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

By Mark Lieberman

Managing Director and Senior Economist

Highlights

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

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

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

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

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

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

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

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

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

By Mark Lieberman

Managing Director and Senior Economist

Highlights

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

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

So, what happened?

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

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

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

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

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

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

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

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

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

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

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

You can follow Mark Lieberman on Twitter at @foxeconomics.

 

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

By Mark Lieberman

Managing Director and Senior Economist

Highlights

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

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

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

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

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

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

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

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

1st Time Unemployment Insurance Claims Resume Decline

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 214,000 1st time claims for unemployment insurance for the week ended July 7 a DECREASE of 18.000 from the prior week’s report;
  • The four-week moving average of first-time claims DROPPED 1,750 to 222,000;
  • The number of initial claims for the week ended June 29 was revised up 1,000 to 232,000;
  • Four-week moving average represented 0.143 percent of employment, DOWN from 0.144 the previous week;
  • The number of continued claims –individuals who have been collecting unemployment insurance — reported on a one-week lag, was 1,739,000 for the week ended June 30, DOWN 3,000 from the previous week’s UPWARDLY REVISED 1,742,000 (revised from 1,739,000);
  • The four-week moving average of continued claims ROSE 9,500 to 1,728,500.

Trends:

  • The drop in the number of initial claims completely wiped out the increase in filings in the prior two weeks (up 10,000 for the week ended June 23 and up 4,000 for the week ended June 30);
  • The four-week moving average of continued claims increased for the first time since the week ended April 7;

Data Source: Department of Labor

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The data set of first time claims for unemployment insurance resumed its downward trajectory after a two-week hiccup due to a resumption of pre-Hurricane processes in the U.S. Virgin Islands (where claims rose from 10,000 to 22,000) and the furloughs of auto workers in Michigan (where claims rose by more than 9,000) as auto plants continued their annual retooling for new models.

Beyond those anomalies, the claims report continued to reflect good news about the tight labor market. Indeed, the weekly report echoed the signals from the Job Opening and Labor Turnover report earlier this week which (although for May) showed a sharp, 8.3 percent, in layoffs and discharges. As a percentage of all separations, layoffs and discharges fell to 29.0 percent, lowest since the JOLTS report began in 2000.

The drop in continued claims was also presaged by JOLTS data which showed the number of hires in May at 5.75 million, the highest monthly total ever recorded in the series.

The unemployment insurance claims data suggest little or no impact of the influx of previously unemployed workers to the total labor force (employed plus unemployed). The Bureau of Labor Statistics last week reported the number of re-entrants to the labor force at 2.086 million, the largest total since February 1987, an increase of 204,000 from May. The month-month change was the largest since December 2012.

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.

Job Openings Dip in May But Remain Above Unemployment; Hires at 17+ Year High

 By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Job openings at the end of May SLIPPED 3.0 percent to 6.4 million from April but remained above unemployment in May of 6.1 million;
  • The number of hires ROSE 3.1 percent to 5.75 million in May
  • The ratio of job openings per unemployed ROSE to 1.09 in May;

Trends:

  • Job openings exceeded unemployed for the third month in a row;
  • The number of hires in May reached its highest level since January 2001;
  • The ratio of quits to layoffs – a sign of confidence in the labor market – was 2.2 to one in May meaning more than twice as many people left jobs voluntarily as were laid off;

Data Source: Bureau of Labor Statistics

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

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

And, that picture has been generating rave reviews, certainly when converted to a six-month moving average to smooth some of the volatility in the monthly numbers.

The JOLTS report of job openings by industry also suggests an uptick in reported hourly and weekly earnings as some of the higher paying industry sectors: business and professional services, construction and health and education services showed relatively high ratios of unemployed to job openings. For example, the ratio was 3.6 to one in professional and business services, more than double the 1.7 to one ratio in April.

In the construction sector as well, the ratio of job openings to unemployed was 1.7 to one in May, up from 1.5 to one in April.

At the other end of the scale, the lower-paying leisure and hospitality sector had an opening to unemployed ratio of 0.5 to one in May, down slightly from 0.6 to one in April. Trade (encompassing both retail and wholesale trade) had a ratio of 0.7 to one in May down from A[til when there were 1.2 job openings for every person unemployed in that sector.

The JOLTS report projected the nation was on a pace for just under 67 million hires in 2018, up about 2.6 percent over 2017 and the highest total since the BLS began publishing JOLTS data in 2000.

The May JOLTS report suggest a pace for the number of layoffs and discharges in 2018 of 19.8 million, down from the 20.6 million layoffs and discharges in 2017 and the lowest total since the JOLTS data has been published.

