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Finance and Economics



Updated: 2017-08-23T20:50:52.279-04:00

 



Thursday: Existing Home Sales, Unemployment Claims, Jackson Hole Economic Symposium

2017-08-23T20:50:52.298-04:00

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released. The consensus is for 236 thousand initial claims, up from 232 thousand the previous week.

• At 10:00 AM, Existing Home Sales for July from the National Association of Realtors (NAR). The consensus is for 5.57 million SAAR, up from 5.52 million in June. Take the under!

• At 11:00 AM, the Kansas City Fed manufacturing survey for August.

• Three days (Thursday, Friday and Saturday): The 2017 Jackson Hole Economic Symposium, "Fostering a Dynamic Global Economy, will take place Aug. 24-26, 2017.  (The program will be available at 6 p.m., MT, Aug. 24, 2017)."(image)



Philly Fed: State Coincident Indexes increased in 33 states in July

2017-08-23T17:32:41.378-04:00

From the Philly Fed:
The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for July 2017. Over the past three months, the indexes increased in 41 states and decreased in nine, for a three-month diffusion index of 64. In the past month, the indexes increased in 33 states, decreased in 15, and remained stable in two, for a one-month diffusion index of 36.
emphasis added
Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:
The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.
(image) Click on graph for larger image.

This is a graph is of the number of states with one month increasing activity according to the Philly Fed. This graph includes states with minor increases (the Philly Fed lists as unchanged).

In July, 34 states had increasing activity (including minor increases).

The downturn in 2015 and 2016, in the number of states increasing, was mostly related to the decline in oil prices.  

The reason for the recent sharp decrease in the number of states with increasing activity is unclear - and might be revised away.

(image) Here is a map of the three month change in the Philly Fed state coincident indicators. This map was all red during the worst of the recession, and almost all green now.

Source: Philly Fed. Note: For complaints about red / green issues, please contact the Philly Fed.(image)



A few Comments on July New Home Sales

2017-08-23T14:44:01.117-04:00

New home sales for July were reported at 571,000 on a seasonally adjusted annual rate basis (SAAR). This was well below the consensus forecast, however the three previous months were revised up sharply.  Overall this was decent report.

Sales were down 8.9% year-over-year in July.

Earlier: New Home Sales decrease to 571,000 Annual Rate in July.

(image) Click on graph for larger image.

This graph shows new home sales for 2016 and 2017 by month (Seasonally Adjusted Annual Rate).  Sales were down 8.9% year-over-year in July.

Note that sales in July 2016 were strong, so this was a difficult year-over-year comparison.

For the first seven months of 2017, new home sales are up 9.2% compared to the same period in 2016.

This was a strong year-over-year increase through July.(image)



AIA: Architecture Billings Index "growth moderates" in July

2017-08-23T11:47:15.179-04:00

Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.

From the AIA: Architecture Billings Index growth moderates
For the sixth consecutive month, architecture firms reported increasing demand for design services as reflected in the July Architecture Billings Index (ABI). As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the July ABI score was 51.9, down from a score of 54.2 in the previous month. This score still reflects an increase in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 59.5, up from a reading of 58.6 the previous month, while the new design contracts index increased from 53.7 to 56.4.

“The July figures show the continuation of healthy trends in the construction sector of our economy,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “In addition to the balanced increases in design billings across all major regions and construction sectors, the strong gains in new project work coming into architecture firms points to future growth in design and construction activity over coming quarters.”
...
• Regional averages: South (53.8), Midwest (53.8), Northeast (53.6), West (50.9)

• Sector index breakdown: multi-family residential (55.8), commercial / industrial (55.4), institutional (52.0), mixed practice (48.4)
emphasis added
(image) Click on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was at 51.9 in July, up from 54.2 the previous month. Anything above 50 indicates expansion in demand for architects' services.

Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.

