Economic Update - January 20, 2014

The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage applications for the week ending January 10 rose 11.9% from the previous week. Purchase volume rose 12%. Refinancing applications increased 11%.

The combined construction of new single-family homes and apartments in December fell 9.8% to a seasonally adjusted annual rate of 999,000 units, compared to the November estimate of 1,107,000 units. Single-family starts decreased 7%. Volatile multifamily starts fell 14.9%. Overall housing units were up 18.3% in December when compared to the previous year. Applications for new building permits, seen as an indicator of future activity, were at a seasonally adjusted annual rate of 986,000 units, 3% below the revised November rate of 1,017,000 units.

The monthly National Association of Home Builders/Wells Fargo housing market index fell one point in January to 56. An index reading above 50 indicates positive sentiment about the housing market.

Retail sales rose 0.2% to $431.9 billion in December. This follows a revised 0.4% increase in November. Compared to a year ago, December retail sales have increased 4.1%.

Total business sales increased 0.8% to $1,318.2 billion in November, up 4% from a year ago. Total business inventories rose 0.4% to $1,699.9 billion in November, also up 4% from a year ago. The total business inventories/sales ratio in November was 1.29.

The producer price index, which tracks wholesale price inflation, rose 0.4% in December, following a 0.1% decrease in November. On a year-over-year basis, wholesale prices were up 1.2% in December. Core prices — excluding food and fuel — rose 0.3% in December.

Initial claims for unemployment benefits for the week ending January 11 fell by 2,000 to 326,000. Continuing claims for the week ending January 4 rose by 174,000 to 3.03 million. The less volatile four-week average of claims for unemployment benefits was 335,000.

Upcoming on the economic calendar are reports on existing home sales and the index of leading economic indicators on January 23.