Economic Report for 7/9/2007

Last Week in the News

The nation's service economy expanded at a faster-than-expected pace in June, as the Institute for Supply Management (ISM) said on July 5 that its index of business activity in the non-manufacturing sector registered 60.7, topping May's reading of 59.7 and Wall Street's forecast of 58.1. A reading above 50 indicates expansion, while one below 50 signals contraction. The June reading was the highest since April 2006, when it hit 61.1.

Output at U.S. factories, plants and utilities also expanded in June, the ISM reported July 2. The ISM's manufacturing index rose to 56 in June, above the May reading of 55, and higher than the market expectation of 55.4. The reading marked the fifth consecutive month of growth for the manufacturing sector.

Late payments on home equity loans -- payments that are 30 days or more past due -- rose to 2.15% in the first quarter of this year, up sharply from 1.92% in the final quarter of 2006, the American Bankers Association (ABA) reported July 3. On a brighter note, the ABA also reported that late payments on credit card bills dropped to 4.41% in the first quarter, down from 4.56% in the fourth quarter of 2006, the best showing in nearly a year.

The average rate for a 30-year, fixed-rate mortgage fell to a one-month low, Freddie Mac said July 5. Rates have ebbed in recent weeks as investors' fears concerning inflation have eased.
This week look for updates on the trade balance on July 12 and retail sales on July 13.

Economic Update for 5/21/2007

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The Consumer Price Index (CPI), which measures inflation at the retail level, rose 0.4% in April, compared with a 0.5% rise in March, the Commerce Department reported May 15. Economists had forecast a 0.6% increase. The more closely watched core CPI, which strips out volatile food and energy prices, rose 0.2%, after a 0.1% gain in March. While core CPI edged up in April, the 12-month core CPI average declined to a 2.3% rise, the lowest rate since April 2006.

Industrial production jumped a bigger-than-expected 0.7% in April, the Federal Reserve said May 16. Analysts expected production to rise only 0.3%. April's rise, paced by gains in auto and high-tech manufacturing, was only the third increase in the last eight months.

The Conference Board's Index of Leading Indicators -- a key gauge of future economic growth -- slipped 0.5% in April, greater than the 0.1% decline analysts had predicted. Of the 10 indicators, only stock prices and the money supply (the total amount of currency and checkable deposits in circulation, which influences interest rates) moved in a positive direction.

Housing starts unexpectedly rose 2.5% in April, confounding analysts who had forecast a 2.2% drop, the Commerce Department reported May 16. But applications for building permits plunged 8.9% in April, the sharpest fall in 17 years.

Americans filed 5,000 fewer jobless claims for the week ended May 12, the Labor Department said May 17. Economists expected a slight rise. Meanwhile, mortgage rates for the week ended May 16 nudged up on lingering Federal Reserve concerns about inflation.

This week look for updates on new home sales on May 24 and existing home sales on May 25.

Economic Report for 5/7/2007

Employers added a net gain of 88,000 jobs to their payrolls in April, down from the 177,000 net increase in March and below Wall Street's forecast of a 100,000 net gain, the Labor Department reported May 4. April's job growth was the weakest since November 2004, when there was a gain of only 65,000 jobs. The unemployment rate edged up to 4.5% in April from the 4.4% reading in March.

U.S. business productivity -- a measure of how much any given worker can produce in an hour -- grew a greater-than-expected 1.7% in the first quarter of 2007. Economists expected a rise of only 1%. Meanwhile, unit labor costs grew 0.6% in the first quarter of 2007, well below the 4% rise analysts predicted.

The Institute of Supply Management (ISM) reported May 3 that its April index of manufacturing activity moved to 54.7, from 50.9 in March. Readings above 50 point to expansion in the economy. Forecasters expected the April index to hit 51.

The ISM also said its non-manufacturing index rose to 56 in April from 52.4 in March, beating Wall Street expectations for a reading of 53. The service sector represents about 80% of U.S. economic activity.

The National Association of Realtors' Pending Home Sales Index fell 4.9% in March, following a 1.1% increase in February, the trade group reported May 1. Economists had predicted a 0.4% rise in the index.

Mortgage rates for the week ended May 4 remained unchanged on signs of weakening consumer spending and cooling inflation, Freddie Mac said.

This week look for updates on the Producer Price Index and retail sales on May 11.