Comerica Economic Weekly

Financial markets had a calmer week this week, following the equity market swoon into mid-October. Equity prices trended higher and bond yields followed, though the yield on 10-Year Treasury bonds is still quite low at 2.24 percent as of Friday morning. The euro resumed losing value against the dollar in anticipation of the ongoing divergence of monetary policy between the Federal Reserve and the European Central Bank.

Inflation metrics are attracting attention lately as energy prices dip while the Federal Reserve contemplates interest rate lift-off. Crude oil prices were relatively stable through the week, but Friday morning is showing downside pressure with WTI at $80.54, matching the lows from June 2012.

Headline CPI was up by 0.1 percent in September. Declines in energy prices through September brought the energy sub-index of the CPI down by 0.7 percent for the month. Food prices were a counterbalance to falling energy prices in September. The food sub-index of the CPI was up by 0.3 percent for the month. Less food and energy, core-CPI was up by 0.1 percent in September, and was up 1.7 percent over the previous 12 months.

Even though inflation is a little weaker than expected due to lower energy prices, labor market metrics are tightening up. The U.S. unemployment rate is already below 6 percent, at 5.9 for September, and will fall further. Fifteen states are already at 5 percent unemployment or lower. Initial claims for unemployment insurance for the week ending October 18 increased by 17,000 to a still very low 283,000. Continuing claims for the week ending October 11 dropped by 38,000 to hit 2,351,000, the lowest since December 2000. Not only are companies hiring at a robust clip, they are generally not laying off.

Existing home sales for September increased by 2.4 percent to hit a 5.17 million unit annual rate, the best since September 2013. New home sales notched up by 0.2 percent, to hit a 467,000 unit annual rate in September, a post-recession high. The Federal Housing Finance Agency has announced plans that will allow Fannie Mae and Freddie Mac to relax underwriting standards, broadening the availability of mortgages. With job creation strong, consumer confidence rising and housing credit set to ease, conditions look positive for the housing sector at year end. Mortgage applications for refinance spiked in mid-October with the drop in interest rates. Purchase apps eased, but we expect them to improve as financial markets stabilize and economic metrics remain strong.

The Conference Board’s Leading Economic Index increased by a strong 0.8 percent in September. Both the Coincident Index and the Lagging Index also increased.

So heading into next week’s FOMC meeting central bankers have a lot to talk about. Falling energy prices complicate the Federal Reserve’s pivot away from extraordinary policy by keeping inflation lower than expected. However, economic conditions in the U.S. remain strong enough to justify the end of asset purchases. We believe that the Fed will announce, as planned, the end of QE at the upcoming October 28/29 FOMC meeting. We also continue to believe that interest rate lift-off will come around June of 2015.

 For a PDF version of the Comerica Economic Weekly, including forecast tables and the variables calendar, click here: CMAEconWeekly 10-24-14.

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September Consumer Prices, Existing Home Sales

Inflation Low as Oil Prices Fall, Home Sales Best in a Year

  • The September Consumer Price Index increased by 0.1 percent, boosted by food prices.
  • The September Core CPI also gained 0.1 percent, and was up 1.7 percent over the previous 12 months.
  • Existing Home Sales for September increased by 2.4 percent to a 5.17 million unit rate.

Inflation metrics are attracting attention lately as energy prices dip while the Federal Reserve contemplates interest rate lift-off. Headline CPI was up by 0.1 percent in September as energy prices continued to fall. The spot price for West Texas Intermediate crude oil has eased from a late June high of more than $107 per barrel, to a mid-October low of $81, a slide of nearly 25 percent. Over the last week, WTI has firmed to near $83 per barrel. Likewise, the national average price of a gallon of unleaded regular gasoline has dipped from $3.69 per gallon in late June to $3.15 per gallon in mid-October, giving up 15 percent. The rule of thumb is that every penny dip in gasoline prices puts an extra $1 billion in the hands of U.S. consumers over the course of a year. Some of those pennies will go to saving, some to paying down debt, but the bulk of it will go to purchasing more stuff, including more gasoline. Declines in energy prices through September brought the energy sub-index of the CPI down by 0.7 percent for the month. Further declines in gasoline prices through October will likely bring the energy sub-index down for the fourth consecutive month when the October CPI report comes out next month. Food prices were a counterbalance to falling energy prices in September. The food sub-index of the CPI was up by 0.3 percent for the month. Less food and energy, core-CPI was up by 0.1 percent in September, and was up 1.7 percent over the previous 12 months.

