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 Plunge

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 206,000 1st time claims for unemployment insurance for the week ended December 8, a DECREASE of 27.000 from the prior week’s upwardly revised report (231,00 to 233,000).
  • The four-week moving average of first-time claims FELL 3,750 to 224,740;
  • Four-week moving average represented 0.143 percent of employment, DOWN from 0.146 the previous week.
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,631,000 for the week ended December 1, DOWN 5,000 from the previous week’s upwardly REVISED 1,636,000 (from 1,631,000);
  • The four-week moving average of continued claims FELL 2,500 to 1,665,750.

Trends:

  • The drop in first-time claims was the largest since the week ended January 18 (down 46,000);
  • The four-week moving average of first-time claims dropped for the first time in five weeks;
  • The drop in the four-week moving average of 1,665,750 continued claims was the first in five weeks;

Data Source: Department of Labor 

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On the heels of Tuesday’s report showing an uptick in both job openings and hires, the weekly report on first-time unemployment insurance claims plunged for the week ended last Saturday.

The report likely reflects seasonal part-time hiring, a trend observed in last week’s Employment Situation report which showed both retail and temp jobs increase. The number of retail jobs increased in November by the largest amount since May and temp jobs were up for the fifth straight month.

The drop in claims in California (6,900 not seasonally adjusted) was a contributing factor. Initial claims in California shot up more than 29,000 one week earlier in the wake of devastating forest fires.

Still, the improvement in claims doesn’t automatically mean the jobs picture has emerged from the doldrums which saw the number of first-time claims jump from 210,000 at the beginning of October to 233,000 two weeks ago. The announcement of major labor layoffs at General Motors may have spooked other employers who see the end of the economic expansion which began in September 2010.

While “recession” has emerged from whispers to a regular part of the economic discussion, trouble signs are hardly hidden. GM’s announcement coupled with business plan changes at Ford put the auto industry in the economic crosshairs and the nation’s other major industry, housing. Continues to struggle, so much so that the Housing Market Index last month plummeted in November to the lowest level in more than two years. The December reading is due next week.

According to both Fortune and Forbes, the tariffs put into effect by the Trump Administration have resulted in cuts in manufacturing.

Falling stock prices could touch off a scramble to improve profits by reducing expenses translated as jobs

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

1st Time Unemployment Claims Show Modest Dip; Longer Trends Not Encouraging

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 231,000 1st time claims for unemployment insurance for the week ended December 1, a DECREASE of 4.000 from the prior week’s unrevised report
  • The four-week moving average of first-time claims ROSE 4,250 to 228,000;
  • Four-week moving average represented 0.146 percent of employment, UP from 0.143 the previous week.
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,631,000 for the week ended November24, DOWN 74,000 from the previous week’s downwardly REVISED 1,705,000 (from 1,710,000);
  • The four-week moving average of continued claims FELL 250 to 1,667,000.

Trends:

  • The drop in first-time claims was the first in four weeks;
  • The four-week moving average of first-time claims increased for the fourth straight week, the eighth time in the last 10 weeks, to its highest level since April
  • The four-week moving average of 1,667,000 continued claims is the highest level for this average in ten weeks.

Data Source: Department of Labor

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The labor market has taken on a decidedly different appearance in the last few weeks as noted by Thursday’s report on first-time unemployment insurance claims.

Initial claims, though down in the last week, have increased in three of the last four weeks and substantially, up 3 percent 2 percent and 4 percent before dropping by 2 percent. From mid-October to mid-November, claims rose 15,000, itself a jump of 7 percent and the largest mid-month to mid-month increase in a year.

The four-week moving average of first time claims also increased from mid-October to mid-November, up 9,000 or 4.3 percent to the highest since September 2017.

The increases don’t suggest alarm but taken with the higher levels of continued claims, a surrogate for hiring (more continued claims suggest fewer individuals getting job offers as a way to get off unemployment rolls) and there could be cause for concern.