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 Adds 213K jobs in June; Unemployment Rate Up to 4.0% but Earnings Increase Slows

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Number of payroll jobs INCREASED 213,000 in June;
  • Unemployment rate in June INCREASED to 4.0 percent, the first month-month increase since last August;
  • Average weekly earnings ROSE $1.72 to $930.81, a 2.7 percent year-year gain, down from a 3.0 percent year-year gain in May;
  • Average hourly earnings GREW 5¢, in June a 2.7 percent annual increase
  • Private sector jobs INCREASED 202,000;
  • Number of multiple jobholders grew 177,000, 83.1 percent of total increase in jobs
  • Prior month job totals REVISED a net 37,000: UP 21,000 in May to a growth of 244,000 jobs (from 223,000) UP in April to a gain of 175,000 (from the last report of a 159,000 increase);
  • The number of persons unemployed ROSE 499,000 as 204,000 individuals re-entered the labor force as “unemployed;”
  • Number of long-term unemployed (27 weeks or longer) ROSE 289,000 largest month-month increase since March 2010;
  • The number of person employed ROSE, by 102,000;
  • Average weekly hours REMAINED at 34.5 in June;
  • Labor force – ROSE 601,000 in June;
  • The number of persons NOT in the labor force FELL 413,000; labor force participation rate ROSE2 percentage points to 62.9 percent;
  • Employment-Population ratio REMAINED at 60.4 percent,
  • Number of retail jobs FELL 21,600, one of only two sectors to lose jobs (Utility jobs dipped 300);
  • Temporary jobs and part-time grew a combined 154,300;

Trends:

  • In the first six months of the year, the economy added 1.29 million jobs compared with 1.1 million in the first six months of 2017;
  • Number of full-time jobs FELL 89,000 in June, after a 904,0000 gain in May;
  • The month-month increase in the number of persons unemployed was the largest since November 2010, when the ranks of unemployed swelled by 565,000
  • Part-time jobs represented 17.4.0 percent of employment in June, up 0.1 percentage points from May;

Data Source Bureau of Labor Statistics

Image result for employment situation reportThen June Employment Situation report from the Bureau of Labor Statistics has almost as many warning signs as positive points.

While there is certainly good news in the month job growth, it is offset by the data showing a good chunk of those new jobs went to individual who already had jobs (multiple job holders),

On the surface it appears the strong market report in May which showed a drop in the unemployment rate drew individuals back into the labor force which led directly to an increase in the June unemployment rate.

But the unemployment rate rose without the re-entrants to the ranks of unemployed, up from 2.6 percent in May to 2.8 percent in June, matching precisely the increase in the overall unemployment rate.

At the same time the “long-term” unemployment capturing those out-of-work for 27 weeks or more as a percentage of the entire labor force rose to 0.9 percent in June from 0.7 percent in May. (The headline unemployment rate is also calculated as a percentage of the total labor force.)

The month’s drop in retail employment 21,600, was the steepest since December and suggests the tax cut – which kicked in in February with a lowering of withholding rates putting more money is the pockets of wage-earners – has not had the expected stimulative impact on the economy writ large.

Indeed, the improved hiring picture hasn’t had much of an impact on earnings which rose 2,7 percent year-year in June. Though the labor market remains tight – at least on paper – employers don’t appear to be trying to lure new hires with better pay. The number of “job leavers” those who are unemployed because they voluntarily left one job to get another, dipped in 41,000 June.

Perhaps the brightest view of the June report came in the widespread increase in jobs from an industry perspective. Retail trade and the utilities sector were the only two to show a drop in jobs in June.

The manufacturing sector showed its strongest month-month increase of the year adding 36,000 jobs. The construction sector added 13,000 jobs but jobs involving construction of residential homes added just 4,000 jobs reflecting the weak home sales market and the price increases for new homes stemming from increased tariffs. Lumber priced have been particularly affected by tariff increases.

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 Insurance Claims Increase; Continued Claims Average Again at 45-year Low

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 227,000 1st time claims for unemployment insurance for the week ended June 23 an INCREASE of 9.000 from the prior week’s report;
  • The four-week moving average of first-time claims EDGED UP 1,000 to 222,000;
  • Four-week moving average represented 0.143 percent of employment, UP from 0.142 the previous week;
  • The number of continued claims –individuals who have been collecting unemployment insurance — reported on a one-week lag, was 1,705,000 for the week ended June 16, DOWN 21,000 from the previous week’s UPWARDLY REVISED 1,726,000 (revised from 1,723,000);
  • The four-week moving average of continued claims FELL 3,750 to 1,719,500.

