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 Continue Down

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 212,000 1st time claims for unemployment insurance for the week ended Aug 11 a DECREASE of 2.000 from the prior week’s upwardly revised report (from 213,000 to 214,000)
  • The four-week moving average of first-time claims ROSE 1,00 to 215,500;
  • Four-week,  moving average represented 0.138 percent of employment, UNCHANGED from the previous week;
  • The number of continued claims – individuals who have been collecting unemployment insurance — reported on a one-week lag, was 1,721,000 for the week ended August 4, DOWN 39,000 from the previous week’s UPWARDLY REVISED 1,760,000 (revised from 1,755,000);
  • The four-week moving average of continued claims FELL 8,000 to 1,735,500.

Trends:

  • Four-week moving average of initial claims ROSE for the first time in six weeks;
  • The four-week moving average of first-time claims has declined year-year for 44 straight weeks;

Data Source: Department of Labor

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Initial claims for unemployment insurance continued their downward roller coaster ride last week and over a longer period, be it four weeks or 52, look positively bullish.

Whether measured as a percentage of employment or the labor force, initial claims filings have maintained a downward trajectory.

The four-week moving average of first-time claims has been down year-year four 47 weeks and the 52-week moving average has been down for 21 straight weeks.

The picture is largely the same for continued claims, a measure of hiring. The four-week moving average has been down year-year every week since January 2010!

What continues to befuddle labor economists is the stubborn nature of weekly earnings which seem to have defied laws of supply and demand, not rising dramatically even as the unemployment and the number of unemployed drops.

One possible explanation is the cut in the corporate tax rate which has removed some of the tax incentive for paying workers more.

When the corporate tax rate was 35 percent, businesses knew the government would essentially “pay” 35¢ of every additional dollar of wages. Now that the rate is 21 percent, the tax advantage is reduced. While employers have not offered that excuse or logic (?), it has affected other facets of the economy, for example, low-income housing tax credits which, with the reduction in the corporate tax rate are no longer as valuable.

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.

Construction Activity Edges Up in July; Remains Weak

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Home building activity, measured by housing permits and starts EDGED UP in July, led by single-family activity;
  • The seasonally adjusted annual rate of Single-family permits ROSE a 1.9 percent while single-starts were UP 0.9 percent;
  • As a share of the increase in all permits, single-family activity represented 84 percent and of starts, 80 percent;
  • Multi-family permits were UP 0.7 percent as did multi-family starts;
  • The rate of housing completions though FELL 1.7 percent, as single-family completions plummeted but multi-family completion increased month-month

Trends:

  • The month-month improvement in housing permits was the first in four months;
  • The SAAR of both permits and starts is down since the beginning of the year; permits are off by less than 1 percent, but the rate of starts is off almost 3.5 percent;
  • The pace of new home completions has now fallen for three straight months and for four of the last five months;

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

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Just one day after the National Association of Home Builders reported yet another dip in builder confidence, the Commerce Department provided an explanation in a report showing weak gains in new residential activity.

The Housing Market Index, NAHB’s yardstick for builder confidence slipped one point in August though it remains strongly positive at 67.

The index, though labeled as the August reading, is largely based on July activity which continued to show challenges for the housing sector borne out by the Commerce data. The sector must still deal with stagnant earnings, rising mortgage rates and higher material costs as a consequence of higher tariffs.

According to Freddie Mac, though the average rate for a 30-year fixed rate mortgage dipped to 4.53 percent last week from 4.59 percent one week earlier, it remains noticeably higher than the 3.89 percent rate a year ago.  The difference would cost a borrower about $112 a month on a 39-year $300,000 mortgage.

The seasonally adjusted annual rate of housings starts was about 1.6 million in January 2006 and fell to under 500,000 at the depths of the Recession. Thursday’s report of a SAAR just under $1.2 million, suggests home construction still has a long way to go.

Of course, the reduced inventory of new homes has affected sales. The seasonally adjusted annual rate of new home sales in June was 631,000, down from a pre-Recession high of nearly 1.4 million.

