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.

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.

Builder Confidence At 20-month High in October

By Mark Lieberman

Managing Director and Senior Economist

Data Highlights:

  • Housing Market Index JUMPED three points in September to 71 (out of 100);
  • The outlook for sales in six months ROSE six points to 76 while the outlook for current sales ROSE 3 points to 78;
  • The gauge of buyer traffic was UP four points to 54;
  • By region, builder confidence ROSE in two of the four Census regions – the South and West – while falling in the Northeast and Midwest.

Trends:

  • The total index rose to its highest level since February 2018;
  • The six-point increase in the outlook for future sales was the largest month-month gain since December 2016 when that component rose nine points;
  • The overall index was up four points year-year.

Data Source: National Association of Home Builders

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On the strength of a 7.1 percent increase in new home sales and s drop in the inventory of new homes for sale in September, builder confidence rose sharply in the beginning with an outsized three-point month-month gain.

It wasn’t the first time the Housing Market Index (HMI) has shown strength as sales rose. In May the HMI jumped three points and one month later new home sales soared 21.9 percent. The sales pace slowed 8.6 percent in July and indeed has fallen three times in the last five months even as builder sentiment has improved.

The boost in confidence comes even as the year-year increase in residential construction jobs slows. The Bureau of Labor Statistics reported earlier this month the year-year increase in residential construction jobs was 2 percent and has averaged around 3 percent; last year the year-year increase in residential construction jobs averaged 5 percent.

But falling interest rates have sparked a new wave of home buying. The average rate for a 30-year fixed rate loan was 3.57 percent, Freddie Mac reported last week, not as low as it had been (3.49 percent at the beginning of September) but  far lower than the 4.90 percent a year ago.

What builders have been seeing as well is an improvement in the pipeline: pe4rmits for new single-family homes have increased four months in a row after falling for seven straight months. The pace of single-family starts has improved in all but two months this year to its highest level since January.

So, while builders are bullish about near-term sales, they are even more optimistic about sales six months out.

Builder sentiment though continues to outpace the reality of relatively weak new home sales, permits and starts. The data might be hitting new post-recession highs (or near) but remains well below levels before the Great Recession.  Seven months before the downturn began (in December 2007) the pace of single-family permits and starts each topped 1,00,000.

Everything, including builder confidence, is relative.

Hear Mark Lieberman every Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:20 am Eastern Time. Follow Mark Lieberman on Twitter at @ foxeconomics.

Retail Sales Fall in September; Signal Weak 3Q GDP

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Retail sales (measured by prices) FELL  0.25 percent or $1.3 billion in September, reversing almost half of August’s 0.57 percent gain;
  • Building material supply store sales DROPPED 1.0 percent, the largest drop of any retail category;
  • Gasoline station sales FELL 0.7  percent as the retail price of a gallon of gasoline dropped 1.11 percent;
  • Non-store retailers accounted for 12.7 percent of all retail activity in September, up from 12.2 percent a year ago;
  • Auto sales FELL $999 million or 1.0 percent in September;
  • Excluding autos, retail activity was DOWN a $330 million or .08 percent in September compared with a 0.2 percent increase in August;
  • The only retail categories to show a sales increase in September were furniture stores (up 1.1 percent) and health and personal care stores, up 0.6 percent;
  • All retail activity was up 4.1 percent year-year in September – compared with 4.3 percent in August — while the Consumer Price Index rose 1.5 percent from September 2018 to September 2019.

Trends:

  • Total retail sales had increased for six straight months, the longest stretch since 2017;
  • BLS reported the number of retail jobs FELL in September for the seventh straight month and are down 0.4 percent in the last year;

Data source: Census Bureau  

With the growth in earnings continuing to slow, consumer reined in spending in September, according to a  report Wednesday from the Census Bureau.

The Census Bureau’s monthly report is not adjusted for price changes and could be viewed more as a gauge of prices than of consumer sentiment but consumers, it appears, did not take advantage of a slower increase in prices in September. Prices, according to the Bureau of Labor Statistics, were essentially flat from August to September. That retail activity was down suggests wavering consumer sentiment.

Total sales fell despite reports that retailers have been forced to increase prices due to higher tariffs imposed on imported good, especially those from China. That dichotomy also suggests some caution among consumers.

