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.

First-time Unemployment Insurance Claims Drop to Another 50-Year Low

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 192,000 1st time claims for unemployment insurance for the week ended April 13, a DECLINE of 5,000 from the prior week’s upwardly revised 197,000 (originally 196,000);
  • The four-week moving average of first-time claims FELL 6,000 to 201,250;
  • Four week moving average represented 0.128 percent of employment, DOWN from 0.132 percent the previous week;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,653,000 for the week ended April 6, DOWN 63,000 from the previous week’s upwardly REVISED 1,716,000 (from 1,713,000)
  • The four-week moving average of continued claims DROPPED 22,750 to 1,712,500.

Trends:

  • First-time claims fell to the lowest level since September 1969 when there were 182,000 claims filed;
  • Initial claims have now fallen for five weeks in a row for only the second time since August-September 2016;
  • Four-week moving average of initial claims fell to the lowest level since November 1, 1969 when it was 200,500.

Data Source: Department of Labor

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Another week, another 50-year record as first time claims for unemployment insurance continue to follow gravity.

Superlatives have become routine in discussing claims….lowest since, largest decline since….but one that is particularly telling is the share of the employment which claims represent, down to 0.128 percent. To put that in perspective, just five years ago initial claims represents about twice that share of total employment. That’s not to say employers aren’t trying to economize, but for a variety of reasons there’s more than enough work to go around.

We’re seeing that of course in the Job Openings and Labor Turnover Survey which despite a dip in job opening in February (the last reported month) continues to show a robust labor market.

According to the Labor Department, the largest increases in initial claims for the week ending April 6 were in Michigan (+1,945), Tennessee (+1,833), Arizona (+1,289), Florida (+1,098), and Arkansas (+1,031), while the largest decreases were in California (-2,301), New York (-406), Illinois (-354), Missouri (-327), and Wisconsin (-297).

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

Retail Sales Soar

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • March retail sales SURGED 1.6 percent or almost $8 billion in March recovering from a slight (0.2 percent) dip in February
  • Excluding auto sales, which rose $3.2 billion, retail activity was up 1.2 percent in March, matching February;
  • Gasoline station sales ROSE 3.5 percent as the price of gasoline increased almost 9 percent in March; the increase in gasoline station sales accounted for just over 30 percent of the total month-month improvement;
  • The only store category to show a decline was sporting goods and hobby stores where sales fell 0.3 percent from February to March.
  • The increase in retail activity came in the same month in which the Consumer Price Index ROSE 0.4 percent month-month, led by an increase in gasoline prices;
  • Retail activity was up 3.6 percent year-year, almost twice the 1.9 percent increase in CPI for the same period.

Trends:

  • The month-month increase in sales was the largest since September 2017 when retail activity increased 2.0 percent;
  • BLS reported the number of retail jobs FELL 11,700 in March, a decrease of 0.07 percent from February;
  • The number of jobs at gasoline stations rose 1,400 or 0.15 percent in March.

Data source: Census Bureau

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Despite climbing gasoline prices, consumers took to their cars and in doing so drove retail sales higher in March.

Virtually every store category saw an improvement in sales over February when sales ticked down largely in lockstep with a slowdown in home sales. In March, except for furniture stores, every store category improved over February. While sales went up at furniture stores in both months, they went up faster in February than in March.

So, housing – specifically home sales – remain a driver of retail activity which itself is the major component of Gross Domestic Product.

With the March data we now know retail activity for the first quarter was barely ahead of activity for the fourth quarter – 0.06 percent – which doesn’t bode well for first quarter GDP since retail activity is about 55 percent of consumer spending which in turn is about 2/3 of the overall economy. Fourth quarter GDP grew at an annualized 2.2 percent rate.

That retail activity increased more rapidly than Consumer Price Index prices reflects the improvement in earnings as reported by the Bureau of Labor Statistics in its Employment Situation release.

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

Builder Confidence Ticks Up in April

By Mark Lieberman

Managing Director and Senior Economist

Data Highlights:

  • Housing Market Index EDGED UP one point in April to 63;
  • Two of the three component measures ROSE with only the outlook for sales six months forward slipping (1 point to 71);
  • By region, builder confidence INCREASED in three of the four Census Regions, falling only in the South (down four points to 66).

Trends:

  • The overall Index has no fallen this year (it was unchanged from February to March);
  • After slipping at the end of 2018, the Index is at its highest level since October;
  • The Index has been positive (i.e. over 50) for 58 straight months;
  • Despite recent positive performance, the Index and its components, remain down year-year.