According to the AIA, there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on non-residential construction.  This index was positive in 9 of the last 12 months, suggesting a further increase in CRE investment in 2017 and early 2018.(image)



New Home Sales decrease to 571,000 Annual Rate in July

2017-08-23T10:12:54.396-04:00

The Census Bureau reports New Home Sales in July were at a seasonally adjusted annual rate (SAAR) of 571 thousand. The previous three months were revised up solidly."Sales of new single-family houses in July 2017 were at a seasonally adjusted annual rate of 571,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 9.4 percent below the revised June rate of 630,000 and is 8.9 percent below the July 2016 estimate of 627,000."emphasis addedClick on graph for larger image.The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.Even with the increase in sales over the last several years, new home sales are still somewhat low historically.The second graph shows New Home Months of Supply.The months of supply increased in July to 5.8 months from 5.2 month in June. The all time record was 12.1 months of supply in January 2009.This is in the normal range (less than 6 months supply is normal)."The seasonally-adjusted estimate of new houses for sale at the end of July was 276,000. This represents a supply of 5.8 months at the current sales rate."On inventory, according to the Census Bureau: "A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted."Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.The third graph shows the three categories of inventory starting in 1973.The inventory of completed homes for sale is still low, and the combined total of completed and under construction is also low.The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).In July 2017 (red column), 49 thousand new homes were sold (NSA). Last year, 54 thousand homes were sold in July. The all time high for July was 117 thousand in 2005, and the all time low for June was 26 thousand in 2010.This was below expectations of 610,000 sales SAAR, however the previous months were revised up solidly.   I'll have more later today. [...]



MBA: Mortgage Applications Decrease in Latest Weekly Survey

2017-08-23T07:00:00.159-04:00

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey
Mortgage applications decreased 0.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 18, 2017.

... The Refinance Index increased 0.3 percent from the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 9 percent higher than the same week one year ago. ...

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) remained unchanged from the week prior at 4.12 percent, with points increasing to 0.39 from 0.38 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added
(image) Click on graph for larger image.


The first graph shows the refinance index since 1990.

Refinance activity will not pick up significantly unless mortgage rates fall well below 4%.


(image) The second graph shows the MBA mortgage purchase index.

According to the MBA, purchase activity is up 9% year-over-year.(image)



Wednesday: New Home Sales

2017-08-22T17:39:11.181-04:00

Wednesday:
• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 10:00 AM, New Home Sales for July from the Census Bureau. The consensus is for 610 thousand SAAR, unchanged from 610 thousand in June.

• During the day: The AIA's Architecture Billings Index for July (a leading indicator for commercial real estate).(image)



Chemical Activity Barometer Shows Modest Slowing in August

2017-08-22T11:45:11.333-04:00

Note: This appears to be a leading indicator for industrial production.

From the American Chemistry Council: Chemical Activity Barometer Shows Modest Slowing
The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), remained unchanged from July, continuing a modest deceleration of growth. The flat reading follows a 0.1 percent increase in July and a flat reading in June. Compared to a year earlier, the CAB is up 3.2 percent year-over-year, an easing from recent year-over-year gains. All data is measured on a three-month moving average (3MMA).

On a year-over-year basis, the unadjusted CAB is up 3.0 percent, also an easing from the previous six months.
...
Applying the CAB back to 1912, it has been shown to provide a lead of two to fourteen months, with an average lead of eight months at cycle peaks as determined by the National Bureau of Economic Research. The median lead was also eight months. At business cycle troughs, the CAB leads by one to seven months, with an average lead of four months. The median lead was three months. The CAB is rebased to the average lead (in months) of an average 100 in the base year (the year 2012 was used) of a reference time series. The latter is the Federal Reserve’s Industrial Production Index.
emphasis added
(image) Click on graph for larger image.

This graph shows the year-over-year change in the 3-month moving average for the Chemical Activity Barometer compared to Industrial Production.  It does appear that CAB (red) generally leads Industrial Production (blue).

CAB increased solidly in early 2017 suggesting an increase in Industrial Production, however, the year-over-year increase in the CAB has slowed recently.(image)



Richmond Fed: "Manufacturing Activity in August Remained Little Changed from July"

2017-08-22T10:04:59.055-04:00

From the Richmond Fed: Reports on Fifth District Manufacturing Activity in August Remained Little Changed from July
Reports on Fifth District manufacturing activity were largely unchanged in August, according to the latest survey by the Federal Reserve Bank of Richmond. The composite index remained at 14 in August, with an increase in the employment index offsetting a decrease in the shipments index and a very slight decline in the new orders metric. Although the employment index rose from 10 to 17 in August, other measures of labor market activity — wages and average workweek — were largely unchanged.
emphasis added
This is suggests solid growth in August. (image)



"Mortgage Rates Steady at 2017 Lows"

2017-08-21T17:12:28.823-04:00

From Matthew Graham at Mortgage News Daily: Mortgage Rates Steady at 2017 Lows
Mortgage rates held steady to start the new week.  This keeps them in line with the best levels since November 2016.  There were no interesting developments in financial markets or in terms of economic data today. ...

