Weekly Economic Update

So much economic data was packed into the previous week, last week appeared quite light by comparison.

(+) The Federal Reserve’s Senior Loan Officer Opinion Survey, which polls 68 U.S. banks and 21 domestic branches of foreign banks, has tended to be a good predictor of upcoming business investment.  Over the months between the last survey in January through the current period ending in April, it appears commercial/industrial lending standards have eased (the component of loan ‘supply’) and that a modest increase in demand for loans has taken place across the board as well.

In fact, it demonstrates that the net percentage of banks easing lending terms to mid/large-sized firms has reached its highest level since the third quarter of 2011.  Terms for smaller firms also improved on the magnitude of ~15% fewer loan officers reporting tighter standards (the lowest level since the 2nd quarter of 2005); this segment has experienced a more difficult environment over the last several years compared to the environment for larger companies.  Loan standards and demand for commercial real estate has also dramatically improved over the quarter and year, as did conditions for prime residential mortgages (however, ‘non-traditional’ and sub-prime remained unchanged) and FICO scores continue to be an important factor post-crisis (at least relative to pre-crisis).  In other consumer loan activity, such as installment loans and credit cards, conditions looked to have eased a bit as well although standards here are also at a higher level than they once were.  Another mixed positive is that consumer demand for revolving credit hasn’t moved up dramatically.

(+) Elsewhere, on the other side of the lending equation, seasonally-adjusted MBA mortgage delinquencies for the first quarter of 2013 rose 0.16% to 7.25%, but remain below that of a year ago by a similar 0.15% (delinquencies include loans that are at least one payment past due but are not in the process of foreclosure).  ‘Serious’ delinquencies (those which are 90 days+ past due and/or have begun the foreclosure process) came in at 6.39%, about a percent lower than this same time last year.  (For those curious, the delinquency rate on sub-prime fixed loans rose about a percentage point to over 20%.)  Actual total loans in the foreclosure process came in at 3.55% for the quarter, 0.84% better than last year and the lowest level since 2008.  This may not be surprising, but affirms solidifying/improving conditions in residential real estate.

(0) Wholesale inventories rose +0.4% for March, which was a tick above the forecasted +0.3%.  Durable goods inventories rose by a half-percent while those for non-durable goods barely moved upward.

(+) Initial jobless claims for the May 4 week declined to 323k, a better result than the forecasted figure of 335k and represented the lowest reading since Nov. 2007 (a month before the recession began officially).  The four-week moving average declined from 343k to 337k.  These continue to improve; it’s not obvious week-to-week, but more apparent on a chart.  Continuing claims for the April 27 week came in at 3,005k, which was lower than the 3,018k expected.

(0) In other jobs data, the government JOLTS reports for March showed a larger than expected number of job openings, at 3,844k (versus a forecasted level of 3,770k), but was still down from February’s level.  The hiring rate continues to be low in the post-recession period and was unchanged on the month at 3.3%.  The quit rate declined by a tenth of a percentage point (to 1.6%), which is a slight negative due to the signaling factors embedded in larger numbers of workers leaving their jobs voluntarily, while the involuntary firing rate rose just a tenth.  All-in-all, the results were largely in line with last month’s official employment as well as other labor data.


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