a-record-plunge

Pending Sales of Existing U.S. Homes Increase 1% Following Record Decline

by on February 2, 2010

By Carlos Torres Feb. 2 (Bloomberg) — The number of contracts to buy previously owned U.S. homes was little changed in December after a record plunge, indicating a renewed tax credit will take time to revive sales. The index of purchase agreements, or pending home sales, rose 1 percent after a 16 percent drop in November that was the largest since records began in 2001, the National Association of Realtors announced in Washington. Compared with a year earlier, pending sales rose 11 percent. Demand jumped last year as first-time buyers rushed to qualify for an $8,000 government incentive due to expire Nov. 30. The subsequent renewal and expansion of the initiative may help underpin sales, cushioning the damage from mounting foreclosures and a possible increase in mortgage rates as Federal Reserve policy makers withdraw from the market. “We’ve had a lot of volatility because of the tax incentive,” said David Sloan , a senior economist at 4Cast Inc., a New York forecasting firm, who correctly projected the increase. “We’re in a moderately improving underlying trend. There is some pent-up demand for housing from very weak levels. Housing will be a source of support for the economy in the coming year. Things will slowly get better.” The gain in December matched the median forecast of 35 economists in a Bloomberg News survey. Estimates ranged from a drop of 3.2 percent to a 6 percent increase. Builder Shares Builder shares rose after D.R. Horton Inc. , the second- largest U.S. homebuilder by revenue, reported its first quarterly profit since 2007 as sales rose and the company booked a tax benefit. The Standard & Poor’s Supercomposite Homebuilder Index climbed 4.9 percent at 10:15 a.m. in New York. The broader S&P 500 rose 0.3 percent to 1,092.9. The Realtors group’s pending sales data go back to January 2001, and it started publishing the index in March 2005. Three of the four regions showed increases in pending sales, led by a 5.2 percent gain in the Midwest. Pending sales dropped 3.8 percent in the West. Pending home sales are considered a leading indicator because they track contract signings. The Realtors’ existing- home sales report tallies closings, which typically occur a month or two later. The Realtors group started publishing the index in March 2005, and data go back to January 2001. Existing Home Sales Sales of previously owned houses dropped 17 percent in December, almost matching the record decrease in pending purchases the prior month, the agents’ group reported last week. President Barack Obama and Congress extended the first-time buyer credit in early November to cover deals signed by April 30 and closed by June 30, and expanded it to include some current homeowners. Even so, some economists believe the original measure pulled sales forward, restraining demand for a few months. About 2.4 million households will take advantage of the credit this year, according to a projection by Lawrence Yun , the real estate group’s chief economist. Yun anticipates existing home sales will rise to 5.6 million this year from 5.16 million in 2009. Another provision in the legislation allowed builders to use losses incurred in 2008 and 2009 to recoup taxes on profits going back as many as five years, three more years than usual. Lennar Corp. , KB Home and Ryland Group Inc. are among the construction companies that have reported quarterly profits because of the tax refunds. Expanding, Hiring The government initiative may help Lennar, the nations’ third-largest homebuilder by revenue, expand and hire, according to its chief executive officer. “We can start adding communities and frankly adding jobs, which I think was the import of exactly that legislation,” Stuart A. Miller , head of the Miami-based company said after announcing quarterly results on Jan. 7. Homebuilder shares are outperforming the broader stock market so far this year as investors believe the tax benefit may buy the companies enough time to turn a profit later this year as sales improve. The S&P Supercomposite Homebuilder Index climbed 11 percent since Dec. 31 compared with a 1.9 percent decline for the S&P 500. Fed policy makers last week confirmed their program to purchase mortgage-backed securities, which was aimed at keeping borrowing costs low, will expire by March 31 as scheduled. Mortgage Rates The plan helped push the rate on a 30-year fixed mortgage down to 4.71 percent in early December, the lowest level since Freddie Mac started keeping weekly records in 1972. The rate hovered around 5 percent in the last two weeks of January. Joblessness and foreclosures are other concerns. Unemployment is forecast to average 10 percent this year, the highest level in seven decades, according to the median estimate of economists surveyed this month. A record 3 million U.S. homes will be repossessed by lenders this year, RealtyTrac Inc. forecast on Jan. 14. That is up from 2.82 million in 2009, the most since the company began compiling data in 2005. The drop in prices associated with foreclosures represents a double-edged sword for the industry. Decreasing values bring more properties within reach of buyers, while also prevents current owners from trading up. The agents’ group’s affordability index was at 163.8 in December, compared with a record high 178.8 reached in April. A reading of 100 means a family earning the median income can afford the median-priced home at the current mortgage rate. — With assistance from John Gittelsohn in New York. Editor: Vince Golle To contact the reporters on this story: Carlos Torres in Washington ctorres2@bloomberg.net

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Pending Sales of Existing U.S. Homes Increase 1% Following Record Decline

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Manufacturing in U.S. Expands at a Faster Pace as Factories Propel Growth

by on November 2, 2009

Bloomberg:

By Shobhana Chandra Nov. 2 (Bloomberg) — Manufacturing in the U.S. expanded in October at the fastest pace in more than three years, a sign that factories will be the main driver of the expansion in coming months. The Institute for Supply Management’s factory index rose to 55.7, the highest level since April 2006, from 52.6 in September, according to the Tempe, Arizona-based group. Readings above 50 signal expansion. The ISM’s employment measure showed the first sign of growth since July 2008, reaching the highest level since 2006. Rising sales, boosted in part by the administration’s “cash-for-clunkers” plan, have led to a record plunge in stockpiles that will keep assembly lines humming. While more than $2 trillion in global stimulus will also lift overseas demand, mounting joblessness signals consumer spending will be slow to recover, restraining the expansion. “Aggressive inventory liquidation in the first half of the year and stabilizing orders suggests that manufacturing output will continue to be better supported in coming months,” Joshua Shapiro , chief U.S. economist at Maria Fiorini Ramirez Inc., a New York forecasting firm, said before the report. The figure exceeded economists’ median forecast for an increase to 53, according to 70 projections in a Bloomberg News survey. Estimates ranged from 52 to 55. Stocks Rise U.S. stocks extended gains after the report. The Standard & Poor’s 500 Index rose 1.3 percent to 1,049.65 at 10:34 a.m. in New York. The yield on 10-year Treasury notes was 3.42 percent, up from 3.39 percent at the end of last week. Separate reports today showed the number of contracts to buy previously owned homes in the U.S. rose in September for an eighth straight month and construction spending unexpectedly increased as the expiration of a first-time home-buyer tax credit approached. The index of signed purchase agreements, or pending home sales, rose 6.1 percent after a 6.4 percent gain in August, the National Association of Realtors announced in Washington. Compared with a year earlier, pending sales rose 19.8 percent, without adjusting for seasonal variations. Construction spending rose 0.8 percent, the most in a year, the Commerce Department said. The ISM’s production index rose to 63.3, the highest level since July 2004, from 55.7 the prior month, and the new orders index declined to 58.5 from 60.8. A gauge of export orders increased to 55.5 from 55. The employment index climbed to 53.1, the first expansion in the gauge in more than a year, from 46.2. Prices Advance The index of prices paid rose to 65 from 63.5. The supplier delivery gauge, a measure of the time it takes to receive goods, fell to 56.9 from 58 the prior month. The measure of orders waiting to be filled held at 53.5 for a second month. The inventory index rose to 46.9 from 42.5. A figure below 50 means manufacturers are reducing stockpiles. The world’s largest economy expanded at a 3.5 percent pace from July through September after a yearlong contraction as government incentives spurred consumers to spend more on cars and homes, according to Commerce Department data released last week. Recent reports on manufacturing have shown improvement. The ISM-Chicago Inc.’s business barometer rose in October to the highest level in 13 months, the group reported last week. Gains in the gauges for new orders, production and backlogs signaled the recovery will persist. Regional Federal Reserve Bank reports showed manufacturing in the New York district expanded in October for a third straight month and grew in the Philadelphia region at a slower pace. Texas Instruments Texas Instruments Inc., the second-largest U.S. chipmaker, is among companies saying the future looks brighter. The Dallas- based company forecast fourth-quarter profit and sales that beat the average estimate of analysts surveyed by Bloomberg, indicating demand for electronic components is recovering further. “Our customers are winding down their inventory corrections and have begun to increase production levels in their factories,” Chief Executive Officer Rich Templeton said in a statement on Oct. 19. To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

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Manufacturing in U.S. Probably Grew by Most Since 2006, Driving Expansion

November 2, 2009

By Shobhana Chandra Nov. 2 (Bloomberg) — Factories in the U.S. probably grew at a faster pace, while the number of people signing contracts to buy houses showed no improvement, signaling a shift to manufacturing as the driver of the expansion, economists said before reports today. The Institute for Supply Management’s manufacturing index rose to 53 in October, the highest level in three years, according to the median forecast of 62 economists surveyed by Bloomberg News. Another report may show pending home sales in September were unchanged, the first time since January they didn’t increase. Increasing demand, boosted in part by the administration’s “cash-for-clunkers” plan, has led to a record plunge in stockpiles that may keep assembly lines humming. After rising last quarter at the fastest pace in two decades, home building will probably cool as uncertainty over another government initiative, the first-time buyer tax credit, slows sales. “Manufacturing is back in expansion territory on a sustained basis,” said Adam York , an economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “The recovery in housing is going to be gradual. The economy will be growing, but this isn’t necessarily going to be a great quarter.” The Tempe, Arizona-based ISM group’s report is due at 10 a.m. New York time. Forecasts ranged from 52 to 55, after a reading of 52.6 in September. Fifty is the dividing line between expansion and contraction. Manufacturing accounts for about 12 percent of the economy. Global Recovery Factories worldwide are starting to raise output. Chinese manufacturing expanded at the fastest pace in 18 months in October, bolstered by exports, a purchasing managers’ index showed today. Europe’s manufacturing industry grew for the first time in 17 months, a separate report showed. Pending U.S. home sales, due from the National Association of Realtors at 10 a.m., jumped 6.4 percent in August. Survey estimates for September ranged from a drop of 2 percent to a gain of 5.5 percent. While falling prices and low mortgages rates have steadied demand, some buyers are waiting while lawmakers debate whether to extend the $8,000 tax credit that has helped housing emerge from its worst slump in eight decades. Also at 10 a.m. today, a Commerce Department report may show spending on construction projects fell 0.2 percent in September, the seventh decrease this year, according to the survey median. S&P 500 The Standard & Poor’s 500 Index fell last week, marking the first monthly drop since February, after reports prompted concern that consumers will restrain the economic recovery. Reports on manufacturing have shown improvement. The ISM- Chicago Inc.’s business barometer rose in October to the highest level in 13 months, the group reported last week. Gains in the gauges for new orders, production and backlogs signaled the recovery will persist. Regional Federal Reserve Bank reports showed manufacturing in the New York district expanded in October for a third month and grew in the Philadelphia region at a slower pace. Texas Instruments Inc., the second-largest U.S. chipmaker, is among companies saying the future looks brighter. The Dallas- based company forecast fourth-quarter profit and sales that beat the average estimate of analysts surveyed by Bloomberg, indicating demand for electronic components is recovering further. “Our customers are winding down their inventory corrections and have begun to increase production levels in their factories,” Chief Executive Officer Rich Templeton said in a statement on Oct. 19. To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

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U.S. Stocks Decline, Led by Energy Producers; Toll Brothers Falls on Loss

August 27, 2009

By Adam Haigh and Elizabeth Stanton Aug. 27 (Bloomberg) — U.S. stocks dropped, led by energy producers , as crude oil fell for a third day and higher-than- forecast jobless claims spurred speculation that the Standard & Poor’s 500 Index ’s 52 percent rally since March isn’t justified. Exxon Mobil Corp. and Chevron Corp., the biggest U.S. fuel suppliers, declined more than 1 percent. Toll Brothers Inc. slid after the largest U.S. builder of luxury homes posted a wider quarterly loss. Boeing Co. , the second-biggest maker of commercial aircraft, gained 8.2 percent after predicting its 787 Dreamliner will make its first flight this year. The Standard & Poor’s 500 Index slipped 7.14 points, or 0.7 percent, to 1,020.98 as of 9:58 a.m. in New York. The Dow Jones Industrial Average lost 42.47, or 0.5 percent, to 9,501.05. The Nasdaq Composite Index decreased 20.52, or 1 percent, to 2,003.91. The S&P 500’s 52 percent rally since March 9 has pushed gauge’s price to about 19 times annual earnings of its companies, the most expensive level since 2004. About 76 percent of companies in the index that have reported results since June 17 beat the average analyst estimate for second-quarter profits, according to Bloomberg data. Jobless claims totaled 570,000, more than forecast, in the week ended Aug. 22, compared with a revised 580,000 the week before, according to the Labor Department. The data offset a Commerce Department report showing the U.S. economy contracted less than anticipated in the second quarter as a jump in government spending and smaller cutbacks by consumers helped mitigate a record plunge in inventories. 200 Days A decline in the S&P 500 below its 200-month average would probably signal an additional slump of as much as 6.5 percent, according to Chicago-based Technical Analytics Inc. The index, which closed at 1,028.12 yesterday, has traded higher than its 200-day moving average since July 13 and rose 17 percent above it yesterday, the most since April 1999. All 10 industries in the S&P 500 fell today, led by a 1.2 percent decline in energy shares. Crude oil slid after a report showed that inventories unexpectedly rose last week in the U.S., the world’s largest energy user. Exxon dropped 97 cents to $70.40 and Chevron lost $1.02 to $70.07. Crude for October delivery retreated 86 cents, or 1.2 percent, to $70.57 a barrel on the New York Mercantile Exchange. Toll Brothers dropped 44 cents, or 1.9 percent, to $22.70. The net loss for the three months ended July 31 swelled to $472.3 million, more than analysts projected. Boeing added $3.81 to $51.63. The first 787 will now fly for the first time by the end of this year and be delivered to customers in the fourth quarter of 2010, the Chicago-based company said in a statement today. The delivery target is about 2 1/2 years behind the original goal of May 2008. Citigroup increased 11 cents to $4.74. Hedge fund manager John Paulson has acquired about a 2 percent stake in the New- York based bank, the New York Post reported today, citing unidentified people. Financial stocks in the S&P 500 have climbed 134 percent since the benchmark for U.S. equity began rallying from a 12-year low on March 9. To contact the reporters on this story: Adam Haigh in London at ahaigh1@bloomberg.net . Elizabeth Stanton in New York at estanton@bloomberg.net

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Initial Jobless Claims in U.S. Decreased Last Week (Update1)

August 27, 2009

By Shobhana Chandra Aug. 27 (Bloomberg) — Fewer Americans filed claims for jobless benefits last week, another sign the economy is pulling out of the worst recession since the 1930s. Applications fell by 10,000 to 570,000, a higher level than forecast, in the week ended Aug. 22 from a revised 580,000 the week before, Labor Department data showed today in Washington. The total number of people collecting unemployment insurance fell to the lowest level since April. Companies’ staff cuts are easing as government stimulus measures help stabilize the housing and manufacturing industries. At the same time, a rebound in hiring will take longer to occur, restraining the consumer spending that accounts for about 70 percent of the economy. “The labor market is improving,” David Sloan , a senior economist at 4Cast Inc. in New York, said before the report. “The economy is returning to growth, but employment and consumer spending are going to remain weak for some time.” Economists forecast claims would fall to 565,000 from a previously reported 576,000, according to the median of 41 projections in a Bloomberg News survey. Estimates ranged from 540,000 to 580,000. A separate report from the Commerce Department showed the U.S. economy contracted less than forecast in the second quarter as a jump in government spending and smaller cutbacks by consumers helped mitigate a record plunge in inventories. No Revision Gross domestic product shrank at a 1 percent annual rate from April to June, the same as estimated last month, the department said today in Washington. The report also showed corporate profits climbed by the most in four years. The jobless claims report showed the four-week moving average of initial applications, a less volatile measure, dropped to 566,250 last week from 571,000. Continuing claims plunged by 119,000 in the week ended Aug. 15 to 6.13 million, the least since the week ended April 4. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, fell to 4.6 percent in the week ended Aug. 15, from 4.7 percent the prior week. Forty states and territories reported a decrease in claims, while 13 showed an increase. These data are reported with a one- week lag. Initial jobless claims reflect weekly firings and tend to rise as job growth — measured by the monthly non-farm payrolls report — slows. 6.7 Million While the economy has lost 6.7 million jobs since the recession started in December 2007, the most of any slump in the post-World War II era, firings are abating. The 247,000 drop in payrolls reported for July was the smallest in almost a year and lower than economists projected. Businesses announcing staff reductions this month included Accenture Ltd., the world’s second-largest technology-consulting firm. The Hamilton, Bermuda-based company said Aug. 20 it will cut about 7 percent of its senior executive positions, at least 336 jobs. Companies are watching to see what impact job losses elsewhere will have on their sales. Tesoro Corp., the largest independent refiner in the western U.S., this week said gasoline demand may lag behind an economic recovery because consumers will need to return to work before they return to the pumps. “We’re waiting on employment, which is a lagging indicator,” said Lynn Westfall , chief economist at San Antonio- based Tesoro. Improvements in economic growth and global trade will likely occur before job gains resume, spurring demand for refined fuels, he said in an interview. To contact the reporters on this story: Shobhana Chandra in Washington schandra1@bloomberg.net

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U.S. Initial Jobless Claims Drop to 570,000 in Sign Recession Is Abating

August 27, 2009

By Shobhana Chandra Aug. 27 (Bloomberg) — Fewer Americans filed claims for jobless benefits last week, another sign the economy is pulling out of the worst recession since the 1930s. Applications fell by 10,000 to 570,000, a higher level than forecast, in the week ended Aug. 22 from a revised 580,000 the week before, Labor Department data showed today in Washington. The total number of people collecting unemployment insurance fell to the lowest level since April. Companies’ staff cuts are easing as government stimulus measures help stabilize the housing and manufacturing industries. At the same time, a rebound in hiring will take longer to occur, restraining the consumer spending that accounts for about 70 percent of the economy. “The labor market is improving,” David Sloan , a senior economist at 4Cast Inc. in New York, said before the report. “The economy is returning to growth, but employment and consumer spending are going to remain weak for some time.” Economists forecast claims would fall to 565,000 from a previously reported 576,000, according to the median of 41 projections in a Bloomberg News survey. Estimates ranged from 540,000 to 580,000. A separate report from the Commerce Department showed the U.S. economy contracted less than forecast in the second quarter as a jump in government spending and smaller cutbacks by consumers helped mitigate a record plunge in inventories. No Revision Gross domestic product shrank at a 1 percent annual rate from April to June, the same as estimated last month, the department said today in Washington. The report also showed corporate profits climbed by the most in four years. The jobless claims report showed the four-week moving average of initial applications, a less volatile measure, dropped to 566,250 last week from 571,000. Continuing claims plunged by 119,000 in the week ended Aug. 15 to 6.13 million, the least since the week ended April 4. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, fell to 4.6 percent in the week ended Aug. 15, from 4.7 percent the prior week. Forty states and territories reported a decrease in claims, while 13 showed an increase. These data are reported with a one- week lag. Initial jobless claims reflect weekly firings and tend to rise as job growth — measured by the monthly non-farm payrolls report — slows. 6.7 Million While the economy has lost 6.7 million jobs since the recession started in December 2007, the most of any slump in the post-World War II era, firings are abating. The 247,000 drop in payrolls reported for July was the smallest in almost a year and lower than economists projected. Businesses announcing staff reductions this month included Accenture Ltd., the world’s second-largest technology-consulting firm. The Hamilton, Bermuda-based company said Aug. 20 it will cut about 7 percent of its senior executive positions, at least 336 jobs. Companies are watching to see what impact job losses elsewhere will have on their sales. Tesoro Corp., the largest independent refiner in the western U.S., this week said gasoline demand may lag behind an economic recovery because consumers will need to return to work before they return to the pumps. “We’re waiting on employment, which is a lagging indicator,” said Lynn Westfall , chief economist at San Antonio- based Tesoro. Improvements in economic growth and global trade will likely occur before job gains resume, spurring demand for refined fuels, he said in an interview. To contact the reporters on this story: Shobhana Chandra in Washington schandra1@bloomberg.net

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