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 Claims, Continued Claims Each Fall to 44-year Low

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 222,000 1st time claims for unemployment insurance for the week ended October 14 – DOWN 22,000 from the prior week – to the lowest level since March 31, 1973;
  • The number of initial claims for the week ended October 7 was revised UP 1,000 to 244,000;
  • The four-week moving average of first time claims DECLINED 9,500 to 248,250;
  • Four week moving average represented 0.162 percent of employment, down from 0.168 percent one week earlier
  • The number of continued claims – reported on a one-week lag – for the week ended September 30 was 1,888,000, DOWN 16,000 from the previous week and the lowest since December 29, 1973 when it was 1,805,000;
  • The four-week moving average of continuing claims DROPPED 22,750 to 1,906,000, the lowest level since January 12, 1974 when it was 1,881,000.

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The week before hurricanes Harvey, Irma and Maria upset lives – some fatally — and property, there were 236,000 first time claims for unemployment insurance. With recovery in process – though still sketchy in Puerto Rico and the U.S. Virgin Islands – claims fell below that level in the week ended Oct 14 to a 44 year low, the Department of Labor http://www.oui.doleta.gov/press/2017/101917.pdf reported Thursday.

Claims data from Puerto Rico and the Virgin Islands remain uncertain with both communications and transportation in disarray, but nevertheless, the current week’s data show a remarkable swing with a net decline of 14,000. Claims rose 62,000 for the week ended September 2 when Houston was rocked by Harvey and 9,000 after Irma swept through Florida. But claims dropped 85,000 in the intervening weeks – including 47,000 in the last three weeks alone.

The result is the labor picture is looking stronger than it has in years.

But, as the Job Openings and Labor Turnover Survey suggested, there remains a “skills gap” with more job openings than hires which should produce higher wages to continue to stimulate sales. Of course, that’s until Federal Open Market Committee steps in to “remove the punchbowl just as the party heats up.”

The FOMC meets twice more before the year ends with another rate hike likely at at least one of those meetings.

The claims numbers also suggest the next employment report from the Bureau of Labor Statistics could show a sizable jump in payrolls wiping out the 33,000 drop registered for September. The Employment Situation report is likely too to to show another drop in the unemployment rate with increased hiring for the rebuilding efforts in Texas and Florida.

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.

Housing Construction Activity Drops in September as Both Starts and Permits Fall

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The rate of housing permit filings in September FELL 4.5 percent to a seasonally adjusted annual rate (SAAR) of 1.21 million units;
  • The rate of permits for single-family home starts in September ROSE 2.4 percent to an SAAR of 819,000 units;
  • The rate of permits for multi-family homes DECLINED 16.1 percent in September to 396,000 units (SAAR), the weakest pace since last September;
  • The rate of housing starts FELL 4.7 percent in September to an SAAR of 1.13 million, the weakest pace in a year; single-family starts DECLINED 4.6 percent to an SAAR of 829,000 while multi-family starts FELL 5.1 percent to an SAAR of 298,000 million, the slowest pace since in a year;
  • The rate of home completions in September ROSE 1.1 percent from August with completions for single-family homes increasing while multi-family completions declined.

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With the South leading the slide, single-family home starts fell in September in the aftermath of hurricanes Harvey and Irma, the Census Bureau and Department of Housing and Urban Development reported Wednesday. http://www.census.gov/construction/nrc/pdf/newresconst_201709.pdf

Change since August 2017

Permits Starts Completions
Total      ↓
Single-Family      ↑
Multi-Family      ↓

The South accounted for more than the national decline in the rate of single-family starts, with the region’s SAAR dropping 73,000 compared with a national decline of 40,000.

And the dip in starts could get even worse as rebuilding kicks in in the South, diverting labor and resources.

The Bureau of Labor Statistics earlier this month reported the number of residential construction jobs, including specialty trade contractors, decreased 4,00 in September to. 2,693,000 – after a drop of 5,000 two months earlier.

While permits for new single-family homes rose to their highest level since May, permits for multi-family homes declined with their steepest percentage month-month drop since May. That said, single -family permits are experiencing something of a rebound. In the last 12 months, single-family permits represented an average of 64.7 percent of all permits, up from 61.6 percent in the preceding 12 months.

Home buyers had been shunning single-family homes in favor of multi-family (which could include condos and coops) to be closer to downtown areas which are experiencing a comeback of their own. But the increasing popularity of new single-family homes could mean further troubles for beleaguered existing home sales market struggling with a lack of inventory.

