Banks and the Economy

Housing Starts Fell Sharply in April

noreply@blogger.com (Banks and the Economy 2) — Thu, 16 May 2013 17:18:00 +0000

New homebuilding slowed notably in April, with the pace falling 16.5% from the previous month. The pace of new construction fell to 853,000 annual units, from over one million in March. Housing starts are now at their slowest pace since November of last year. Despite the deterioration, we have seen significant improvement in the past year.

April’s decline was driven primarily by multi-family construction, which fell 38.9% from the previous month. Single-family construction also slowed over the month, albeit by a much more modest 2.1%. Multi-family construction tends to be volatile, but has accounted for a large portion of the improvement over the past year.

Housing permits rose sharply in April, giving hope for a rebound in construction in March. Permit issuance rose 14.3%, driven primarily by multi-family permits, which rose 37.5%.

Read the Census report.

Consumer Prices Fell 0.4% in April

noreply@blogger.com (Banks and the Economy 2) — Thu, 16 May 2013 17:02:00 +0000

The consumer price index declined 0.4% in April due primarily to falling gasoline prices. Core prices rose at a weak 0.1% in April, matching the previous month’s pace. Consumer prices are now just 1.1% above year-ago levels, the weakest level since late 2010.

The energy index was entirely responsible for April’s decline, plunging 4.3% over the month. This decline is even sharper than the strong 2.6% decline seen the previous month. Seasonally adjusted gasoline prices dropped 8.1% over the month, more than offsetting modest increases in electricity and natural gas prices.

Core price appreciation remained weak, with prices rising just 0.1% for the second consecutive month. This is considerably slower than the 0.3% monthly increases seen at the beginning of the year. Prices for goods failed to appreciate in April, while prices on services rose just 0.1%.

Read the BLS report.

Homebuilder Sentiment Improved in May

noreply@blogger.com (Banks and the Economy 2) — Wed, 15 May 2013 14:24:00 +0000

According to the NAHB, homebuilder sentiment improved in May as the index rose to 44 and reversed a three month negative trend. The details of the report were good as well, with all three components of the report showing improvement from the previous month, particularly optimism in the next 6 months.

Out of the four housing market regions in the U.S., only the west declined from April. The Midwest showed the most improvement and grew to an index of 45.

Low interest rates continue to help the housing market.

Read the NAHB release.

Producer Prices Fell in April

noreply@blogger.com (Banks and the Economy 2) — Wed, 15 May 2013 14:04:00 +0000

Producer prices fell 0.7% in April. Aside from gains in January and February, prices have fallen since October. The decline was broad based, led by a 2.5% decline in finished energy goods. Producer prices are now 0.7% above year ago levels, the slowest reading in 9 months.

Core prices for finished goods grew at 0.1%, down from 0.2% the previous month. Food prices dropped 0.8%, reversing a positive reading last month.

The prices of crude goods fell 2.8% from the previous month and is 5.9% below year ago levels. Crude prices continue their declining trend.

Read the BLS release.

Small Business Optimism Rose in April

noreply@blogger.com (Banks and the Economy 2) — Tue, 14 May 2013 13:21:00 +0000

The NFIB’s Small Business Optimism Index rose 2.6 points in April, reaching 92.1. The index is still weak, only 1.4 points above the recovery average of 90.7 and well below the long run average of 98.1.

Financing continues to be the least citied challenge facing small business, with only 2% of respondents reporting it as their single most important problem, a 1% drop from the previous month. Taxes and government requirements remained unchanged as the first and second most often cited problems for small businesses at 23% and 21% respectively.

Competition from large business and quality of labor increased, while inflation and cost of labor decreased from March. Despite the increase in the index, small businesses continue to remain pessimistic about the economy and on net a negative 15% expected business conditions to improve in 6 months. The good news is that the figure is a 13% increase over March.

Read the NFIB report.

Retail Sales Increased 0.1% in April

noreply@blogger.com (Banks and the Economy 2) — Mon, 13 May 2013 13:39:00 +0000

Retail sales increased 0.1% in April, following a revised 0.5% decline the previous month. Retail sales continue their volatile trend, alternating between increasing and decreasing the past five months. Retail sales are now 3.7% above year ago levels, an improvement from March, but still well below year-ago growth seen in other previous months.

Excluding autos and gas, sales were up 0.6% from the previous month and 3.9% from year ago levels.