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

1st Time Unemployment Claims Resume Decline, But Exansion Sputters

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 213,000 1st time claims for unemployment insurance for the week ended Aug 4 a DECREASE of 6.000 from the prior week’s upwardly revised report (from 218,000 to 219,000)
  • The four-week moving average of first-time claims DROPPED 500 to 214,250;
  • Four-week moving average represented 0.137 percent of employment, DOWN from 0.138 the previous week;
  • The number of continued claims – individuals who have been collecting unemployment insurance — reported on a one-week lag, was 1,755,000 for the week ended July 28, UP 29,000 from the previous week’s UPWARDLY REVISED 1,726,000 (revised from 1,724,000);
  • The four-week moving average of continued claims ROSE 3,000 to 1,745,250.

Trends:

  • Four-week moving average of initial claims fell for the fifth week in a row for the first time since last November;
  • The four-week moving average of first-time claims has declined year-year for 43 straight weeks;
  • After falling for 11 straight weeks (from April to mid-June) the four-week moving average of continued claims has not increased in four of the last five weeks.

Data Source: Department of Labor

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On the heels of a meh JOLTS (Job Openings and Labor Turnover Survey) Tuesday, the Department of Labor Thursday reported a drop in the number of first-time claims for the week ended last Saturday.

While the two reports don’t necessarily feed into each other, they are related in that one of the surest ways to get off the unemployment rolls (as reported in the continued claims report) is to get a job. According to the JOLTS data, the number of job openings barely budged in June (the most recent reporting month) up just 3,000 to 6,662,000. Also, in June, the number of hires dropped 96,000 to 5,651,000.

The slowdown in hiring is one explanation as to why the number of continued claims – measuring those who are still collecting unemployment benefits – rose in the last week and why the four-week moving average of continued claims rose as well.

According to the JOLTS data, the number of unemployed per job opening rose in June in six occupational sectors: professional and business services, construction, trade, education and health services, transportation and leisure and hospitality.

The number of layoffs in the construction sector, one of the country’s core occupational sectors, rose in June as the number of hires fell.

The JOLTS data taken with the initial claims reports suggest a slowing in the labor market which will only exacerbate the stagnant wages environment plaguing the labor market, suggesting the 4.1 percent GDP growth of the second quarter might have been an aberration and not the new norm for the nation’s economy.

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 Disappointing 157K jobs in July; Unemployment Rate Drops Back to 3.9%

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Number of payroll jobs INCREASED 157,000 in July;
  • Unemployment rate in July FELL to 3.9 percent;
  • Average weekly earnings DROPPED 28¢ in July to $933.23, a 2.8 percent year-year gain, down from a 3.0 percent year-year gain in June;
  • Average hourly earnings GREW 7¢, in June a 2.5 percent annual increase
  • Private sector jobs INCREASED 170,000;
  • Number of multiple jobholders grew 453,000, almost 3x the number of “new” jobs;
  • Prior month job totals REVISED up 59K: UP 35,000 in June to a growth of 248,000 jobs (from 213,000) UP in May to a gain of 268,000 (from the last report of a 244,000 increase);
  • The number of persons unemployed FELL 284,000 as 287,000 fewer individuals re-entered the labor force;
  • The number of person employed ROSE, 389,000;
  • Average weekly hours SLIPPED to5 in July from 34.6 in June;
  • Labor force – ROSE 105,000 in June;
  • The number of persons NOT in the labor force INCREASED 96,000;
  • Labor force participation rate REMAINED at 62.9 percent;
  • Employment-Population ratio ROSE to 60.5 percent,
  • By sector number of professional and business service jobs ROSE 51,000 paced by a 27,900 increase in temp jobs; number of leisure and hospitality jobs grew 40,000 with 33,800 new food service jobs; number of retail jobs INCREASED 7,100;
  • Manufacturing jobs INCREASED 37,000.

