8/16: MetroIntelligence Econ Update, P.DUFFY

August builder confidence drops one point to 67, buyer traffic index falls below 50

Builder confidence in the market for newly-built single-family homes edged down one point to a solid 67 reading in August on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The HMI index measuring current sales conditions inched one point lower to 73 while the component gauging expectations in the next six months all fell a single point to 72. Meanwhile, the metric charting buyer traffic dropped two points to 49.

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2Q 2018 productivity up 2.9 percent from 1Q versus 1.3 percent year-on-year

Nonfarm business sector labor productivity increased 2.9 percent during the second quarter of 2018, as output increased 4.8 percent and hours worked increased 1.9 percent. From the second quarter of 2017 to the second quarter of 2018, productivity increased 1.3 percent, reflecting a 3.5-percent increase in output and a 2.2-percent increase in hours worked.

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Retail sales up 0.5 percent in July and 6.4 percent year-on-year

U.S. retail sales rose a healthy 0.5% in July, although June’s sales were reduced from a 0.5% to a 0.2% gain.  Retail sales rose 0.6% minus gas stations and auto dealers.  Over the last year, retail sales have increased 6.4%, close to the long-run average since 1980.

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July Small Business Optimism Index rose to second-highest level in its 45-year history

The Small Business Optimism Index marked its second highest level in the survey’s 45-year history at 107.9 in July, rising to within 0.1 point of the July 1983 record-high of 108.

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2Q household debt reaches new record level while delinquencies remain relatively low

Total household debt increased by $82 billion (0.6%) to $13.29 trillion in the second quarter of 2018. It was the 16th consecutive quarter with an increase, and the total is now $618 billion higher than the previous peak of $12.68 trillion, from the third quarter of 2008. While overall delinquency rates have remained stable at relatively low levels, transition rates into delinquency have fallen noticeably for student debt over the past year, reflecting an improved labor market and increased participation in various income-driven repayment plans.

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Inflation expectations for business remain unchanged at 2.1 percent in the year ahead

Firms’ inflation expectations went unchanged at 2.1 percent over the year ahead. Current economic environment: Sales levels remain “about normal,” on average. Profit margins improved somewhat, and year-over-year unit costs increased somewhat to 2.0 percent, on average.

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