Falling energy prices complicate the Federal Reserve’s pivot away from extraordinary policy. We believe that the Fed will announce, as planned, the end of its asset purchase program at the upcoming October 28/29 FOMC meeting. There is a benefit to the Fed from being predictable and holding to its previously announced intentions. We also continue to believe that interest rate lift-off will come around June of 2015. Even though inflation is a little weaker than expected, due to lower energy prices, labor market metrics are tightening up. The U.S. unemployment rate is already below 6 percent, at 5.9 for September, and will fall further. Fifteen states are already at 5 percent unemployment or lower. The drop in energy prices, if durable, will also shift the regional balance of strength in the economy, marginally, toward energy consuming areas and away from energy producing areas. This will help labor market metrics in lagging regions.

Existing home sales for September increased by 2.4 percent to hit a 5.17 million unit annual rate, the best since September 2013. With job creation strong, consumer confidence rising and housing credit set to ease, conditions look positive for the housing sector at year end. The Federal Housing Finance Agency has announced plans that will allow Fannie Mae and Freddie Mac to relax underwriting standards, broadening the availability of mortgages.

Market Reaction: Equity markets are rebounding after their mid-October sell-off. Treasury yields are still low, but trending up. The 10-Year Treasury bond is yielding 2.24 percent. NYMEX crude oil is up to $83.26/barrel. Natural gas futures down to $3.85/mmbtu.

ALERT102214

For a PDF version of this Comerica Economic Alert click here: CPI Oct 22 14.

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Comerica Economic Weekly

October is often an “interesting” month for financial markets. No exception this year. At week’s end, global equity prices appear to have settled after a major slide. The yield on 10-year Treasury bonds dipped below 2.0 percent on Wednesday and Thursday. WTI oil prices appear to have temporarily stabilized at around $81/barrel.

The dollar weakened against the euro this week as the European Central Bank appears increasingly hamstrung in its efforts to provide monetary stimulus for the European economy. The dollar also continued to weaken against the yen, reversing most of the September gains.

Retail sales data for September came in softer than expected, with the headline number down by 0.3 percent. The miss on retail sales added to the downside momentum in U.S. equity markets. Some of the weakness in retail sales may be interpreted as a signal of soft overall consumer spending, but not all of it. We knew that retail sales of automobiles would decline as unit auto sales eased from the robust 17.5 million unit pace of August to a 16.4 million unit sales rate in September. Crude oil prices eased through September and gasoline prices fell, so retail sales at gasoline stations also fell.

Producer prices in September dipped as energy prices dropped. The PPI for final demand fell by 0.1 percent. With WTI crude oil now down to $81/barrel, we will see an even bigger drag from energy in the October PPI and CPI reports.

Business inventories gained 0.2 percent in August, providing a hint that inventories may be a drag on third quarter GDP.

Industrial production for September increased by 1.0 percent, boosted by mining and utilities. Manufacturing output increased by a respectable 0.5 percent even though vehicle assemblies eased for the month.

Initial claims for unemployment insurance fell again for the week ending October 11. The 23,000 claim drop to 264,000 put initial UI claims to their lowest level since April 15, 2000.

Economic, financial market and geopolitical events are muddying the waters for Federal Reserve policy. St. Louis Federal Reserve President James Bullard said Thursday that the Fed may delay ending its asset purchase program.

For a PDF version of the Comerica Economic Weekly, including forecast tables and the variables calendar, click here: CMAEconWeekly 10-17-14.

 

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September Retail Sales, Producer Prices, August Inventories

Soft Sales Data Adds Momentum to De-Risking, Stocks Sell-Off, Bond Yields Fall

  • September Retail Sales decreased by 0.3 percent, adding to de-risking momentum in financial markets.
  • Ex-auto Retail Sales decreased by 0.2 percent. Most categories were down. Gasoline prices dropped.
  • The September Producer Price Index for final demand decreased by 0.1 percent
  • The PPI for final demand less food and energy increased by 0.2 percent.
  • Business Inventories for August were up by 0.2 percent, following a 0.4 percent gain in July.

