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.

1st-time Unemployment Insurance Claims Drop;

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 211,000 1st-time claims for unemployment insurance for the week ended November 2, 2019, a DECREASE of 8,000from the previous week’s upwardly revised 219,000 (from 218,000);
  • The four-week moving average of initial claims INCREASED 250 to 215,250;
  • Four-week moving average represented 0.138 percent of employment, UNCHANGED from one week earlier;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,689,000 for the week ended October 26, DOWN 3,000 from the previous week’s UPWARDLY REVISED 1,692,000 (from 1,690,000)
  • The four-week moving average of continued claims REMAINED at 1,86,750.

Trends:

  • First-time claims for unemployment insurance fell for the third time in the last five weeks;
  • The number of continued claims has increased year-year for five straight weeks for the first time in 10 years;
  • The four-week moving average of continued claims which was unchanged has not dropped five straight weeks.

Data Source: Department of Labor

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Despite another decline in the number of first-time claims for unemployment insurance, the weekly Labor Department report continues to reflect a weakness in the labor market by detailing that those collecting unemployment benefits are unable to find jobs.

The report offered evidence to support the interpretation of the Job Opening and Labor Turnover Survey (JOLTS) earlier this week. The JOLTS data showed the number of job openings fell to the lowest level in 18 months (in September) in part responsible for the relatively weak report on new October jobs.

But the decline in job openings also means those on unemployment rolls have new challenges in finding new jobs, thus the number of continued claims has not been dropping.

The two reports together underscore a skills mismatch especially as in some industry sectors the number of unemployed is rising along with the number of job openings.

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

Job Openings Fall to 18-month Low in September

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Layoffs and discharges ROSE 8.2 percent or 152,000 in September to 1.96 million5.95 million
  • Job openings at the end of September FELL 3.8 percent to 7.02 million;
  • Hiring in September rose 0.8 percent to 5.9 million;
  • The ratio of job openings per unemployed ROSE to 1.22 in September from 1.21 in August.

Trends:

  • Job openings at the end of September dropped to 7.02 million, the lowest level since March 2018 (6.9 million
  • Job openings were down year-year for the fourth straight month for the first time in 10 years

Data Source: Bureau of Labor Statistics

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There were more warning signs about the job market Tuesday in the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS) report.

While employers in September hired 50,000 more people than they had in August, other measures tracked in the JOLTS report were far from bullish.

The number of job openings fell as layoffs and discharges increased suggesting employers are  trying to stay one step ahead of a coming economic downturn.

As concerning, unemployment fell overall in September – to 5.8 million from slightly over 6 million in August, unemployment was up in several key industry sectors as job openings in those sectors fell.

Case in point, in professional and business services, a broad sector, the number of unemployed inched up 3,000 but job openings fell 42,000 according to the JOLTS data.

And then in some sectors though unemployment fell, job openings rose pointing to a skills mismatch and a shortage of qualified. In the construction sector, for example, unemployment fell 11.6 percent in September but job openings rose 6.7 percent. The trend is even more dramatic on a year-year comparison. Unemployment in the construction sector is down 22.6 percent year-year but job openings have increased 21.9 percent in the same period.

The number of unemployed in the financial services sector fell 29.2 percent from September 2018 to September 2019 as the number of job openings jumped 55.7 percent.

A third category would be sectors which appear to be cutting back. In the Information sector, which includes broadcasting, the number of individuals unemployed went up 75.8 percent from September to September while job openings in the sector fell 8.3 percent.

According to the September JOLTS data, hiring this year is on a pace to exceed 2018 hiring by about 1.6 percent.  At the same time though, the JOLTS data extrapolates to a 2.3 percent increase in total separations in 2019 over 2018.

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.