The improvement in single-family completions – up 4.6 percent in September to 781,000 – could add to builder inventory concerns. The unsold inventory of new homes climbed to 284,000 in August – its highest level since May 2009.

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; Continued Claims at 44-year Low

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 243,000 1st time claims for unemployment insurance for the week ended October 5 – DOWN 15,000 from the prior week;
  • The number of initial claims for the week ended September 30 was revised DOWN 2,000 to 258,000;
  • The four-week moving average of first time claims DECLINED 9,500 to 257,500;
  • Four week moving average represented 0.168 percent of employment, down from 0.174 percent one week earlier
  • The number of continued claims – reported on a one-week lag – for the week ended September 30 was 1,889,000, DOWN 32,000 from the previous week and the lowest since December 29, 1973 when it was 1,805,000;
  • The four-week moving average of continuing claims DROPPED 11,500 to 1,925,000.

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With first time claims for unemployment insurance declining in Florida and Texas, the weekly report on new claims began to stabilize for the week ended October 5, the Department of Labor reported Thursday

At the same time – or at least on a one-week lag – the number of continued claims reflecting those who have been receiving benefits for at least a week, fell to a 44-year low, suggesting increased hiring.

The four-week moving average of first time claims as a percentage of those employed also dropped suggesting layoffs have slowed. Two weeks ago, the percentage reached its highest level since the end of May 2016, reflecting the impact of hurricanes Harvey, Irma, and Maria.  Indeed, the number of claims filed in Florida, Texas and even Puerto Rico dropped from the previous week, though the decline in Puerto Rico may have reflected an inability to file rather than an absolute improvement.

The report today suggests the payroll decline of 33,000 in September as reported by the Bureau of Labor Statistics was clearly storm related, though other aspects of the BLS Employment Situation release suggested some weakness in the labor market. Similarly, this week’s Job Openings and Labor Turnover Survey from the BLS underscored a skills gap as for the 20th consecutive month hires were less than job openings one month prior.

The continued claims data also suggests employers may be hiring from the ranks of the unemployed but combined with the JOLTS numbers, they may be looking elsewhere.

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 Fall in August; Hiring Remains on Record Pace

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Job openings at the end of August FELL 0.9 percent from July to 6.08 million – but the level was 10.8 percent ahead of a year earlier, the strongest year-year jump in 17 months;
  • Hiring FELL 6.3 percent in August, down 91,000 from July;
  • The ratio of unemployed to job opening in May EDGED UP to 1.17 in August highest since May;
  • 12 million workers quit their jobs in August, down from 3.19 million in July.

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In advance of two stormy months, the US labor picture tightened in August as both the number of job openings and new hires declined, the Bureau of Labor Statistics reported Wednesday in its monthly Job Openings and Labor Turnover Survey (JOLTS).  That the report showed the jobs opening rate in August, 4.0 percent, was unchanged from July.

The job openings rate, according to the BLS, is computed by dividing the number of job openings by the sum of employment and job openings and multiplying that quotient by 100.

Job openings at the end of July exceeded hires in August for the 20th straight month suggesting a skills gap with employers unable to find the right candidates for jobs. The gap suggests higher wages to come as employers remain under pressure from a tight labor market.

The report reflects job openings at the end of the month which means it likely did not pick up openings which may have resulted from Hurricane Harvey as it ripped through Texas.

The JOLTS report tracks the ins and outs of the labor market as contrasted with the BLS Employment Situation report which reports net changes. Differences can result though as the same individual can be counted in more than one category.

Despite the decline in job openings at the end of August, businesses Shed 33,000 jobs in September the first time US payrolls have contracted in seven years (September 2010). Nonetheless, the pace of hiring through August suggest 64,300 hires this year which would be the most since the JOLTS report began in 2001. According to the BLS, a “job opening” means a specific position exists and there is work available for that position, full-time or part-time. The job can be permanent, short-term, or seasonal and there is active recruiting for workers from outside the establishment location that has the opening. Openings for positions with start dates more than 30 days in the future are not included in the job openings count for a specific month.

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.

