Provided by: Federal Reserve
Official Release: Speech

Ben Bernanke offered strong words on the central bank's commitment to a strong US currency. The Fed Chairman said that the Dollar is important to monetary policy and its weakness has led to an "unwelcome" rise in US inflation and is acting to increase inflation expectations. The central bank is unlikely to lower rates further, and will probably not raise them until the housing sector shows some signs of life, as it has been the major drag on the economy.

The comments set off strong moves favoring the Dollar, especially in the EUR/USD and USD/CHF. 

From the Release: "In collaboration with our colleagues at the Treasury, we continue to carefully monitor developments in foreign exchange markets.  The challenges that our economy has faced over the past year or so have generated some downward pressures on the foreign exchange value of the dollar, which have contributed to the unwelcome rise in import prices and consumer price inflation.  We are attentive to the implications of changes in the value of the dollar for inflation and inflation expectations and will continue to formulate policy to guard against risks to both parts of our dual mandate, including the risk of an erosion in longer-term inflation expectations.  Over time, the Federal Reserve's commitment to both price stability and maximum sustainable employment and the underlying strengths of the U.S. economy--including flexible markets and robust innovation and productivity--will be key factors ensuring that the dollar remains a strong and stable currency."

Final Version for 1st Quarter
Provided by: Department of Labor

Labor Costs q/q: 3.3%, prel. 2.0%, pr. 2.8% (4th Q)

Q1 non-farm labor productivity was revised higher to a 2.6% increase from the previous quarter. Compared to Q1 2007, productivity improved 3.3%, the highest yearly gain sincce Q2 2004.

For May
Latest Release Provided by: Institute of Supply Management

The services sector in may expanded, and the ISM index increased higher than expected. The sector has rebounded since the first quarter, where the index was below 50 for 3 months. The report comes along a line of better than expected data lately and bodes well for the economy.

For Week Ending May 31st
Latest Release Provided by: The Department of Labor

4-Week Moving Average (May 31st): 368,500, pr. 372,250, 372K, 367K
Continuing Claims (May 24th): 3.093M, pr. 3.109M - r, 3.073M

Initial jobless claims surprised forecasts and fell 18K to 357K for the week ending May 31st. Its the lowest level of claims in more than a month, though it may be possible that the closing of offices for Memorial Day may  have a role in skewing the data. As we've seen in previous reports, the data suggests that firms are reluctant to hire new workers, but at the same time are not shedding their current payrolls at the same numbers as they did in previous downturns. The employment situation has gotten weaker overall, as non-farm payroll data has shown over the first quarter. This month employment change is expected to show a drop of 57K jobs in the government's release on Friday.

The 4-week moving average fell to 368,500 from 372,250 and even continuing claims saw a reduction to 3.093 million. This number has been steadily rising and in last week's report its 3.109 million was the highest in more than 4 years.    

Unemployment Rate: 5.5% pr. 5.0%, 5.1% (Mar), 4.8% (Feb)

The Non-Farm Payroll employment change was more or less expected. This is the 5th month in a row that the economy has shed jobs. The unemployment rate increased 0.5% to 5.5% partly due to an additional 577,000 persons to the civilian labor force nudging up the participation rate to 66.2%.

From the Release: In May, employment continued to fall in construction, manufacturing, retail trade, and temporary help services, while health care continued to add jobs. Average hourly earnings rose by 5 cents, or 0.3 percent, over the month.

The Dollar was pressured following the release against its main rivals as another month of job losses dampens expectations of an interest rate increase in the near term, which was a slight possibility as inflation remains a problem and Fed Chairman Bernanke signaled that the Fed was concerned with the value of the Dollar. Today's data, especially the large jump in the unemployment rate may lower expectations that the economy was rebounding more smoothly than first anticipated.

For April
Release from U.S. Census Bureau
Official Release: PDF

Inventories increased 1.3%, more than expected, and sales were up 1.4%. The inventory to sales ratio was at 1.09, meaning firms had enough goods on hand to last 1.09 months at the current sales pace, down from the prior month and a matching a record low reached in November. This means firms are positioning themselves to be able to sell their stockpiles without having excess inventory. The higher inventory number however means that wholesalers may place less order lowering the industrial production numbers in the near term.  

From the Release: "The U.S. Census Bureau announced today that April 2008 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $390.3 billion, up 1.4 percent (+/-0.5%) from the revised March level and were up 12.7 percent (+/-1.2%) from the April 2007 level.

Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $427.4 billion at the end of April, up 1.3 percent (+/-0.3%) from the revised March level and were up 8.1 percent (+/- 1.2%) from a year ago."