Trends:

  • The increase in the number of initial claim filings was the first since May 19 and was also the largest since then
  • The four-week moving average of continued claims dropped for the tenth straight week;
  • The four-week moving average of continued claims fell again to its lowest level since December 8, 1973, when it was 1,715,500.

Data Source: Department of Labor

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The increase in first-time claims for unemployment insurance did little to knock the labor market off course, in part because of the plethora of job openings. Indeed, those job openings contributed to the steady decline in continued claims (as measured by the four-week moving average). The continued claims series loosely reflects the pace of hiring which remains robust.

This report firmed the mid-month comparisons of claims and showed initial claims fell 5,000 from mid -May to mid-June. The four-week moving average of initial claims, however, increase 7,500 or almost 4.0 percent in the last month. The two data points send mixed signals about the trend for employment and the unemployment rate when the Bureau of Labor Statistics issued its Employment Situation Report a week from tomorrow.

Continued claims dropped 37,000 from mid-May to mid-June while the four-week moving average is down 32,500 or 7.0 percent. The “streak” of 10 straight weekly declines in the four-week moving average stretches still longer: 18 of the last 20 weeks. The four-week moving average of continued claims declined for 12 consecutive weeks from August 27, 201,6 through November 12, following a similar stretch from February 13 to April 30 that year.

An interesting note is the absence of any real impact on the claims filings of the retooling of auto plants as manufacturers gear up for a new model year. Auto workers furloughed during that period. First time claims in Michigan (not seasonally adjusted) though did increase more than 25 percent to 5,529 for the week ended June 23.

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

Pending Home Sales Index Down Again in May

Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • National Association of Realtors’ May Pending Home Sales Index (PHSI) FELL 0.5 percent from April to 105.9;
  • Year-year the index was DOWN 2.5 percentage points;

Trends:

  • The May decrease was the third in five months this year;
  • Index is down year-year for the five straight months;
  • PHSI is essentially tracking the Census Bureau’s new homes report (also based on contracts for sale) which was flat in January and rose in February and March

Data Source: National Association of Realtors (NAR)

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In another blow to the home sale market, the NAR’s pending home sales index dropped again in May, the third decline this year, as home sales face new challenges in fears of a recession and higher interest rates.

Since the beginning of the year the average rate for a 30-year fixed rate mortgage, according to Freddie Mac, has risen for 3.95 percent to 4.57 percent, raring the average monthly payment (excluding insurance and taxes) on a $300,000 mortgage from $1,425 to $1,534.

Realtors already face significant challenges as, according to Harvard’s Joint Center for Housing Studies which said in its annual State of the Nation’s Housing report stagnant wage growth is stifling home ownership in the U.S.

Although the homeownership rate rose last year, the report noted the year-year increase was the first in 13 years. Homeownership, the report said, is down 8.2 percent among 35-44 years-olds and down 6.3 percent for 25-34-year-olds since 1987, the first year of the annual report.

The 2018 study said the profile of homeowners has changed since the initial study and is older.

“The overall aging of the US population has important implications for housing markets, with 65–74-year olds now the fastest-growing age group,” the report said. “Since older adults generally live in established households and strongly prefer to remain in their homes as they age, they have not historically added significantly to new housing demand. But given the size of the baby-boom generation, households headed by persons age 65 and over will continue to grow at an unprecedented pace in the next decade, increasing the presence of older households in both the homeowner and rental markets.”

In addition to demographics, would-be younger home-buyers carry a significant student loan debt burden which adds another hurdle to the mortgage process.

The NAR’s pending home sales report had been tracing closely the Census Bureau’s similar report on (pending) new home sales, but has begun to diverge. The government report on new home sales (contracts for sale) showed a sharp increase in May.

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 Up in May as Prices Drop Despite Increase in Material Costs

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Pace of contracts for new home sales ROSE 6.7 percent in May to 689,000 (Seasonally Adjusted Annual Rate);
  • Unsold inventory increased 3,000 in May to 299,000 computing to a 5.2-month supply, down from 5.5 months in April;
  • Median price of a new home DROPPED $5,500 from April to $313,000;
  • Year-year the median price of a new home was DOWN $10,600 (4.8 percent)

Trends:

  • The increase in the pace of sales was the strongest since last November when sales rose 15.2 percent month-month;
  • The median price of a new single-family home dropped for the second straight month and is at its lowest level since April 2017 ($311,100);

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

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Led by a surge of home-buying in the South, new home sales spurted in May with the strongest month-month gain since last November. The increase in sales (contracts) in the South was consistent with the increase in housing permits in that region in April.