Those concerns were noted in forecasts for tomorrow’s employment situation report. The median forecast is for 190,000 new payroll jobs, down from the 250,000 new jobs reported for October and below the average number of new jobs each month this year: 213,00

Though the unemployment rate is expected to remain at 3.7 percent, the year-year growth in average hourly earnings is also expected to remain at October 3.0 percent suggesting the tighter labor market is not pushing wages up.

We can expect retail hiring to show an increase in November as stores ramp up for holiday shoppers but given that retail is the lowest paying job sector, an increase in those jobs would likely adversely affect the average growth.

You can hear Mark Lieberman tomorrow (Friday, December 7) at 8:45 am on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124.

Unemployment Insurance Claims Remain Low; Data Suggest Labor Woes

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 214,000 1st time claims for unemployment insurance for the week ended November 3 a DECREASE of 1.000 from the prior week’s upwardly revised report.
  • The four-week moving average of first-time claims WAS DOWN 750 to 213,750.
  • Four-week moving average represented 0.137 percent of employment, UNCHANGED from the previous week.
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,623,000 for the week ended October 27, DOWN 8,000 from the previous week’s UNREVISED 1,631,000;
  • The four-week moving average of continued claims FELL 7,500 to 1,633,250.

Trends:

  • Four-week moving average of continued claims has now declined for 13 straight weeks
  • The year-to-date average of initial claims for unemployment insurance is 4.9 percent below the level of a year ago.
  • The 1,623,000 continued claims are the lowest level for continued claims since July 28, 1973, when it was 1,603,000.
  • The 4-week moving average of 1,633,250 continued claims is at the lowest level since August 11, 1973, when it was 1,627,250.

Data Source: Department of Labor 

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The strong labor picture didn’t help Republicans in the House, but it may have been a factor from the GOP in extending its control of the Senate, according to polls, put health care on the top of their list of issues which could impact their vote.

Initial claims for unemployment insurance for the week ended November 3 continued to hover in a narrow range but permits more significantly continued claims fell again suggesting those on the unemployment rolls are finding jobs.

That said, job openings, according to Tuesday’s Job Openings and Labor Turnover Survey report from the Bureau of Labor Statistics, dipped slightly at the end of September to just over 7 million, from just under 7.3 million at the end of August. Hires in September dropped as well, 5.7 million in September from 5.9 million in August. The decline in job openings could suggest employment may have peaked as the unemployment rate in October remained at 3.7 percent.

The JOLTS report, taken together with eh claims data, suggests a widening of the skills gap between those available and looking for work and the types of jobs.

In fact, the number of unemployed per job opening rose again in September, up to 11.8 from 1.17 – the third straight monthly increase.

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

Economy Adds 250K jobs in October; Unemployment Rate Holds at 3.7%; Earnings Up

 

By Mark Lieberman

Managing Director and Senior Economist

 

Highlights

  • Number of payroll jobs INCREASED 250,000 in October
  • Unemployment rate in October REMAINED AT7 percent;
  • Average weekly earnings INCREASED $4.35 in October to $941.85, a 3.3 percent year-year gain, strongest annual increase since August 2010
  • Average hourly earnings GREW 5¢, in October a 3.0 percent annual increase
  • Private sector jobs INCREASED 246,000; Government payrolls were up 4,000;
  • Number of multiple jobholders INCREASED 176,000, suggesting 7 of every 10 new jobs went to individuals who were not already working
  • Prior month job totals were essentially unchanged: the number of new jobs in September was revised down 16,000 to 118,000 but the number of new jobs in August was revised up 16,000 to 286,000;
  • The number of persons unemployed GREW 111,000 to 6.075 million while the number of people employed INCREASED 600,000; The Labor Force, therefore, GREW 711,000;
  • The number of persons not in the labor force fell 487,000;
  • Labor force participation rate IMPROVED to 62.9 percent, the level it had reached in July; the Employment-Population ration (EPOP) GREW to 60.6 percent, highest since January 2009;
  • By sector number of manufacturing jobs INCREASED 32,000; the number of construction jobs was UP 30,000 and the number of healthcare jobs INCREASED 46,700;

Trends:

  • Payroll jobs were up for the 97th straight month
  • Construction jobs reached their highest level since March 2008 (127 months); manufacturing jobs reached their highest level since December 2008;
  • In a statistical quirk, even with revisions, the total number of payroll jobs for September remained at 149,500

Data Source  Bureau of Labor Statistics

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If incumbents designed an employment situation report to be released just four days before election day, they couldn’t have come up with a better report than the data released by the Bureau of Labor Statistics Friday.

