Strategic Global Intelligence Brief for February 15, 2019

Short Items of Interest—U.S. Economy Wasn't Such a Happy Holiday After All It seems that retailers had a far less exciting December than they realized at first. The gangbuster consumer spending that marked November fizzled fast in December—even the usual late season rush by clueless male shoppers was not enough. The retailers had the slowest Decemb...
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Dodge Index Rebounds in January

The Dodge Momentum Index rebounded slightly in January to a reading of 157.7 after a step back in December. The index released by Dodge Data & Analytics measures the initial report of nonresidential building in planning and has been an indicator of nonresidential spending within a full year. January's index increased 4.7% following December's d...
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Credit Managers’ Index Lags to Open 2019

The Credit Managers' Index from NACM is off to a slow start in 2019 following a decline to end the previous year. The combined index dipped to 53.4 in January from December's reading of 54.2. Many of the issues were seen in the unfavorable factors—accounts placed for collection, disputes, dollar amount beyond terms and dollar amount of customer ded...
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US Home Prices Still Showing Increases

U.S. home prices are increasing, however, at a slower pace than the month prior. According to the latest S&P CoreLogic Case Shiller U.S. National Home Price NSA Index, prices were up 5.2% annually in November compared to 5.3% in October. The 10-city and 20-city composite indices were also down year-over-year in November compared to the previous...
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Corporate Liquidity Squeeze on Horizon

Corporate liquidity is in for a slight squeeze in the future according to the latest Liquidity-Stress Indicator (LSI) from Moody's Investors Service. The LSI was unchanged in December; however, at 3.7%, it is at its highest reading since May 2017. "We expect slower corporate earnings growth and tighter funding conditions this year to continue to li...
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Euro Area Sovereign Outlook Stable to Start 2019

Euro area sovereigns have a stable outlook for 2019 according to a new report from Moody's Investors Service. Economic growth is expected to remain healthy as government debt burdens ease. "While economic growth in the euro area will slow in 2019, at 1.9%, it will remain robust enough to be credit supportive," said Steffen Dyck, a vice president an...
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Despite Dip in Construction Confidence, There Is Still a Positive Outlook for 2019

Contractors in the construction industry lost confidence during 2018's third quarter, but moving into the near future, many regained a sense of optimism, according to Associate Builders and Contractors' (ABC) latest Construction Confidence Index (CCI). The index claims about 75% of construction firms expect sales will see an uptick through the end ...
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Latest Home Data Shows Spike in Costs, Dip in Pending Sales

U.S. home prices are on the rise according to two separate data releases announced this week. The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index reports home price increases in all nine census divisions—a year-over-year jump of 5.5% in October. Meanwhile, the Federal Housing Finance Agency announced prices rose 0.3% in October co...
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Credit Managers’ Index Ends 2018 on Sour Note

NACM's Credit Managers' Index, hoping to build momentum from November, closed out 2018 with a slight flop. The December reading slipped 1.6 points back toward its October reading. "On one level, this is disappointing. It would have been nice to see the index continue tracking upwards, but it is important to remember that any reading over 50 suggest...
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Builder Confidence Slips to End 2018

Builder confidence for newly built single-family homes is at its lowest level in more than three years. The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) dipped four points to 56 in December, the lowest reading since May 2015; however, confidence is still in positive territory. One of the contributing factors to the D...
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Construction Materials Prices Decline in November

Construction materials prices are on the decline; however, prices are still higher than they were a year ago. Prices fell 1.8% in November according to Associated Builders and Contractors (ABC), yet materials prices were more than 5% higher than the previous November. "Earlier in 2018, materials prices were racing skyward due to a combination of st...
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US Building Materials Outlook Lowered

The outlook for the U.S. building materials sector has been lowered due to a decreased demand in private construction. Moody's Investors Service downgraded its outlook from positive to stable following four years of strong growth. "We expect lower organic operating income growth in the building materials sector over the next 18 months, as growth in...
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Somber Credit Managers’ Index Starts 4Q

After a string of solid results in NACM's Credit Managers' Index (CMI) starting this past spring, the predictive index is at its worst output since April. The October CMI reading dropped nearly two points to 54.5 from 56.4 in September. "This is not an emergency situation to be sure as these numbers are still solidly in the mid-50s, but it isn't th...
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Moody’s: US Oil Sector Debt Levels ‘Unsustainable’

The current debt levels of U.S. oilfield and drilling (OFS) companies is unsustainable over the long term. According to Moody's Investors Service, OFS companies need a "substantial improvement in cash flow." "U.S. oilfield services and drilling companies' high debt levels will continue to constrain their credit quality in 2019 and beyond," said Sre...
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Strategic Global Intelligence Brief for Oct. 26, 2018

Short Items of Interest—U.S. Economy Consumer Sentiment Up but Not as High as Before The level of consumer confidence has been elevated all year. This is better than it being lower than usual, but given that consumer confidence surveys can be notoriously fickle it is hard to really understand what they are indicating. This month, the level of confi...
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Sears Seeking Financial Help, Vendors Reacting

Sears Holdings Corp. Chairman Eddie Lampert is in the process of finding a financing partner for the company's bankruptcy filing. According to Reuters, Lampert's private equity firm, ESL Investments, has talked with investment firm, Cyrus Capital Partners LP, about sharing the financial burden of a $300 million loan. Meanwhile, some of Sears' vendo...
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September U.S. Housing Starts Take Step Back

U.S. housing starts did not turn out as expected in September, according to the latest release from the Census Bureau and Department of Housing and Urban Development. Privately-owned housing starts staggered slightly from August to a seasonally adjusted rate of 1.201 million in September. Economists surveyed by Reuters expected starts to decline, h...
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Dodge Momentum Index Takes Step Back

Construction spending in the nonresidential sector is taking a hit, according to a leading economic indicator. The Dodge Momentum Index, which has been shown to lead nonresidential building construction spending by one year, is in a bit of a slump following September's 2.6% downturn from August. The index also declined in August after a string of s...
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Trade Credit Insurance Payout Hits Quarterly High

Trade credit insurance payout is at an all-time high. According to the Association of British Insurers (ABI), the second quarter payout of one million pounds daily ($1.3 million) to help cover bad debts is a quarterly record. A total of 92 million pounds was paid to U.K. firms to combat bad debt, also a quarterly record, surpassing the previous mar...
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Amendment to Pennsylvania Construction Act to Take Effect in October

Only a few weeks remain until Pennsylvania's Contractor and Subcontractor Payment Act (CASPA) changes, shaking up the future of timeliness for construction payments. The new act will affect construction contracts entered into, on or after Oct. 10, 2018. In Pennsylvania, CASPA affects downstream payments on private construction projects. The amendme...
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