Seasonally adjusted annual rate for April
Provided by: National Association of Realtors
Official Release: Press Release
Official Release: PDF

Pending Home Sales y/y: -13.1%

The seasonal rebound in home sales seem to be preceding expectations, as the NAR showed a rush of home buyers. The NAR forecasted a flat spring followed by recovery in summer. The South and Western regions saw these gains, while the Northeast and Midwest regions continue to see decline. It doesn't seem plausible that these are all buyers for home ownership, so the increase probably has a large component of investors who find house prices to be at bargain rates.

Advance Retail sales for May
Latest Release Provided by: US Department of Commerce

Retail Sales ex. Autos: 1.2%, forecast 0.7%, pr. 1.0%

Data from the Commerce Department showed that consumers went on a spending spree in May that is comparable to the holiday season, as US shoppers used their tax rebates to shop at electronics and department stores. Gains came across the board even in the automotive sector, which has seen major downturns in sales this year. The positive retail sales figures and upwardly revised figures for April, worked to further strengthen the dollar, which begain rallying overnight.

For Week Ending June 7th
Latest Release Provided by: The Department of Labor

4-Week Moving Average (June 7th): 371.5K, pr. 368.5K
Continuing Claims (May 31st): 3.139M, pr. 3.093M

Initial jobless claims jumped 25,000 for the week ending June 7th, well above the consensus forecast. Labor department officials said the volatility may be a result of seasonal adjustment factors revolving around Memorial Day - which was on May 26th and falls on a different date every year. Today's result is a 10-week high, and more in line with more recent data. The labor market has been weakening and jobless claims should remain around this level. The total persons claiming unemployment benefits rose to 3.139 million, the highest since February of 2004.

The numbers do bear out one positive fact and that is firms are being hesitant about hiring new staff, but they are not slashing payrolls during this time of slower demand. Those losing their jobs are finding a looser labor market, with more new entrants, which has pushed the unemployment rate to 5.5% in the US. In a separate release, retail sales were boosted by shopping as a result of stimulus checks. 

For April (s.a.)
Provided by: US Department of Commerce

US Business Inventories y/y: 5.4%, pr. 5.2%

Business stockpiles grew, with main contributions from non-automotive industries. From the release:

Sales. The U.S. Census Bureau announced today that the combined value of distributive trade sales and manufacturers’ shipments for April, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,177.7 billion, up 1.4 percent (±0.2%) from March 2008 and up 6.8 percent (±0.5%) from April 2007.

Inventories. Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,474.8 billion, up 0.5 percent (±0.1%) from March 2008 and up 5.4 percent (±0.4%) from April 2007.

Inventories/Sales Ratio. The total business inventories/sales ratio based on seasonally adjusted data at the end of April was 1.25. The April 2007 ratio was 1.27.

For June
Provided by: Federal Reserve Bank of New York

June Empire State Manufacturing Survey fell 5 points to -8.7, worse than economists had expected. Inflation is surging but a notable increase in prices received means manufacturers were able to pass on higher prices to customers. It also indicates that there was enough demand for firms to charge at higher prices. From the release:

The general business conditions index fell 5 points, to -8.7. The indexes for new orders, shipments, and unfilled orders were negative and lower than their May levels. The prices paid index remained elevated, falling only slightly below last month’s record high. The prices received index rose markedly and, at 26.7, approached a record level; the future prices received index also rose sharply, reaching a record high of 47.7. Employment indexes hovered around zero. Future indexes generally improved only slightly from the relatively low levels of the past several months, although the capital expenditures index rose several points.

The US housing downturn continues, and the decline in the NAHB HMI index to its record low, which was reached last December. There is still a large housing stockpile to run through before new construction can pick up. House prices have shown some signs of bottoming, but purchases of homes are limited by tight credit conditions.

Builder confidence in the market for newly built single-family homes edged down in June, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The index slipped to 18 this month, returning to the record low that was posted in December of 2007 (the series began in January of 1985).

Building Permits m/m: -1.3%, pr. 4.9% (Apr), -5.8% (Mar)

See "Housing Starts" comment above.

For May

See "Producer Price Index" 

For May 

See "Industrial Production"

New Orders: -12.4, pr. -3.7 (May), Apr. -18.8 (Apr)
Shipments: -6.7, pr. 2.2 (May), -8.0 (Apr)
Prices Paid: 69.3, pr. 53.8 (May), 51.6 (Apr)
Prices Received: 29.7, pr. 31.6 (May), 30.9 (Apr)
Employment: -6.9, pr. -1.0 (May), -11.1 (Apr)

From the Release: "The region’s manufacturing sector continued to contract this month, according to firms polled for the June Business Outlook Survey. Indexes for general activity, new orders, shipments, and employment were all negative this month and registered lower readings than in May. There was an appreciable increase in the share of manufacturers reporting price pressures this month, and about one-third of the firms continued to report higher prices for their own products. The region’s manufacturing executives remained optimistic about future activity, but most future indicators fell back from their May readings."