The BLS report showed the number of jobs up in virtually every industry sector with the unemployment rate remaining at 3.7 percent, an almost 49-year low (the unemployment rate was 3.5 percent in December 1969).

Even average weekly earnings rose to a 3.3 percent year-year growth at $941.35, the fastest pace since August 201 (3.4 percent year-year). When earnings started to climb a few months ago, one of the reasons was that the number of low-paying retail and leisure-and-hospitality jobs had been declining and were not pulling down the average. But those two job categories grew 44,400 in September (about one of every six new jobs) while wages jumped.

The improvement should be a perfect platform for incumbents – Republican or Democratic – yet Republicans at least continue to campaign against “job-killing” Obamacare even though since Obamacare became effective in January 2014, the economy has added 12,376,000 jobs – an 8.9 percent increase.

One of the few negatives in the October jobs report was the increase in Black unemployment rate which grew from 6.0 percent in September to 6.2 percent. The improving labor market was also not kind to persons with a college degree: the unemployment rate for those without a high school diploma rose 0.5 percentage points to 6.0 percent and for high school graduates with no college rose to 4.0 percent from 3.7 percent.

The strengthening labor market drew 606,000 persons back to the labor force in October an increase of 20,000 over September.

Though Hurrican Michael made landfall in Florida during the reference period for both the household and establishment surveys, it had “no discernible effect” on the surveys. The household survey determines the unemployment rate and the establishment survey provides the count of new jobs. According to the BLS, the response rates for the surveys “were within normal ranges>”

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.

Economy Adds 250K jobs in October; Unemployment Rate Holds at 3.7%; Earnings Up

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Number of payroll jobs INCREASED 250,000 in October
  • Unemployment rate in October REMAINED at 3.7 percent;
  • Average weekly earnings INCREASED $4.35 in October to $941.85, a 3.3 percent year-year gain, strongest annual increase since August 2010
  • Average hourly earnings GREW 5¢, in October a 3.0 percent annual increase
  • Private sector jobs INCREASED 246,000; Government payrolls were up 4,000;
  • Number of multiple jobholders INCREASED 176,000, suggesting 7 of every 10 new jobs went to individuals who were not already working
  • Prior month job totals were essentially unchanged: the number of new jobs in September was revised down 16,000 to 118,000 but the number of new jobs in August was revised up 16,000 to 286,000;
  • The number of persons unemployed GREW 111,000 to 6.075 million while the number of persons employed INCREASED 600,000; The Labor Force, therefore, GREW 711,000;
  • The number of persons not in the labor force fell 487,000;
  • Labor force participation rate IMPROVED to 62.9 percent, the level it had reached in July; the Employment-Population ration (EPOP) GREW to 60.6 percent, highest since January 2009;
  • By sector number of manufacturing jobs INCREASED 32,000; the number of construction jobs was UP 30,000 and the number of healthcare jobs INCREASED 46,700;

Trends:

  • Payroll jobs were up for the 97th straight month
  • Construction jobs reached their highest level since March 2008 (127 months); manufacturing jobs reached their highest level since December 2008;
  • In a statistical quirk, even with revisions, the total number of payroll jobs for September remained at 149,500

Data Source:  Bureau of Labor Statistics 

Image result for employment situation report

If incumbents designed an employment situation report to be released just four days before election day, they couldn’t have come up with a better report than the data released by the Bureau of Labor Statistics Friday.

The BLS report showed the number of jobs up in virtually every industry sector with the unemployment rate remaining at 3.7 percent, an almost 49-year low (the unemployment rate was 3.5 percent in December 1969).