Trends:

  • Increase in the number of multiple jobholders was the largest since October 2014 (481,000)
  • Multiple jobholders represented 5.0 percent of all jobholders in July, up from 4.7 percent in June;
  • Month-month increase in temporary jobs (27,900) was the largest since September 2016 (35,500).

Data Source Bureau of Labor Statistics

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The June Employment Situation report from the Bureau of Labor Statistics was another mixed bag: a smaller than expected increase in the number of payrolls (157,000 versus market consensus of 190,000) but a decline in the unemployment rate.

Why the dichotomy?

For starters, the increase in good-producing jobs has leveled off, albeit at a still strong monthly average of 52,000 for the last three months, down from 60,000 for the first four months of the year.

The drop in the unemployment rate itself stems from a faster increase in the labor force (the sum of those employed and those unemployed) – up 1.8 million in the last year — than the decline in the number of persons unemployed (679,000). It also reflects a slowdown in the number of individuals re-entering the job market.

The number of re-entrants average 2,200 per month in the last two years as the economy was recovering from the Recession to an average of 1,950 in the first seven months of this year.

What’s more intriguing perhaps is the labor force participation rate – the percentage of the over-16 population either employed or unemployed – has been unchanged in the last year at 62.9 percent, well below pre-recession levels.

And below the headline numbers of jobs and the unemployment rate remains the stubbornly stagnant wage picture which seems to defy normal laws of labor supply and demand. With the unemployment rate generally at its lowest level of this century, year-year growth in hourly wages is a full percentage point below where it was the last time the unemployment was as low as it is now.

Taken together that suggests an out of synch economy unless we’re in the midst of a new paradigm.

All that would be fine if prices were stable, but we’ve seen an inexorable – albeit relatively small – increase in the cost of living along with a slowing in key economic sectors. With the Federal Open Market Committee remaining on course to increase interest rates, the situation could only get worse.

Home sale activity, for example, remains slow. As a result, residential construction jobs represent 1.9 percent of all jobs, down from 2.5 percent at their peak. Instead, low-paying leisure and hospitality jobs – primarily food service jobs, now account for almost 11 percent of all jobs.

We’ve yet to feel the effects of the trade war started by the Trump Administration which will impact the cost of home construction.

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 Inch Up

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 218,000 1st time claims for unemployment insurance for the week ended July 28 an INCREASE of 1.000 from the prior week’s unrevised report;
  • The four-week moving average of first-time claims DROPPED 3,500 to 214,500;
  • Four-week moving average represented 0.138 percent of employment, DOWN from 0.140 the previous week;
  • The number of continued claims – individuals who have been collecting unemployment insurance — reported on a one-week lag, was 1,724,000 for the week ended July 21, DOWN 23,000 from the previous week’s UPWARDLY REVISED 1,747,000 (revised from 1,745,000);
  • The four-week moving average of continued claims FELL 4,500 to 1,741,750.

Trends:

  • Initial claims rose for the second week in a row and the fourth time in the last six weeks;
  • The four-week moving average of first-time claims has declined year-year for 42 straight weeks;
  • The drop 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 Federal Open Market Committee in announcing its interest rate decision Wednesday said, “job gains have been strong, on average, in recent months, and the unemployment rate has stayed low” and the weekly report on first-time claims for unemployment insurance, despite an upward tick, put numbers behind the commentary. Noting recent trends, the FOMC said the labor market conditions “realized and expected.”

And so, the labor strength continues, with the numbers to be released tomorrow in the monthly Employment Situation release likely to provide further statistical reinforcement.

Only 12 of the 92 economic forecasts received by Reuters see the unemployment rate remaining at 4.0 percent with virtually all the others anticipating the unemployment rate will drop back to 3.9 percent. Three forecasters see it dropping further, to 3.8 percent, the level in May.

The more critical number to be reported Friday, to be sure, is the year-year growth in average weekly earnings which rose 2.5 percent in June, the smallest year-year increase since January when it went up 2.2 percent.

The claims report continued the pattern of the improving labor picture, unlikely to change unless it continues unable to resist pressures on several fronts: tariffs which could affect food production, manufacturing, and home building.