Gasoline continued to drag on retail sales, as gasoline stations saw a 4.7% drop in sales from March. Along with food and beverages, they were the only two categories with negative sale growth from the previous month. Building materials showed the strongest gains in April, increasing 1.5%.

Read the Census release.

Consumer Credit Growth Slowed in March

noreply@blogger.com (Banks and the Economy 2) — Tue, 07 May 2013 20:34:00 +0000

Consumer credit increased $8.0 billion in March, less then half of the $18.1 billion gain seen in February. Non-revolving credit continued to drive the gains in consumer credit, as revolving credit decreased. Growth slowed to 3.4%, after sharp increases the previous month.

Revolving credit shrank for the first time this year, dropping $1.7 billion, which was 2.4% decline from the previous month. Revolving credit continues the volatile trend seen in 2012. In the past year, revolving credit has grown by just $4.0 billion.

Non-revolving credit grew 6.5%, gaining $9.7 billion. Non-revolving credit, consisting primarily of auto and student loans, has been the primary driver of credit growth over the past two years, and has gained $154.6 billion in the past year. Student loans continue to account for the majority of this growth accounting for 80% of March’s increase on a non-seasonally adjusted basis.

The consumer credit report from January echoes the same trends witnessed in the last two years. Non-revolving consumer credit continues to swell while there is minimal revolving consumer credit change.

Read the Federal Reserve release.

April’s Federal Reserve Survey Reports Stronger Loan Demand

noreply@blogger.com (Banks and the Economy 2) — Mon, 06 May 2013 21:18:00 +0000

According to April’s Senior Loan Officer Opinion Survey on Bank Lending Practices conducted by the Federal Reserve, domestic banks, on balance, reported having eased their lending standards and having experienced stronger demand in several loan categories over the past three months.

Tightening standards for prime mortgage loans decreased 7.8% and demand for the prime loans increased 39.1%. The subprime mortgage market still reported tightening. Both large and medium, as well as small firms said the C&I loan market tightening decrease by 19.1% and 23.1% respectively. Moreover, loan demand increased for both categories. Banks that eased their C&I lending policies generally cited increased competition for such loans as an important reason for having done so.

The survey is based on responses from 68 domestic banks and 21 U.S. branches and agencies of foreign banks.

Read the Federal Reserve release.

James Chessen Discusses the Fed on Fox Business News

noreply@blogger.com (Banks and the Economy 2) — Fri, 03 May 2013 19:24:00 +0000

ABA's Chief Economist James Chessen spoke with Fox Business News today, where he discussed the wealth effect and broke down how quantitative easing relates to the market rally.

"Because [the Fed] has pushed the price of treasury’s up and interest rates down, it means that those are not good investments, so investors… look for other, better alternatives. That means riskier alternatives, and that often means stocks.”

Watch the video.

Service Industry Expansion Cooled in April

noreply@blogger.com (Banks and the Economy 2) — Fri, 03 May 2013 15:24:00 +0000

The service sector growth slowed in April, after cooling in March as well. The ISM non-manufacturing index fell to 53.1 in April from 54.4 the previous month. Despite the decline, services continue to outperform the manufacturing sector, which declined to 50.7 in April. Any reading over 50 indicates industry expansion.

The details of March’s report deteriorated across the board except for inventories and exports. The employment index dropped 1.3 points to 52.0. Overall business activity edged lower to 55.0 index points, losing 1.5 points from the previous month.

Despite the overall decline in March, the indexes remained above the neutral threshold of 50, signaling an expansion, albeit at a slower rate then the previous month.

Read the ISM release.

U.S. Economy added 165,000 jobs in April and Unemployment Fell to 7.5%

noreply@blogger.com (Banks and the Economy 2) — Fri, 03 May 2013 14:20:00 +0000

The U.S. economy added 165K jobs in April, with strong upward revisions to past reports as well. Moreover, the unemployment rate continued to fall due to real improvement in labor markets. March’s jobs growth was revised up from 88K jobs to 138K jobs. February’s numbers were revised up as well to 332K jobs. The cumulative revisions added 114,000 jobs over the previous two months. Overall April’s report is encouraging, and allays fears that job growth is slowing.

As seen in past months, April’s strong numbers resulted from positive growth in the private sector, particularly the services industry, which added 185K jobs in April. The private industry as a whole added 176K jobs in April, and saw positive revisions to the previous two months. The goods producing sector saw a 9K job loss, following 6 months of positive growth.

