No Harvey Impact yet but 1st Time Unemployment Insurance Claims Rise

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 236,000 1st time claims for unemployment insurance for the week ended August 27, 1,000 MORE than the previous week;
  • The number of initial claims for the week ended August 19 was UNCHANGED at 232,000;
  • The four-week moving average of first time claims FELL 1,250 to 236,750 or 0.154 percent of total employment;
  • The number of continued claims – reported on a one-week lag – for the week ended August 19 was 1,942,000, a decline of 12,000 from the previous week’s unrevised number;
  • The four-week moving average of continuing claims DROPPED 6,250 to 1,951,500;

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The increase in first time claims for unemployment insurance for the week ended August 26, as the Department of Labor reported Thursday is just a tease as to what this report will look like in a few weeks.

If history is any guide, we can probably expect unemployment insurance claims to jump by about 100,000, In 2005, about two weeks after Hurricane Katrina ravaged Louisiana (and, not, internet rumors notwithstanding Barack Obama was not president then), initial claims which had been averaging about 320,000 per week, spiked by 96.000 and then dropped 65,000 two weeks later. Claims returned to their pre-storm average within two months.

President Obama was in the White House when Superstorm Sandy tore up the East Coast in 2012, sending first-time claims up 90,000 two weeks later.

Just as Harvey’s impact on employment will be transitory, so too will be impact of the storm be on gasoline prices, affected because it hit a refinery-rich part of the country. Analysts expect a 15¢ jump in the per gallon price of gasoline in the next couple of weeks but prices should be back to pre-storm levels in a couple of weeks.  Platforms and rigs were shut down in anticipation of the storm, which made landfall late Friday as a Category 4 storm but weakened mid-Saturday into a tropical storm. Following Katrina, gasoline prices shot up 40¢ per gallon within a month but then fell back to below pre-storm levels two months later.

Thursday’s data on claims will have no impact on the Bureau of Labor Statistics’ report Friday on the August labor market. The unemployment rate is expected to remain at 4.3 percent and non-farm payrolls to increase about 182,000 which would be below the July increase of 209,000 and the three-month average increase of 195,000.

Average hourly earnings are expected to increase 6¢ to $26.42 which would compute to a 2.6 percent annual increase and average weekly earnings are expected to slip $3.59 to $905.83 which would be 2.6 percent higher than August 2016.

You can hear Mark Lieberman tomorrow (Friday Sep. 1) at 8:45 am and again at 12:05 pm on POTUS Sirius XM 124 and every Friday at 6:20 am on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

Unemployment Rate Drops to 4.5% in March as Job and Earnings Growth Stall

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Unemployment rate FELL in March to 4.5 percent, the lowest rate in almost 10 years (May 2007);
  • Payroll jobs INCREASED 98,000 in March, the weakest job growth since last May;
  • Prior month job totals were revised down: February from a gain of 235,000 to a gain of 219,000 and January from a gain of 238,000 to an increase of 216,000 jobs;
  • Private sector payrolls rose 89,000 in March, also the weakest growth since last May;
  • Average weekly hours in March FELL to 34.3, the lowest since last November;
  • Average weekly earnings INCREASED in March to $896.60 — up $1.77 from February but the 2.4 percent year-year growth was slightly weaker than the 2.5 percent annual growth recorded in February;
  • Average hourly earnings ROSE 5¢ in March to $26.14, a 2.7 percent year-year jump; in February average, hourly earnings registered a 2.8 percent year-year improvement;
  • The number of full-time workers INCREASED 326,000 in February; the number of part-time workers ROSE 149,000;
  • Labor force participation rate HELD at 63.0 percent;
  • Employment-Population ratio ROSE to 60.1 percent, the highest level since February 2009;
  • The number of multiple jobholder went UP 138,000; multiple jobholders represent 5.2 percent of all employed individuals, up from 5.1 percent in February;

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Despite the lowest unemployment rate in almost 10 years, this has to be considered a disappointing Employment Situation report, with the weakest job growth in 10 months and downward revisions to the job totals reported for the first two months of the Trump Administration. The revisions to January and February job growth trimmed the number of new jobs by 38,000.

