Housing Starts are Still Weak.

MBA Mortgage Applications (week ended 2/12/2016)

 
– Purchase Index Week/Week -4.0%. Previous weeks were +0.2%, -7.0%, +5.0%, -2.0%, +18.0%,-15.0%, +4.0%, -3.0%, +0.04%, +8.0%, -1.0%, +12.0%, and +0.1%.

– Refinance Index Week/Week +16.0%. Previous weeks were +16.0%, +0.3%, +11.0%, +19.0%, +24.0%, -37.0%, +11.0%, +1.0%, +4.0%, -6.0%, -5.0%, +2.0%, and -2.0%.

– Composite Index Week/Week +8.2%. Previous weeks were +9.3%, -2.6%, +8.8%, +9.0%, +21.3%, -27.0%, +7.3%, -1.1%, +1.2%, -0.2%, -3.2%, and +6.2%.

Lower rates = more refinance applications.  Purchase applications are up 30% year-on-year.

 
Housing Starts (January 2016)

– Starts seasonally adjusted, annualized 1,099,000. Previous was 1,143,000
– Permits seasonally adjusted, annualized 1,202,000. Previous was 1,204,000.

One of the greatest factors contributing to the weakness of the recovery is housing.  The largest factor in causing the Great Recession was bad mortgage lending.  Government regulations have made it so that many people who can make payments cannot qualify for a mortgage due to tougher guidelines. Maybe they overcorrected and one result is a weak housing sector.  We should have 1,500,000 Housing Starts but have been below that since December 2006.

 
PPI-FD – Wholesale Inflation (January 2016)

– PPI-FD month/month  +0.1%. Previous was -0.2%
– PPI-FD year/year    -0.2%. Previous was -1.0%
– PPI-FD less food & energy month/month +0.4%. Previous was +0.2%
– PPI-FD less food & energy year/year  +0.6%. Previous was  +0.2%
– PPI-FD less food, energy & trade services month/month +0.2%. Previous was +0.2%
– PPI-FD less food, energy & trade services year/year  +0.8%. Previous was +0.3%

Analysis of inflation remains bifurcated into commodities and non-commodities.  No matter what one looks at inflation is still well contained.

Redbook  Chain Store Sales (week ended 2/13/2016)

– Chain Store Sales year/year  +0.7%. Previous was +0.6%.

 
Industrial Production (January 2016)

– Production month/month  +0.9%. Previous was -0.7%
– Manufacturing month/month +0.5%. Previous was -0.2%
– Capacity Utilization Rate 77.1. Previous was 76.4

The recovery in Industrial Production from a miserable December was driven largely by auto manufacturing which contributed more than half the gain.

 

 

Atlanta Federal Reserve Business Inflation Expectations (February 2016)

– Business Inflation Expectation year/year +1.8%. Previous was 1.8%.

The Atlanta Fed surveys businesses trying to estimate what inflation will be over the next 12 months.  This is an estimate of costs to businesses and should correlate with PPI.