The government continues to drag on job growth, shedding 11K jobs in April. April’s value is still below the government’s 6-month average of 14K job losses per month. As the impacts of sequester take hold, the government employment loss is expected, and anticipated to continue through the remainder of this fiscal year.

The unemployment rate fell to 7.5%, the lowest level since 2008. The improvement in the unemployment was solely due to new job creation, as the labor force participation rate held constant at 63.3. The lower unemployment rate was a “real” improvement with 83K fewer people reported being unemployed in April.

Read the BLS report.

Trade Deficit Sharply Drops in March

noreply@blogger.com (Banks and the Economy 2) — Thu, 02 May 2013 13:23:00 +0000

The US foreign trade deficit dropped 11% in March to $38.8 billion. The decrease is the second in two months, following a revised decline of 2% in February. The trade gap is well below the 2012 high of $52.3 billion. The decrease in the deficit is primarily due to shrinking imports.

Imports declined by 2.5% in March, settling at $223.1 billion. Exports declined as well from a revised 186.0 to 184.3, a -0.9% change. The goods deficit was primarily responsible for March’s trade deficit, and helped contribute to the drop, decreasing from $60.8 billion to $56.1 billion. The services surplus also increased $0.2 billion to $17.3 billion, adding to the deficit reduction.

The real goods deficit, which is important to calculate GDP, narrowed to $44.4 billion from $47.8 billion.

Read the Census report.

Fed Maintains Policy Stance

noreply@blogger.com (Banks and the Economy 2) — Wed, 01 May 2013 19:59:00 +0000

The Federal Reserve will maintain its present level of bond buying at a pace of $85 billion per month following the Federal Open Market Committee’s April/May meeting. The Federal Reserve left its open-ended quantitative easing program (QE3) unchanged and left interest rates at near zero levels. The Fed did, however, note that it is prepared to vary purchases according to economic conditions.

“The committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes,” the Fed noted in its announcement. Chairman Bernanke has already eluded that the pace of bond buying may vary depending on the economy, however today’s statement is the first to state it explicitly.

The Fed’s statement suggested that the economy continues to recover at a “moderate pace,” with some improvement in labor and housing markets. They did note, however, that fiscal policy is restraining growth.

Read the full FOMC statement below.

May 1st Meeting	March 20th Meeting
Information received since the Federal Open Market Committee met in March suggests that economic activity has been expanding at a moderate pace. Labor market conditions have shown some improvement in recent months, on balance, but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy is restraining economic growth. Inflation has been running somewhat below the Committee's longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable.	Information received since the Federal Open Market Committee met in January suggests a return to moderate economic growth following a pause late last year. Labor market conditions have shown signs of improvement in recent months but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy has become somewhat more restrictive. Inflation has been running somewhat below the Committee's longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee continues to see downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective.	Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee continues to see downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective.
To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.	To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.
The Committee will closely monitor incoming information on economic and financial developments in coming months. The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes. In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objective.	The Committee will closely monitor incoming information on economic and financial developments in coming months. The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objective.
To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.	To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.

ISM Manufacturing Continues Declining Trend in April

noreply@blogger.com (Banks and the Economy 2) — Wed, 01 May 2013 15:17:00 +0000

The ISM manufacturing index fell to 50.7 in April, after sharply falling in March as well. While still above the expansionary threshold of 50, March’s reading is the lowest so far in 2013. Currently the index is at its lowest point since December.

Details of the report were mixed, with production and new orders rising. Production grew 1.3 to 53.5 and new orders increased to 52.3.

Not all of the details were positive however. Imports rose to 55.0 and new export orders shrank by 2.0, widening the trade gap. The employment index dropped 4.0 points, settling at 50.2, its lowest level since November.

Inventory growth continued to fall in April, leading the gap between inventories and new orders – a proxy for future production – to 5.8 index points.

Read the ISM release.

Construction Spending Dropped 1.7% in April

noreply@blogger.com (Banks and the Economy 2) — Wed, 01 May 2013 14:57:00 +0000

Construction spending decreased 1.7% in April, the second decline in three months. Despite the weakness construction spending is still 4.7% above year-ago levels. March's report was revised up, while February's was revised down to 1.5% and -4.0% respectively.

Each component of construction spending deteriorated in April. Total private construction declined 0.4%, due to a 1.5% decrease in non-residential construction. Only private residential construction grew in April, a mere 0.4% compared to 2.3% in March.

