All posts by joel

August Import and Export Prices and Housing Starts and Permits


KEY DATA: Imports: +0.6%; Nonfuel: +0.3%; Exports: +0.6%; Less Fuel and Food: +0.1%/ Starts: -0.8%; 1-Family: +1.6%; Permits: +5.7%; 1-Family: -1.5%


IN A NUTSHELL: “With the housing sector entering a period of hurricane-induced uncertainty and inflation pressures building only slowly, the Fed’s decision tomorrow will not be made easily.”


WHAT IT MEANS: The Fed has started its two-day meeting and the data they are looking at couldn’t be less clear. Take today’s numbers. Import prices jumped in August, led by a surge in petroleum and petroleum-related goods costs. It also looks like food expenses are picking up. But excluding those two volatile components, there really were not a lot of cost issues coming from the import side. Consumer goods, vehicles and capital goods prices increased a touch, but over the year every one of those three categories were up less than 0.5%. That is hardly anything for the Fed to fear.   In contrast, U.S. firms are beginning to push through somewhat higher price increases for the goods they sell overseas. A wide variety of non-food or fuel prices were up decently in August.


Meanwhile, the housing market continues to post strange numbers. In August, housing starts fell, but only for multi-family dwellings. Single-family construction improved. Did Harvey have a hand in the overall decline? Hard to say since single-family starts rose in the South, even as multi-family activity dropped sharply. The Northeast was the weakest link and I don’t remember us getting hit by any major storm. And then there were the permit requests. While they were up, it is the levels that are odd. Over the past three months, permit requests have run about 6% above starts, implying that that construction should surge in the months ahead. That is especially true for single-family units. But starts have outpaced permits by 33% for multi-family structures and that points to a major slowdown in that sector. And when you add in the uncertainty from the hurricanes, who knows what the housing data will look like in the months ahead?  


MARKETS AND FED POLICY IMPLICATIONS: The summary of the data going into the FOMC meeting was that growth in the third quarter looked like it was moving back toward trend before the storms hit. Now, it is likely to come in below 2%. But all those vehicles, homes, businesses and infrastructure have to be rebuilt, demolished, repaired or whatever, and that means an awful lot of spending will have to occur over the next six to twelve months – at a minimum. With labor shortages already an issue in the construction sector, much of the rebuilding will have to wait, possibly for years. If you can do anything in construction, there will be a job waiting, and at a very good salary. But that means inflation could pick up, especially for building supplies and used vehicles. I believe that Fed will indicate, in both the statement and during Chair Yellen’s press conference, that they will monitor the data, but will be moving forward with the interest rate and balance sheet normalization process. The only issue is timing. I expect a specific start-data for balance sheet reduction will be communicated, if not at tomorrow’s meeting, then after the October 31/November 1 meeting and a rate hike to occur before year’s end.

August Retail Sales and Industrial Production

KEY DATA: Sales: -0.2%; Less Vehicles: +0.2%/ IP: -0.9%; Manufacturing: -0.3%

IN A NUTSHELL: “The early returns from Harvey are trickling in and the news is not good.”

WHAT IT MEANS: It looks like Harvey was not invisible, not a buddy and clearly not a cuddly bunny (anybody remember the movie?). It was, however, an economy wrecker – at least initially. Retail sales fell in August, largely due to a sharp drop in vehicle sales. Large parts of Texas and segments of Louisiana shut down and demand dropped, which should surprise no one. Vehicle sales this month will probably be bad as well, since Florida is shut down and much of the insurance payments, when they do arrive, will likely go to used vehicles. But there should be a rebound in October. Excluding vehicles, sales weren’t anything special, especially when you consider that the biggest winners were gasoline dealers, which were charging a lot more. Households spent money on food, both in restaurants and at supermarkets, while furniture stores saw things pick up. Despite the hurricane, sales at home improvement stores fell. I have no idea why that happened.

Not only did consumer spending slow in August, but industrial production cratered as well. Of course, utilities going offline does have a tendency to depress output. But even manufacturing activity hit the skids. Yes, the expected suspects, chemical and energy firms, were down, but there were a variety of other sectors that posted production cut backs. Still, the hurricane impacted industries are already turning around, though the lack of utilities in Florida will make it anyone’s guess what the September industrial production report will look like. As a counterpoint, the Empire State Manufacturing Index, produced by the New York Fed, was up sharply in August and held onto most of the gain in September. That gives some insight into how much the hurricanes changed the direction of the data, at least in the short run.