Economy Shed 33,000 Jobs in September But Unemployment Rate Falls to 16-Year Low

 

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Unemployment rate FELL in September to 4.2 percent, lowest since February 2001;
  • Number of jobs FELL 33,000 in September, first decline in jobs since September 2010;
  • Average weekly earnings ROSE $4.13, a 2.8 percent year-year GAIN, down from the 3.0 percent year-year gain in August;
  • Average workweek REMAINED at 34.4 hours;
  • Prior month job totals REVISED DOWN a net 38,000: UP 13,000 in August but Down 51,000 in July
  • Private sector payrolls FELL 40,000 in September; Government payrolls ROSE 7,000;
  • Unemployment in September FELL to 6,801,000 – lowest in more than 10 years (May 2007: 6,766,000);
  • Number of food service jobs DROPPED 104,700, due to Hurricane Irma, largest month-month decline ever
  • Number of construction jobs INCREASED 8,000, after increasing 19,000 in August; Residential construction jobs declined.

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This is one of those monthly Employment Situation releases you don’t want to see. The only thing missing from the report were the asterisks denoting the special circumstance as the Bureau of Labor Statistics reported Friday the economy lost 33,000 jobs in September but the unemployment rate dropped to 4.2 percent.

That said, the storm related damage to the labor sector as delineated in the month Employment Situation  report masked deeper concerns about the economy. Historically, major storms or disasters shrink payrolls by about 50,000 in the month after they occur. Adding back those 50,000 jobs would have meant a paltry gain of 17,000 jobs, far below the average gain of 164,000 since the Trump Administration began.

It wasn’t so much that the storms hit, but was where they hit. Though state-by-state numbers aren’t yet available, Florida would appear to have been the greatest contributor to the job loss as the leisure and hospitality sector shed 111,000 of its 15.9 million jobs. The number of restaurant jobs alone fell 104,700, about 0.9 percent of the total of those jobs.

The drop in the number of low-paying food service jobs drove average weekly earnings up $4.13, a gain of 0.5 percent, the largest since June as low paying jobs disappeared. Leisure and hospitality jobs are among the lowest paying occupation with average weekly earnings of $404.30 less than half the average of $913.32 for all jobs.

The anomaly in the Employment Situation Report of course is that while the total number of payroll jobs contracted, so did the unemployment rate, as the number of persons unemployed fell to the lowest level in more than 10 years.

Other sectors were not immune to the weaker job count. The construction sector, for example, added 8,000 jobs in September after growing by 19,000 jobs in August. The number of residential construction jobs fell 4,000 in September reflecting the weakening housing sector. While construction jobs in storm-ravaged states should increase as rebuilding efforts kick in, the increase could be geographical shift.

The number of retail jobs also declined in September, dropping for the eighth straight month with no relief in sight as major retailers have announced plans to scale back hiring for the holiday season.

Despite the impact of Hurricane Harvey in Louisiana and Texas – two states heavily dependent on oil drilling – the number of oil and gas extraction jobs rose to 181,700 – the highest level since April, 2016.

There were some comparative bright spots in the otherwise disappointing report but the headline numbers masked weakness. The number of heal service and education jobs, for example, grew 27,000 in September, but the three-month average in that sector was 41,000. The growth was evenly split between education and health jobs but the increase in health jobs was far below the three-month average for that sector.

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 Unemployment Claims Fall Despite Storms

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 260,000 1st time claims for unemployment insurance for the week ended September 30 – DOWN 12,000 from the prior week;
  • The number of initial claims for the week ended September 16 was UNCHANGED at 272,000;
  • The four-week moving average of first time claims DECLINED 9,500 to 268,250;
  • Four week moving average represented 0.175 percent of employment, down from 0.181 percent one week earlier
  • The number of continued claims – reported on a one-week lag – for the week ended September16 was 1,938,000, UP 2,000 from the previous week’s number;
  • The four-week moving average of continuing claims DROPPED 3,250 to 1,947,000.

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Data on first time claims for unemployment somersaulted for the week ended September 30 – with the number of claims falling 12,000, precisely the amount by which they increased one week earlier, the Department of Labor reported Thursday. The 9,500 drop in the four-week moving average of claims offset the 9,000 increase one week earlier.

Indeed, the number of claims filed in Florida, Texas and even Puerto Rico dropped from the previous week, though the decline in Puerto Rico may have reflected an inability to file rather than an absolute improvement.

In all, the claims data – compared with one month ago — suggest an increase in unemployment for September but should have no negative impact on jobs. Part of that is due to the definitions the Bureau of Labor Statistics uses in counting jobs and employment. For the storms to affect jobs – tracked for the “reference” period of the week including the 12th of the month – an individual would have to be off from work without any pay for the entire week.