Even average weekly earnings rose to a 3.3 percent year-year growth at $941.35, the fastest pace since August 201 (3.4 percent year-year). When earnings started to climb a few months ago, one of the reasons was that the number of low-paying retail and leisure-and-hospitality jobs had been declining and were not pulling down the average. But those two job categories grew 44,400 in September (about one of every six new jobs) while wages jumped.

The improvement should be a perfect platform for incumbents – Republican or Democratic – yet Republicans at least continue to campaign against “job-killing” Obamacare even though since Obamacare became effective in January 2014, the economy has added 12,376,000 jobs – an 8.9 percent increase.

One of the few negatives in the October jobs report was the increase in Black unemployment rate which grew from 6.0 percent in September to 6.2 percent. The improving labor market was also not kind to persons with a college degree: the unemployment rate for those without a high school diploma rose 0.5 percentage points to 6.0 percent and for high school graduates with no college rose to 4.0 percent from 3.7 percent.

The strengthening labor market drew 606,000 persons back to the labor force in October an increase of 20,000 over September.

The BLS report noted Hurricane Michael made landfall in Florida during the reference period for both household and establishment surveys (the household survey produce the unemployment rate and the establishment survey determines the number of jobs). According to the BLS, the storm “had no discernible effect” on either survey and  respo0nse rates to the surveys “were within normal ranges.”

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.

Unemployment Claims Continue to Show Labor Strength

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 214,000 1st time claims for unemployment insurance for the week ended October 20 a DECREASE of 2.000 from the prior week’s upwardly revised report.
  • The four-week moving average of first-time claims WAS UP 1,750 to 213,750.
  • Four-week moving average represented 0.137 percent of employment, UP from the previous week.
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,631,000 for the week ended October 20, DOWN 7,000 from the previous week’s downwardly REVISED 1,638,000;
  • The four-week moving average of continued claims FELL 6,250 to 1,640,750.

Trends:

  • Four-week moving average of continued claims has now declined for eleven straight weeks
  • The year-to-date average of initial claims for unemployment insurance is 5.1 percent below the level of a year ago, the largest year-year drop of the year.
  • The 1,640,000 continued claims is the lowest level since July 28, 1973, when it was 1,603,000.
  • The 4-week moving average of 1,653,000 continued claims is the lowest level for this average since August 11, 1973, when it was 1,627,750.

Data Source: Department of Labor 

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This is just the kind of report Republicans can gloat about as they head into election day: further evidence that the country’s job engine is doing just fine, thank you very much!

That conclusion can be drawn from the data on continued claims for unemployment insurance which continues its decline suggesting jobs are available for those who on the unemployment insurance rolls. It fits perfectly with forecasts that the Employment Situation Report to be released Friday will show an uptick in job creation in October after a disappointing report for September.

BLS reported 190,000 new jobs for September; the consensus is October will show 225,000. The September numbers were, of course, heavily impacted by storms.

Indeed, from mid-September to mid-October, the number of the volatile first-time claims was essentially flat while the more stable four-week moving average rose only slightly, suggesting no change in the 3.7 percent unemployment rate.

Continued claims, which more closely track jobs (as opposed to unemployment) fell sharply from mid-September to mid-October and the four-week moving also dropped.

However, polling suggests the economy writ large is not necessarily the major issue for many voters who, according to polls, put health care on the top of their list of issues which could impact their vote.

You can hear Mark Lieberman tomorrow at 8:45  am on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124.

Homeownership Rate Inches Up in 3Q to Four Year High

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Homeownership rate in 3Q 2018 was 64.4 percent, UP from 64.3 percent in 2Q;
  • 182,000 MORE households owned homes in 3Q 2018 than in 2Q, 1.9 million more than in 3Q 2017
  • 93,000 MORE vacant homes for sale in 3Q than in 2Q, 8,000 more than in 3Q 2017

Trends

  • At 64.4 percent, the homeownership rate is at its highest level since 3Q 2914;

 

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Despite ongoing weakness in home sales – both new and existing – the nation’s homeownership rate ticked up again in the third quarter, to the highest level in four years.