The drop in the median price of a new single-family home did not reflect the higher cost of building materials resulting from the imposition of higher tariffs by the Trump Administration. The drop in the median price – while reflecting a change in buyer activity – cane before the impact of higher prices for lumber (affecting framing and roof shingles).

In May, 46 percent of homes sold carried a price tag of less than $300,000, the highest percentage since last June.

Still, the new home sales report confirmed the still high level of builder confidence in the Housing Market Index for June. The Index, compiled by the National Association of Home Builders was down two points from May at 68. Any reading above 50 is considered positive.

 

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.

Unemployment Insurance Claims Fall Again; Continued Claims Average at 45-year Low

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 218,000 1st time claims for unemployment insurance for the week ended June 16 a DECREASE of 3.000 from the prior week’s UPWARDLY REVISED (from 218,000 to 221,000) report;
  • The four-week moving average of first-time claims FELL 4,000 to 221,000;
  • Four-week moving average represented 0.142 percent of employment, DOWN from 0.145 the previous week;
  • The number of continued claims –individuals who have been collecting unemployment insurance — reported on a one-week lag, was 1,723,000 for the week ended June 9, UP 22,000 from the previous week’s UPWARDLY REVISED 1,701,000 (revised from 1,697,000);
  • The four-week moving average of continued claims FELL 39,750 to 1,773,750.

Trends:

  • The number of initial claim filings fell for the fourth straight week;
  • The four-week moving average of continued claims dropped for the ninth straight week;
  • The four-week moving average of continued claims fell again to its lowest level since December 8, 1973, when it was 1,715,500.
  • The Four-week moving average of continued claims has fallen in 12 of the last 14 weeks

Data Source: Department of Labor 

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With the report a couple of weeks back that the number of job openings was larger than the number of persons counted as unemployed (according to preliminary numbers for May and “final” numbers for April), it follows that unemployment claims should remain on a downward trend.

Occasional spikes in the number of continued claims reflect a skills mismatch and don’t detract from the positive labor market news.

What doesn’t follow though is stagnant wages although the report on May payrolls showed average weekly earnings up 3.0 percent year-year, the average annual growth rate remains far below pre-recession levels.

 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.

Housing Construction Starts Hit 11-year High in May

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The rate of housing permit filings in May FELL 4.6 percent to a seasonally adjusted annual rate (SAAR) of 1.30 million units;
  • The rate of permits for single-family home permits filed in May DROPPED, 2.2 percent to an SAAR of 844,000 units;
  • The rate of permit filings for multi-family homes FELL 8.8 percent in May to 457,000 units (SAAR);
  • The rate of all housing starts ROSE 5.0 percent in May to an SAAR of 1.35 million with virtually all the increase attributable to stronger single-family starts which ROSE 3.9 percent in May;
  • The rate of home completions in May INCREASED 1.9 percent from April driven by an11.0 percent jump in single-family home completions.

Trends:

  • The pace of housing starts ROSE in May to the highest level since July 2007 (1.354 million);
  • Housing permits FELL month-month for the third time (in five months) this year with the largest percentage month-month drop since February 2017;
  • Permits for single-family homes dropped to the lowest level since last September (831,000 units);
  • The 11.0 percent month-month jump in single-family home completions will likely exacerbate the inventory glut which rose in April to 300,000, the highest level since April 2009.

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

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Builders rushed material orders to get construction started on new housing in May, before the impact of higher tariffs on lumber and other components kick in.

According to Real Clear Politics the Random Lengths Framing Lumber Index which tracks lumber prices hit its highest level ever — $512 per thousand board feet – in May, a 25 percent price increase from one year ago. The RCP report said the increase in lumber prices would add about $6,400 to the cost of a new home.

The median price of a new single-family home in April, the Commerce Department reported, was $312,400.

On top of the higher lumber prices, the Trump Administration’s imposition of higher tariffs on steel could flow through to multi-family construction either increasing the cost of construction or sharply cutting home building.

Lumber is used for shingles as well as framing in home building.

The National Association of Home Builders reported Monday its Housing Market Index, measuring builder confidence, dropped two points in June (the survey is conducted in the first 10 days of the month) to 68 as the measure of buyer traffic fell to its lowest level since last November. The outlooks for current new home sales and for new home sales six months out also dropped. The index measure of 68 though means the outlook for home sales and building remains positive (index value over 50) as it has been since July 2014.