Retail sales data for September came in softer than expected, with the headline number down by 0.3 percent. The miss on retail sales added to the downside momentum in U.S. equity markets this morning. De-risking has driven the yield on 10-Year Treasury bonds to below 2.0 percent at press time. Some of the weakness in retail sales may be interpreted as a signal of soft overall consumer spending, but not all of it. We knew that retail sales of automobiles would decline in September as unit auto sales eased from the robust 17.5 million unit pace of August to a 16.4 million unit sales rate in September. The dollar value of retail sales of autos and parts declined by 0.8 percent in September. Crude oil prices eased through September and gasoline prices fell, so retail sales at gasoline stations also dropped by 0.8 percent. However, other categories were also weak. Furniture sales declined by 0.8 percent. Building materials sales were off by 1.1 percent. Clothing store sales were down by 1.2 percent. The bright spot in the report was electronics store sales, which gained 3.4 percent, perhaps aided by the new iPhone. But an iPhone boost is not seen in the non-store retailers category, which was down by 1.1 percent. All in all, bad timing for a soft report, but the sky is not falling.

Producer prices in September eased as energy prices fell. The PPI for final demand dipped by 0.1 percent. Energy prices were down by 0.7 percent in September, the third consecutive monthly drop. Food prices were also down in September by 0.7 percent. Food prices at the wholesale level are now down in four out of the last five months. The drought in California increased food prices last spring. However, a bumper corn harvest is having the opposite effect now. Less food and energy, the PPI for final demand goods was up by 0.2 percent in September. Lower energy prices are also spilling over into prices for services. The PPI for final demand services was down by 0.1 percent for the month. Transportation and warehousing services prices eased by 0.2 percent. WTI crude oil is now down to $81.75/barrel, well below the September average of $93.21, so we will see an even bigger drag from energy in the October PPI and CPI reports.

Business inventories gained 0.2 percent in August, providing a hint that inventories may be a drag on third quarter GDP. Real inventories increased by a strong $84.8 billion ($2009) in Q2. Trend inventory growth may be somewhere around $65 billion. The modest gain in the monthly inventory report for August is consistent with a net drag in inventories for the recently completed third quarter. The first estimate of Q3 real GDP growth is due out the morning of October 30.

Market Reaction: Equity markets sold off at the open. The 10-year Treasury yield is down to 1.96 percent. NYMEX crude oil is down to $81.75/barrel. Natural gas is down to $3.94/mmBTU.

Alert10152014

For a PDF version of this Comerica Economic Alert click here:Retail Sales 10-15-14.

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October 2014, Comerica U.S. Economic Update

Coupling, Decoupling, Reverberations and Over-Steer

Increased awareness of downside risk has shaken financial markets since mid-September. The S&P 500 Index has declined nearly 7 percent from its September 18 peak at 2011 to October 14 at 1882. Likewise, Treasury bond yields have dropped significantly. The yield on 10-Year Treasury bonds has declined over the same interval from 2.63 percent to 2.24 percent. A key factor elevating financial market uncertainty is the European economy. Real GDP growth in Germany appears to be stalling. France has stalled through the first half of 2014. Italy remains in recession. Moreover, the pathway for European growth is as uncertain as ever. Fiscal austerity policies are being challenged and government deficit limits are being ignored. At the same time, the European Central Bank’s monetary easing program is being attacked. Banking sector reforms have been slow and labor policies remain a perennial issue. Europe, yet again, appears to be in disarray, with no unifying voice. A weaker Europe has knock-on effects in China, with further ripples to Asia generally.

As Europe wobbles, crude oil prices are dropping. Global demand growth is weak, driven only by developing economies outside of the U.S. and Europe. Crude oil and natural gas supply is ample and growing rapidly, supported by shale reservoir development enabled by the trifecta of directional drilling, zone control, and hydraulic fracturing. Oil production is no different from any other industrial process in that high prices drive technological advancement, leading to oversupply, which drives down price until consolidation happens. The spot price for West Texas Intermediate crude oil has declined almost 21 percent from its June 25 high of $107/barrel to $85/barrel on October 14.

Lower energy prices are pulling inflation indicators down. This may make the ECB’s job a little easier, providing ammunition to those favoring more stimulus to avoid deflation. It makes the Federal Reserve’s job more complicated. The Fed is trying to unwind extraordinary policy as Europe stagnates and inflation indicators drop. A key concern for the Fed is the economic transmission mechanism from Europe to the U.S. The U.S. economy is growing based on internal drivers. In that sense it is decoupled from Europe. But financial markets transmit contagion very quickly.

