Consumer Credit Increased More Than Expected in September
The Federal Reserve’s monthly report on Consumer Credit indicated an $11.4 billion increase, beating expectations.
On Wednesday, the Federal Reserve released its report on Consumer Credit for September. The report indicated that the increase in consumer credit for August was revised upward to $18.4 billion. The $11.4 billion increase in 
consumer credit during September was the second consecutive monthly gain, beating economists’ expectations for a $10.2 billion increase. Increased automobile financing was a big factor in September’s advance. Non-revolving credit, as used for automobile purchases and tuition, increased by $14.3 billion. Revolving credit, as used with credit cards, decreased by $2.9 billion in September.
From the report:
Consumer credit increased at a seasonally adjusted annual rate of 4 percent in the third quarter. Revolving credit decreased at an annual rate of 1-1/2 percent, while nonrevolving credit increased 6-1/2 percent. In September, consumer credit increased at an annual rate of 5 percent.
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Also on Wednesday, the Mortgage Bankers’ Association (MBA) reported that mortgage applications declined by 5 percent during the week ending November 2, as a result of Hurricane Sandy.
From the report:
Mortgage applications decreased 5.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 2, 2012.
The Market Composite Index, a measure of mortgage loan application volume, decreased 5.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 5 percent compared with the previous week. The Refinance Index also decreased 5 percent from the previous week. The Refinance Index has declined for five straight weeks and is at its lowest level since the end of August. The seasonally adjusted Purchase Index decreased 5 percent from one week earlier. The unadjusted Purchase Index decreased 7 percent compared with the previous week and was 3 percent lower than the same week one year ago.
“Last week’s storm had a significant impact on application volumes on the East Coast,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “Applications fell more than 60 percent compared to the prior week in New Jersey, almost 50 percent in New York and nearly 40 percent in Connecticut. Other East Coast states also saw declines over the week, while many states in other parts of the country had increases in application volumes.”
The major ETFs expected to respond to the Federal Reserve’s Consumer Credit report for September and the Mortgage Bankers’ Association Weekly Mortgage Application Survey are:
Consumer Discretionary Select Sector SPDR Fund ETF (NYSEARCA:XLY) -1.17%
SPDR S&P Retail ETF (NYSEARCA:XRT) -1.85%
Consumer Staples Select Sector SPDR Fund ETF (NYSEARCA:XLP) -1.19%
Market Vectors Retail ETF (NYSEARCA:RTH) -0.91%
SPDR KBW Mortgage Finance ETF (NYSEARCA:KME) -1.27%
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Bottom line: The continued increase of consumer credit suggests increased consumer confidence about job security and the availability of alternative employment in the job market.
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