Auto Strike Weakens Job Growth; Unemployment Rate Edges Up; Earnings Remain Weak

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Unemployment rate in October ROSE to 3.6 percent from 3.5 percent in September;
  • Number of payroll jobs INCREASED 128,000 in October,
  • Average weekly earnings ROSE in October to $969.39, a 2.7 percent year-year gain, up from  the 2.6 percent year-year gain in September;
  • Average hourly earnings ROSE  in October  to $28.18 a 3.0 percent annual increase, up from 2.9 percent in August
  • Private sector jobs INCREASED 131,000; Government payrolls FELL 3,000,led by a decline of 17,000 federal government jobs;
  • Prior month job totals were REVISED UP SIGNIFICANTLY, up 95,000; the number of new jobs in September was revised from 136,000 to 180,000, the number of new jobs in July was revised to 219,000 from 168,000;
  • The Labor Force participation rate rose to 63.3 percent, highest since July 2013;
  • Manufacturing sector LOST 36,000 jobs, principally the auto sector which had 41,600 fewer jobs than in September;
  • The unemployment rate for teenagers FELL to 12.3 percent from 12.5 percent in September but higher than 12.0 percent in October 2018.
  • The unemployment rate for Blacks fell to 5.4 percent, a new record low;
  • The unemployment rate for those over 25 without a high school diploma ROSE sharply to 5.6 percent from a record low 4.8 percent in September;
  • The number of persons not in the labor force DECLINED 118,000 to 95.48 million.

Trends:

  • Payroll jobs were up for the 1098h straight month
  • Low-wage retail and leisure-and-hospitality jobs accounted for 52.4 percent of total jobs gains, highest share since January 2016 (59.1 percent);
  • Retail jobs rose for the second month in a row (after revisions) following seven straight

Data Source: Bureau of Labor Statistics:

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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.

Pending Home Sales Index Rises on Low Mortgage Rates

Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • National Association of Realtors’ Pending Home Sales Index (PHSI) ROSE 1.5 percent in September to 108.7;
  • Year-year the index ROSE 3.7 percent.

Trends:

  • The PHSI ROSE to its highest level since December 2017 (109.8
  • The Index for September ROSE for the fourth time in the last five months;
  • The year-year increase is the largest since December 2015 (4.5 percent).

Data Source: National Association of Realtors (NAR)

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With mortgage rates remaining low, the National Association of Realtors Pending Home Sales rose in September for the fourth time in the last five months.

The NAR’s report came as Standard & Poor’s reported home prices, as measured by its Case Shiller CoreLogic Home Price Index barely budged in August.

At the same time, according to Freddie Mac’s most recent weekly survey of mortgage interest rates showed lending rates remaining at near record lows. The average rate for a 30-year fixed rate loan, according to Freddie Mac’s report last week, was 3.75 percent, down from 4.86 percent a year ago. The drop would reduce the monthly payment on a $300,000 30-year mortgage by almost $200.

The NAR’s pending home sales report –based on contracts for sale – compares with the government’s new home sales report which showed a decline of about 0.7 percent for September.

The two-month boost in pending sales couldn’t come at a better time for realtors who saw closings drop 2.2 percent in September, two months after the PHSI fell 2.5 percent.

While the 1.5 percent September gain was strong, it was made to seem even stronger with the downward revision of the August PHSI from 107.3 to 107.1.

The drift to lower home prices can only last so long before sellers pull back. The inventory of homes for sale which had increased for six straight months has not risen for three months in a row. The last time that happened, existing home sales fell by about 50,000 per month (seasonally adjusted annual rate). That followed a four-month stretch in which the median price of an existing single-family home fell an average of 1.7 percent per month.

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.

Pressure on Home Prices Continues

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Case Shiller CoreLogic indices BARELY BUDGED in August with one of the three indices unchanged;
  • The August 10-city index WAS FLAT to July after increasing just 0.07 percent in July;
  • The 20-city index ROSE 0.04 percent and the National index ROSE 0.20 percent in August compared with increases of 0.16 percent and 0.36 percent respectively in July;
  • Year-year the 10-city index was UP 1.5 percent and the 20-city index ROSE 2.0 percent in July after annual increases of 1.6 percent and 2.2 percent in July;
  • The national index IMPROVED 3.2 percent in year-year in August compared with a 3.1 percent year-year increase in July;
  • Year-year the price growth slowed in 12 cities in July.