Meanwhile, lower oil prices are a threat to growth in energy producing regions of the U.S., while consumers and transportation companies nationwide get a break on fuel prices. A stronger U.S. economy and desynchronization of global monetary policy is driving up the value of the dollar, adding to the headwinds for U.S. exporters. The reverberations from the Great Recession combined with the cyclical nature of the oil market raises the possibility of central bank over-steer. It is no wonder that financial markets are jittery as central banks grope through an uncertain economic landscape. Solid U.S. economic data will help in the near term.

For a PDF version of the complete Comerica U.S. Monthly with additional commentary, tables, and charts, click here: USEconomicUpdate1014.

 

 

 

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Comerica Economic Weekly

We had a light economic data calendar this week, but financial markets were very much in the news. Dominating the economic news was the release of the Federal Open Market Committee’s minutes from their meeting of September 16/17. In the minutes we see hints that within the FOMC there is a range of opinions about the condition of the economy, and about the appropriate stance of monetary policy.

An example of the divergence of opinions about the condition of the economy is found in the assessment of labor market conditions. The minutes read, “Most measures of labor compensation showed no broad-based increases in wage inflation. However, business in several Districts continued to report upward pressure on wages in specific industries and occupations….while a couple of participants noted a more general rise in current or planned wage increases in their regions.” Not terribly consistent.

The range in opinions about the stance of monetary policy is seen in the treatment of forward guidance. Several committee members expressed concern about forward guidance on interest rates, specifically about the phrase “considerable time.” However, that phrase was retained in the policy announcement issued on September 17.

Disharmony within the FOMC was echoed in financial markets this week. Equity prices fell as did Treasury bond yields. The yield on the 10-Year Treasury bond fell to 2.31 percent by Friday morning. Growing concern about the health of the European economy has contributed to de-risking here.

WTI crude oil finished Monday at about $90/barrel and slid through the week to $84.50 as of Friday morning. Lower energy prices will pull inflation metrics lower here, adding to the uncertainty within the FOMC about monetary policy.

Labor data this week was good. The August Job Openings and Labor Turnover Survey showed an uptick in the job openings rate in August and a continuation of the improving trend this year. Initial claims for unemployment insurance for the week ending October 4 fell by 1,000 to hit a very low 287,000. Continuing claims for the week ending September 27 dropped by 21,000 to hit 2,381,000, also a very low reading.

The dollar was relatively stable against the euro and the yen this week.

For a PDF version of the Comerica Economic Weekly, including forecast tables and the variables calendar, click here: CMAEconWeekly 10-10-14.

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Comerica Economic Weekly

We had plenty of data to digest this week, most of which was positive. Even though some metrics declined, the dips were generally from very strong levels and not indicative of an enduring downshift in economic activity.

Next week’s calendar is spare. Second tier labor data, including weekly jobless claims and the August JOLTS data will add some color to labor market analysis. The Federal Reserve minutes from September 16/17 may shed some light on what to expect in at the upcoming October 28/29 FOMC meeting.

Personal income for August increased by 0.3 percent, driven by a 0.4 percent gain in wages and salaries. Nominal consumer spending was up by 0.5 percent, reflecting strong auto sales. The PCE price index was unchanged in August, weighed down by falling energy prices. Inflation adjusted spending was up by a strong 0.5 percent. This is important because it puts Q3 consumer spending back on track to support moderate GDP growth, after a slight decline in real consumer spending in July.

The Conference Board’s Consumer Confidence Index dipped in August to 86.0, possibly responding to anxiety-provoking geopolitical events. We expect consumer confidence to continue to improve through the fall.

House prices were mixed in July, with most major markets showing small declines. According to the Case-Shiller data, national average house prices were up 0.2 percent in July, and were up 5.6 percent over the previous year. Recent easing in house prices in some markets is not a bad thing, realigning price gains with income growth.

The ISM Manufacturing Index for September eased to a still-positive 56.6. Eight out of 10 component indexes were positive for the month. Likewise, the ISM Non-manufacturing Index for September also eased to a still-strong 58.6.

U.S. light vehicle sales for September relaxed after the August blowout. The sales rate declined from a very strong 17.5 million unit sales rate in August to a merely good 16.4 million unit rate in September.

Construction spending for August dipped by 0.8 percent. These numbers are notorious for their revisions, so a one-month outlier is not cause for concern.

Initial claims for unemployment insurance fell by 8,000 for the week ending September 27, to hit 287,000, a very good number. Continuing claims fell by 45,000 for the week ending September 20, to reach 2,398,000, also a good number.