So, what happened?

Some of the changes can be attributed simply to the calendar as the number of retail jobs fell marking the official end of the holiday shopping season. Some too relates to the weather with 6,000 new construction jobs in March, down from the addition of 15,000 in February.

Unusually good winter weather in the Midwest and Northeast probably strengthened job growth in January and February. March was payback time.,

Offsetting the drop in retail jobs, the number of restaurant jobs grew 21,700. Restaurant jobs have been a steady source of job growth having increased for 57 consecutive months. But, those jobs remain among the lowest paying jobs.

The health care sector too remained a strong source of new jobs, adding 16,700 jobs in March, the 54th straight month of job growth. The health care sector, of course, dodged a bullet when the House cancelled a vote on a replacement for the Affordable Care Act. Since the ACA took effect, the number of health care jobs has increased by 1.5 million or just over 39,000 per month.

Wage growth, though up in March appears to be slowing slightly. Coupled with the dip in average weekly hours, it means workers have less, not more, money in their pockets. Indeed, the slight drop in weekly hours is a bad omen for future hiring. An increase in hours would mean employers have to add to staff. In the immediate aftermath of the onset of the Great Recession, hours fell below 34, dropping as low as 33.8.

Average weekly earnings fell in the construction, and manufacturing sectors. The construction sector is one of the highest paying industry sectors with average weekly earnings of $1,039.77, topped only by the utilities sector ($1,5550.86) and the mining and logging sector ($1,262.69). Manufacturing workers earned an average of $864.84 per week in March, down $2.04 from February. Construction worker earnings fell $6.97 a week in March.

The weakness in hours and the mild slowing in wage growth suggest a weaker labor market than we’d like to see but there also seems to be little basis for concern about inflationary pressures.

The overall job growth should be tempered by the increase of 138,000 multiple jobholders.

The drop in the unemployment rate though remains the redeeming factor in this report. The number of persons unemployed fell 326,000 to 7.2 million, the lowest level since September 2007. Delving into that number, the number of individuals unemployed because of layoffs dropped 190,000 in March and the number of individuals unemployed for fewer than five week dropped 232,000. Some of those could have left that bracket and are now unemployed for 5-14 weeks, but that category fell 29,000. Together that suggest that new entrants to the ranks of the unemployed don’t remain there very long.

Unemployment rates for sub-categories also showed improvement. The unemployment rate for blacks dipped to a still high 8.0 percent from 8.1 percent in February and the unemployment rate for Hispanics dropped 0.5 percent to 5.1 percent. Even the teenage unemployment rate was down, dropping 1.3 percentage points to 13.7 percent, the lowest it has been since May 2001 when it stood at 13.4 percent.

Hear Mark Lieberman every Friday morning at 6:20 am on The Morning Briefing on POTUS on Sirius-XM 124.

You can follow Mark Lieberman on Twitter at @foxeconomics.

 

1st Time Jobless Claims Remain Highly Volatile, Falling 10,000 in Last Week

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • 1st time claims for unemployment insurance for the week ended December 3 FELL 10,000 to 258,000;
  • The number of claims for the week ended November 28 was unchanged at 268,000
  • Filings remained under 300,000 for the 92nd straight week, the longest streak since 1970;
  • Four week moving average of first time claims INCREASED 1,000 to 252,500;
  • The four week moving average represented 0.166 percent of total employment, UP .001 percentage points from a week earlier;
  • Continuing claims for the week ended November 28 – reported on a one-week lag – DECREASED 79,000 – largest week-week drop since July 2015 — to 2,005,000;
  • The number of continuing claims for the week ended November 21 was REVISED UP 3,000 to 2,084.000;
  • Four-week moving average of continuing claims FELL 9,500 to 2,028,750;

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First time claims for unemployment insurance remained extremely volatile as the calendar turned to December, with a five-figure swing for the fifth straight week, according to the Labor Department.

The average change (regardless of direction) for the last five weeks has been 15,400 compared 6,600 for the previous five weeks. To be sure, the net change has been a drop of 7,000 claims over the last five weeks, but the wide swings suggest some instability in labor markets which would call into question the wisdom of tinkering with interest rates in the short term. Nonetheless, “body language” from the Federal Open Market Committee – the federal Reserve Board’s policy-setting arm – suggest the FOMC is poised to lower the target fed funds rate when it convenes next Tuesday. Though widely anticipated, the FOMC action could our a damper on holiday sales. Retailers had been anticipating strong sales, up about 3.6 percent, according to the National Retail Federation (NRF).

The NRF estimated retailers would add between 640,000 and 690,000 jobs to deal with the increased sales volume for the holiday season which, according to NRF, covers all of November and December.

The four week moving average, designed to smooth the volatility of the weekly numbers, is showing less of a swing in the last five weeks ranging from an increase of 1,000 to a drop of 6,000 and a net decline of 5,250 for the period dropping the total to 252,500, 6.7 percent below the level a year ago.

Despite the recent volatility, both initial claims and continuing claims have been on a relatively stable downward trajectory over the past year. Continuing claims, often seen as a surrogate for hiring, are down 10.7 percent from a year ago. The four-week moving average of continuing claims has dropped a more modest7.1 percent.

In raw numbers, continuing claims fell 241,000 in the last year with most of that decline, 137,000, since September 1.

You can hear Mark Lieberman every Friday at 6:20 am on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

Job Openings Jump to Record High in August;

 By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Job openings at the end of August ROSE to a record high 7.14 million from July 14 percent higher than unemployment
  • The number of hires ROSE 1.2 percent to a record 5.78 million in August
  • The ratio of job openings per unemployed ROSE to 1.14 in August;

Trends:

  • Job openings exceeded unemployed for the fourth month in a row;
  • The ratio of quits to layoffs – a sign of confidence in the labor market – was 2.0 to one in August meaning twice as many people left jobs voluntarily as were laid off;

Data Source: Bureau of Labor Statistics

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That the JOLTS (Job Openings and Labor Turnover Survey) report for August showed a continuation of the trend we’ve seen in the labor market for several months with available jobs remaining unfilled as a skills mismatch among workers continues.

The job openings data tracks new jobs as reported in the Bureau of Labor Statistics monthly Employment Situation report. While the monthly report is a snapshot of the labor market, the JOLTS data resemble more of a moving picture.

With the number of unemployed persons dropping to under six million in September, the JOLTS reports will likely only improve.

Hiring, according to the August JOLTS data, is now on a pace for 67.6 million which would be 3.6 percent higher than last year. The JOLTS report of job openings by industry also suggests an uptick in reported hourly and weekly earnings as some of the higher paying industry sectors: business and professional services, construction and health and education services showed relatively high ratios of unemployed to job openings.

You can hear Mark Lieberman on P.O.T.U.S Morning Briefing (Sirius 124) every Friday at 6:20 am Eastern Time. Follow him on Twitter at @foxeconomics.

1st Time Unemployment Claims Take Another Hit as New Storms Ravage Coast

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 214,000 1st time claims for unemployment insurance for the week ended October 6 an INCREASE of 7.000 from the prior week’s unrevised report;
  • The four-week moving average of first-time claims ROSE 2,250 to 209,500;
  • Four-week moving average represented 0.134 percent of employment, UP from 0.133 percent the previous week
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,660,000 for the week ended September 28, UP 4,000 from the previous week’s upwardly REVISED 1,656,000 (from 1,650,000);
  • The four-week moving average of continued claims FELL 10,000 to 1,656,000.

Trends:

  • Four-week moving average of continued claims has now declined for nine straight weeks
  • Four-week moving average of initial claims has now increased for four straight weeks; first time since May 19-June 2.
  • The year-to-date average of initial claims for unemployment insurance fell to 234,348 – 5.1 percent below the level of a year ago, the largest year-year drop of the year.

Data Source: Department of Labor

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With a new storm expected to batter the Carolinas – and the unemployment rolls — first time claims for unemployment insurance rose for the second time in three weeks, according to the Labor Department.