Last week’s report on Gross Domestic Product notwithstanding, the economy remains vulnerable.

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.

Homeownership Rate Inches Up in 2Q

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Homeownership rate in 2Q 2018 was 64.3 percent, UP from 64.2 percent in 1Q;
  • 934,000 MORE households owned homes in 2Q 2018 than in 1Q, 2.2 million more than in 2Q 2017
  • 2,000 MORE vacant homes for sale in 2Q than in 1Q, but 38,000 fewer than in 2Q 2017

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The nation’s housing market remained essentially flat in the second quarter the Census Bureau and Department of Housing and Urban Development reported Thursday.

The homeownership rate which had been growing from the first quarter through the fourth quarter a year ago, rose just 0.1 percentage points in the second quarter, an improvement from the first quarter but still well below the 65.3 percent average during the Obama Administration.

The homeownership rate peaked at 69.2 percent in 2004 and dropped to a 48-year low of 62.9 percent in the second quarter of 2016.

According to the National Association of Realtors (NAR), sales of existing single-family homes in the second quarter averaged 5.41 million (seasonally adjusted annualized rate) down from 5.54 million in 2017.

New home sales though averaged 646,000 in the second quarter, up from 615,000 in 2017.

New tax rules limiting the tax advantage of homeownership went into effect in January and existing home sales have fallen in four of the first six months of this year. New home sales have dropped in three of the first six months this year. (Since both are reported as “seasonally adjusted annual rates” the most recent reports are significant: for existing home sales 5.38 million in June, matching January as the weakest since last September; for new home sales: 631,000 in June, slowest pace since August 2017.)

An encouraging sign in the data was the uptick in homeownership rates by younger age cohorts. The homeownership rate among those under 35 rose to 36.5 percent (from 35.3 percent), its highest level since the end of 2013. The homeownership rate in the 35-40 age bracket rose to 60 percent (from 59.8 percent), its highest since 2Q 2014.

Those increases bucked a trend which saw younger families shunning homeownership for a variety of reasons. The lower percentages of homeownership among younger families were attributed to the Great Recession when those 30-34 were watching their parents or their friends’ parents struggle in the mortgage meltdown. Since then, of course, while mortgages may have stabilized, that same age cohort has been saddled with student loans which make homeownership more of a dream and rising interest rates in addition to a new cap on tax breaks from owning a home.

According to Thursday’s report, the percentage of senior citizens (over 65) owning homes has fallen from 81.2 percent to 78.0 percent in the last five years.

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.

 

1st Time Unemployment Insurance Claims Rise; Hint at Temperate Jobs Report Next Week

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 217,000 1st time claims for unemployment insurance for the week ended July 21 an INCREASE of 9.000 from the prior week’s upwardly revised (207,000 to 208,000) report;
  • The four-week moving average of first time claims DROPPED 2,750 to 218,000;
  • Four week moving average represented 0.140 percent of employment, DOWN 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 1,745,000 for the week ended July 14, DOWN 8,000 from the previous week’s UPWARDLY REVISED 1,753,000 (revised from 1,751,000);
  • The four-week moving average of continued claims ROSE 9,500 to 1,745,750.

Trends:

  • Year-to-date, initial claims have averaged 237,580, down 2.7 percent from the 244,138-year-to-date average in 2017, marking the 38th straight week of year-year decline in the YTD average,
  • The 52-week average of first-time claims is 234,462, down 500 in the last week; the 52-wee-moving-average has improved for 15 straight weeks;
  • The four-week moving average of continued claims increased for the third consecutive week, the longest stretch this year.

Data Source: Department of Labor

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There was nowhere to go but up.

After dropping to a 49-year low last week, the number of initial claims for unemployment rose modestly in the week ended last Saturday, July 21.

Still, at 217,000, the number of first-time claims remains near historic lows.

The report portends a mixed result for the Employment Situation release from the Bureau of Labor Statistics due out August 3.