3.875% remains the most prevalently-quoted conventional 30yr fixed rate for top tier scenarios, although quite a few lenders remain at 4.00%.
Tuesday:
• At 9:00 AM ET, FHFA House Price Index for June 2017. This was originally a GSE only repeat sales, however there is also an expanded index.

• At 10:00 AM, Richmond Fed Survey of Manufacturing Activity for August.

• Also expected at 10:00 AM (not confirmed), Q2 MBA National Delinquency Survey.(image)



Existing Home Sales: Take the Under on Thursday

2017-08-21T11:55:22.922-04:00

The NAR is scheduled to report July Existing Home Sales on Thursday, August 24th at 10:00 AM ET.The consensus, according to Bloomberg, is that the NAR will report sales of 5.57 million. Housing economist Tom Lawler estimates the NAR will report sales of 5.38 million on a seasonally adjusted annual rate (SAAR) basis, down from 5.52 million SAAR in June.Housing economist Tom Lawler has been sending me his predictions of what the NAR will report for over 7 years.  The table below shows the consensus for each month, Lawler's predictions, and the NAR's initial reported level of sales.  Lawler hasn't always been closer than the consensus, but usually when there has been a fairly large spread between Lawler's estimate and the "consensus", Lawler has been closer.NOTE: There have been times when Lawler "missed", but then he pointed out an apparent error in the NAR data - and the subsequent revision corrected that error.  As an example, see: The “Curious Case” of Existing Home Sales in the South in AprilOver the last seven years, the consensus average miss was 145 thousand, and  Lawler's average miss was 70 thousand.Many analysts now change their "forecast" after Lawler's estimate is posted, so the consensus has improved a little recently!Existing Home Sales, Forecasts and NAR Reportmillions, seasonally adjusted annual rate basis (SAAR)MonthConsensusLawlerNAR reported1May-106.205.835.66Jun-105.305.305.37Jul-104.663.953.83Aug-104.104.104.13Sep-104.304.504.53Oct-104.504.464.43Nov-104.854.614.68Dec-104.905.135.28Jan-115.205.175.36Feb-115.155.004.88Mar-115.005.085.10Apr-115.205.155.05May-114.754.804.81Jun-114.904.714.77Jul-114.924.694.67Aug-114.754.925.03Sep-114.934.834.91Oct-114.804.864.97Nov-115.084.404.42Dec-114.604.644.61Jan-124.694.664.57Feb-124.614.634.59Mar-124.624.594.48Apr-124.664.534.62May-124.574.664.55Jun-124.654.564.37Jul-124.504.474.47Aug-124.554.874.82Sep-124.754.704.75Oct-124.744.844.79Nov-124.905.105.04Dec-125.104.974.94Jan-134.904.944.92Feb-135.014.874.98Mar-135.034.894.92Apr-134.925.034.97May-135.005.205.18Jun-135.274.995.08Jul-135.135.335.39Aug-135.255.355.48Sep-135.305.265.29Oct-135.135.085.12Nov-135.024.984.90Dec-134.904.964.87Jan-144.704.674.62Feb-144.644.604.60Mar-144.564.644.59Apr-144.674.704.65May-144.754.814.89Jun-144.994.965.04Jul-145.005.095.15Aug-145.185.125.05Sep-145.095.145.17Oct-145.155.285.26Nov-145.204.904.93Dec-145.055.155.04Jan-155.004.904.82Feb-154.944.874.88Mar-155.045.185.19Apr-155.225.205.04May-155.255.295.35Jun-155.405.455.49Jul-155.415.645.59Aug-155.505.545.31Sep-155.355.565.55Oct-155.415.335.36Nov-155.324.974.76Dec-155.195.365.46Jan-165.325.365.47Feb-165.305.205.08Mar-165.275.275.33Apr-165.405.445.45May-165.645.555.53Jun-165.485.625.57Jul-165.525.415.39Aug-165.445.495.33Sep-165.355.555.47Oct-165.445.475.60Nov-165.545.605.61Dec-165.545.555.49Jan-175.555.605.69Feb-175.555.415.48Mar-175.615.745.71Apr-175.675.565.57May-175.555.655.62Jun-175.585.595.52Jul-175.575.38---1NAR initially reported before revisions.[...]



Chicago Fed "Index Points to Growth near Historical Trend in July"

2017-08-21T09:50:56.460-04:00

From the Chicago Fed: Index Points to Growth near Historical Trend in July
The Chicago Fed National Activity Index (CFNAI) moved down to –0.01 in July from +0.16 in June. Three of the four broad categories of indicators that make up the index decreased from June, and three of the four categories made negative contributions to the index in July. The index’s three-month moving average, CFNAI-MA3, moved down to –0.05 in July from +0.09 in June.
emphasis added
This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967.

(image) Click on graph for larger image.

This suggests economic activity was close to the historical trend in July (using the three-month average).

According to the Chicago Fed:
The index is a weighted average of 85 indicators of growth in national economic activity drawn from four broad categories of data: 1) production and income; 2) employment, unemployment, and hours; 3) personal consumption and housing; and 4) sales, orders, and inventories.
...
A zero value for the monthly index has been associated with the national economy expanding at its historical trend (average) rate of growth; negative values with below-average growth (in standard deviation units); and positive values with above-average growth.
(image)



Sunday Night Futures

2017-08-20T20:59:57.454-04:00

Weekend:
Schedule for Week of Aug 20, 2017

Monday:
• At 8:30 AM ET, the Chicago Fed National Activity Index for July. This is a composite index of other data.

From CNBC: Pre-Market Data and Bloomberg futures: S&P 500 futures are up 2, and DOW futures are up 32 (fair value).

Oil prices were mixed over the last week with WTI futures at $48.48 per barrel and Brent at $52.66 per barrel.  A year ago, WTI was at $47, and Brent was at $48 - so oil prices are up slightly year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.32 per gallon - a year ago prices were at $2.16 per gallon - so gasoline prices are up 16 cents per gallon year-over-year.(image)



Update: For Fun, Stock Market as Barometer of Policy Success

2017-08-20T08:11:10.056-04:00

Note: This is a repeat of a June post with updated statistics and graph.

There are a number of observers who think the stock market is the key barometer of policy success.  My view is there are many measures of success - and that the economy needs to work well for a majority of the people - not just stock investors.

However, for example, Treasury Secretary Steven Mnuchin was on CNBC on Feb 22, 2017, and was asked if the stock market rally was a vote of confidence in the new administration, he replied: "Absolutely, this is a mark-to-market business, and you see what the market thinks."

And Larry Kudlow wrote in 2007: A Stock Market Vote of Confidence for Bush: "I have long believed that stock markets are the best barometer of the health, wealth and security of a nation. And today's stock market message is an unmistakable vote of confidence for the president."

Note: Kudlow's comments were made a few months before the market started selling off in the Great Recession. For more on Kudlow, see: Larry Kudlow is usually wrong

For fun, here is a graph comparing S&P500 returns (ex-dividends) under Presidents Trump and Obama:

(image) Click on graph for larger image.

Blue is for Mr. Obama, Orange is for Mr. Trump.

At this point, the S&P500 is up 6.8% under Mr. Trump compared to up 22.9% under Mr. Obama for the same number of market days. (image)