MARKETS AND FED POLICY IMPLICATIONS: The economic data are being distorted by the hurricanes and the first signs of how much the monthly numbers may be affected were seen in the August data. It looks like it is a lot. All I can do is report the data and suggest how they will likely change in the months ahead. Judgments on whether the longer-term trend in growth has been altered cannot be made until we see how quickly the recovery takes hold, how much money is poured into the affected states and the timing of the spending.   What can be said is that most economists are likely marking down third quarter growth and marking up the fourth quarter. I would not be surprised if the third quarter comes in below 2%. As for investors, they seem to be looking past the economy. They want nothing to rain on their parade.

August Consumer Prices, Real Earnings and Weekly Jobless Claims

KEY DATA: CPI: +0.4%; Less Energy: +0.2%; Gasoline: +6.3%/ Real Earnings: -0.3%/ Claims: -14,000

IN A NUTSHELL: “The hurricane blew up the cost of energy, but otherwise, inflation is still reasonably well contained.”

WHAT IT MEANS: We knew that Harvey’s hitting Texas would affect the inflation indices and it did. Consumer prices jumped in August, led by a surge in gasoline costs. A loss of production, even for a short time, tends to do that. Are we are likely to see some spillover into September? Gasoline costs spiked during the early portion of the month, though they have started coming down. We still have half the month to go so it is not clear what will be the impact this month. Otherwise, prices rose moderately. Food and clothing costs increased minimally while clothing, medical goods and vehicle prices were either flat or even down. Restaurants continue to push through price increases even as supermarket prices fall. Whole Wallet is now only Half a Wallet. Inflation is picking up in the services side of the ledger. Housing, transportation and medical services costs were up sharply.

The large rise in overall consumer costs in August cut deeply in household spending power. While hourly wages rose, the increase was more than offset by the jump in prices. Thus, real earnings declined. Over the year, inflation-adjusted hourly earnings were up only 0.6%. As I keep saying, it is hard to grow quickly if purchasing power is rising modestly.

Weekly jobless claims fell sharply last week but the level is extremely high due to the Hurricanes. These numbers will be likely remain elevated as Irma’s impact is still to be seen in the labor data. It is impossible to know how high they will go and when they will come down, so just use the data to understand the impact on jobs, not the trend in the labor market.

MARKETS AND FED POLICY IMPLICATIONS: The gasoline situation will not mislead the Fed into thinking inflation is on the rise. It is accelerating, but only slowly. Excluding energy or even when both food and energy are removed from the index, the rate is still below the Fed’s 2% target. The Fed will look past the short-term impacts as Fed policy works with a lag anyway. The members are worried about next year not next month. They might want to temporize at next week’s FOMC meeting, as there is a lot of uncertainty about the impacts of the storms. Even if they do, expect announcements about balance sheet reductions and a rate hike to come in the November and/or December meetings. As for the markets, when it rallies on the belief that the insurance costs will by huge but not incredibly huge, then you have to wonder about the rationality of investors. It is hard to see that the storm didn’t cause massive damage. The real problem will come if insurance companies don’t pay or are slow to pay for repairs. Without those funds, much of the needed renovations will either not be made or it will take a really long time for homeowners and businesses to make them. Lower and slower insurance payments mean less growth. Regardless, the cost of the Hurricanes will likely be enormous and a lot of the infrastructure will have to be repaired. Government spending will rise sharply at the federal, state and local levels. The huge cost to utilities will likely lead to price increases down the road. We are looking at a change in a lot of the economic indicators and investors will need to understand what is trend and what is temporary. The answer, my friend, is not blowing in the wind. The problem was the wind.

August Producer Prices

KEY DATA: PPI: +0.2%; Less Food and Energy: +0.2%; Energy: +13.4%

IN A NUTSHELL: “The winds of change hit the energy sector in August, driving up prices sharply.”

