It’s been a busy week for data as federal agencies work their way back to a normal release schedule after the partial government shutdown.
As expected, the Federal Reserve’s Federal Open Market Committee voted to maintain its program of asset purchases at a rate of $45 billion in agency mortgage-backed securities and $40 billion in longer-term Treasury securities. The FOMC took a step back from some member’s public comments about the timing of the “taper” of asset purchases. According to the FOMC, “Asset purchases are not on a preset course…”. This statement provides maneuvering room both in terms of the beginning of the taper, and also in terms of its likely end date, in effect, neutralizing previous suggestions that the taper would begin this year and end by mid-year 2014. The near-zero fed funds rate is still linked to an unemployment rate threshold of 6.5 percent.
Industrial production for September increased by 0.6 percent. This was the biggest increase in IP since last February. However, the gain in the headline index came from utility output. Utility output increased by 4.4 percent in September, reversing five straight monthly dips. The ISM Manufacturing Index improved in October, ticking up to 56.4 percent, from September’s 56.2. Nine out of ten sub-indexes were in positive territory. Only customers’ inventories showed contraction. Anecdotal comments were generally positive.
The Pending Home Sales Index declined in September by 5.6 percent. This was the fourth consecutive decline for that index. The Case-Shiller 20-City Composite Index was up 12.8 percent in August from a year ago. 13 of the 20 metropolitan areas measured reported double digit growth from August of last year.
Retail sales decreased by 0.1 percent in September. However, Q3 sales were up 4.5 percent from a year earlier. September auto sales pulled the index down as unit sales relaxed to a 15.3 million unit rate.
The ADP Employment Report for October showed a modest gain of 130,000 private-sector jobs for October, the weakest monthly gain in that report since last April, and, ominously, the fourth consecutive monthly decline in private sector job creation. Initial claims for unemployment insurance fell by 10,000 to reach 340,000 for the week ending October 26.
Price pressure was weak in September. Producer prices for finished goods decreased 0.1 percent for the month, and were up only 0.3 percent from a year earlier. Core PPI (less food and energy) was up 0.1 percent in September. Consumer prices gained 0.2 percent in September and were up 1.2 percent over the previous year. The core CPI gained 0.1 percent for the month.
For a PDF version of the Comerica Economic Weekly, including forecast tables and the variables calendar, click here: CMAEconWeekly110113.