Public construction saw the largest decrease as it declined 4.1% from the previous month. The public construction sector will likely continue the downward trend, as the impacts of sequester begin to show.

Read the Census report.

ADP Employment Grew By 119,000 in April

noreply@blogger.com (Banks and the Economy 2) — Wed, 01 May 2013 12:53:00 +0000

ADP’s National Employment Report indicated that the private sector added 119k jobs in April. April’s increase was weaker than March's gain, which was revised down to 131k jobs. April's report is the slowest pace of expansion since September 2012. March's ADP report, indicating 131k jobs translated to 88k jobs created as reported by the BLS, so it is possible that this month's job creation will be even weaker than last.

Keeping with recent trends, the majority of job creation in April came from the service sector, which created 113k jobs.

The goods sector continued its positive trend, adding 6k jobs. Trade, transportation and utilities led the way in April's job growth, adding 29k jobs. After driving gains in March, the manufacturing sector was the only component to lose jobs in April, decreasing by 10k jobs. The goods sector has now seen employment gains for five consecutive months.

Read the ADP release.

Home Prices Continue Upward Trend in February

noreply@blogger.com (Banks and the Economy 2) — Tue, 30 Apr 2013 14:11:00 +0000

Existing home prices increased 0.3% in February according to the Case-Shiller 20-city index. Home prices improved 9.3% above year-ago levels, an improvement from January’s 8.1% gain. The country’s 10 largest cities improved 0.4% from January and are 8.3% above year ago levels.

For the second consecutive month, all metro regions included in the release reported home price appreciation from year-ago levels, a first in almost 5 years. Phoenix reported the highest change from year-ago levels, increasing 23.0%. New York was the lowest at 1.9%.

While the improvements in February’s report are positive, home prices still remain 29.0% below the peak in July of 2006.

Read Standard and Poor’s release.

Personal Income Rose 0.2% in March

noreply@blogger.com (Banks and the Economy 2) — Mon, 29 Apr 2013 16:53:00 +0000

Personal income increased 0.2% in March, matching the 0.2% rise in consumption. Income had been volatile due to distortions stemming from tax increases at the beginning of the year. Personal income improved 2.5% over year ago levels, and consumption grew 3.2% over year ago levels.

There was no one driving force for March’s personal income gains. Wage growth and disposable personal income both grew 0.2% from February. Consumption decreased slightly from 0.7% to 0.2%. The decline was driven by nondurable goods, which dropped 1.1% in March.

Consumer prices, as measured by the PCE deflator, fell -0.1% in March. Prices are 1% above year ago levels. March’s report is the lowest inflation levels since late 2009.

The savings rate remained constant at February’s revised 2.7%.

Read the BEA report.

Consumer Sentiment Declined in April

noreply@blogger.com (Banks and the Economy 2) — Fri, 26 Apr 2013 14:50:00 +0000

Consumer Sentiment dropped 2.2 points in April to 76.4, according to the University of Michigan’s Consumer Sentiment index. Consumer sentiment is extremely vulnerable the debate taking place in Washington, dropping almost 10 points during the fiscal cliff negotiations. The sequester may be partially responsible for April’s decline. April’s reading is the lowest since the fiscal cliff debate in late December and January.

The dip in consumer sentiment for April was due both to present and future expectations declining to 84.8 and 64.2 respectively.

Inflationary expectations were mixed in April, with one-year expectations dropping to 3.0% and five-year expectations remaining constant at 2.8%

U.S. Economy Grew 2.5% in 1st Quarter

noreply@blogger.com (Banks and the Economy 2) — Fri, 26 Apr 2013 14:29:00 +0000

Real GDP grew 2.5% in the first quarter of 2013, up from just 0.4% in the fourth quarter of 2012. The improvements in the first quarter were driven primarily by consumption as well as inventory accumulation.

Consumption drove first quarter GDP growth, rising 2.2%. Consumption was expected to decrease with the expiration of the payroll tax holiday at the beginning of the year. Inventories, recovered in the first quarter, rising 1.0% which declined heavily in the 4th quarter of 2012, likely due in part to Hurricane Sandy, increased in the 1st quarter by 1.0%, after declining in the 4th quarter 1.5%.

Government spending continues to drag on the economy, lowering growth by 0.8% in the first quarter. Although less than the 1.4% drag last quarter, spending cuts continue to present a strong headwind to the U.S. economy. Sequester began March 1st, and government drag is anticipated to increase in the coming quarters for 2013. Defense spending cuts alone slowed growth by 0.6%. Net exports decreased for the first time since 2011, slowing growth by 0.5%.