The employment tally is derived from the household survey with individuals self-reporting their employment status. The household survey collects data on the number of persons who had a job but were not at work due to bad weather.

While the number of claims dropped in areas affected by Harvey, Irma and Maria, they are still above normal weekly levels.

Given the need for rebuilding efforts, we should see jobs increasing in those areas.

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 Claims Up due to Irma

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 272,000 1st time claims for unemployment insurance for the week ended September 23 – UP 12,000 from the prior week;
  • The number of initial claims for the week ended September 16 was REVISED UP 1,000 to 260,000;
  • The four-week moving average of first time claims ROSE 9,000 to 278,500 – highest since May 2016 –or 0.184 percent of total employment.
  • The number of continued claims – reported on a one-week lag – for the week ended September16 was 1,934,000, DOWN 45,000 from the previous week’s number, which was revised down 1,000 to 1,979,000
  • The four-week moving average of continuing claims DROPPED 2,750 to 1,949,750.

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Hurricane Irma, as expected, tore through the unemployment insurance data boosting, first time claims to 272,000 – after what proved to be a temporary respite one week ago, the Department of Labor reported Thursday. Despite raging through Puerto Rico and the U.S. Virgin Island Hurricane Maria appeared to have no impact on the numbers.

Initial claims filings in Florida jumped more than 80 percent for the week ended September 23 as that state continued to recover from the storm but word out of Florida is reports on the Florida Keys will resume operation this weekend. Initial claim filings in Texas fell just over 29 percent from the previous week and filings in Louisiana dropped almost 10 percent. First time claims in the U.S. Virgin Island more than doubled from the prior week while initial claims filing dropped in Puerto Rico as most residents there were cut off.

It should take a few weeks for this data series to calm in the walk of the storms which should also ripple through to the Employment Situation release due next week from the Bureau of Labor Statistics. The BLS takes pains to try to avoid dramatic disruptions in its jobs and unemployment report.

In the establishment survey, which tracks the number of jobs, the reference period is the pay period that includes the 12th of the month. For severe weather conditions to reduce employment estimates, employees must be off work without pay for the entire pay period. Employees who receive pay for any part of the pay period, even 1 hour, are counted in the payroll employment figures. Unusually severe weather is more likely to have an impact on average weekly hours than on employment.

In the household survey, the reference period is generally the calendar week that includes the 12th of the month. Persons who miss the entire week’s work for weather-related events are counted as employed whether they are paid for the time off.  The household survey collects data on the number of persons who had a job but were not at work due to bad weather. The normal “rules” apply to consider an individual unemployed: out-of-work, available-for-work and looking-for-work.

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.

Pending Home Sales Index Drops to 19-Month Low

Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • National Association of Realtors’ Pending Home Sales Index (PHSI) FELL 2,6 percentage points in August to 106.3, the lowest levels since January 2016;
  • PHSI has fallen in six of the eight months this year
  • August decline was the steepest since January;
  • Year-year the index is also DOWN 2.6 percentage points.

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There was more bad news for the housing sector with Wednesday’s report that the National Association of  Realtors’ (NAR) Pending Home Sales Index (PHSI) fell for the fifth time in six months and sixth time this year. The PHSI data followed by one day a government report showed new home sales fell for the second straight month in August. Both reports measure contracts for sale, not closings.

Last week, the NAR reported existing home sales (closings) in August dropped for the third straight month to the lowest level in a year

Spinning like a top, the NAR said Hurricanes Harvey and Irma would pull sales down. The PHSI in the South fell 3.5 percentage points in August (matching April for the sharpest month-month decline since April 2014). The PHSI fell 4.4 percentage points in the Northeast in August.

The real culprit seems to be supply. The existing home sales report showed a decline in the number of homes for sale, down to 1.88 million in August from 1.92 million in July. That 1.88 million computes to a 4.2-month supply of homes for sale, unchanged since May.

The median price of an existing single family home dropped in August to $253,500, the second straight month-month decline. Year-year the median price is up $13,500, a 10.1 percent increase. Still, that hasn’t been enough to lure sellers back to the market, frustrating buyers who see choices reduced. That standoff spilled over to contracts for sale executed in August.

A Bloomberg analysis earlier this month found empty nesters are holding on to their homes, an anlysis confirmed by homeownership by age cohort data from the Census Bureau. At the same time younger, first-time homebuyers – many of whom are burdened by heavy student loan obligations — are facing challenges in accumulating money for a down payment and qualifying for a mortgage.

