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Data Release: July Personal Income & Spending

by Sergio Mariaca on Aug 29, 2016 9:59:02 AM |Share:

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Data Release: Strong personal income and spending growth in July

  • Personal income rose a robust 0.4% in July, on par with survey expectations. Controlling for inflation and taxes, real disposable personal income was also up 0.4% (price growth was flat on the month).
  • Personal consumption rose by 0.3% in both nominal and real terms. By component, real spending on durable goods led the way, rising by 1.9%. Spending on services rose 0.2%, while spending on non-durable goods edged down 0.1%
  • Both income and spending were revised up in June, with personal income now registering 0.3% growth (from 0.2%), and personal spending up 0.5% (from 0.4% previously).
  • Headline inflation edged down to 0.8% year-on-year (from 0.9% in June), while the core index remained steady at 1.6%.
  • The personal saving rate drifted up to 5.7% (from 5.5% in June).

Key Implications

  • This is a great way to start the second half of the year. Combined with upward revisions to the previous month and robust income growth, personal consumption is on track for 3.3% growth (annualized) in the third quarter. This builds on the narrative of strong household spending leading economic activity higher.
  • The strength in income growth is really the story of this report, allowing households to add to savings while also increasing spending. With a sturdy savings buffer, spending should continue to rise in the months ahead.
  • For a data-dependent Federal Reserve, the strength in real income and spending growth should offset the weak inflation reading. As long as job growth holds up and wages continue to move higher, the Fed should have all the evidence it needs to move forward with a rate hike this calendar year.

 

James Marple, Senior EconomistTD-1.jpg

 


DISCLAIMER

This report is provided by TD Economics.  It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes.  The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice.  The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs.  The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete.  This report contains economic analysis and views, including about future economic and financial markets performance.  These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties.  The actual outcome may be materially different.  The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.

Data Release: July Housing Starts & Permits

by Sergio Mariaca on Aug 16, 2016 10:11:30 AM |Share:

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Data Release: Housing starts climb to a five-month high in July

  • Housing starts increased by 25k units in June to 1,211k (annualized), beating expectations for a modest pullback to 1,180k. However, revisions to the previous two months' of data subtracted modestly (10k) units from the overall tally.
  • Most of the increase was concentrated in the multifamily segment (+21k), but the pace of single family homebuilding also rose modestly on the month (+4k).
  • Building permits declined by 1k units to 1,152k (annualized), marking the first decline following three consecutive monthly increases. Permitting in the multifamily increased by 26k but this gain was more than offset by a pullback in single family permit applications (-27k).
  • Aside for the West (-18k), which retraced some of the gains in the prior two months, the monthly increase was broad-based, with the South (+21k), Northeast (+18k), and Midwest (+4k) all recording moderate to modest gains.

Key Implications

  • This morning's report is a healthy one with both starts and permitting activity holding near post-recession highs. Despite expectations for a modest pullback following June's very strong increase, construction activity continued to grind higher in July, corroborating our view that homebuilding in America is on a modestly upward trajectory, with the pace of housing starts well above both the 6-month (1,168k) and the 12-month (1,155k) moving averages.
  • Permitting activity was little changed on the month with the decline in single family permitting was the one fly in the ointment, given its decline to the lowest level since September 2015. Nonetheless, the near- to medium-term homebuilding outlook remains favorable and is supported by yesterday's rebound in the NAHB's housing market index, which rose back up to a seasonally adjusted level of 60 in July after a modest decline in the previous month.
  • Continued recovery in housing will be supported by historically low mortgage rates coupled with a firming labor market that has begun to spur on wage gains for workers. As such, we expect housing to remain a key support for the ongoing U.S. economic recovery which we view as resilient.

 

Neil Shankar, EconomistTD-1.jpg

 


DISCLAIMER

This report is provided by TD Economics.  It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes.  The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice.  The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs.  The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete.  This report contains economic analysis and views, including about future economic and financial markets performance.  These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties.  The actual outcome may be materially different.  The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.