Payroll employment surprised on the upside in September, increasing by 248,000 jobs. Positive revisions to July and August were added good news. The U.S. unemployment rate dipped below 6 percent for the first time since July 2008, falling to 5.9 percent this September.

Trade data from August was good. The U.S. international trade gap narrowed to -$40.1 billion. Trade is on track to be positive for Q3 real GDP growth.

On the topic of trade, we continue to see strengthening of the U.S. dollar relative to many other currencies. Strong U.S. economic performance, relative to both Europe and Japan is adding to the push from monetary policy. The Bank of Japan remains engaged in very aggressive quantitative easing as the U.S. Federal Reserve ends its QE program here. The European Central Bank is also ramping up QE and other extraordinary policy to combat a softening economy, again, in contrast to the Federal Reserve. As a result, the dollar has been strengthening steadily against the euro since last May, and strengthening against the yen since late 2012. Thus, foreign exchange rates are a growing headwind for U.S. exports, and a tailwind for imports, working to widen the U.S. trade gap. Increasing energy exports have helped to counter that headwind.

On the topic of energy, crude oil prices are easing. WTI crude is now down to $89.56 per barrel, erasing the run-up we saw through the first half of this year, and easing overall inflation rates. The world is awash in hydrocarbons right now and demand in developing economies is not increasing. Natural gas prices are trending up slightly into winter, but still remain very low at $4.00/mmbtu.

For a PDF version of the Comerica Economic Weekly, including forecast tables and the variables calendar, click here: CMAEconWeekly 10-03-14.

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September U.S. Employment, ISM Non-MF, August International Trade

Solid Economic Data Supports Stabilizing Stock Market, Decoupling, Fedspeak

  • The September Payroll Employment Survey showed a gain of 248,000 jobs. July and August revised up.
  • The Unemployment Rate for September dropped to 5.9 percent.
  • The ISM Non-Manufacturing Index for September dipped to a still-strong 58.6.
  • The U.S. International Trade Gap narrowed slightly in August to -$40.1 billion, supportive of Q3 GDP.

The U.S. jobs machine revved up in September after a weaker-than-expected report last month. Today’s strong labor report will help bolster confidence in the U.S. economy. Confidence has been rattled lately by the previously reported weaker August jobs data, the slide in equity markets this week, and international events. The September employment data removes the concern about weak August numbers. It will likely bolster equity markets. It does not change the geopolitical situation, but it does reinforce the concept of decoupling. The U.S. economy can grow even as Europe struggles and China looks more tenuous. Payroll jobs increased by a net of 248,000 in September. July and August payrolls were revised up. August graduated from a soft 142,000 reported last month, to a revised 180,000 net new jobs. Including historical revisions, we now see 317,000 more jobs in the U.S. economy than we thought we had last month. The unemployment rate for September dropped to 5.9 percent, the first 5-handle on the unemployment rate since July 2008. Driving the unexpectedly large drop in the unemployment rate was the gain in the household employment survey of 217,000 jobs. But more significantly, we had a 97,000 worker decline in the labor force in September. So we can say that the drop in the unemployment rate for September was not for the best reason. It also raises the possibility of an unemployment rate increase next month, even with good payroll gains. Average hourly earnings, watched by the Fed for signs of labor market tightening, were little changed in September, and are up 2.0 percent over the last year. This is about even with inflation, but behind where we would expect given productivity gains. Today’s crop of data should support U.S. equity prices and also give the Federal Reserve a lot to think about. This was the last jobs report before the next FOMC meeting on October 28/29. We expect to see the end of QE announced at the upcoming FOMC meeting. Also, we could see a change to forward guidance, reflecting solid economic data and a clearer view about the eventual timing of interest rate liftoff. Construction industries added 16,000 jobs in September. Manufacturing was up a modest 4,000. Retail trade was strong, gaining 35,300 jobs after losing 4,000 in August (a strike-related swing). Information industries added 12,000 jobs, as did financial services. Professional/business services added a whopping 81,000 jobs in September. Education/healthcare was up 32,000. Leisure and hospitality gained 33,000 jobs. Government added 12,000.

The U.S. international trade gap narrowed slightly to -$40.1 billion in August. Imports gained $0.2 billion, while exports were up $0.4 billion for the month. Trade looks like it will be supportive of Q3 GDP. The ISM Non-Manufacturing Index for September dipped to a still-strong reading of 58.6 percent. Mining was one of five out of 17 industries reporting contraction for the month, possibly related to lower oil prices.