The increase came even though homeownership tax incentives were capped in the tax changes enacted by Congress last December, mortgage rates have increased, and income growth has been virtually nonexistent.

One contributing factor, ironically, has been the weak sales market which is keeping people in their homes even as a relatively small number of new buyers jump in.

While not the price bubble which burst ten years ago, the bump up in homeownership, without supporting fundamentals feels like another crisis in the making. With rates and other factors clogging the market, homeowners could find themselves trapped and unable to sell as rate increases outpace income growth.

At the same time, builders continue to add to inventory with new construction. Although much of the increase in housing permits and starts has come in multi-family activity, builders continue to build and add to inventory.

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

 

Case Shiller Home Prices Index Show Weakness in August

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Case Shiller CoreLogic 20-city index FELL in August for the first time in almost two years, dropping 0.2 percent;
  • The 10-city index was UP 0.01 percent, the weakest improvement since October 2016 (when it fell 0.26 percent);
  • The national index increased 0.22 percent, weakest growth since February 2017;
  • Index ROSE in 12 of the 20 cities surveyed in August; in July the index improved in 18 cities;
  • For the first time in a year, year-year price growth (in the national index) slipped below 6.0 percent.

Trends:

  • All three index readings remained above their previous peak;
  • The National Index set a record high for the 20th straight month;

Data Source: S&P Case Schiller/Core Logic

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Growth in home values, measured by the Case Shiller Core Logic Home Price Index reversed itself in August showing the impact of tax changes enacted by Congress last year making homeownership less attractive from a tax standpoint.

Indeed, home price growth according to both the Case-Schiller 10- and 20-city index has been slowing since April. Nationally, home price growth has been falling since May.

The fall in prices though has not stimulated sales. Existing home sales have been down month-month since April, according to data from the National Association of Realtors. The median price of an existing single-family home is down almost six percent in the last three months.  As a result, the number of homes for sale fell for the third straight month in September and the months’ supply of homes for sale rose to 4.4, the highest level since October 2016.

According to the Case-Schiller survey, prices rose 0.5 percent or more from July to August in just three cities – Cleveland, Detroit, and Tampa –compared with July when price growth topped 0.5 percent in six cities.

Prices rose 0.4 percent from July to August in the Midwest, 0.2 percent in the South and were flat in the Northeast. Prices fell 0.4 percent in Western cities which dominate the survey.

Prices rose year-year in all 20 cities but in all 20 cities, but the year-year increase was slower in 13 cities than it had been a month ago.

While the slower price increases could have a positive impact on home sales, those sales still face challenges with increasing mortgage rates as well as the tax law changes.

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.

1st Time Unemployment Claims Show Modest Increase from Storm

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 215,000 1st time claims for unemployment insurance for the week ended October 20 an INCREASE of 5.000 from the prior week’s unrevised report
  • The four-week moving average of first-time claims WAS UNCHANGED at 211,750;
  • Four-week moving average represented 0.136 percent of employment, UNCHANGED from the previous week.
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,636,000 for the week ended October 13, DOWN 5,000 from the previous week’s upwardly REVISED 1,641,000 (from 1,640,000);
  • The four-week moving average of continued claims FELL 6,750 to 1,646,500.

Trends:

  • Four-week moving average of continued claims has now declined for eleven straight weeks
  • The year-to-date average of initial claims for unemployment insurance fell to 233,894 – 4.9 percent below the level of a year ago, the largest year-year drop of the year.

Data Source: Department of Labor

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1st time claims for unemployment insurance recorded only a modest increase nationally in the wake of the storm which devastated Florida and Georgia last week. While seasonally unadjusted claims in Florida and Georgia soared 65 percent, claims in the rest of the country declined, keeping the unemployment rolls essentially flat.

And, continued claims, which reflect hiring, showed an ongoing decline reflecting a solid labor market.

At the same time, the Bureau of Labor Statistics, in an in-depth analysis of its monthly Job Openings and Labor Turnover Survey” underscored the skills mismatch in the labor market.

According to the analysis, the average “hires-per-job-opening” was below 1 for each of the last three years (2015-16-17) suggesting a lot of jobs still go begging.