But like the previous increase, 13, 00 two weeks ago, and the increase likely a week from now, these jumps have more of a meteorological than economic explanation.

And like those jumps they will likely be wiped out when workers are called back, many to deal with storm damage.

While the storms may not have much of an impact on overall labor market data, they could have an impact on hours worked and thus average weekly earnings which continue to struggle even though this recovery.

You can hear Mark Lieberman every Friday at 6:20 am on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124.

1st Time Unemployment Claims Shrug Off Florence; Resume Downward Slope

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 207,000 1st time claims for unemployment insurance for the week ended September 28 a DROP of 8.000 from the prior week’s upwardly revised report (214,000 to 215,000);
  • The four-week moving average of first-time claims ROSE 500 to 207,000;
  • Four-week moving average represented 0.133 percent of employment, UNCHANGED from the previous week
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,650,000 for the week ended September 21, DOWN 13,000 from the previous week’s upwardly REVISED 1,645,000;
  • The four-week moving average of continued claims FELL 15,250 to 1,654,500.

Trends:

  • Four-week moving average of continued claims has now declined for eight straight weeks
  • Four-week moving average of continued claims is at its lowest level since October 27, 1973 (1,664,250).
  • The year-to-date average of initial claims for unemployment insurance fell to 234,560 – 5 percent below the level of a year ago;

Data Source: Department of Labor

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On the eve of yet another employment situation release, initial claims for unemployment insurance shrugged off the impact of Hurricane Florence by resuming its downward trajectory.

Indeed, one of the two states most affected by Florence showed a sharp decrease in first-time claims for unemployment insurance. The raw numbers (not seasonally adjusted) for North Carolina showed claims dropped 4,783, all but reversing the 8,035 increase a week ago, the first week after the storm. South Carolina which had an increase of 1,899 first time claims in the first week after the storm, had an increase of 939 claims last week.

As a predictor of the employment reports for September, the four-week moving average of initial claims dropped 7,750 from mid-August to the middle of last month, suggesting a further decline in unemployment. The unemployment rate is based not only on the level of unemployment however but on the change in the labor force.

The four-week moving average of continued claims for unemployment insurance, a surrogate for jobs, dropped 52,000 month-month which should translate into a strong jobs report. The month-month change was the largest since May when the four-week average of continued claims fell 124,000. The number of payroll jobs jumped 268,000 in May, the second highest monthly increase since President Trump took

You can hear Mark Lieberman every Friday at 6:20 am on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124.

Pending Home Sales Index Down Again in August

Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • National Association of Realtors’ August Pending Home Sales Index (PHSI) FELL8 percent from July to 104.2;
  • Year-year the index was DOWN7 percentage points;

Trends:

  • The August decrease was the fifth this year;
  • Index is down year-year for the eight straight months;

Data Source: National Association of Realtors (NAR) 

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In another blow to home sales, the NAR’s pending home sales index dropped again in August, the fifth decline this year, as home sales face continued challenges in fears of a recession and higher interest rates.

The report followed by one day the parallel report on new home sales from the Census Bureau which showed a 3.5 percent increase in new home sales in August – contracts for sale – from July.

It also followed by one day the action by the Federal Open Market Committee increasing the target Fed Funds rate. Although the Fed Funds rate is not directly related, mortgage interest rates are also rising. Freddie Mac reported Thursday the average rate for a 30-year mortgage rose to 4.72 percent from 4.65 percent one week earlier and 3.83 percent one year ago. That translates into a monthly payment of $1,558.07 up 11.2 percent from $1,401.30 a year ago. It was the fifth straight week mortgage rates, as surveyed by Freddie Mac, have increased.

Sales of existing single-family homes have not increased for five straight months (sales were flat from July to August) even though the pending home sales index improved in three of those five months.

The median price of an existing single-family home fell $4,500 in each of the last two months without having a positive impact on the sales rate.

Hear Mark Lieberman every Friday at 6:20 am on POTUS Morning Briefing, Sirius-XM 124. You can follow Mark Lieberman on Twitter at @foxeconomics.