Schedule for Week of Aug 20, 2017

2017-08-19T08:09:09.640-04:00

The key economic reports this week are New and Existing Home sales for July.Fed Chair Janet Yellen will speak at the Jackson Hole Economic Symposium on Friday.----- Monday, Aug 21st -----8:30 AM ET: Chicago Fed National Activity Index for July. This is a composite index of other data.----- Tuesday, Aug 22nd -----9:00 AM ET: FHFA House Price Index for June 2017. This was originally a GSE only repeat sales, however there is also an expanded index.10:00 AM: Richmond Fed Survey of Manufacturing Activity for August.10:00 AM, Expected: Q2 MBA National Delinquency Survey.----- Wednesday, Aug 23rd -----7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.10:00 AM ET: New Home Sales for July from the Census Bureau. This graph shows New Home Sales since 1963. The dashed line is the May sales rate.The consensus is for 610 thousand SAAR, unchanged from 610 thousand in June.During the day: The AIA's Architecture Billings Index for July (a leading indicator for commercial real estate).----- Thursday, Aug 24th -----8:30 AM ET: The initial weekly unemployment claims report will be released. The consensus is for 236 thousand initial claims, up from 232 thousand the previous week.10:00 AM: Existing Home Sales for July from the National Association of Realtors (NAR). The consensus is for 5.57 million SAAR, up from 5.52 million in June.The graph shows existing home sales from 1994 through the report last month.Housing economist Tom Lawler expects the NAR to report sales of 5.38 million SAAR for July.Three days (Thursday, Friday and Saturday): The 2017 Jackson Hole Economic Symposium, "Fostering a Dynamic Global Economy, will take place Aug. 24-26, 2017.  (The program will be available at 6 p.m., MT, Aug. 24, 2017)."11:00 AM: the Kansas City Fed manufacturing survey for August. ----- Friday, Aug 25th -----8:30 AM: Durable Goods Orders for July from the Census Bureau. The consensus is for a 5.7% decrease in durable goods orders.10:00 AM, Speech by Fed Chair Janet L. Yellen, Financial Stability, At the Federal Reserve Bank of Kansas City Economic Symposium, Jackson Hole, Wyoming[...]



Oil Rigs "Rigs counts are now off the peak"

2017-08-18T17:03:05.385-04:00

A few comments from Steven Kopits of Princeton Energy Advisors LLC on Aug 18, 2017:
• Rigs counts are now off the peak

• Total US oil rigs were down 5 to 763

• Horizontal oil rigs were down 4 at 650
...
• Expect rigs counts to roll off for the next three months or so, with oil prices languishing in the $46-49 range typically.
(image) Click on graph for larger image.

CR note: This graph shows the US horizontal rig count by basin.

Graph and comments Courtesy of Steven Kopits of Princeton Energy Advisors LLC.(image)



Sacramento Housing in July: Sales up Slightly YoY, Active Inventory down 18% YoY

2017-08-18T14:57:03.552-04:00

During the recession, I started following the Sacramento market to look for changes in the mix of houses sold (equity, REOs, and short sales). For several years, not much changed. But in 2012 and 2013, we saw some significant changes with a dramatic shift from distressed sales to more normal equity sales.

Note: The Sacramento Association of REALTORS® started breaking out REOs in May 2008, and short sales in June 2009.

In July, total sales were up 0.7% from July 2016, and conventional equity sales were up 5.0% compared to the same month last year.

In July, 2.4% of all resales were distressed sales. This was down from 3.2% last month, and down from 4.9% in July 2016.

The percentage of REOs was at 1.3%, and the percentage of short sales was 1.1%.

Sacramento Realtor Press Release: July sees decrease in sales volume; inventory, price increase
July ended with a 10.4% decrease in sales, down from 1,824 to 1,634. Compared with 2016, current number is .7% higher than the 1,622 sales for that month. Equity sales for the month reached a high point, accounting for 97.2% (1,588) of the sales this month. REO/bank‐owned and Short Sales made up the difference with 22 sales (1.3%) and 18 sales (1.1%) for the month, respectively.
...
The decrease in sales for the month and increase in active listings raises the Months of Inventory, which showed a 25% increase from 1.2 Months to 1.5 Months. A year ago the Months of inventory was 1.7. Total Active Listing Inventory increased 13.8% from 2,105 to 2,395. This current figure is down 14.5% from the 2,801 listings of July last year.

The Average DOM (days on market) remained at 18 from June to July.
emphasis added
Here are the statistics.

(image) Click on graph for larger image.

This graph shows the percent of REO sales, short sales and conventional sales.

There has been a sharp increase in conventional (equity) sales that started in 2012 (blue) as the percentage of distressed sales declined sharply.

Active Listing Inventory for single family homes decreased 14.5% year-over-year (YoY) in June.  This was the 27th consecutive monthly YoY decrease in inventory in Sacramento.

Cash buyers accounted for 13.8% of all sales - this has been generally declining (frequently investors).

Summary: This data suggests a normal market with few distressed sales, and less investor buying - but with limited inventory.(image)



Lawler: Early Read on Existing Home Sales in July

2017-08-18T11:57:00.202-04:00

From housing economist Tom Lawler:

Based on publicly-available local realtor/MLS reports from across the country released through today, I project that US existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 5.38 million in July, down 2.5% from June’s preliminary pace and up 0.9% from last July’s seasonally adjusted pace.

On the inventory front, local realtor/MLS data suggest that the YOY decline in active listings last month was slightly less than in June, and I forecast that the NAR’s existing home inventory estimate for July will be 1.98 million, up 1.0% from June’s preliminary estimate and down 6.2% from last July’s estimate.

Finally, local realtor/MLS data suggest that the NAR’s estimate of the median exiting home sales price last month was up 6.1% from a year earlier.

CR Note: The NAR is scheduled to release existing home sales for July on Thursday, August 24th. The early consensus forecast is for sales of 5.56 million SAAR (take the under!).(image)



BLS: Unemployment Rates Unchanged in 46 states in July, Two States at New Series Lows

2017-08-18T10:13:21.353-04:00

From the BLS: Regional and State Employment and Unemployment Summary
Unemployment rates were higher in July in 3 states, lower in 1 state, and stable in 46 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today. Twenty-seven states had jobless rate decreases from a year earlier and 23 states and the District had little or no change. The national unemployment rate, 4.3 percent, was little changed from June but was 0.6 percentage point lower than in July 2016.
...
North Dakota and Colorado had the lowest unemployment rates in July, 2.2 percent and 2.4 percent, respectively. The rates in North Dakota (2.2 percent) and Tennessee (3.4 percent) set new series lows. (All state series begin in 1976.) Alaska had the highest jobless rate, 7.0 percent.
emphasis added
(image) Click on graph for larger image.

This graph shows the current unemployment rate for each state (red), and the max during the recession (blue). All states are well below the maximum unemployment rate for the recession.

The size of the blue bar indicates the amount of improvement.   The yellow squares are the lowest unemployment rate per state since 1976.

Ten states have reached new all time lows since the end of the 2007 recession.  These ten states are: Arkansas, California, Colorado, Maine, Mississippi, North Dakota, Oregon, Tennessee, Washington, and Wisconsin.

The states are ranked by the highest current unemployment rate. Alaska, at 7.0%, had the highest state unemployment rate.

(image) The second graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 2006. At the worst of the employment recession, there were 11 states with an unemployment rate at or above 11% (red).

Currently one state has an unemployment rate at or above 7% (light blue); Only two states and D.C. are at or above 6% (dark blue). The states are Alaska (7.0%) and New Mexico (6.3%).  D.C. is at 6.4%.(image)



Mortgage Rates Fall below 4%, Lowest since November 2016

2017-08-17T19:45:59.376-04:00

From Matthew Graham at Mortgage News Daily: Trump Administration Drama Pushing Rates Even Lower
Mortgage rates fell yesterday in response to a tweet about Trump disbanding his councils of CEOs.  Twitter was in play again today.  This time around it was Gary Cohn, Trump's economic advisor.  Rather, it was rumors of Cohn's departure that sent financial markets into a tail-spin.  Terror attacks in Spain may have played a supporting role.  The net effect was heavy losses for stocks and solid gains for bonds.  When bonds improve, rates fall.

Mortgage lenders continue to be slow to pass along the gains in bond markets in general, but they're certainly passing them along.  Multiple lenders issued positive reprices in the afternoon as bond markets rallied.  Conventional 30yr fixed rates are increasingly being quoted at 3.875% as opposed to 4.0% on top tier scenarios.  On average, rates are the lowest since November 2017--something we've been able to say for the 2nd straight day, and several times over the past few weeks.
(image)



Hotels: Occupancy Rate up Year-over-Year

2017-08-17T14:16:03.161-04:00

From HotelNewsNow.com: STR: US hotel results for week ending 12 August
The U.S. hotel industry reported mostly positive year-over-year results in the three key performance metrics during the week of 6-12 August 2017, according to data from STR.

In comparison with the week of 7-13 August 2016, the industry recorded the following:

Occupancy: +0.7% to 73.6%
• Average daily rate (ADR): +1.5% to US$128.39
• Revenue per available room (RevPAR): +2.2% to US$94.46
emphasis added
The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

(image) The red line is for 2017, dash light blue is 2016, dashed orange is 2015 (best year on record), blue is the median, and black is for 2009 (the worst year since the Great Depression for hotels).