Trends:

  • The growth in the price indices slowed for the fourth straight month;
  • The price index ROSE in 11 cities in August, down from 15 in July;
  • The price index rose for the 20th straight month in Miami while falling for the second straight month in Los Angeles and San Francisco.

Data Source: S&P Case Shiller/Core Logic

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Though home prices continued to increase in August, they did so at an alarmingly weaker pace, according to the monthly Case Shiller-CoreLogic home price index produced by Standard & Poor’s.

The slower increase in home values immediately recalled the slowdown prior to the Great Recession. Price growth, according to the Case Shiller tabulations, slowed in mid-2006 before turning negative for almost three years.

The slower price growth combined with near-record low mortgage interest rates should combine to lead to an increase in home sales, but that hasn’t been the case. The National Association of Realtors reported recently sales of existing single-family homes fell 2.2 percent in September as the price of an existing single-family home dropped for the third straight month. And, last week the government reported sales of new single-family homes slipped 0.7 percent in September as the median price of a new single-family home fell to its lowest level since February 2017.

The Case Shiller report showed a distinct geographic bent with prices falling 0.2 percent in the West but increasing in the other three census regions.

The sharpest increase came in Phoenix (up 0.9 percent in August compared with 0.7 percent in July. Prices were up 0.3 percent in Cleveland, Miami, and Tampa. But prices dropped 0.5 percent in San Francisco, 0.3 percent in Seattle and 0.2 percent in Denver and San Diego.

Year-year, prices fell 0.1 percent in San Francisco, the first year-year price drop there since April 2012. While prices rose year-year in the 19 other cities surveyed, the year-year price increase was lower in 11 cities than it had been in July.

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.

New Home Price Drops to 31-Month Low as September Sales Slip

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Pace of contracts for new home sales EDGED DOWN 0.7 percent in September to a seasonally adjusted annual rate (SAAR) of 701,000;
  • The August sales pace originally reported as 713,000 was REVISED DOWN to 706,000
  • The inventory of unsold new homes DIPPED 2,000 in September to 321,000;
  • The months’ supply of new homes for sale REMAINED at 5.5 in September;
  • Median price of a new home TUMBLED $25,800, or 7.9 percent, from August to $299,4000. Year-year the median price of a new home is DOWN 8.8 percent or $28,900.

Trends:

  • The sales pace for new single-family homes fell for the fourth time in the first nine months of 2019 and the sixth time in the last 12 months;
  • The number of homes for sale is at its lowest level since August 2018
  • The median price of a new home fell to its lowest level since February 2017.

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

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The median price of a new single-family home fell to its lowest level in 31 months, February 2017 when it was $298,000, the Census Bureau and Department of Housing and Urban Development reported jointly Thursday.

The price drop didn’t even boost sales which edged down month-month for the fourth time this year though year-year sales are up.

The disappointing government report underscores a troubled housing market. Earlier this week the National Association of Realtors reported existing home sales fell 2.2 percent in September. (The two reports are not precisely comparable however: the NAR data is based on closings and the government statistics track contracts for sale, The NAR report on contracts, pending home sales, is scheduled for release tomorrow.)

The new home sales report is consistent with other data reported by the two agencies showing a decline in permits and starts for single-family homes. In addition, for September the Census Bureau and HUD reported builders had completed 852,000 new homes (seasonally adjusted annual rate) including homes built on speculation and to order. The number of completions was just 151,000 more than sales in September, the smallest “gap” between sales and completions since November 2017 when builders completed just 69,000 homes more than were sold. Since then the average “gap” has been 223,000 more homes completed than sold per month.

The new report adds to troubles in the housing sector which has been hit with rising expenses due to higher tariffs on materials.

Despite the disappointing sales report, builder confidence remains high. According to the National Association of Home Builders, the Housing Market Index which tracks confidence rose three points in the beginning of October to its highest level in 20 with builders reporting a jump in buyer traffic.

The inventory dropped about 45,000 (8.2 percent) from May through November 2007, compared with the decline of 21,000 (6.1 percent) in the most recent seven-month period.