1st Time Unemployment Claims Move Up Following Florence

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The number of continued claims – individuals who have been collecting unemployment insurance — reported on a one-week lag, was 1,661,000 for the week ended September 14, UP 16,000 from the previous week’s UNREVISED 1,645,000;
  • The four-week moving average of continued claims FELL 12,500 to 1,679,250.
  • There were 214,000 1st time claims for unemployment insurance for the week ended September 21 an INCREASE of 13.000 from the prior week’s unrevised report;
  • The four-week moving average of first-time claims ROSE 250 to 206,000;
  • Four-week moving average represented 0.132 percent of employment, UNCHANGED from the previous week;

Trends:

  • The number of first-time claims INCREASED for the first time in four weeks;
  • Four-week moving average of initial claims HAS FALLEN for the fifth straight week;
  • The week-week increase in continuing claims was the largest since the end of July;

Data Source: Department of Labor 

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In the first report on initial claims for unemployment insurance, first-time claims rose a relatively modest 13,000 (seasonally adjusted).

According to the Labor Department, the unadjusted number of claims rose about 7,500 with the increases in North and South Carolina alone totaling 9,934.  In the same week, the number of first-time claims from Kentucky (northwest of the Carolinas) increased 4,461 and California 1,377. The increase in claims in North Carolina was 369 percent from the previous week and in South Carolina, the increase was 129 percent.

Overall, from mid-August to mid-September first-time claims fell 9,000 and the four-week moving average rose 8,000. Continued claims fell 49,000 from mid-August to mid-September while the four-week average of continued claims dropped 52,000.

Those movements point to a decline in unemployment (from the current population (household) survey and an uptick in jobs (from the establishment survey.

The only caveat may be the response rate from employers, particularly in the storm-affected areas which may be more concerned about getting their businesses up and running again than completing a government survey.

Following Superstorm Sandy in 2012, the collection rate of the establishment survey dipped to 70.3 from a year-to-date average of 73.8 percent but jumped to 93.3 percent before the first revised employment situation report for August; in 2005 the initial response rate was 60.8 percent (compared with a year-to-date average of 68.1 percent.

You can hear Mark Lieberman every Friday at 6:20 am on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124.

New Home Sales Improve in August As Median Price Drops

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Pace of contracts for new home sales ROSE5 percent in August to 627,000 (Seasonally Adjusted Annual Rate);
  • The sales pace for July was REVISED DOWN 9,000, the slowest sales pace since August 2017 (558,000); without the revision, the July month-month increase would have been 1.9 percent;
  • Unsold inventory INCREASED 5,000 in August to 318,000 but the inventory for July was revised downward to 313,000 from 315,000;
  • The months’ supply of new homes for sale FELL to 6.1 in August from 6.2 in July
  • Median price of a new home FELL $7,9 00, 2.4 percent, from June to $321,200;
  • Year-year the median price of a new home was UP $6,000 (1.9 percent)

Trends:

  • New home sales in August were UP7percent from August 2017, the largest year-year jump since December;
  • The median price of a new single-family home has DROPPED month-month in six of the eight months this year;
  • The inventory of new homes for sale INCREASED for the fifth straight month

Data Source: Census Bureau and Department of Housing and Urban Development

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Builders may have finally figured out how to boost lagging sales of new homes: lower the price. New home sales, or as the government reports them contracts for the sale of new homes, jumped 21,000 in August (SAAR), the strongest increase since February when, coincidentally, the median price of a new home fell $2,400.

But the Census/HUD report didn’t assuage realtors who were still feeling the impact of last week’s report that the pace of existing home sales in August was flat to July – even though the median price of an existing single-family home fell 1.7 percent ($4,600) – the second consecutive month-month decline.

The inventory of existing homes for sale was also flat in August and the months’ supply of homes for sale remained at 4.3. the highest it’s been since October 2016.

The standard explanation the NAR has offered for sluggish sales has been a lack of inventory but with the inventory at 4.3 months’ supply for three straight months, that explanation is starting to wear thin.

