, gas prices continued to drop. Sales figures were up 0.3% when cars and gas are taken out of the equation. Restaurant sales were up 0.7%. On the negative side, building materials and furniture were down 1.8% and 0.9%, respectively. There was more good news in terms of revisions, though, as July numbers were revised up 0.2% to a gain of 0.6%.
Industrial Production: Production was down 0.4% month to month, and manufacturing fell 0.5% in August. Factories were utilizing 77.6% of their capacity, down 0.4% from July. A large part of this was a decline in motor vehicle production of 6.4%, running contrary to sales figures. Utility production was up 0.6%. Mining fell by the same amount. Manufacturing is only up to 1.4% on the year at this point. There was some good news in terms of July revisions, as both production and manufacturing were revised up to 0.9%.
MBA Mortgage Applications: Mortgage applications were down 7.0% this week as refinances fell 9.0%. Some of this might be related to the Labor Day holiday, as the average rate for a 30-year-fixed loan was down one basis point to 4.09%. Purchases were also down 4.0%.
Consumer Price Index (CPI): Low gasoline pushed prices down 0.1% in August. Prices were only up 0.2% annually. Prices for gasoline were down 4.1% on the year. Prices for plane travel were down 3.1%. Apparel was up 0.3%, largely because of the back-to-school rush. Food prices were up 0.2%. Prices excluding energy and food were up 0.1% and were up 1.8% on the year.
Housing Market Index: Builders see a slightly better outlook in the housing market in September, with the sentiment increasing by a point to 62. Traffic, which measures the number of potential buyers coming through new homes was up two points to 47. This is seen as a good sign that more first-time home buyers may be fed up with rent in their apartments or houses. Current sales are also very strong, coming in at 67. Future sales were up one point at 68.
Housing Starts: Housing starts slowed down in August, falling 3.0% to 1.126 million. Single-family starts matched the overall decline, falling 3.0%. The news wasn’t all bad as permits were up 3.5%, including a 2.8% rise in single-family homes. This puts overall permits at 1.170 million. Houses under construction were up to 920,000 from 908,000 in July. However, houses that will be completed fell 31,000 to 935,000. Turning to regional data, housing starts are strongest in the South, where they were up 7.1% for the month. Permits were up 9.6% from July in the West.
Jobless Claims: Initial claims fell by 11,000 this week to 264,000. This is the lowest level seen in 40 years, and 13,000 lower than the same time a month ago. Meanwhile, the four-week average of initial claims fell by 3,250 to come in at 272,500. This is on par with a month ago. Continuing claims fell 26,000 to 2.237 million. Meanwhile, the four-week average is down 5,000 to 2.256 million.
Mortgage rates didn’t move much last week as everyone waited out the Fed.
30-year fixed-rate mortgages (FRMs) averaged 3.91% with an average 0.6 point for the week ending September 17, 2015, up from last week when they averaged 3.90%. A year ago at this time, 30-year FRMs averaged 4.23%.
15-year FRMs this week averaged 3.11% with an average 0.6 point, up from last week when they averaged 3.10%. A year ago at this time, 15-year FRMs averaged 3.37%.
5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 2.92% this week with an average 0.5 point, up from last week when they averaged 2.91%. A year ago, 5-year ARMs averaged 3.06%.
1-year Treasury-indexed ARMs averaged 2.56% this week with an average 0.2 point, down from last week when it averaged 2.63%. At this time last year, 1-year ARMs averaged 2.43%.
It’s a no-win situation. That must really be what the Fed is thinking. They left short-term interest rates the same, partly out of concern for what raising rates might do to the U.S. market in a fragile global economy. Then the stock market saw quite the drop on Friday as investors worried about the Fed’s lack of confidence. It’s really quite a pickle.
The Dow Jones Industrial Average fell 290.16 points on Friday to 16,384.58, a 0.30% dip on the week. The S&P 500 wasn’t much better, falling 0.15% since last Friday after being down 32.17 points to 1,958.03 at the close. The NASDAQ was down 66.72 points Friday to 4,827.23. Still, it had the best week, finishing up 0.10%.
The Week Ahead
Monday, September 21
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.
Tuesday, September 22
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 House Price Index was derived from transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac.
Wednesday, September 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.
Thursday, September 24
Durable Goods Orders (8:30 a.m. ET) – Durable goods orders are based on the new orders placed with domestic manufacturers for factory hard goods.
Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to show the number of individuals who filed 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.
New Home Sales (10:00 a.m. ET) – New home sales measure the number of newly constructed homes with a committed sale during the month.
Friday, September 25
GDP (8:30 a.m. ET) – This measures the monetary value of all final goods and services produced within the U.S. This report is released on a quarterly basis.
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.
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