Yearly Change from April for 20-City Composite
Provided by: Standard & Poor's
March's Release: PDF

10-City Composite y/y: -16.3%, pr. -15.3% (Mar), -13.6% (Feb)

Housing prices in 20 metropolitan regions fell 15.3% in April compared to the same time last year, though the change was slightly less than the forecast -16%. The 10-city composite fell 16.3% compared to a year ago. Both composites posted record annual falls (year-over-year records go back to 2001). All cities were negative though some like Chicago, Cleveland, and Denver showed some improvement, while prices in Las Vegas and Miami were down around 27% respectively. The index has fallen every month since January 2007. 

There is excess supply as mortgage defaults and foreclosures put more properties on the market, while the pool of potential buyers shrinks as banks tighten up their lending standards.

For April
Provided by: Office of Federal Housing Enterprise Oversight (OFHEO)
Official Source: PDF

HPI y/y: -4.6%, pr. -3.1%

From the Release: "U.S. home prices fell 0.8 percent on a seasonally-adjusted basis from March to April, according to OFHEO’s monthly House Price Index. For the 12 months ending in April, U.S. prices fell 4.6 percent. As April 2007 was the peak of the monthly HPI, 4.6 percent is also the total fall from the peak.

For the nine Census Divisions, seasonally-adjusted monthly price changes from March to April ranged from -2.0 percent in the Pacific Census Division (which includes Alaska, Hawaii, Washington, Oregon and California) to 0.9 percent in the East South Central Division (which includes Kentucky, Tennessee, Mississippi and Alabama).

“Due to the broader geographic reach and narrower range of financing types than other house price indexes, the HPI’s fall has been comparatively muted,” said OFHEO Director James B. Lockhart. “However, on a 12-month basis, there have been large geographic differences, from -15.0 percent in the Pacific to small increases in the West South Central (1.9 percent) and East South Central (0.1 percent). House prices on a nationwide basis have retreated to their December 2005 levels.”

For May
Provided by the U.S. Census Bureau
Official Release (pdf)
 
ex-transportation: -0.9% pr. 1.9%(r)
ex-defense: -0.6%, -0.8%(r)

Orders for durable goods were flat in May after a downwardly revised 1.0% drop in April. Non-defense capital goods orders excluding aircrafts is a barometer of business investment dropped 0.8% after rising 3.1% in April. The good news is that capital spending still stands 3.4% higher than a year ago. Look ahead for future demand, unfilled orders dropped 1.1%. From the release:

New orders for manufactured durable goods in May increased slightly to $213.6 billion, the U.S. Census Bureau announced today. This was the first increase in three months and followed a 1.0 percent April decrease. Excluding transportation, new orders decreased 0.9 percent. Excluding defense, new orders decreased 0.6 percent.

So much for the resilience in demand. The FOMC will need to weigh in the continuing slowdown in its decision later today. The Fed knows that its oil and food prices that have been dampening mood, and they don't really have the tools to control these external factors. It's best to wait and allow the cooling economy to create extra capacity and in turn introduce some downside pressure to prices.

New Home Sales m/m: -2.5%, forecast -2.7%, pr. 3.3%

New home sales retreated for the 5th time in the last 6 months, falling 2.5% for the May period to an annual pace of 512K. Inventories of homes declined to an estimated 453,000 homes for sale at the end of May from April's 461,000 as earlier bloated inventories were depressing housing and construction. The median price for a new home decreased by 5.7% to $231,000 in May from $245,000 in May 2007. The average price rose by 0.5% to $311,000 from $309,700.

Potential home buyers are facing higher mortgage rates, and continue to wait for prices to decline, as there has not been a bottom yet in the US housing market.

The Federal Reserve
Official Release: Press Release

The FOMC held rates at 2% and offered little in the way of any surprises. The key details in the announcement had been tested in speeches and came in about as expected. The Fed seems less concerned now about the recent downturn the economy experienced, and shifting their focus to inflation. It will be some time before the Fed can increase interest rates as the economy is still sputtering with housing yet to find a bottom and other indicators pointing to weaker growth ahead. However to combat inflation, which will be a major theme the rest of the year, the next move the Fed will do will be a rate increase.

From the Release: "The Federal Open Market Committee decided today to keep its target for the federal funds rate at 2 percent.

Recent information indicates that overall economic activity continues to expand, partly reflecting some firming in household spending. However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and the rise in energy prices are likely to weigh on economic growth over the next few quarters.

The Committee expects inflation to moderate later this year and next year. However, in light of the continued increases in the prices of energy and some other commodities and the elevated state of some indicators of inflation expectations, uncertainty about the inflation outlook remains high.

The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time. Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability."