Key U.S. Economic Indicators for Today: ISM Up; Construction Spending Down

Here is a quick summary of the key U.S. economic indicators released today: ISM Manufacturing Index jumped; Construction spending edged down; U.S. chain store sales increased 0.3% last wee; Mortgage applications rose 3.6% in December; and ADP employment report shows decline in private sector employment. 

ISM Manufacturing Index:

The nation's manufacturing sector expanded in December, reversing a contraction a month earlier. The Institute for Supply Management said Wednesday its manufacturing index registered 51.4 in December, compared with 49.5 in November, which was the first time the sector's activity shrank since April 2003. A reading below 50 indicates contraction, while a reading above 50 signals expansion.

The manufacturing sector had grown for 41 consecutive months prior to November, but falling home prices, high energy prices and other factors conspired to reduce industrial activity that month.

Construction Spending:

The Commerce Department reported Wednesday that building activity edged down 0.2% in November to a seasonally adjusted annual rate of $1.18 trillion. That followed declines of 0.3% in October and 0.8% in September.

The weakness was led by a 1.6 percent plunge in home construction to $589.3 billion, which followed an even bigger 1.7 percent drop in October. 

Spending on private construction was at a seasonally adjusted annual rate of $905.8 billion, 0.6% below the revised October estimate

Spending on nonresidential projects actually showed strength last month, rising a strong 1.5 percent to an all-time high of $316.5 billion at an annual rate. The increased reflected strong gains for office buildings, hotels and shopping centers.

Government building activity rose by 1 percent to an all-time high of $278.4 billion at an annual rate. 

ADP Employment Report:

Private sector employment declined by 40,000 in December, following three months of gains that averaged 121,000 per month, according to today's ADP National Employment Report(SM), created by ADP in partnership with Macroeconomic Advisers, LLC. 

ICSC-UBS Store Sales:

U.S. chain store sales increased 0.3% for the week ending December 30, as consumers redeemed gift cards and took advantage of post-Christmas deals, according to ICSC’s index. Year-over-year sales grew 2.8 percent.

Sales at U.S. retailers may have increased 2.5% in December, resulting in the slowest holiday season in two years, after warm weather, falling home prices and rising energy costs discouraged shoppers.

The International Council of Shopping Centers, which will issue its final December figure tomorrow, expected sales at stores open at least a year for the five weeks through Dec. 30 to increase at the low end of 2.5% to 3.5%. Sales in the final week gained 2.8% from a year earlier, ICSC and UBS Securities LLC reported today. 

MBA Purchase Applications:

The volume of mortgage applications at major U.S. banks rose 3.6% on a seasonally adjusted basis for the week ending December 29, compared to the week before Christmas, the Mortgage Bankers Association reported Wednesday. The Market Composite Index, a measure of mortgage loan application volume, decreased 27.4% on an unadjusted basis compared with the previous week and was up 6.9% compared with the same week one year earlier.

The Refinance Index increased by 2.2% from the previous week and the seasonally adjusted Purchase Index increased by 4.3% from one week earlier. 

The refinance share of mortgage activity decreased to 48.1% of total applications from 48.8% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 20.4 from 23.1 percent of total applications from the previous week. The ARM share is at its lowest level since July 2003.

The average contract interest rate for 30-year fixed-rate mortgages increased to 6.22 from 6.12 percent, with points decreasing to 0.92 from 0.96 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 5.93 percent from 5.84 percent, with points decreasing to 1 from 1.06 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs decreased to 5.84 percent from 5.87, with points increasing to 0.83 from 0.80 (including the origination fee) for 80 percent LTV loans.

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