BLS reported earlier this month average weekly earnings grew 2.6 percent year-year in September, down from 2.9 percent in August. Average hourly earnings were up 2.89 percent year-year in September, down from 3.2 percent in August.

The only “good” news in the report came in the revision to August retail data showing sales up 0.6 percent instead of the originally reported 0.4 percent increase.

Consumer spending represents about two-thirds of the economy and retail sales about 55 percent of consumer activity. For the third quarter, sales rose 1.43 percent over second quarter sales, Consumer activity in the second quarter – when Gross Domestic Product rose by 2.0 percent –was up 1.87 percent from the first . The weaker third quarter growth thus suggests GDP for the third quarter could again be weak.

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 him on Twitter at @foxeconomics.  

1st-time Unemployment Insurance Claims Fall but Continued Claims Increase

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 210,000 1st-time claims for unemployment insurance for the week ended October 5, 2019, a DECLINE of10,000from the previous week’s upwardly revised 220,000 (from 219,000);
  • The four-week moving average of initial claims ROSE 1,000 to 213,750;
  • Four-week moving average represented 0.136 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 1,684,000 for the week ended September 28, UP 29,000 from the previous week’s UPWARDLY REVISED 1,655,000 (from 1,651,000)
  • The four-week moving average of continued claims ROSE 2,500 to 1,665,000;

Trends:

  • The week-week drop in initial claims was the first in four weeks;
  • The increase in continued claims was the first in four weeks;
  • The increase in the four-week moving average of continued claims was the first in four weeks.

Data Source: Department of Labor

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The upbeat report of initial claims for unemployment insurance followed by a day a somewhat disappointing report on job openings.

To be sure the two reports – despite the timing different (the Job Openings and Labor Turnover Survey report was for August and the report on unemployment insurance claims was for the week ended October 5 – could be linked.

The drop in job openings – a 1.7 percent month-month decline – suggests employers might be optimally staffed, thus producing fewer layoffs with fewer individuals seeking unemployment insurance. Indeed, the total number of separations in August dropped 3.0 percent, almost matching the 3.3 percent dip in hires for the month. The number of job openings fell 1.7 percent from the end of July to the end of August explaining the weaker than expected increase in jobs in September.

And that weakness, the unemployment claims report suggest, is likely to continue with fewer layoffs, leaving employers with few openings to fill. A couple of other ratios suggest that as well: the number of job openings per unemployed, according to the JOLTS data, dipped slightly in August and the ratio of quits to layoffs dipped as well.

The openings-to-unemployed measure reflects declines in both datasets, underscoring a desire by employers to retain knowledgeable staff. The ratio of quits to layoffs, primarily due to a lower number of “quits” suggests an acknowledgment of a somewhat tight labor market.

The increase in continued claims supports that interpretation with fewer individuals currently collecting unemployment insurance able to find jobs.

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.

Unemployment Rate Drops to 50-year low at 3.5% Amid Weak Job Growth

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Unemployment rate in September FELL to 3.5;
  • Number of payroll jobs INCREASED 136,000 in September, down from 168,000 in August;
  • Average weekly earnings FELL in September to $966.30, a 2.6 percent year-year gain, down from the 2.9 percent year-year gain in August;
  • Average hourly earnings FELL  in September  to $28.09 a 2.9 percent annual increase, down from 3.2 percent in August
  • Private sector jobs INCREASED 114,000; Government payrolls ROSE 22,000, principally in local and state governments;
  • Prior month job totals were REVISED UP, 45,000; the number of new jobs in August was revised from 130,000 to 168,000, the number of new jobs in July was revised to 166,000 from 159,000;
  • Four industry sectors lost jobs: retailing (down 11,400), “other services” (down 3,000) and manufacturing (down 2,000) and utilities (down 2,000);
  • The unemployment rate for Hispanics fell to 3.9 percent – lowest on record; Unemployment rate for blacks remained at its all-time low, 5.5 percent;
  • The unemployment rate for those over 25 without a high school diploma also fell to the lowest level on record – 4.8 percent
  • The number of persons not in the labor force DECLINED 8,000 to 96,215;
  • Labor force participation rate REMAINED at 63.2 percent, up from 62.7 percent a year ago;

Trends:

  • Payroll jobs were up for the 1088h straight month; 3Q job growth averaged 157,000 per month down from 189,000 per month in the 3rd quarter last year;
  • The unemployment rate dropped to its lowest level since June 1969
  • The year-year growth in average weekly earnings matched July for the weakest growth since October 2017 (2.3 percent)
  • Retail jobs fell for the seventh straight month

Data Source: Bureau of Labor Statistics:

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Aside from the lowest unemployment rate in more than 50 years and record low unemployment rates for Hispanics and those without a high school diploma, there wasn’t much to cheer about in the October Employment Situation release from the Bureau of Labor Statistics.