WHAT IT MEANS: The Fed meets next week and good luck to the members as they try to figure out where we go from here. The best they can do is determine where things were BH (before hurricanes) and as we have seen, economic growth was running pretty much at a normal pace. As for their inflation concerns, wholesale costs rose in August, but most of that had to do with energy dislocations that drove up the prices of most products. Excluding energy, producer prices increased modestly. Food costs were down fairly sharply with a variety of products posting declines. The other sectors where prices jumped were transportation, warehousing and construction. Services costs, which had been leading the way toward higher inflation, rose again but not by much. Over the year, finished goods costs have surged 2.9%.   Though there is a wide variation across the categories, the increases were widespread enough to point to some increased producer costs. Looking into the future, the major source of pressure is the energy sector. Once the problems created by the hurricanes dissipate, those will likely fade as well.

MARKETS AND FED POLICY IMPLICATIONS: Another day, another number that tells us where we were but not where we are going. Inflation is picking up and had this been the case without the weather, everyone would be saying that the Fed was going to hike rates soon. While energy prices are already starting to come down, other costs will likely rise and some of them sharply. Somewhere between one-half and a million vehicles may have to be replaced and that will put pressure on new and especially used vehicle prices. Home reconstruction in both Texas and Florida will put major price pressures on building supplies while labor is likely to be in short supply. Good luck trying to repair a roof. In other words, over the next six months we should see a whole slew of prices rise, at both the consumer and producer level. That will likely give the Fed some cover to raise rates and reduce its balance sheet. So we are only dickering over timing. I still believe there will be one more rate hike and the start of balance sheet normalization by year’s end. The members will likely look past any short-term negative numbers and that includes the surge in energy costs. They know the economy is moving forward and that ultimately, there will have to be an awful lot of private and public spending on goods and services that would not have happened without the massive losses created by Harvey and Irma. Let’s hope this is it for the hurricane season.

July Job Openings and August Small Business Index

KEY DATA: Openings: +54,000; Hiring: +69,000/ NFIB: +0.1 point

IN A NUTSHELL: “Small businesses remain optimistic and are hiring, even as the labor market tightens.”

WHAT IT MEANS: The August below-expectations jobs report was a disappointment to some but a reality check to others. The simple fact is that firms are hiring but are having massive problems finding workers in an ever-expanding economy. The Job Openings and Labor Turnover report, commonly called JOLTS, is one of the more closely watched releases that the government produces, especially by Fed Chair Yellen. The July report highlighted all the issues in the labor market. Hiring was solid, as we saw with the July jobs report. But more importantly, job openings reached their highest level on record. Firms cannot add workers fast enough to close the needs gap. The job openings rate, which is the number of openings as a percent of employment and openings, was up sharply over the year in a wide variety of industries. One of the problems facing firms is that workers are still pretty much locked into their current positions. The quit rate, which you would expect to rise in a tight labor market, ticked up but remained in the range it has been for the entire year. With companies unwilling to bid for workers from other firms, there is little reason to leave and that is limiting the availability of qualified workers.

Job gains should remain decent going forward as small business optimism is still quite high. The National Federation of Independent Business’ index edged up in August, led by a jump in the percentage of those that felt now is a good time to expand. To do that, firms are looking to invest more, which for small businesses is a strong sign of confidence. Firms would like to hire but labor quality remains a huge problem. Interestingly, while businesses are raising wages, expectations of future increases are falling. Maybe they think they have done enough. I suspect they will be disappointed.

MARKETS AND FED POLICY IMPLICATIONS: Until we start getting September numbers, the data will basically be good only for knowing how the condition of the economy going into the hurricanes. But the numbers tell us nothing about what we will see in the next six months. Indeed, it really makes no sense to react to these data. Keep in mind, Texas and Florida have the second and fourth highest state GDPs. Together, they account for about 14% of total U.S. GDP and employment. In other words, when they have problems, it has an impact on national economic activity. And their economies have taken a lickin’, though they will start tickin’ again soon. All we know right now is that going into the hurricanes, the economy was growing at a moderate pace and the labor markets were tight. After the initial downdraft in growth, the rebuilding process will hype spending. Think of all the houses, appliances, furniture, household products, motor vehicles, commercial and industrial buildings and so on have to be replaced. But at the same time, many businesses will never come back and many jobs will be lost permanently. But that would also free up a lot of workers to take other jobs, possibly easing the labor shortage in some areas. So as you can see, how this all shakes out is unclear, but it is likely to add to growth by the end of this year and well into the first half of next.