From mid-June to mid-July the number of 1st time claims dropped 10,000 and the four-week moving average of 1st time claims inched down 500. While not pointing to a decrease in the 4.0 percent unemployment rate, the numbers don’t suggest an increase either.

The numbers for continued claims – an increase of 38,000 from mid-June to mid-July in claims themselves and an increase of 36,000 in the four-week moving average – hint that the number of new jobs created in July may disappoint. In June the nation created 213,000, on par with the three-month moving average of 211,000 new jobs.

The possibility of weak jobs numbers could also mean no significant change in average hourly or weekly earnings.

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.

New Home Sales Drop in June Even as Median Price Falls

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Pace of contracts for new home sales FELL 5.3 percent in June to 631,000 (Seasonally Adjusted Annual Rate);
  • Unsold inventory increased 5,000 in June to 301,000 but the inventory for May was revised downward to 296,000 from 299,000;
  • The months’ supply of new homes for sale ROSE to 5,7 in June from 5.3 in May
  • May sales were revised downward to show an increase of 3.9 percent instead of the originally reported 6.7 percent
  • Median price of a new home DROPPED $7,600 from May to $302,100;
  • Year-year the median price of a new home was DOWN $13,100 (4.2 percent)

Trends:

  • The drop in the pace of sales was the largest this year and driven by declines in the Midwest. South and West;
  • The median price of a new single-family home dropped for the third straight month, falling to its lowest level since February 2017;
  • The median price has declined every month this year except March.

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

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Following the pattern set by existing home sales which fell 0.6 percent in June, new home sales declined by the largest month-month percent this year.

Although the two reports are not directly comparable – the National Association of Realtors’ existing home sales report is based on closings and the government report on new home sales is based on contracts – they provide a sense of the direction of the home sales market.

New home sales – which involve the construction of a new home are less than 10 percent of all home sales — have a greater impact on the economy because they involve the creation of an asset while existing home sales reflect the transfer of an asset.

Despite concerns that the uncertainty caused by the imposition of higher tariffs on building material, the median price of a new home fell in June but that reflects buyer choices more than the cost of construction. Half of the new homes sold in June were priced under $300,000. In the last three months, about 48 percent of new homes sold had prices below $300,000 compared with 41 percent in the prior three months.

The changing preference among buyers for lower-priced homes could ultimately effect builders although builder confidence for July, according to the National Association of Home Builders remained at a strong 68 (out of 100) as an uptick in buyer traffic offset a dip in the outlook for home sales six months from now.

Residential construction jobs improved in June, according to the Bureau of Labor Statistics but the increase in those jobs was far weaker than it had been in April and May.

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.

Home Sales in June Fall for 6th Straight Month; Inventory Improves

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The pace of existing home sales – closed sales — FELL 0.6 percent, 30,000, in June a seasonally adjusted annual sales rate of 5.38 million;
  • The May sales rate was REVISED DOWN 20,000 to 5.41 million;
  • Median price of an existing single-family home ROSE 4.5 percent, $11,800, to $276,900;
  • Year-year the median price is up 5.2 percent or $13,600;
  • Number of homes available for sale ROSE 80,000 or 43. percent to 1.95 million;
  • The months’ supply of homes for sale in June was UP 0.2 months to 4.3 months.

Trends:

  • Existing home sales (closings) FELL for the third straight month and year-year sales were down 2.4 percent, the fourth month in a row year-year have slipped;
  • Number of homes for sale INCREASED for the sixth straight month, to the highest level since October 2016;
  • The median price of an existing single-family home ROSE for the sixth straight month;
  • The median price of an existing single-family home in the West topped $400,000 for the first time since the NAR began reporting sales and prices in 1999.

Data Source: National Association of Realtors: (NAR) tinyurl.com

 

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Housing doldrums continued in June though, if Freddie Mac’s analysis is correct, there may be light at the end of the tunnel.

At about the same time the National Association of Realtors (NAR) was issuing its report on June existing home sales, Freddie Mac issued its July housing forecast which blamed weak sales on a low inventory of existing homes for sale.