Sales – of new, not existing — homes could begin to pick up as the Carolinas and other affected areas dry out from recent storms and realize must replace destroyed by Hurricane Florence. That, of course, could perversely be good news for builders.

Beyond the month-month gyrations of new and existing home sales, the longer-term trends remain discouraging.  New home sales have averaged 618,000 over the last three months, down sharply from 653,000 in the prior three months and 661,000 in the previous three months. The two reports are not precisely comparable: the government data measures contracts for sale while the NAR reports on closed transaction. The NAR’s pendign home sales (contracts) will be released next week.

Existing home sales averaged 5.35 million in the last three months compared with 5.48 million in the previous three months and 5.49 million in the three months before that.

Among the factors conspiring to tamp down home sales: stagnant wages despite a “seller’s” job market; mortgage interest rates creeping up (3.83 percent for a 30-year fixed rate loan in September 2017 to 4.65 percent this year and the still-present student debt load of borrowers in the prime home-buying age cohort.

That difference in rates would increase the monthly payment on a $300,000, 30-year loan from $1401.30 to $1,545.44, an increase of about 10.3 percent over a period when weekly earnings have gone up just about 3 percent.

Hear Mark Lieberman on P.O.T.U.S. (Sirius-XM 124) Friday at 6:20 am Eastern Time. You can follow Mark Lieberman on Twitter at @foxeconomics.

Home Price Growth Slowed in July per Case Shiller Index

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Case Shiller CoreLogic 10- and 20-city indices each GREW in July but at the slowest rate since January;
  • The 10-city index was UP 0.24 percent or 0.54 points to 227.0; the 20-city index grew 0.28 percent or 0.59 points, to 213.76;
  • The Case Schiller national index GREW 0.45 percent or 0.91 points to 205.35;
  • Index ROSE in 18 of the 20 cities surveyed in July; Prices were flat month-month in San Diego and Seattle;
  • Year-year prices were UP in all 20 cities, but the year-year increase slowed in 15 cities.

Trends:

  • The 20-city index remained above its previous peak (206.52 in July 2006)
  • The National Index set a record high for the 19th straight month;
  • 10-city index was above its previous record high, 226.29 (June 2006)

Data Source: S&P Case Schiller/Core Logic

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Growth in home values, measured by the Case Shiller Core Logic Home Price Index slowed in July as the reality of the new tax law which capped some of the tax advantages to homeownership began to sink in.

 

Whatever increase there was may have been the result more of tight home sale inventories affording buyers less of a choice.

According to the latest data from the National Association of Realtors, the inventory of homes for has averaged 1.72 million per month this year, down from 1.80 million per month last year and 1.97 million per month in 2016.

Values rose in July in all four Census regions, increasing 0.6 percent in the Midwest, 0.4 percent in the West and 0.3 percent in the South and just 0.1 percent in the Northeast. But prices grew more slowly in July than in June in 15 of the cities surveyed.

According to Case-Schiller, prices rose more than 0.5 percent from June to July in seven cities. From May to June, prices increased by more than 0.5 percent in 18 cities. Price gains in July were by Cleveland and Las Vegas (1.4 percent each)

July values were up more than 10 percent year-year in three cities Las Vegas (13.7 percent), Seattle (12.1 percent) and San Francisco (10.8 percent).

While the weaker price growth could mean increased sales, fundamentals (including higher mortgage rates) still argue against an uptick in homebuying.

Hear Mark Lieberman this Friday on P.O.T.U.S. radio’s Morning Briefing, Sirius-XM 124, at 6:20 am Eastern Time. You can follow Mark Lieberman on Twitter at @foxeconomics.

Construction Activity Edges Up in August but Permits Tumble

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Home building activity, measured by housing starts IMPROVED in August, led by multi-family activity;
  • The seasonally adjusted annual rate of multi-family starts ROSE 29.3 percent while single-family starts were UP 1.9 percent;
  • Permit activity, however, slowed in August to its lowest level since last September, with single-family permit DOWN 6.1 percent from July and multi-family permits down 4.9 percent. The combined month-month drop was 5.7 percent;
  • The rate of housing completions though ROSE 2.5 percent, as single-family completions jumped 11.6 percent from July, offsetting an 18.5 percent DROP in multi-family completions.