Indeed, the report showed a number of concerns about the labor market:

  • Weekly earnings fell and showed the weakest year-year gain in almost two years (matching July for that ‘distinction’)
  • Hourly earnings dropped for the first time in almost two years with the weakest year-year increase in  14 months;
  • Job growth in the third quarter was down almost 17 percent from the third quarter a year ago; and
  • Manufacturing jobs fell.

While the dip in manufacturing jobs was relatively low, it demonstrated the continued weakness of the sector since the Trump Administration invoked higher tariffs and trading partners reacted.  In the 18 months from August 2017 through January 2019, the economy added an average of 23,000 manufacturing jobs per month. Since January though new manufacturing jobs have all but disappeared, increasing at a rate of about 3,000 per month.

The pattern is similar in the construction sector – which is also affected by higher tariffs on construction materials. From August 2017 through this past January, the number of construction job grew an average of almost 28,000 per month. Since January, the monthly growth has been 6,800, including April when the number of construction jobs jumped 34,000.

To be sure there were some gains reported for September, but they were weak as professional and business service jobs increased along with health care. construction employment rose along with a relatively strong gain in health sector jobs, no doubt a consequence of “job-killing” Obamacare.

The dip in earnings is probably the cause for even greater concern. Average earnings are often pulled down with a proliferation of low wage jobs in retail and leisure and hospital, the latter including low paying restaurant and food service jobs. In September though those two sectors combined added fewer than 10,000 jobs of which food service accounted for just 1,500 new jobs.

Instead, September saw earnings drop in what are usually higher paying sectors such as professional and business services along with the utility sector which historically records some of the highest earnings as well as the information sector which includes publishing, telecommunications and broadcasting.

In sum, the employment report painted a picture of a weakening economy which has yet to feel the full brunt of the Administration’s trade war.

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 With Lower Mortgage Rates

Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • National Association of Realtors’ Pending Home Sales Index (PHSI) ROSE 1.6 percent in August to 105.6;
  • Year-year the index ROSE 3.1 percent.

Trends:

  • The PHSI ROSE year-year for the just the second time in the last 20 months;
  • The Index for August ROSE for the third time in the last four months.

Data Source: National Association of Realtors (NAR)

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With mortgage rates remaining low – and closing out the traditional home-buying season – the National Association of Realtors Pending Home Sales rose in August for the third time in the last four months.

The NAR’s report came as Freddie Mac ‘s weekly mortgage survey showed the average rate for a 30-year fixed rate loan dipped to 3.64 percent from 3.73 percent a week ago.

The August PHSI recovered some of the 2,5 percent drop registered in July. The NAR report came one day after the Census Bureau and Department of Housing and Urban Development reported new home sales – tracked by contract, not closings – increased a solid 7.1 percent in August after dropping 8.6 percent in July.

The NAR gain came at the tail end of what is considered a home-buying season when families try to settle in a new home before the school year begins. Nonetheless contracts signed in August likely won’t become closings until late September or October.

Closings increased in July and August, lining up with increases in the PHSI for May and June. The July drop in the PHSI presages a decline in closings in September.

Though the PHSI rose in each of the four census regions in August, the increases in each case were less than the declines in July.

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 Insurance Claims Increase; Continued Claims Fall

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 213,000 1st-time claims for unemployment insurance for the week ended September 21, 2019, an INCREASE of3,000from the previous week’s upwardly revised 210,000 (from 208,000);
  • The four-week moving average of initial claims FELL 750 to 212,000;
  • Four-week moving average represented 0.135 percent of employment, DOWN 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 1,650,000 for the week ended September 14, DOWN 15,000 from the previous week’s UPWARDLY REVISED 1,665,000 (from 1,661,000)
  • The four-week moving average of continued claims FELL 12,750 to 1,665,750;

Trends:

  • The week-week increase in initial claims was the fourth in the last five weeks;
  • The decline in the four-week moving average of initial claims was the third in a row;
  • The last increase in continued claims was for the week ended August 17
  • The four-week moving average of continued claims has declined for four straight weeks for the first time since Spring.