The BLS analysis showed the situation was particularly dire in health care where the ratio of hires to openings was 0.55 in both 2016 and 2017. In financial activities fell to 0.57 in 2017 from 0.59 in 2016.

For all industries, the ratio was above 1 each year from 2007 through 2014.
The BLS analysis is a virtual roadmap to industry sectors having difficulty finding people to hire.

The weekly report on unemployment insurance claims, a different view of labor market tightness, pointed to a further drop in the unemployment rate in the Labor Situation release for October, due out November 2. To the extent labor market conditions have an impact on the midterm elections, the continuing strong numbers could upset Democratic hopes of wresting control of the House (and Senate) from Republicans.

However, polling suggests the economy writ large is not necessarily the major issue for many voters who, according to polls, put health care on the top of their list of issues which could impact their vote.

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

Pending and New Home Sales Diverge in September

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Pace of contracts for new home sales FELL3 percent in September to 553,000, the lowest level since December 2016;
  • At the same time, the National Association of Realtors’ Pending Home Sales Index edged UP 0.5 percentage points to 104.6;
  • August new home sales were revised downward to 585,000 from an originally 627,000 pace, turning a 3.5 percent increase to a 3.0 percent decline; The August PHSI was revised up 104.1 from 104.0;
  • The unsold inventory of new homes INCREASED 9,000 in September to 327,000 but the inventory for August was revised downward to 313,000 from 315,000;
  • The months’ supply of new homes for sale ROSE to 7.1 in September from 6.5 in August;
  • Median price of a new home ROSE $800, 0.3 percent, from August to $320,000;
  • Year-year the median price of a new home was DOWN $11,500 (3.5 percent)
  • Year-year the PHSI fell 0.9 percentage points, the ninth consecutive month-month decline.

Trends:

  • At 327,000, the inventory of unsold new homes is at its highest level since February 2009;
  • The 9,000 increase in new homes for sale was the largest month-month increase since June 2015;
  • New home sales in September were DOWN4 percent from September 2017, the largest year-year drop since April 2011;
  • The year-year drop in the median price of a new home was the steepest since February 2017;
  • The inventory of new homes for sale INCREASED for the sixth straight month;
  • The PHSI increase was the fourth month-month improvement this year, but the weakest improvement since February when it rose 2.8 percent.

Data Source: Census Bureau and Department of Housing and Urban Development ; National Association of Realtors

The two indicators designed to forecast home sale moved in opposite directions in September showing slightly stronger existing new homes but decidedly weaker new home sales.

What to believe?

The new home sales report from the Census Bureau and Department of Housing and Urban Development showed a continued drop, falling for the fourth month in a row and fifth time in the last six months. The National Association of Realtors’ report of pending existing home sales was up for just the second time in the last six months.

The government report reflects not only buyer attitudes but the cost of building a new single-family home which has been affected by blowback from the Administration’s tariff proposals. Indeed, of the two reports, the government report is probably more meaningful with a deeper economic impact since it reflects the creation of an asset not only the transfer of an asset. Building a new home puts more people to work than selling one.

Nonetheless, existing home sales represent about 90 percent of the home sale market.

That said, the NAR report showed increased activity in the Midwest and West but a fall-off in the South and West. The South, of course was hit by major storms which would put more of an emphasis on building (or rebuilding).

The two reports are comparable because each tracks home sales contracts. The NAR’s existing home sales report deals with closings.

New Home construction is likely to be affected by rebuilding efforts from recent storms which will increase demand for both construction workers and material. With resources diverted to rebuilding we’ll likely see a drop off in home building, except for replacements.

The NAR has repeatedly cited weak inventories as the explanation for lagging sales of existing homes; that doesn’t appear to be an issue for new homes with the inventory at a nine-year high. The last sales (closings) report from the NAR put the inventory of existing homes for sale at 1.92 million, a 4.3-month supply for the third straight month.

Sales of existing homes pretty much hit a wall after the new tax plan kicked in, capping the tax deduction for homeownership (mortgage interest and real estate tax).

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.