Trends:

  • The month-month 5.7 percent decline in all permits was the largest monthly drop since February 2017 6.2 percent);
  • The SAAR of both permits and starts is down since the beginning of the year; permits are off by 10.1 percent, while the rate of starts is down 3.9 percent;
  • The pace of new home completions ROSE month-month for the first time since April.

Data Source: Census Bureau and Department of Housing and Urban Development 

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Just one day after the National Association of Home Builders reported no change in the Housing Market Index, the Commerce Department provided an explanation in a report showing weak gains in new residential activity.

The Housing Market Index, NAHB’s yardstick for builder confidence remained at a strongly positive 67 in September.

But as the index reading was released, the NAHB also excoriated the Administration’s new tariff proposals.

The proposal to impose a 10 percent tariff on Chinese imports, the organization said, “could have major ramifications for the housing industry. With housing costs on the rise, this action translates into a tax increase on housing that will rise even more significantly on Jan. 1 when the tariff rate jumps to 25 percent.”

The tariffs the NAHB statement said “is coming on top of the current 20 percent tariffs on softwood lumber imports from Canada. The lumber tariffs have already added thousands of dollars to the price of a typical single-family home.”

The tariff boost could explain why the NAHB in its builder confidence survey noted a drop in buyer traffic last month which continued into September.

Most troubling in the government data was the drop in permits which are not affected by the weather. Permit – and construction activity – is likely to increase in the aftermath of Hurricane/Tropical Storm Florence.

Over the six months following hurricanes Harvey and Irma last year, permits jumped 9 percent with a 12 percent increase in single-family permits.

Hear Mark Lieberman every Friday at 6:20 am on POTUS Morning Briefing, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

1st Time Unemployment Claims Fall to 49-Year Low, Again

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The number of continued claims – individuals who have been collecting unemployment insurance — reported on a one-week lag, was 1,645,000 for the week ended September 7, DOWN 55,000 from the previous week’s DOWNWARDLY REVISED 1,700,000 (revised from 1,711,000);
  • The four-week moving average of continued claims FELL 20,750 to 1,691,500.
  • There were 201,000 1st time claims for unemployment insurance for the week ended September 15 a DECLINE of 3.000 from the prior week’s unrevised report;
  • The four-week moving average of first-time claims FELL 2,250 to 205,750;
  • Four-week moving average represented 0.132 percent of employment, DOWN from 0.134 percent the previous week;

Trends:

  • The number of first-time claims DROPPED for the sixth time in the last seven weeks, falling to its lowest level since the week ended November 15, 1969 (197,000); It was the seventh time this year the number of first-time claims has fallen to the lowest level since November 1969.
  • Four-week moving average of initial claims HAS FALLEN for the fifth straight week and is at the lowest level since Dece6, 1969 when it was 204,000.
  • The number of continued claims FELL to the lowest level since August 4, 1973 (1,633,000);

Data Source: Department of Labor

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As the number of initial and continued claims for unemployment insurance continued its limbo dance, data watchers braced for a sharp increase as the Carolinas dry out from Hurricane / Tropical Storm Florence. While the storms will eventually create new jobs as the rebuild gets under way, the immediate impact will be devastating for employment data and of course the disruption of lives.

Claims for unemployment insurance spiked by about 10 percent following storms last year (Harvey, Irene, and Maria). Claims jumped more than 15 percent following Superstorm Sandy and almost 30 percent following Hurricane Katrina.

Hitting as it did in another heavily populated area, Florence will pack an eerily similar statistical punch.

Based on its timing, Florence will also have an impact on the monthly Employment Situation Report for September due to be released October 5. The storm struck during the data collection period for both the household and payroll surveys.

According to the Bureau of Labor Statistics, “unusually severe” weather is more likely to have an impact on hours worked than the jobs count which is what the establishment survey develops. In the household survey, which produces the unemployment rate, according to the BLS: Persons who miss the entire week’s work for weather-related events are counted as employed whether they are paid for the time off or not.

