Economy in Brief: September 2012

For nine straight weeks gas prices have moved upward. The pump price of regular gasoline rose another six cents last week to $3.84 per gallon, the highest level since late April. And this is the time of year when seasonal price pressures should be easing with less driving. So when Haver Analytics made the adjustment, the seasonally-adjusted price for regular rose a greater eight cents w/w to $3.62 per gallon.

The price for a barrel of light sweet crude oil pulled back 79 cents w/w to $95.68 per barrel last week but still was up from the late-June weekly low of $80.92. Yesterday, the cost of crude slipped further to $95.30 per barrel. Prices peaked at $113.93 in April, 2011. Brent crude also fell last week to $112.83 per barrel but recovered to $114.26 yesterday.

Natural gas prices slipped last week to $2.73 per mmbtu but yesterday jumped back to $2.86, still roughly half the early-January 2010 peak of $6.50.

Reduced driving and improved fuel economy lowered the demand for gasoline by 1.0% y/y last week. The demand for residual fuel oil, used for heating, fell 13.6% y/y and distillate demand was off 6.2% y/y. Inventories of crude oil and petroleum products ticked up 0.2% y/y. That comparison was improved from the 5.0% y/y decline this past fall.

The energy price data are reported by the U.S. Department of Energy and can be found in Haver's WEEKLY database. The daily figures are in DAILY and the gasoline demand figures are in OILWKLY.  

Weekly Price	09/03/12	08/27/12	08/20/12	Y/Y%	2011	2010	2009
Retail Regular Gasoline ($ per Gallon, Regular)	3.84	3.78	3.74	4.6	3.52	2.78	2.35
Light Sweet Crude Oil, WTI ($ per bbl.)	95.68	96.47	94.42	8.6	95.14	79.51	61.39
Natural Gas ($/mmbtu)	2.73	2.78	2.77	-32.3	3.99	4.40	3.95

U.S. Chain Store Sales Back Off
by Tom Moeller  September 5, 2012

Chain store sales slipped 0.4% last week (+3.7% y/y) and reversed the prior week's increase. For August as a whole, sales fell 1.6% m/m after a 3.3% July gain. During the last ten years there has been a 72% correlation between the y/y change in chain store sales and the change in retail sales at general merchandise stores. That correlation recently has increased.

General merchandise store sales account for 15% of total retail sales. The ICSC-Goldman Sachs retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

The leading indicator of purchases at chain stores weakened for the sixth week in the last seven (+1.5% y/y). The composite leading economic indicator is compiled from four series: (1) The MBA's volume index of mortgage applications for home purchase, (2) the ABC News/Money magazine's survey of consumer buying conditions, (3) new filings for jobless benefits, and (4) the 30-year government bond yield.

The chain store sales data are in Haver's SURVEYW. 

ICSC-UBS (SA, 1977=100)	08/31/12	08/25/12	08/18/12	Y/Y	2011	2010	2009
Total Weekly Chain Store Sales	536.1	538.4	535.9	3.7%	3.2%	2.9%	0.1%
W/W %	-0.4	0.5	-1.5	--	--	--	--

U.S. Mortgage Applications Fall Further With Interest Rates
by Tom Moeller  September 5, 2012

It seems odd, but fewer mortgage applications are accompanying falling interest rates. The Mortgage Bankers Association index of total mortgage applications fell another 2.5% last week (+27.5% y/y), the fifth straight week of sharp decline. Applications have fallen 18.6% from the June high. Applications to refinance fell 3.0% w/w and by nearly one quarter during the last five weeks. Home purchase applications slipped 0.8% last week and they're down 13.2% from the June high. Applications for fixed interest rate loans have risen by nearly one-third y/y as lower mortgage rates are locked in. Conversely, variable rate loan applications have fallen 19.5% y/y.

The effective rate on fixed-interest, conventional 15-year mortgages fell w/w to 3.19% compared to 3.47% in January. The effective rate on a 30-year fixed rate loan fell back to 3.89%. On a 30-year Jumbo loan, the effective rate declined to 4.14%. Though it's narrowed slightly of late, the spread between 15- and 30-year loan rates continued wide by historical standards. The effective interest rate on an adjustable 5-year mortgage slipped to 2.77% and was down from its 3.93% high during February of last year.

The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey covers roughly 50% of all U.S. residential mortgage applications processed each week by mortgage banks, commercial banks and thrifts. The figures for weekly mortgage applications are available in Haver's SURVEYW database.

MBA Mortgage Applications (SA, 3/16/90=100)	08/31/12	08/24/12	08/17/12	Y/Y%	2011	2010	2009
Total Market Index	766.1	786.1	821.3	27.5	572.3	659.3	736.4
Purchase	178.4	179.9	177.4	11.8	182.6	199.8	263.5
Refinancing	4,216.0	4,346.2	4,609.9	33.0	2,858.4	3,348.1	3,509.2
15-Year Mortgage Effective Interest Rate (%)	3.19	3.23	3.26	3.76 (8/11)	3.97	4.39	4.85

U.S. Productivity Growth Is Revised Up
by Tom Moeller  September 5, 2012

Workers produced more for their effort in Q2'12 than estimated last month. Nonfarm business sector productivity for last quarter was revised up to 2.2% (1.2% y/y) from last month's estimate of a 1.6% gain. However, since growth in compensation also was revised up to 3.7% (2.2% y/y) from 3.3%, the rise in unit labor costs was lessened just slightly to 1.5% (0.9% y/y) from 1.7%. In the factory sector productivity growth was little-changed at a minimal 0.1% (2.9% y/y), but compensation growth was raised to 0.9% (0.4% y/y). As a result, growth in unit labor costs was raised to 0.8% (-2.4% y/y) from 0.3%.

The productivity & cost figures are available in Haver's USECON database.

Productivity & Costs (SAAR,%)	Q2'12 (Revised)	Q2'12	Q1'12	Q4'11	Q2 Y/Y	2011	2010	2009
Nonfarm Business Sector
Output per Hour (Productivity)	2.2	1.6	-0.5	2.8	1.2	0.7	3.1	2.9
Compensation per Hour	3.7	3.3	5.1	-0.7	2.2	2.7	2.0	1.4
Unit Labor Costs	1.5	1.7	5.6	-3.3	0.9	2.0	-1.0	-1.5
Manufacturing Sector
Output per Hour	0.1	0.2	5.5	0.7	2.9	2.5	6.4	0.1
Compensation per Hour	0.9	0.5	6.7	-6.0	0.4	2.6	1.1	4.1
Unit Labor Costs	0.8	0.3	1.2	-6.6	-2.4	0.1	-5.0	4.0