Currently the occupancy rate is tracking close to last year, and behind the record year in 2015.

Seasonally, the occupancy rate has peaked and will decline into the Fall.

Data Source: STR, Courtesy of HotelNewsNow.com(image)



Earlier: Philly Fed Manufacturing Survey "region continued to advance" in August

2017-08-17T10:36:14.598-04:00

Earlier from the Philly Fed: August 2017 Manufacturing Business Outlook Survey
Manufacturing conditions in the region continued to advance in August, according to firms responding to this month’s Manufacturing Business Outlook Survey. The diffusion index for general activity fell slightly but continued to reflect growth. There was a notable improvement in the new orders and shipments indexes, and overall employment expansion continued among the reporting firms. The survey’s indexes of future activity indicate that firms expect a continuation of growth in the region’s manufacturing sector over the next six months.

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, fell slightly from 19.5 in July to 18.9 in August. The index has been positive for 13 consecutive months ... The survey’s indicators for labor market conditions suggest modest growth in employment. The percentage of firms reporting increases in employment (15 percent) was greater than the percentage reporting decreases (5 percent). The employment index held near steady at 10.1. Firms also reported overall increases in average work hours in August, and the workweek index was positive for the 10th consecutive month.
emphasis added
Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

(image) Click on graph for larger image.

The New York and Philly Fed surveys are averaged together (yellow, through August), and five Fed surveys are averaged (blue, through July) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through July (right axis).

This suggests the ISM manufacturing index will show somewhat faster, and solid expansion in August.(image)



Industrial Production Increased 0.2% in July

2017-08-17T09:23:19.488-04:00

From the Fed: Industrial production and Capacity Utilization
Industrial production rose 0.2 percent in July following an increase of 0.4 percent in June. In July, manufacturing output edged down 0.1 percent; the production of motor vehicles and parts fell substantially, but that decrease was mostly offset by a net gain of 0.2 percent for other manufacturing industries. Following a six-month string of increases beginning in September 2016, factory output was little changed, on net, between February and July. The indexes for mining and utilities in July rose 0.5 percent and 1.6 percent, respectively. At 105.5 percent of its 2012 average, total industrial production was 2.2 percent above its year-earlier level. Capacity utilization for the industrial sector was unchanged in July at 76.7 percent, a rate that is 3.2 percentage points below its long-run (1972–2016) average.
emphasis added
(image) Click on graph for larger image.

This graph shows Capacity Utilization. This series is up 9.9 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 76.7% is 3.2% below the average from 1972 to 2015 and below the pre-recession level of 80.8% in December 2007.

Note: y-axis doesn't start at zero to better show the change.

(image) The second graph shows industrial production since 1967.

Industrial production increased in July to 105.5. This is 21.1% above the recession low, and above the pre-recession peak.

The increase was slightly below expectations.(image)



Weekly Initial Unemployment Claims decrease to 232,000

2017-08-17T08:32:43.556-04:00

The DOL reported:
In the week ending August 12, the advance figure for seasonally adjusted initial claims was 232,000, a decrease of 12,000 from the previous week's unrevised level of 244,000. The 4-week moving average was 240,500, a decrease of 500 from the previous week's unrevised average of 241,000
emphasis added
The previous week was unrevised.

The following graph shows the 4-week moving average of weekly claims since 1971.

(image) Click on graph for larger image.


The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 240,500.

This was lower than the consensus forecast.

The low level of claims suggests relatively few layoffs.(image)



Thursday: Unemployment Claims, Industrial Production, Philly Fed Mfg

2017-08-16T19:33:00.179-04:00

Personal Note: Sometimes we must not remain silent. I found Mr. Trump's comments on Saturday disgraceful. His comments on Monday were more appropriate, and better late than never. However Mr. Trump's comments yesterday were despicable. Unfortunately, this isn't a surprise. Here is what I wrote last May: Off-Topic: A Comment on Litmus Test Moments

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released. The consensus is for 241 thousand initial claims, down from 244 thousand the previous week.

• Also at 8:30 AM, Philly Fed manufacturing survey for August. The consensus is for a reading of 17.0, down from 19.5.

• At 9:15 AM, The Fed will release Industrial Production and Capacity Utilization for July. The consensus is for a 0.3% increase in Industrial Production, and for Capacity Utilization to increase to 76.7%.(image)