August NonManufacturing Activity and July Trade Deficit

KEY DATA: ISM (NonMan.): +1.4 points; Orders: +2 points; Employment: +2.6 points/ Trade Deficit: up $0.1 billion

IN A NUTSHELL: “The economy was doing fine before Harvey hit and if Irma causes major damage, it could be many months before we know the actual trend growth rate.”

WHAT IT MEANS: Well, coming into the worst phase of the hurricane season, the economy was doing fine. How we will come out of it is anyone’s guess right now. In August, the Institute for Supply Management reported that non-manufacturing activity rebounded from the downdraft it hit in July. Orders increased, production rose and backlogs built, all pointing continued good growth in the months ahead. This report mirrored the manufacturing numbers that were released last Friday. About the only negative in the report was that the level of the index was below the average for the past twelve months. It is still solid, but we may not see any major acceleration in growth going forward.

The U.S. trade deficit widened a teensy bit in July as both imports and exports declined. That is not good news. We want to see both expand as it would indicate both the U.S. and world economies are growing faster. On the export side, we sold a lot more food and aircraft, but fewer cell phones and motor vehicles. We imported more food, cell phones and computer products, but our demand for foreign oil, steel, vehicles and pharmaceutical products dropped. The trade deficit with most countries and regions widened, which should not make the president happy. It hit an eleven-month high with China even though exports expanded.

MARKETS AND FED POLICY IMPLICATIONS: The climate may not be changing, but in the span of two weeks, a hurricane dropped the most amount of rain on the continental U.S. in recorded history and the strongest Atlantic storm on record is bearing down on Florida. These extreme climate events will have real impacts on the pattern and level of growth and will modify trends in the data. The great losses in Texas and potentially Florida would slow growth in the third quarter and into the fourth. But as rebuilding efforts kick into high gear, spending in a variety of sectors will expand at unusually high levels. Going forward, it will be important to dismiss the headline number and figure out what is real and what is fake news, I mean, temporary factors. That complicates the Fed’s decision-making process as it will be hard for the members to have a good handle on growth. And the uncertainty could last through the fall as some of the data are lagged a month. This will be especially true if Irma or any of the remaining storms hit the mainland and cause major damage. All we can say right now is going into September, the economy was moving ahead moderately. Investors should use data for the next few months only to understand where things are, not necessarily to forecast what will happen going forward.


August Employment Report, Manufacturing Activity, Consumer Sentiment and July Construction

KEY DATA: Payrolls: +156,000, Revisions: -41,000; Unemployment Rate: 4.4% (up from 4.3%); wages: +0.1%/ ISM (Manufacturing): +2.5 points; Orders: -0.1 points/ Confidence: up 3.4 points/ Construction: -0.6%

IN A NUTSHELL: “The jobs report was not disappointing as the increases are now closer to the moderate growth we are seeing in the economy.”

WHAT IT MEANS: Since the July employment numbers were released, I have been saying I cannot figure out where all those workers are coming from if businesses are complaining that they cannot find qualified employees and job openings are at record highs. Well, it turns out that the government got a little carried away when estimating payroll increases for June and July and revised those numbers downward. BLS may have gotten it right in August. Yes, the number of new positions added was well below expectations, but it is right in line where it should be given the labor shortage and moderate growth pace. Indeed, the August increase may have been a little high the second biggest increase was in manufacturing, the vehicle sector in particular. Given the slowdown in sales, don’t be surprised if vehicle companies cut back on hiring in September. There weren’t any other sectors that added above-average jobs. As for the rise in the unemployment rate, it was minor, though minimal labor force growth is not a good sign. The participation rate was stable. Finally, wage growth remains minimal and troubling.

The manufacturing sector picked up steam in August. The Institute for Supply Management’s index rose solidly, led by strong hiring. That confirms the jobs increase reported in the August employment report. However, while production is booming, orders grew less rapidly and inventories soared, so we could see a softening in this sector going forward.

The University of Michigan’s Consumer Sentiment Index rose in August, confirming the increase reported by the Conference Board. Interestingly, respondents indicated that current conditions are softening, even if they are still raising their hopes about the future.

Construction slowed in July. Weakness in nonresidential activity more than offset a solid rise in housing. This is important because business investment in structures added to growth in the spring. That could turn around this quarter.