Would-be home buyers are facing the double-whammy of higher prices and higher mortgage rates.  The median rate for a 30-year fixed rate mortgage, according to Freddie Mac, was 4.62 percent last week, an increase of almost 20 percent from 3.91 percent a year ago.

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

Ho hum: Continued Claims for Unemployment Insurance Hit New Post-Recession Low

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 222,000 1st time claims for unemployment insurance for the week ended May 12 an INCREASE of 11.000 from the prior week’s unrevised report;
  • The four-week moving average of first-time claims FELL 2,750 to 213,250;
  • Four-week moving average represented 0.137 percent of employment, DOWN from 0.139 the previous week;
  • The number of continued claims –individuals who have been collecting unemployment insurance — reported on a one-week lag, was 1,707,000 for the week ended May 5, DOWN 87,000 from the previous week’s UPWARDLY REVISED 1,794,000;
  • The four-week moving average of continued claims FELL 39,750 to 1,773,750.

Trends:

  • The four-week moving average of initial claims for unemployment insurance fell to its lowest level since December 13, 1969 (210,750);
  • The number of continued claims for unemployment insurance was at its lowest level since December 1, 1973 (1,692,000)
  • The four-week moving average of continued claims fell again to its lowest level since December 22, 1973 (1,756,000);
  • The Four-week moving average of continued claims has fallen in 12 of the last 14 weeks dropping more than 160,000 in that span;
  • The four-week moving average of initial claims has fallen for four weeks in a row.

Data Source: Department of Labor

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By any measure, despite the blip up in this week’s report, claims for unemployment insurance are showing unparalleled improvement which belies the trend in earnings which have not improved in synch.

The report which does match up quite nicely with the weekly claims data is the Job Openings and Labor Turnover Survey (JOLTS) showing as it does a sharp increase in the ratio of quits to layoffs/discharges, 2.14, highest ever, in the most recent JOLTS report (for March). The ratio is another indicator of market strength, with more workers willing to quit with the confidence in their ability to land another job. Of course, those “quits” are not without cost as new workers must be trained to replace those who’ve left and the replacements will take some time to get up to speed and likely be less productive in the near term.

That, of course, argues for a bump in earnings as a retention tool but employers too are affected by the market knowing they will easily be able to replace departing employees or at least temporarily take advantage of the savings in wages.

The low levels of unemployment insurance claims have also given state unemployment insurance trust funds – from which benefits are actually paid – an opportunity to recover from the Recession when states had to borrow from the federal government to maintain unemployment insurance payouts.

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.

Housing Construction Activity Stronger Despite April Dip

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The rate of housing permit filings in April FELL 1.8 percent to a seasonally adjusted annual rate (SAAR) of 1.35 million units;
  • The rate of permits for single-family home permits filed in April ROSE, 0.9 percent to a SAAR of 859,000 units;
  • The rate of permit filings for multi-family homes FELL 6.3 percent in April to 493,000 units (SAAR);
  • The rate of all housing starts FELL 3.7 percent in April to a SAAR of 1.29 million with all the decline attributable to weaker multi-family starts; the rate of single-family starts edged up 1,000 to 894,000;
  • The rate of home completions in April INCREASED 2.8 percent from March; The pace of both single-family and multi-family completions increased.

Trends:

  • The April report on single-family permits would have been stronger had it not been for an upward revision to March data;
  • The “gap” between March new home sales (latest available) and single-family completions narrowed to 160,000 (seasonally adjusted annual rate) from 215,000 in February;
  • Permits for single-family homes represented 63.5 percent of all permits in April, UP from 61.8 percent in March;
  • At the same time, single-family homes accounted for 69.5 percent of all starts, below 70 percent for the fourth straight month.

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

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Led by a continued decline in multi-family activity, housing permits and starts slipped again in April. Completions of single-family homes also dropped which could be good news reducing inventory pressures.

The decline in inventories could have been the main reason behind the report yesterday that builder confidence improved in May as reported Tuesday by the National Association of Home Builders.

But the net effect of the April report by the Census Bureau and Department of Housing Development would be to continue a dour outlook for home building one of the two basic industries fueling the U.S. economy. As significantly – or perhaps more – residential construction is an endeavor that cannot be off-shored.

That said, the impact of the Trump Administration’s imposition of higher tariffs on steel could flow through to multi-family construction either increasing the cost of construction or cutting it sharply.

Despite the month-month gyrations of these data series, home construction is actually looking stronger: total permits in the first four months of this year (unaffected by weather) and starts (which do respond to weather) are each up 7.6 percent from the same period last year. Single-family permits for the first four months of this year are up 6.3 percent over the same period a year ago and starts are up 6.7 percent.

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