The establishment survey could also be affected by the response rate of businesses surveyed. Any delayed surveys though would be included in the two revisions to the jobs numbers.

You can hear Mark Lieberman every Friday at 6:20 am on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124.

Economy Adds 201K jobs in August; Unemployment Rate Holds at 3.9%

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Number of payroll jobs INCREASED 201,000 in August;
  • Unemployment rate in August REMAINED AT 3.9 percent;
  • Average weekly earnings INCREASED $3.15 in August to $937.02, a 3.1 percent year-year gain, strongest since March;
  • Average hourly earnings GREW 10¢, in August a 2.8 percent annual increase, strongest since last September
  • Private sector jobs INCREASED 204,000;
  • Number of multiple jobholders FELL 128,000, suggesting all the new jobs went to individuals who were not already working
  • Prior month job totals REVISED DOWN 50K: DOWN 10,000 in July to a growth of 147,000 jobs (from 157,000) DOWN in June to a gain of 208,000 (from the last report of a 248,000 increase);
  • The number of persons unemployed FELL 46,000 as the number of person employed DECLINED 423,000;
  • Average weekly hours REMAINED AT5 in August;
  • Labor force – FELL 469,000 in June as the labor force participation rate DROPPED to 62.7 percent (lowest since January) from 62.9 percent;
  • The number of persons NOT in the labor force INCREASED 692,000, the largest month-month increase since last October;
  • Employment-Population ratio FELL to 60.3 percent –lowest since January –from 60.5 percent in July,
  • By sector number of professional-and-business-service jobs and health-and education jobs ROSE 53,000 each;
  • The number of temp jobs INCREASED 10,000 in August (as it had in July);
  • The number of leisure and hospitality jobs grew 13,000 in August, net of a 17,500 INCREASE in food service jobs;
  • Manufacturing jobs FELL 3,000.

Trends:

  • Unemployment rate among Blacks FELL to 6.3 percent, lowest on record;
  • Three-month average of job growth fell to 185,000 lowest since January (167,000)

Data Source Bureau of Labor Statistics

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Then August Employment Situation report from the Bureau of Labor Statistics had something for everyone. For optimists, it marked the 95th straight month the number of payroll jobs. For pessimists, it showed a surprising decline in both the labor force participation rate and the employment-population ratio as well as an increase in the number of persons not in the labor force; the largest such increase since last October.

(An optimist, of course, sees a glass half full, a pessimist sees a glass half empty and an engineer is interested in the size of the glass.)

There are some troubling signs in this report, buried in the data.

Despite a sharp jump in average weekly earnings translating to a 3.1 percent year-year growth, retailers cut back on staffing, suggesting they don’t see a boost in activity.

Of course, the increase in average weekly earnings could also be due to declines or weak increases in jobs in the two lowest paying sector: retail and leisure and hospitality, which together produced 11,100 new payroll jobs, about 8.5 percent of the total new jobs.

We should be encouraged that higher paying sectors are adding more jobs. In July 2017, the retail and leisure-and-hospitality sectors accounted for one-third of the increase in payroll jobs. The decline could be due to students returning to school, turning in their burger-flipping spatulas for laptops and textbooks.

But while the weak gain in low-paying jobs was occurring, the labor force itself shrank (thanks again to return to school) and the labor force participation rate fell. The drop in the labor force itself demands a closer look. The labor force includes all persons who have a job and all persons who want and are available for one. The latter definition might exclude a huge chunk of the students to classrooms.

The encouraging numbers in the report came in the construction sector which continues to grow tortoise-like, adding 23,000 jobs in August, the fifth consecutive monthly increase. About 13,000 of those new jobs came in the residential construction sector even though new home sales continue to decline. And, we’ve yet to feel the effects of the trade war started by the Trump Administration which will impact the cost of home construction.

Hear Mark Lieberman every Friday morning at 6:20 am on The Morning Briefing on POTUS on Sirius-XM 124. You can follow Mark Lieberman on Twitter at @foxeconomics.