The Conference Board LEI for the U.S. improved again in February, driven mostly by positive contributions from the financial components and building permits. In the six-month period ending February 2015, the leading economic index increased 2.4 percent (about a 5.0 percent annual rate), slower than the growth of 3.7 percent (about a 7.5 percent annual rate) during the previous six months. In addition, the strengths among the leading indicators have remained widespread.
Manufacturing activity in the region increased at a modest pace in March, according to firms responding to this month’s Manufacturing Business Outlook Survey. The survey’s current indicators for general activity and new orders were positive and remained near their low readings in February. Firms reported overall declines in shipments and in work hours, while overall employment increased only slightly. Firms reported more widespread price reductions in March, although most firms continued to report steady prices.
Components were generally quite weak:
5 Things Lennar’s Results Tell Us About the New-Home Market Lennar Corp.’s quarterly results on Thursday depict a new-home market shifting into a higher gear so far this year, perhaps finally shaking off last year’s doldrums.
(…) “An early read from this spring selling season suggests that the market is continuing to improve at a very steady pace,” Lennar Chief Executive Stuart Miller said Thursday. Less restrained was RBC Capital Markets analyst Robert Wetenhall Jr. “This is the start of the best spring selling season of the past five years,” he said. (…)
Lennar’s increase in its average closing price slowed to a 3.2% year-over-year gain in its first quarter from a 17.5% gain in the previous year. Overall, that might mean buyers are fed up with big price hikes. It likely also signals that builders are constructing a greater number of less-expensive homes. (…)
In its fiscal first quarter, Lennar provided an average of $21,800 per home in freebies, which amounts to 6.3% of home-sales revenue. That’s about the same as the $21,300, or 6.3%, that it provided in incentives a year earlier. And it’s well less than Lennar’s incentives in the more trying times of 2012. (…)
Lennar sold 520 homes in the Houston area in its first quarter, a 7% decline from a year earlier. Its average price there was flat from a year ago at $280,000. TRI Pointe Homes Inc. said this month that its sales in Houston in the first two months of this year are down 10% to 15% from a year earlier. (…)
Now Lennar is experimenting with building single-family homes for rent. (…)
These CalculatedRisk charts are not signalling “the best spring selling season” just yet:
(…) In 21 of the 50 biggest U.S. housing markets, the number of borrowers who owe more on their homes than the homes are worth increased during the fourth quarter, according to a report to be released Friday by Zillow Group Inc., a real-estate information company.
Nationwide, the picture got better, but only marginally so. About 16.9% of all mortgaged homes were underwater in the fourth quarter, down 0.1 percentage point from the third quarter. Zillow said the normal share of underwater borrowers is generally thought to be around 5%. (…)
The problem, Zillow said, is that while average home prices are rising, the low end of the market is seeing values fall. More than 27% of homes with values in the bottom third of their market were underwater in the fourth quarter. In Detroit and Atlanta, about half of such homes were underwater. (…)
Key macroeconomic indicators such as industrial production indicate that economic activity in China experienced a sharp slowdown in the months of January and February. However, CEBM’s proprietary Composite Economic Performance Index synthesizing total social financing (TSF, 36%), electricity generation (30%), railway freight (30%) and securities market transaction volume (4%) indicates that the deterioration in activity was not as bad as that reflected by popular macro indicators.
Among the four sub-indices of the composite index, only railway freight deteriorated significantly during the first two months of the year, most likely reflecting seasonal factors rather than a cyclical decline, while the other three sub-indices all trended up compared to the trough in mid 2014. In addition, as global commodities prices rebounded in February and the Lunar New Year is expected to continue to have a distortive effect on economic activity in March, we expect GDP to grow at around 7.1% in 1Q15 and remain stable at 7.0% in 2Q15.
Beijing Helps Yuan Climb Against Dollar China’s yuan scored its best week in over seven years, as Beijing steps in to the markets to drive the currency higher and kick out speculators betting on losses.
The yuan gained 0.9% against the U.S. dollar since Monday, with the currency touching a three-month high Friday before slipping back to end at 6.2062 per dollar. The central bank has been setting a morning reference rate higher most days while traders say Chinese state banks are also buying the currency to shore up its value.
The sudden gains have taken traders by surprise after four months of losses, serving as a reminder that Beijing still keeps a firm grip on the tightly-controlled currency and won’t allow heavy losses or one-way speculation. Capital has also been flowing out of China this year as the yuan weakens and worries linger that further currency losses could exacerbate that and destabilize the already fragile financial system. (…)
The surprise intervention is a reversal from last year when China’s central bank engineered an unexpected wave of yuan depreciation, forcing an unwinding of billions of dollars in highly leveraged bets on the currency’s appreciation. Back then, Beijing was also concerned that overseas cash was flooding its economy with excess funds and contributing to asset appreciation, such as in property prices. (…)
The yuan’s gains this week though signal China may not be eager to be part of a trend where central banks around the world are taking moves to weaken their currencies to help boost exports. Severe devaluation would hurt China’s goal of rebalancing the economy away from relying on exporters and more toward domestic consumption, while Beijing is also trying to have the yuan used more broadly abroad. (…)
Iran Talks Stall Over Ending of Sanctions As negotiators press toward an agreement constraining Tehran’s nuclear program by the March 31 deadline, Tehran wants U.N. sanctions lifted right away. The U.S. and Europeans say ‘no way.’
(…) The U.S. and its European allies are demanding the U.N.’s sanctions be suspended or terminated in a phased time-frame over years. (…)
The Iranians “say it’s a deal breaker. They don’t want it at all,” said a senior European diplomat involved in the Lausanne talks, referring to Iran’s position on the U.N. sanctions. “There’s no way that we would give up on that…. No way.”
The official said it would take much more than a year or two for U.N. sanctions to be lifted.
“If you’re talking about the IAEA certifying that the Iranian program is clean, I think it will take years by any measure,” the European official said. U.S. officials on Thursday voiced the same position. (…)
There is wide agreement that many of the unilateral sanctions the U.S. and European Union imposed on Iran could start to be suspended within months, if not weeks, of a deal being stuck.
This would boost Iran’s economy as the EU could resume purchasing oil from Iran and restrictions on Iranian banks could be lifted. Iran could also begin repatriating some of the over $100 billion in oil revenue frozen in overseas accounts. (…)
U.S. officials said the diplomacy could continue through the weekend in a bid to make the March 31 deadline. Others warned it may simply be impossible to meet the deadline.
“I don’t think we have made sufficient progress,” the European official said. “A lot of issues remain on the table.” (…)