Market Reaction: U.S. equity markets opened with gains. The 10-Year T-bond yield is up to 2.47 percent. NYMEX crude is down to $90.91/barrel. Natural gas futures are down to $3.97/mmbtu.

Economic Alert 100314

For a PDF version of this Comerica Economic Alert click here: Employment 10-03-14.

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September ADP Employment, ISM-MF Index, August Construction Spending

Solid Q3 Data Keeps the Fed on Track for Policy Pivot

  • The September ADP Employment Report showed a solid gain of 213,000 private-sector jobs.
  • The ISM-Manufacturing Index for September fell to a still-positive 56.6, indicating improving conditions.
  • Total Construction Spending for August dipped by 0.8 percent after a strong July.

Job creation appears to be strengthening after weaker-than-expected August payroll data from the Bureau of Labor Statistics. For August, the BLS reported a net increase of 142,000 payroll jobs. Today’s report from payroll processor ADP showed an increase of 213,000 private-sector jobs for September. The unofficial ADP payroll numbers are a precursor to this Friday’s official BLS employment report for September. If we take the 213,000 private sector ADP count at face value, and add in a guess-timated 5,000 net addition of government workers, that puts us at a reasonable expectation of +218,000 payroll jobs for Friday morning’s official payroll count. We believe that this will not be enough to bring the September unemployment rate down from the 6.1 percent registered in August. Payroll job gains consistently in the neighborhood of 200,000 per month will allow the Federal Reserve to make good on its promise to end its active asset purchase program by the end of this year. We expect the FOMC to announce the end of QE at its upcoming October 28/29 meeting. With the end of active QE, the focus at the Fed will turn toward interest rate liftoff and winding down the reinvestment of maturing assets (passive QE). The likely next step in the Fed’s pivot will be to alter their forward guidance. Through September the FOMC has maintained its forward guidance saying that it intends to maintain the current near-zero target range for the fed funds rate “for a considerable time after the asset purchase program ends.” If the Fed does the expected, and announces the end of asset purchases at its upcoming meeting, it would then be appropriate to amend the “considerable time” phrase, taking the next step toward interest rate liftoff. We continue to look to the second quarter of 2015 as the most likely time for interest rate liftoff. Given recent economic data, June still looks like a good conservative guess for the month of liftoff. If the jobs data is strong over the fall and winter, we could move that up to April 2015.

The ISM Manufacturing Index fell from 59.0 in August to 56.6 in September. The September reading is still a good number, indicating improving manufacturing conditions. Anecdotal comments were positive. The September drop in the headline index was driven by a big drop in the new orders index, from a red-hot 66.7 in August, to a merely hot 60.0 in September. We already knew that commercial aircraft orders rebalanced in September after soaring in August. Most other components of the ISM headline index were strong. However, it is worth noting that the customers’ inventories sub-index dipped to 44.5, suggestive of a more moderate Q3 inventory component to GDP. Total construction spending dipped by 0.8 percent in August, after a strong 1.2 percent gain in July. Private residential, private non-residential, and public, all dipped in August.

Market Reaction:U.S. stock prices were down early. Long-term Treasury yields are down with the 10-Year T-bond rate at 2.42 percent. NYMEX crude oil is up to $92.61/barrel. Natural gas futures are up to $4.13.

Economic Alert 100114

For a PDF version of this Comerica Economic Alert click here: ADP 10-01-14.

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Comerica Bank’s Florida Index Advanced in July

Comerica Bank’s Florida Economic Activity Index improved in July, growing 2.5 percentage points to a level of 121.6. July’s index reading is 41 points, or 51 percent, above the index cyclical low of 80.4. The index averaged 114 in 2013, nine points above the average for all of 2012. June’s index reading was revised slightly down to 119.1.

“Our Florida Economic Activity Index increased in July, with five out of eight components gaining. A noticeable drop in unemployment insurance claims, combined with a nice increase in residential building permits lifted the overall index. However, one of the key supports for a strong economy, job growth, was sporadic this summer,” said Robert Dye, Chief Economist at Comerica Bank. “Payroll jobs declined in May and also in July. Fortunately, the August payroll numbers, which do not figure into our July index, were up again. Condo construction is warming up again in Florida even though there is still some inventory hangover from the previous down market.”

FL Index 0914

For a PDF version of the Florida Economic Activity Index click here: FloridaIndex_0914.

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