MARKETS AND FED POLICY IMPLICATIONS: Today’s employment data gets us closer to economic reality. The job numbers didn’t fit with other data, so the downward revisions were not surprising. The August growth rate is what we should be seeing and closer to what I expect going forward. That doesn’t mean the economy is slowing: It isn’t. It’s just that job gains now better reflect economic growth and the tightness in the labor market. This report is also more in line where the Fed expected, so it shouldn’t change any views. The FOMC members are more worried about wages than jobs and right now, compensation remain moribund. The next meeting September 19-20 and I don’t expect any rate hike, though we might get some indication when balance sheet reductions will start.

July Spending, Income and Pending Home Sales, August Layoffs and Weekly Jobless Claims

KEY DATA: Consumption: +0.3%; Disposable Income: +0.3%; Prices: +0.1%/ Pending Sales: -0.8%/ Layoffs: 33,825/ Claims: +1,000

IN A NUTSHELL: “It looks like the economy is sustaining the momentum created in the spring as consumers are still spending decently.”

WHAT IT MEANS: Can the economy keep it up? GDP expanded quite solidly in the second quarter, led by strong consumer spending and robust business investment. While the investment numbers are not yet out, it looks like the consumer is still hitting the stores and websites, though not at the pace we saw in the spring. Consumption rose moderately in July. When adjusted for price gains it was good but not that great even though inflation remains contained. Still, spending on both durable and nondurable goods was robust. It was just that demand for services was mediocre. Consumers, though, can maintain that decent pace. Disposable income continues to grow as wage and salary gains were strong for the third time in four months. The concern, though, is that the savings rate continues to decline, so how long people will keep up the spending pace is uncertain.

The roller coaster that is the housing market continues its up and down ride. The National Association of Realtors reported that pending home sales fell slightly in July. Declines were in three of the four regions, with only a small gain in the West. Over the year, there was an increase only in the Northeast. It looks like home sales will not pick up much, if at all, in the next couple of months.

Businesses continue to hold on to their workers tightly. Challenger, Gray and Christmas reported that layoff announcement did rise in August, both over the month and the year. But so far this year, planned payroll reductions are down over 26% compared to the first eight months of 2016. Retailers have announced the largest number of layoffs this year, but that is slowing. The services sector is also running well ahead of 2016 numbers. In contrast, the energy sector has cut its layoff announcements by 87%.

Weekly jobless claims rose minimally last week and remain near record lows.

MARKETS AND FED POLICY IMPLICATIONS: The expansion continues unabated, but it is beginning to look like we may not see growth at or above the 3% pace posted in the second quarter. Houston is going to create some noise in the data for quite a while. The metro area is so large that reductions in some sectors or increases in others can affect the monthly, seasonably adjusted data. The numbers don’t account for major natural catastrophes. So, it is really hard to know what third and fourth quarter growth will come in at. That said, the overall impact might not be large, as much of the rebuilding will occur over many months if not years. I had flood insurance but it still took many weeks to get just the first check after Sandy flooded the first floor. Some homes took years to be rebuilt. Imagine the situation in Houston where most people don’t have insurance. It could take a long time to get things done, even if Congress acts quickly. Thus, investors will have to parse the data over the next few months really carefully to separate out the temporary factors from the underlying trend. As for tomorrow’s jobs report, the expectations are that it will be a good one with about 175,000 new positions added and the unemployment rate remaining at 4.3%. I think that forecast is high and it will be closer to 150,000.


Revised Second Quarter GDP Growth and August Private Sector Jobs and Help Wanted OnLine

KEY DATA: GDP: 3.0% (Up from 2.6%); After Tax Profits (Over-Quarter): +1.3%/ ADP: +237,000; Large: 115,000/ HWOL: down 125,900

IN A NUTSHELL: “Solid growth in the spring has led to better job gains this summer.”

WHAT IT MEANS: The economy grew a little faster this spring than initially thought. GDP hit the 3% pace, led by a major upward revision to consumer spending. Households really did spend money; the government just didn’t count all of it. Unfortunately, income gains were sluggish and the declining savings rate raises questions whether people can continue shopping at the solid pace we saw in the spring. There were also some decent improvements in most categories of business investment, but the government slowed things down more than thought. After tax corporate profits grew moderately over the quarter, but were up a strong 8.6% from second quarter 2016. Companies are doing just fine and an additional moderate gain in the third quarter could lead to record profit levels.