Meanwhile Thursday, Freddie Mac reported the average rate for a 30-year fixed-rate mortgage last week was 3.75 percent, up from 3.69 percent one week ago.

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.

1st-time Unemployment Insurance Claims Edge Down but Data Hint at Weaker Jobs Report

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 212,000 1st-time claims for unemployment insurance for the week ended October 19, 2019, a DECREASE of6,000from the previous week’s upwardly revised 218,000 (from 214,000);
  • The four-week moving average of initial claims DROPPED 750 to 215,000;
  • Four-week moving average represented 0.137 percent of employment, UNCHANGED from one week earlier;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,682,000 for the week ended October 12, DOWN 1,000 from the previous week’s UPWARDLY REVISED 1,683,000 (from 1,679,000)
  • The four-week moving average of continued claims ROSE 6,500 to 1,677,250;

Trends:

  • The four-week moving average of continued claims fell has increased for three straight weeks
  • The four-week moving average of first-time claims fell for the first time in four weeks;
  • Wee-week, the number of initial claims for unemployment insurance has fallen only twice since mid-August;

Data Source: Department of Labor

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On the strength of declines in first-time claims (not seasonally adjusted) in two auto-manufacturing states, the number of initial claims for unemployment insurance fell for the week ended October 19 according to the Department of Labor.

Despite the week-week improvement though the claims reports (both initial and continued) suggest another weak jobs report from the Bureau of Labor Statistics on November 1.

From mid-month to mid-month, first time claims rose 8,000 and the four-week moving average of initial claims went up 3,000, a sign of increased layoffs, though likely not enough to move the 3.5 percent unemployment rate.

And, on the jobs front, continued claims for unemployment insurance rose 27,000 from mid-September to mid-October while the four-week moving average of continued claims rose 14,000. Both numbers suggest employers are not creating jobs to lift individuals off the unemployment rolls.

The unemployment claims report – more importantly its trend – is another indicator of a weakening economy though the level of both initial and continued claims remains near historic lows.

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

Existing Home Sales Slip in September

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The pace of existing home sales – closed sales – FELL 2.2 percent, 120,000, in September to a seasonally adjusted annual sales rate of 5.38 million;
  • Sales pace for August was revised up 10,000 to 5.5 million;
  • Median price of an existing single-family home FELL 2.4 percent, $6,800, to $272,100;
  • Year-year the median price is up 5.9 percent or $15,200;
  • Number of homes available for sale was UNCHANGED at 1.83 million;
  • With the decline in sales, the months’ supply of homes for sale in September INCREASED 0.1 months to 4.1 months.

Trends:

  • The September decrease in closings was the steepest since March (270,000)
  • Year-year sales were UP 4.5 percent, the third consecutive month of year-to year increases after 16 months of year-year declines;
  • The median price of an existing single-family home FELL for the third straight month;
  • September marked the third straight month of no increase in the inventory of unsold homes.

Data Source: National Association of Realtors: (NAR)

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Despite near record low mortgage rates, housing stumbled in September with existing home sales (closings) falling for just the second time in the last six months. The drop was not entirely unexpected as pending home sales (contracts for sale) had fallen 2,5 percent in July.

The dip in closings in September came after two relatively strong months for home sales: the pace of sales rose 130,000 in July and another 80,000 in August.

The slowdown in sales came despite the third straight month of price declines, though the median price of a used home remains up over a year ago. Mortgage rates remain however low. According to Freddie Mac, the average rate for a 30-year fixed rate loan was 3.61 percent in September compared with 3.62 percent in August and 4.63 percent in September 2018.

Sales of existing single-family homes have been treading water for the last six years with closings remaining in a relatively narrow range between 4.6 million and 5.7 million. Prior to the onset of the Great Recession, from January 200 to December 2006, existing home sales averaged 6.1 million per month, peaking at 7.25 million in September 2005.

The slowdown in housing has a ripple effect on sales at appliance stores and furniture stores.

The three-month decline in the median price of an existing home is likely the cause of the inventory drop as would-be sellers hold out for a higher return on their investment. The weaker inventory in turn gives buyers less of a choice and leads to weaker sales and perhaps further price reductions.