Data Source: Department of Labor

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The first nationwide strike by automobile workers since 2007 sent initial claims for unemployment insurance for the week ended September 21 up 3,000, the Labor Department reported Thursday. The strike, which began September 15, is the longest in 50 years.

Unemployment insurance claims (not seasonally adjusted) more than doubled in Michigan, from 3,573 for the week ended September 14 to 7,724 for the week ended September 21. The increase doesn’t necessarily mean striker are collecting benefits but rather support workers in perhaps other industries. Each autoworker accounts for five indirect jobs according to the International Organization of Motor Vehicle Manufacturers.

Because of when the stroke began, it has the potential to affect the Employment Situation Report scheduled for release October 4. That report will be based on data collected for the “reference” week, the week of the month including the 12th calendar day.

That doesn’t even include the impact of the strike on auto sales a key component of retail activity.

Because of the impact of the strike, it may be difficult to assess just what the steady increase in initial unemployment insurance claims means for the overall economy. The total number of claims remains historically low suggesting no immediate cause to reach for a panic button.

More significant perhaps than the increase in first-time claims is the continuing drop in continued claims, often a surrogate for hiring. A decline implies individuals who had been collecting unemployment insurance have been successful in finding jobs.

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.

New Home Sales Rebound in August but Inventory Shrinks

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Pace of contracts for new home sales ROSE 7.1 percent in August to a seasonally adjusted annual rate (SAAR) of 713,000;
  • The May sales pace originally reported as 635,000 was REVISED UP to 666,000
  • The inventory of unsold new homes DROPPED 4,000 or 1.2 percent in August to 326,000;
  • With the faster sales rate, the months’ supply of new homes for sale FELL to 5.5 in August from 5.9 in July;
  • Median price of a new home ROSE $23,000, or 7.5 percent, from July to $328,400. Year-year the median price of a new home is UP 2.2 percent or $7,000.

Trends:

  • The sales pace for new single-family homes rose for the third time in the first eight months of 2019 and only the fourth time in the last 12 months;
  • The decline in the months’ supply of new homes for sale was the largest since February;
  • The August increase in the median price of a new home was the first since April.

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

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Capitalizing on the traditional home-buying season, the pace of new single-family home sales rose solidly in August. New home sales have typically improved in August, increasing in seven of the last 10 Augusts.

This year’s improvement was accompanied by yet another increase in builder confidence which, according to the National Association of Home Builders (NAHB), rose in August (and September) largely on the strength of sales expectations and traffic at model homes.

The improvement in sales – despite a hefty price increase – comes as good news for builders and construction workers. According to Bureau of Labor Statistics, the number of residential construction jobs improved in August for the fourth straight month and ninth time in the last 12 months.

Home sales generally have been challenged by the slow increase in earnings and the heavy debt-burdens of student loans. On top of that, according to Vox reported, the 10 percent tariff on $300 billion of Chinese products announced last month by President Trump to kick in September 1 will send new home prices even higher

The first round of tariff increases on imported building materials which took effect in May is already affecting many of the raw materials the housing industry depends on.

NAHB branded the May tariffs a $2.5 billion tax on housing” and the California Building Industry Association estimated the higher tariffs added $20,000 to $30,000 to the cost of an average-size new home.

Buffeting the higher building and material costs, despite an increase last week, mortgage rates remain low. According to Freddie Mac, the average rate for a 30-year fixed rate mortgage last week was 3.73 percent, down from 4.54 percent a year ago.

The Census report on new home sales tracks contracts for sale, not closings. The National Association of Relators parallel pending home sales report for existing single-family homes is due for release Thursday.

One of the more intriguing points in the Census/HUD report was the decline in the inventory of new homes for sale. The number of homes for sale at month-end has fallen for three straight months and six times in the last seven months. The supply of new homes for sale dropped for 60 straight months from May 2007 through April 2012, from an annualized rate of 545,000 to 144,000. The current decline either points to more of an economic downturn or an opportunity for construction jobs, depending on how you view the half-full or half-empty glass.

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.

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.