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.

New Home Sales Hit 2017 Low in August

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Pace of contracts for new home sales FELL 3.4 percent in August to 560,000 (seasonally Adjusted Annual Rate), the weakest since last December;
  • Unsold inventory ROSE 10,000 to 284,000 – highest level since May 2009
  • Sales pace for July was revised up 9,000 to 580,000 but the sales rate for June was revised down 16,000 to 614,000;
  • With lower August sales rate, months’ supply of new homes for sale ROSE to 6.1 months in August, highest since January 2016;
  • Median price of a new home FELL $19,700 from July to $300,200;
  • Year-year the median price of a new home was up $1,300 (0.4 percent)

 

Image result for new home sales

New home sales continued to send bad news about the housing market as the Census Bureau and Department of Housing and Urban Development reported sales (contracts) of new dropped for the second straight month to 560,000. Sales have fallen 8.8 percent in the last two months.

The average rate for a 30-year fixed rate mortgage in August, according to the weekly Freddie Mac survey, was 3,88 percent, down from 3.97 percent, in July.

The decline in contracts for sale of new homes came as builder confidence slipped at the beginning of September and housing starts dropped. The weakness in housing activity will likely be exacerbated in the aftermath of Hurricanes Harvey and Irma as building material and construction workers are diverted to rebuilding efforts and away from new home building.

Perhaps the more troubling piece of data in the new home sales report was the spike in unsold inventory. The 10,000 month-month jump was the largest since July 2013 and followed a steady decline in buyer traffic at model homes as indicated by the National Association of Home Builders’ monthly survey. It flows logically that an increase in inventory and drop in new home sales should result in a slowdown in building which could show up in weaker construction employment numbers.

The number of residential construction jobs rose 13,000 in August – the largest month-month increase since February –- to the highest level since September 2008, but home builders might be hard-pressed to sustain that given the continued increase in the inventory of unsold homes and declining sales..

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.

Housing Construction Activity Mixed in August: Starts Up, Permits Down

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The rate of housing permit filings in August ROSE 5.7 percent to a seasonally adjusted annual rate (SAAR) of 1.3 million units, matching January for the fastest pace this year
  • The rate of permits for single-family home starts in August FELL 1.5 percent to an SAAR of 800,000 units;
  • The rate of permits for multi-family homes IMPROVED 19.6 percent in August to 500,000 units (SAAR), the fastest pace since last October;
  • The rate of housing starts FELL 0.8 percent in August to an SAAR of 1.18; single-family starts Improved 1.6 percent to an SAAR of 851,000 while multi-family starts FELL 6.5 percent to an SAAR of 329,000 million, the slowest pace since last November;
  • The rate of home completions in July DROPPED 10.2 percent from July with for both single- and multi-family completions declining.

Image result for housing starts

Perhaps with one eye on weather forecasts, residential construction activity generally slipped in August, a direction reflected in the monthly Housing Market Index (HMI) released Monday by the National Association of Home Builders (NAHB). Tuesday’s activity report, a product of both the Census Bureau and Department of Housing and Urban Development, did indicate a continuation of the trend toward multi-family housing and away from single-family

Change since July 2017

Permits Starts Completions
Total     
Single-Family      ↓
Multi-Family      ↑

 

 

 

 

The Bureau of Labor Statistics earlier this month reported the number of residential jobs, including specialty trade contractors, increased 13,00 in August to .2,709,000 – the strongest month-month jobs gain since February.

Single-family permits represented 61.5 percent of all permits in August, down from 61.9 percent a year ago. Starts of single-family homes through August were 72.1 percent of all starts compared with 62.5 percent a year earlier.

That could all change however in the wake of Hurricanes Irma and Harvey which will likely divert labor and material to Florida, Louisiana and Texas as part of a massive rebuilding effort. At the very least the resulting scarcity of labor and material in other parts of the country could drive up the cost of a new home.

The NAHB’s gauge of builder confidence increased in September dipped four points from the original August reading (three points after the August reading was revised downward). The confidence measure still stand at a positive 64. While one month does not constitute a trend, the direction of the change, if it continues, is not encouraging.

Builders are already under pressure from a drop in new home sales which fell in July (the most recent reporting month) to an annual rate of 571,000 – the lowest level of the year and a 9.4 percent drop from July, the steepest slide in a year.

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