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

1st-time Unemployment Insurance Claims Up Again

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 214,000 1st-time claims for unemployment insurance for the week ended October 12, 2019, an INCREASE of 4,000from the previous week’s unrevised 210,000;
  • The four-week moving average of initial claims ROSE 1,000 to 214,750;
  • Four-week moving average represented 0.137 percent of employment, UP from 0.136 percent one week earlier;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,679,000 for the week ended October 5, DOWN 10,000 from the previous week’s UPWARDLY REVISED 1,689,000 (from 1,684,000)
  • The four-week moving average of continued claims ROSE 3,500 to 1,669,750;

Trends:

  • The week-week increase in initial claims was the fourth in the last five weeks;
  • The four-week moving average of first-time claims has risen for three straight weeks;
  • On a year-year basis, the four-week moving average of initial claims has increased for seven straight weeks;

Data Source: Department of Labor

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Making sense of the weekly report on unemployment insurance claims is always a challenge. The frequency of data release and the volatility contribute as do unexpected (usually disasters) events, so when clear patterns start to emerge – even though the numbers are relatively small – we tend to pounce on them.

Such is the case with this week’s report on unemployment insurance claims.

Even though numbers are small by recent historical standards (they were even smaller 50 years ago when the series began, but then too so was the population), they can be revealing. And what they are revealing now is some trouble brewing in the labor market.

The increases we’re seeing in the weekly data are consistent with the data in the Job Openings and Labor Turnover Survey report showing increases in the number of layoffs and discharges, qualifying factors for unemployment insurance

At the same time, the monthly release of the Employment Situation report has been showing a declining number of new jobs, another troubling sign.

That’s not to say a recession is around the corner, but the evidence pointing to a slowdown is mounting .

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

Housing Construction Tumbles in September

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Home building activity, measured by housing permits and starts FELL SHARPLY in September as multi-family activity contracted;
  • Permits and starts data for August was revised upward, making the September downturn still steeper;
  • The seasonally adjusted annual rate of total permits FELL 2.7 percent or 38,000 to1.39 million;
  • Permits for new single-family homes, however, ROSE 0.8 percent or 7,000 to 882,000;
  • The SAAR of all housing starts FELL 9.4 percent or 130,000 to 1.26 million;
  • Single-family permits ROSE a scant 0.3 percent or 3,000 while multi-family starts DROPPED a staggering 28.2 percent or 133,000 to 327,000;
  • The rate of total housing completions DROPPED 123,000 or 9.7 percent in September;
  • The SAAR of single-family completions FELL 8.6 percent or 80,000.

Trends:

  • Permit activity for single-family homes rose to the highest level since February 2018;
  • The percentage decline in multi-family starts was the largest since November 2016;
  • Single-family housing starts rose for the fourth straight month for the first time since March-June 2012;
  • Despite the month-month decline, total housing starts were up year-year for the fourth straight month;
  • The decline in housing completions was the steepest since June 2014.

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

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Single-family home building barely survived a sharp downturn of all housing construction in September which may turn out to be good news for builders and developers.

The minuscule increases in single-family home permits and starts along with the sharp drop in completions of single-family homes could help to reduce the inventory of unsold new homes leading to higher prices for finished product.

According to the most recent report from the Census Bureau – for August – the number of new homes for sale at the end of August fell to a seasonally adjusted annual rate of 326,000, the lowest since last October. The number of unsold new single-family homes has fallen for three months in a row. Data for September is scheduled to be released next Thursday.

The data on home building activity provides explanation and context for the increase in builder confidence reported earlier this week by the National Association of Home Builders. At the same time continued low mortgage rates provide would-be home buyers with an incentive.

The Census-HUD report also marked a shift back to single-family home building activity.

In August, permits for new single-family homes represented just 61.4 percent of all housing construction permits. In September that share rose to a more respectable 63.6 percent but still from the 2018 average of 64.6 percent.

Single-family starts jumped to 73.1 percent of all starts in September, up from 66.0 percent in August and from the 69.9 percent average for all of 2018.

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