According to the NAR report, the number of existing homes for sale increased in June to a seasonally adjusted annual rate of 1.95 million. It was the sixth straight month the inventory has increased, a jump 33.6 percent over that span. For the first time in more than three years (since June 2015), inventory is up year over year. The months’ supply of new homes (calculated as the inventory divided by the sales pace) reached its highest level, 4.3, since October 2016.

Though not cited by the NAR as an explanation, the tax law changes which capped the deductibility of real estate taxes has had an impact as well. Since the tax law took effect in January, the pace of housing sales has fallen 4.1 percent in the Northeast and Western regions (combined) where real estate taxes are the highest and just 2.8 in the Midwest and South combined.

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 Fall to 49-year low

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 207,000 1st time claims for unemployment insurance for the week ended July 14 a DECREASE of 8.000 from the prior week’s upwardly revised (214,000 to 215,000) report;
  • The four-week moving average of first-time claims DROPPED 2,750 to 220,500;
  • Four-week moving average represented 0.142 percent of employment, DOWN from 0.143 the previous week;
  • The number of continued claims – individuals who have been collecting unemployment insurance — reported on a one-week lag, was 1,751,000 for the week ended July 7, UP 8,000 from the previous week’s UPWARDLY REVISED 1,743,000 (revised from 1,739,000);
  • The four-week moving average of continued claims ROSE 6,250 to 1,735,750.

Trends:

  • Year-to-date, initial claims have averaged 237,825, down 2.6 percent from the 241,207 year-to-date average in 2017;
  • The 207,000 initial claims filings are the lowest since December 6, 1969, when there were 202,000 first -time filings;
  • The four-week moving average of continued claims increased in consecutive weeks for the first time since April;

Data Source: Department of Labor 

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Time to party like its 1969?

It should be as initial claims for unemployment insurance fell to the lowest level since December 1969 and threaten to go even lower based on data in the Job Openings and Labor Turnover Survey which show the number of job openings exceeding the number of unemployed.

 

Of course, the companion data – as reported in the Employment Situation report issued the first Friday of each month by the Bureau of Labor Statistics – don’t appear to reflect just how tight the labor market is with hourly and weekly earnings not ratcheting up as the law of supply and demand would suggest.

The Federal Reserve’s Beige Book, issued Wednesday for the six weeks ended July 9, reflected the paradoxical data.

“Employment continued to rise at a modest to moderate pace in most Districts,” according to the Beige Book. “Labor markets were described as tight, with most Districts reporting firms had difficulty finding qualified labor. Shortages were cited across a wide range of occupations, including highly skilled engineers, specialized construction and manufacturing workers, IT professionals, and truck drivers; some Districts indicated labor shortages were constraining growth. Districts noted firms were adding work hours, strengthening retention efforts, partnering with local schools, and converting temporary workers to permanent, as well as raising compensation to attract and retain employees. On balance, wage increases were modest to moderate, with some differences across sectors; a couple of Districts cited a pickup in the pace of wage growth.”

Indeed, according to the BLS report on “Real Earnings” (adjusted for inflation), hourly earnings are up just 0.1 percent June and for the 12-months ended last June are unchanged.

“From June 2017 to June 2018, real average hourly earnings decreased 0.2 percent, seasonally adjusted. Combining the change in real average hourly earnings with a 0.3-percent increase in the average workweek resulted in no change to real average weekly earnings over this period,” the BLS reported.

The unemployment insurance claims data suggest unemployment could show a decline drop in July when the BLS issues its next employment situation release. From mid-June to mid-July (the “reference” weeks used by BLS) first-time claims for unemployment insurance dropped 11,000 and the four-week moving average of initial filings fell 500 suggesting fewer layoffs. Offsetting that however, the tighter labor market could result in individuals who had dropped out of the labor force rejoining. Once those individuals resume looking for work, they would meet one of the three tests to be counted as “unemployed.” (The other two tests are out-of-work and available for work.)

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