Last Week in the News

Workers take a bow. According to the Labor Department, your productivity — the amount of output per hour of work — rose 2.2% in the first quarter, better than the 1.5% increase that had been expected. When productivity increases, businesses can afford to pay workers higher wages out of the increased output without the risk of inflation.
Sales at many of the nation’s retailers also were better than expected in April, with Wal-Mart Stores Inc. and Costco Wholesale Corp. leading the way, Thomson Financial said May 8. In Thomson’s tally of same-store sales — or business at stores open at least a year — 19 retailers beat estimates, while nine missed. Costco reported an 8% increase and Wal-Mart reported a 3.2% gain. Gap Inc., however, reported a 6% decline.
The U.S. service sector, which represents about 80% of U.S. economic activity and includes businesses such as banks, airlines, hotels and restaurants, expanded in April to snap a three-month period of contraction. The Institute for Supply Management’s non-manufacturing index issued May 5 came in at 52.0 in April, up from 49.6 in March. Any reading above 50 indicates growth.
The number of newly laid-off workers seeking jobs benefits fell to 365,000, a decline of 18,000 from the previous week, the Labor Department said May 8. Nationwide, the total number of unemployed workers receiving benefits dipped to 3.02 million for the week ending April 24 but remained above the 3 million mark for the second consecutive week.
Economic news due out this week includes reports on consumer inflation on May 14 and housing starts on May 16.

Consumer prices edged up only 0.2% in April, slightly lower than the 0.3% rise that economists anticipated, the Labor Department reported May 14. Core inflation, which excludes food and energy prices, increased just 0.1%, also lower than analysts’ 0.2% forecast. Helping keep a lid on inflation was the price of hotel rooms, which fell by 1.9% in April, the third straight monthly decline reflecting cutbacks in business and vacation travel.
Housing posted a surprising rebound in April as the pace of new-home construction rose 8.2%, the biggest monthly increase in more than two years, the Commerce Department said May 16. Most growth came from a 36% jump in apartment construction.
The housing market was further buoyed by Fannie Mae’s announcement on May 16 that it was eliminating higher minimum down payment requirements for borrowers in distressed real estate markets. The government-sponsored enterprise said it will require minimum down payments of between 3% and 5% for all loans it guarantees. The change replaces a December policy that required a higher minimum if the loan was for a home in a declining real estate market.
Fannie’s reversal is much needed because the number of U.S. homes facing foreclosure in April shot up 65% versus the same month a year ago, and 4% since March, RealtyTrac said May 14. One in every 519 U.S. households received a foreclosure notice in April.
The slowing economy contributed to the lowest level of consumer confidence in 28 years, according to the Reuters/University of Michigan consumer sentiment index, which has been tracking consumer confidence in the economy for more than half a century. The preliminary index fell to 59.5 in May from 62.6 in April. A reading above 100 indicates strong consumer confidence.
Sounds like a bit of good news for the real estate market.

Last Week in the News
Consumer prices edged up only 0.2% in April, slightly lower than the 0.3% rise that economists anticipated, the Labor Department reported May 14. Core inflation, which excludes food and energy prices, increased just 0.1%, also lower than analysts’ 0.2% forecast. Helping keep a lid on inflation was the price of hotel rooms, which fell by 1.9% in April, the third straight monthly decline reflecting cutbacks in business and vacation travel.
Housing posted a surprising rebound in April as the pace of new-home construction rose 8.2%, the biggest monthly increase in more than two years, the Commerce Department said May 16. Most growth came from a 36% jump in apartment construction.
The housing market was further buoyed by Fannie Mae’s announcement on May 16 that it was eliminating higher minimum down payment requirements for borrowers in distressed real estate markets. The government-sponsored enterprise said it will require minimum down payments of between 3% and 5% for all loans it guarantees. The change replaces a December policy that required a higher minimum if the loan was for a home in a declining real estate market.
Fannie’s reversal is much needed because the number of U.S. homes facing foreclosure in April shot up 65% versus the same month a year ago, and 4% since March, RealtyTrac said May 14. One in every 519 U.S. households received a foreclosure notice in April.
The slowing economy contributed to the lowest level of consumer confidence in 28 years, according to the Reuters/University of Michigan consumer sentiment index, which has been tracking consumer confidence in the economy for more than half a century. The preliminary index fell to 59.5 in May from 62.6 in April. A reading above 100 indicates strong consumer confidence.
Sounds like a bit of good news for the real estate market.