Consumer Prices Rise by Most Since 2013
Consumer prices increased 0.4 percent, the biggest gains since February 2013, following a 0.1 percent advance in March, a Labor Department report showed Tuesday in Washington. The so-called core measure, which strips out food and energy costs, rose 0.2 percent after a 0.1 percent gain the prior month. (…)
The CPI climbed 1.1 percent in the 12 months ended April after rising 0.9 percent in the previous period.
The increase in core prices matched the median estimate of economists surveyed. Projections ranged from no change to a gain of 0.3 percent. At a year-over-year rate, core prices rose 2.1 percent in April after climbing 2.2 percent the prior month. (…)
Empire State Factory Sector Activity Index Reverses Earlier Improvement
The Empire State Factory Index of General Business Conditions indicated deterioration in business activity during May. The New York index declined to -9.02 following unrevised positive readings in the prior two months. Nineteen percent of respondents reported a higher level of business activity while 28% reported a decrease. Expectations had been for 7.3 in the Action Economics Forecast Survey. The data are reported by the Federal Reserve Bank of New York and reflect business conditions in New York, northern New Jersey and southern Connecticut.
Based on these figures, Haver Analytics calculates a seasonally adjusted index that is comparable to the ISM series. The adjusted figure declined to 48.1 from 51.9, and also indicated that business activity deteriorated this month. Since inception in 2001, the business conditions index has had a 65% correlation with the change in real GDP.
Deterioration in the component series was broad-based. The new orders reading declined -5.54 following two months above break-even. Shipments also returned to negative territory, indicating that shipments levels fell, while delivery times shortened. The level of unfilled orders declined at the quickest pace in three months. Inventory decumulation continued at a fairly steady pace. Running counter to these indications was the employment figure which rose to 2.08. It was the highest level since July, and suggested positive job growth for a second straight month. During the last ten years there has been a 69% correlation between the index level and the m/m change in factory sector payrolls. The workweek index declined to the lowest level this year.
The prices paid index declined to 16.67, but remained near its highest level since early last year. It remained down, however, from the 2011 high of 69.89. Twenty two percent of respondents paid higher prices while 5% paid less. The index of prices received fell back into negative territory, where it has been for three months this year.
NAHB Index Unchanged, Pointing to Steady Housing Growth A gauge of home-builder sentiment was unchanged in May— coming in at 58 for the fourth straight month—in a sign of steady growth for the housing market.
Housing Starts in U.S. Rose in April, Extending See-Saw Pattern
Residential starts increased 6.6 percent to a 1.17 million annualized rate from 1.1 million in March, Commerce Department data showed Tuesday in Washington. The median forecast of 79 economists surveyed by Bloomberg projected an increase to a 1.13 million rate. Permits, a proxy for future construction, also climbed. The March figure was previously reported as a 1.09 million pace. (…)
Permits rose 3.6 percent to a 1.12 million annualized rate, indicating little scope for further gains in starts. They were projected to rise to 1.14 million. The March reading in applications was 1.08 million.
Construction of single-family houses climbed 3.3 percent to a 778,000 rate from 753,000 in March. (…)
U.S. Economic Slowdown Reflected in Freight Volumes
From CASS FREIGHT INDEX REPORT:
One Measure of U.S. Wage Growth Just Hit a New Post-Recession High
The median U.S. worker is enjoying their highest wage growth since 2009, according to the Federal Reserve Bank of Atlanta’s wage growth tracker.
This metric showed that the median employee saw pay rise 3.4 percent year-over-year as of April, setting a new record for this expansion. (…)
One key difference between the Atlanta Fed’s measure and the commonly-reported BLS metric is that the latter is plagued by composition effects, according to the analysts.
That is to say, the BLS print would show that average hourly earnings declined in the event that a baby boomer retired and was replaced by a millennial working for three-quarters of that pay. The Atlanta Fed, meanwhile, tracks how wage pressures for the same individuals evolve over time, thereby removing this cohort effect. (…)
American Farmers Face Oversupply of Cheese and Meat, Pushing Down Prices Growing stacks of cheddar and other cheeses—three pounds per person in America—are the tip of a surplus of U.S. agricultural products that is swamping markets for grains, meat and milk.
Grains trade sets record volumes Total value falls as production rise outruns growth in demand
Oil rallies near $50 on rising supply threat
Militant threats to production in Nigeria, a key Opec producer, are the latest fillip for an oil price that has also benefited from a booming gasoline market and rising demand in India. (…)
Anxiety over supply has also been fanned after Venezuelan president Nicolás Maduro on Friday announced plans to extend his government’s emergency powers — a reminder to investors of the deepening political instability in another oil producer.
Supply disruptions around the world are likely to average more than 3m barrels a day this month, with Nigerian output at its lowest level in decades. On Monday its oil minister said output had fallen by 800,000 barrels a day to 1.4m b/d. (…)
The spectre of diminished supply and strengthening demand was enough to prompt analysts at Goldman Sachs, arguably the most influential bank in commodity markets, to lift their forecast for WTI. It now thinks the US benchmark will average $45 per barrel during the second quarter, up from an earlier estimate of $35 in March. (…)
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Oil patch producers start shutdown as wildfires move north
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Crude oil imports are trending up for the first time in 6 years
U.S. dynamics remain supportive of higher oil prices. According to the most recent data released by the U.S. Energy Information Administration (EIA), gasoline demand in the U.S. rose to a new cyclical high in May while crude oil output dropped to a 2½-year low of 8.8 million barrels per day. As today’s Hot Charts show, this development has led to the first uptrend in U.S. oil imports in six years. Canada has benefitted from this situation by recently becoming the single-largest exporter of crude oil to the U.S., surpassing OPEC. We see more upside for Canadian exports. Though the recent fires in Alberta will reduce Canadian shipments, the impact will only be temporary as production facilities were spared. (NBF)
US companies step up share buybacks Market tumult spurs first-quarter moves by likes of Apple and GE
Based on preliminary data, share repurchases are 20 per cent higher in the first three months of the year versus the fourth quarter and 31 per cent above the year-ago period, according to S&P Dow Jones Indices. (…)
“They spent more on shares that cost less and the result was more companies reducing their share count than previously,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.
Almost 27 per cent of the companies in the index have already reduced their year-over-year share count by at least 4 per cent, increasing earnings per share by the same amount. (…) (Chart from BofAML via Zerohedge)
Retail sales—a traditional bright spot—grew by a less-than-expected 10.1% in April compared with a year earlier, slowing from March’s 10.5% year-over-year rise, the statistics bureau said. (…) 