The BEA announced that starting in July 2013, it will release the initial results of the 14th comprehensive, or benchmark, revision of the national income and product accounts (NIPAs). GDP will increase roughly 3.0% as a result of the new computing measures which include new items such as research and development as well as royalties on intellectual property.

Read the BEA release.

New Home Sales Increased in March

noreply@blogger.com (Banks and the Economy 2) — Tue, 23 Apr 2013 15:03:00 +0000

New home sales increased slightly to an annual pace of 417,000 units in March, a 1.5% improvement from the previous month. New home sales have now improved 19% from year-ago levels, signaling a rebounding housing market.

The supply of new homes on the market remains extremely low at 4.4 months.

Improving sales and tight supplies are combining to push up house prices, which have risen 3.0% above year ago levels to $247,000.

Read the Census report.

Existing Home Sales Slowed in March

noreply@blogger.com (Banks and the Economy 2) — Mon, 22 Apr 2013 15:29:00 +0000

The pace of existing home sales slowed slightly in March, but are still stronger than most of 2012’s reports. Existing home sales slowed 0.6% to a pace of 4.92 million units annually. The previous month’s figure was also revised down to 4.95 million units.

March’s drop was driven by declining condo sales, which decreased 3.2% from February. However, condo sales are still 20% above year ago levels.

March’s disappointing jobs growth, along with weaker income and consumer confidence growth likely contributed to March’s softer existing home sales report. Moreover, lower inventory of existing homes for sale have also depressed existing home sales in March. Market supply is at 4.7.

Housing prices continue to strengthen, with the median price of existing homes sold increasing to $184,300 from a revised $173,200 in February. The current pace is 11.8% above year ago levels.

Read the NAR release.

Beige Book Reports Modest Growth

noreply@blogger.com (Banks and the Economy 2) — Wed, 17 Apr 2013 18:52:00 +0000

The Federal Reserve released its Beige Book today, which shows that the economy is recovering at a modest pace. All twelve districts reported economic activity improvement since the last report. The report noted increase in manufacturing, particularly industries tied to automobiles and residential construction.

Consumer spending grew modestly. Higher gasoline prices, expiration of the payroll tax cut, and winter weather likely suppressed retail gains.

Defense related sectors reported uncertainty and weakness as a result of sequestration.

Home prices rose in most districts, which positively impacted real estate sales, particularly residential. Loan demand rose slightly from the previous report, which may be due, in part, to the rebounding housing market.

Employment was unchanged or slightly improved, coming off of a disappointing jobs report in March. Reports of hiring occurred most prevalently in manufacturing, residential construction, information technology, and professional services sectors.

Read the report.

Industrial Production Rose 0.4% in March

noreply@blogger.com (Banks and the Economy 2) — Tue, 16 Apr 2013 14:59:00 +0000

Industrial production increased 0.4% in March due primarily to a surge in utilities. Unseasonably cold weather led utilities production to surge 5.3% in March, buoying overall industrial production. Both manufacturing and mining output fell over the month.

Manufacturing production fell 0.1% in March on lower durable good spending. Auto production was, however, a bright spot in manufacturing, rising 2.9%. Overall, manufacturing saw decent gains in the first quarter, rising 5.3% at an annualized pace.

The capacity utilization rate rose to 78.5 in March, a high for the current recovery.

Read the Federal Reserve report.

Consumer Prices Fell 0.2% in March

noreply@blogger.com (Banks and the Economy 2) — Tue, 16 Apr 2013 14:45:00 +0000

Consumer prices fell 0.2% in March, reversing a strong reading from the previous month according to the consumer price index. March’s decline in consumer prices was driven entirely by retreating energy prices. Price appreciation of core goods continued, albeit at a slower pace than the previous month. Consumer prices are now 1.5% above year-ago levels, lower than the 2.0% reported last month.

The energy index declined 2.6% over the month, following a strong 5.4% rise in February. This fall was mostly due to gasoline prices, which fell 4.4 percent in March. Food prices were unchanged in March and remain 1.5% above year-ago levels.

Prices for core goods rose 0.1% over the month, slower than the pace seen in the past two months. The appreciation in core goods was entirely due to services, which rose 0.2%. Goods prices fell 0.1% in March. Core prices are now 1.9% higher than year-ago levels.

Read the BLS release.