The solid economy has created better than expected job gains and that may have continued in August. ADP estimates that firms added employees at a robust pace as large corporations went on a hiring binge. The large-firm gain was one of the largest on record, so don’t get too carried away with the forecast. The increases were in just about every industry, so this was a strong report.

Looking forward, even if we get a strong August jobs report, the increases may not to be sustainable. The Conference Board reported that online job ads continued to drop sharply in August. The declines were across all regions and in most occupations. In other words, firms everywhere are turning away from advertising job openings. That may be due to slowing demand or firms giving up trying to fill all the openings they have because of the labor shortage. Either way, it is hard to see how the economy can keep adding more than 200,000 jobs each month that the ADP numbers indicate.

MARKETS AND FED POLICY IMPLICATIONS: The economy is in good shape and firms are making plenty of money, so what is the problem? It is slow wage growth. And that raises the question: Do we need tax cuts or tax reform? Clearly, we don’t need tax cuts, which does little or nothing to long-term growth. Reform is needed, but it has to be directed in ways that improves efficiency, not adds simply to corporate profits. Firms have the money to spend and credit is readily available for firms of all sizes, so we don’t need “reform” that hypes short-term investment, especially since there is no reason to think it will lead to faster wage gains. Instead, reform needs to be structured in a way to provide the firms with the incentive to plan for the long-term. These decisions must be based on economic not tax gain factors. Will that happen? I doubt it. Instead, tax cuts will likely be sold as tax reform and that is not good for the economy or the budget. Meanwhile, investors will be focused on shorter-term issues, such as Friday’s jobs number. I still don’t see how firms are actually hiring so many workers, so I think Friday’s payroll gain number will disappoint. We shall see.

August Consumer Confidence, Small Business Hiring and June Housing Prices

KEY DATA: Confidence: +2.9 points; Current Conditions: +5.8 points/ Jobs Index: -0.02%/ National Home Prices (Over-Year): +5.8%

IN A NUTSHELL: “Despite the chaos in Washington, consumers remain upbeat and that holds out hope that spending will be solid this quarter.”

WHAT IT MEANS: Washington is a mess and nothing is getting done on anything, while Houston is in the midst of a massive disaster that will require months if not years to overcome (given my experience with super storm Sandy), but consumers remain upbeat. The Conference Board’s Consumer Confidence Index rose in August as respondents’ perception of current conditions picked up sharply. The current conditions index is near its all-time high. Business conditions and the labor market are both seen as having gotten better. However, looking outward, impressions were more mixed as to the availability of jobs and the likelihood that economic activity will accelerate. The cut off point for the survey was August 16th, so any impact of Charlottesville and Houston may not have been fully factored into the numbers.

Friday we get the August jobs numbers and today Paychex released its index of small business employment. The measure declined for the sixth consecutive month, though the decline in August will modest. That raises questions about how many new jobs will be reported on Friday, as it is hard for the solid payroll gains we have seen to be sustained if the small business sector isn’t adding workers.

The housing data, including sales and construction, have been bouncing around, but one number has been on a fairly steady upward trend: Prices. That pattern was reinforced as the S&P CoreLogic Case-Shiller U.S. National Home Price Index rose solidly in June and over the year. Sixteen of twenty major metro areas reported prices increases over the month. Only Atlanta, Chicago, Cleveland and New York were down, on a seasonally adjusted basis. The national index is now 4.3% above the prior, housing bubble peak.

MARKETS AND FED POLICY IMPLICATIONS: All thoughts are with Houston, but as is the case with investors and economists, the catastrophe is being looked at in terms of the impact on the markets and growth. As is usually the case with natural disasters, the short-term impact is likely to be negative. But the rebuilding will create massive amounts of new activity. It is also likely that Congress will pass a major recovery bill. (It is doubtful the Texas Congressional delegation will require the increases in spending be met by spending cuts elsewhere, as many did with Sandy. Those of us who were flooded out and had to live through that debate have not forgotten those no votes.) So the fourth quarter should see a lot of activity that would not have happened without the storm. Thus, we could see a slight reduction in third quarter growth but a faster fourth quarter and a little better first half of 2018. Investors will parse that as to who will be the winners and losers, especially since there will likely be a lot of home and infrastructure-rebuilding occurring paid for by a lot of insurance claims and government assistance.