U.S. Data Release: Existing Home Sales Shine

by Sergio Mariaca on Jul 22, 2016 9:54:37 AM |Share:

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Data Release: Existing home sales shine in June despite tight inventories

  • houses.jpgAfter rising for three consecutive months, existing home sales increased once again, up 1.1% m/m to 5.57 million (annualized) in June. The headline surprised on the upside, with markets expecting sales to decline to 5.48 million (from 5.51 million in May).  May's sales were revised down slightly, with revisions cutting 20 thousand transactions in that month.
  • The pickup in activity was broad-based. Sales of single-family homes advanced by 0.8% m/m to 4.92 million, while sales in the condo/co-op segment surged by 3.2% to 650 thousand.
  • Home prices growth accelerated on the month. Median prices advanced by 4.8% y/y, up from a 4.4% pace in May. Single-family homes led the way, with values increasing 5% year-over-year. Prices for condos and co-ops were 3.2% y/y higher than a year ago.  
  • First-time homebuyers accounted for 33% of transactions. This marked an improvement from the 30% share recorded in the previous month and a year ago, but still remains shy of historical levels.
  • Inventory of houses available for sale remained low. Inventory of for-sale homes declined by 0.9% m/m in June to 2.12 million properties – a level 5.8% lower than a year ago. Relative to the current pace of home sales, the inventory of available homes for sale also edged lower to 4.6 months' of sales, with both single-family and condo/co-op inventories equally tight.

Key Implications

  • Home sales defied expectations in June, increasing for the fourth consecutive month and reaching the highest level of the recovery despite continually tight inventory levels. After tallying up the monthly numbers, home sales averaged 5.50 million units in Q2 – up 3.8% from Q1 and 4.2% from a year ago levels.
  • An increase in the share of first-time homebuyers was the cherry-on-top as far as today's report is concerned. We hope to see further improvement in this indicator in the months ahead as traditional buyers become increasingly active in the market. Additionally, several major banks have recently announced mortgage programs focused on first-time and low- and moderate-income borrowers, offering low down payment requirements and other borrower-friendly features. These measures should help to ease some of the challenges faced by first-time buyers.
  • We expect housing activity to continue to improve this year, supported by gains in employment and wages, and ultra-low mortgage rates. The average rate on conventional 30-year mortgages is down 0.7 pp from a year ago level, and should shore up consumers' appetite for refinancing and new purchases. Refinancing activity has already surged by 27% on a 4-week moving average basis according to the MBA index. At the same time, purchases should continue to climb, but the improvement is likely to be far more gradual given the very low supply of houses available for sale.       

TD-1.jpgKsenia Bushmeneva, Economist

 

DISCLAIMER

This report is provided by TD Economics.  It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes.  The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice.  The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs.  The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete.  This report contains economic analysis and views, including about future economic and financial markets performance.  These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties.  The actual outcome may be materially different.  The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.

 

Data Release: Housing Starts Make a Comeback in February

by Sergio Mariaca on Mar 16, 2016 12:17:53 PM |Share:

economic growth data release TD Economics housing

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  • Housing starts increased by 58k units (annualized) in February to 1,178k, beating expectations for a more modest uptick to 1,150k. Revisions to the previous two months' of data added 37k units to the overall tally.
  • The lion's share of the increase was concentrated in the single-family segment (+55k), while the pace of multifamily construction rose only slightly on the month (+3k).
  • Building permits came in well-below expectations, declining by 37k units to 1,167k (annualized), though all of the pullback was due to the decline in the volatile multifamily sector (-40k), while single-family permits offset some of the decline (+3k).
  • Gains in the West (+64k), South (+41k), and Midwest (+30k), were offset somewhat by a pullback in the Northeast (-77k).

Key Implications

  • This morning's report was quite upbeat. February's rebound in construction confirms that homebuilding in America continues on a modestly positive course. The decline in permitting activity was somewhat expected with permits outpacing starts for several months now in the multifamily segment. Importantly, the singe family segment recorded modest gains.
  • Current building activity has been likely affected by the unusually warm winter which pulled building activity forward into previous months. As such, we may continue to see some near-term restraint in homebuilding.
  • Still, as these effects dissipate, we see a relatively bright future for the housing market. Any interest rate hikes will be very gradual at best – something that's likely confirmed at today's FOMC meeting. Moreover, global weakness will continue to pressure long-term yields lower. Alongside continued job and income gains, a nascent rebound household formation, and improving household balance sheets we expect households will be increasingly motivated to purchase new homes, supporting homebuilding in the coming quarters.

TD-1.jpgNeil Shankar, U.S. Regional Economist

 

DISCLAIMER

This report is provided by TD Economics.  It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes.  The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice.  The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs.  The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete.  This report contains economic analysis and views, including about future economic and financial markets performance.  These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties.  The actual outcome may be materially different.  The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.

 

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