Data Source: National Association of Home Builders https://www.nahb.org/news-and-publications/press-releases/2019/04/builder-confidence-edges-higher-in-april.aspx

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Despite relatively weak home sales, the Housing Market Index, which reflects builder confidence in the market for newly-built single-family homes, rose one point in April, climbing to 63 (out of 100), its highest level since last October.

The confidence index increase came against a backdrop of mixed results for new home sales which rose in February (the latest report from the Commerce Department) but are virtually flat to one year ago. That said, the National Association of Home Builders (NAHB) which compiles the index is optimistic about home sales.

The optimism flies in the face of a new study by the New York Federal Reserve which found the December 2017 tax act which capped the deductions related to homeownership. According to the New York Fed study in “Liberty Street Economics” its research newsletter, new home sales fell 7.6 percent from 4Q 2017 through 3Q 2018. From 2Q 2016 through 1Q 2017, new home sales rose 10.3 percent.

“While certainly not conclusive, the evidence,” the NY Fed study concluded, “is consistent with the view that changes in federal tax laws enacted in December of 2017 have contributed to the slowing of housing market activity that occurred over the course of 2018.”

The 2017 tax changes imposed a $10,000 cap on the deductibility of state and local taxes (i.e., real estate taxes) as well as lower limits for the amount of mortgage debt qualifying for the deductibility of mortgage interest.

According to the confidence index, the outlook for sales six months out scored an impressive 71 (our of 100) in April, down only one point from March and the measure of buyer traffic, would-be consumers visiting model homes, rose to 47 from 44 in March.

Regionally, confidence rose in all regions except the South.

Meanwhile, a study by national real estate network Clever real Estate found a relationship between the legalization of marijuana and home values, though not necessarily causation.

According to the study

  • Cities that allow retail dispensaries saw home values increase $22,888 more than cities where marijuana is illegal from 2014 to 2019 (controlling for population and initial home values)
  • In cities where only medicinal marijuana is legal, home values increased at a comparable rate to cities where marijuana is illegal.

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

First-time Unemployment Insurance Claims Drop to near 50-Year Low

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • 196,000 1st time claims for unemployment insurance for the week ended April 6, a DECLINE of 8,000 from the prior week’s upwardly revised 204,000 (originally 202,000);
  • The four-week moving average of first-time claims FELL 7,000 to 207,000;
  • Four week moving average represented 0.132 percent of employment, DOWN from 0.137 the previous week;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,713,000 for the week ended March 30, DOWN 38,000 from the previous week’s upwardly REVISED 1,726,000 (from 1,717,000)
  • The four-week moving average of continued claims DROPPED 11,000 to 1,734,500.

Trends:

  • First-time claims fell to the lowest level since last October 1969 when there were also 193,000 claims filed;
  • Initial claims have now fallen for four weeks in a row for the first time since last November 2017
  • The four-week moving average of continued claims fell for the third straight week for the first time since last November.

Data Source: Department of Labor

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Initial claims for unemployment insurance continued their downward march in the same week the Bureau of Labor Statistics reported the lowest level of job openings in a year.

The seemingly contradictory reports actually reinforce the strong numbers from the monthly Employment Situation release but could mean the end to the strong labor market is in sight.

That, of course, could presage the long-forecast recession or higher earnings.

It would work this way. With fewer people unemployed employers would be competing for scarce talent and have to pay up for it. On the flip side, employers may find themselves compelled to keep workers they might otherwise replace as the talent pool contracts.

Data from last week’s Employment Situation release was though encouraging showing fewer people unemployed because they quit their jobs and an increase in the number of “re-entrants” to the labor force as suggested by the drop in continued claims for unemployment insurance.

The decline in job openings, as the Job Openings and Labor Turnover Survey reported this week hints employers may already be feeling the pinch. It was accompanied by a dip in hires in February to the lowest level since last September.

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

Retail Sales Showed Fall in February

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • February retail sales FELL 0.2 percent or $1.01 billion after rising an upwardly revised $3.7 billion or 0.7 percent in January;
  • The February decline is consistent with the drop in home sales as sales at furniture, appliance and building material outlets were a combined $1.95 billion;
  • Gasoline station sales ROSE 1.0 percent as the price of gasoline increased 2.7 percent, according to the Energy Information Administration;
  • Sales at non-store retailers (online) ROSE 0.9 percent down from the 4.5 percent increase in January; sales at non-store retailers remained at 11.0 percent of total sales;
  • The increase in retail activity came in the same month in which the Consumer Price Index ROSE 0.2 percent month-month;
  • Retail activity was up 2.2 percent year-year while CPI rose 1.5 percent.

Trends:

  • After falling sharply in November and December (a combined $355 million), sales at restaurants improved for the second straight month. The January-February increases totaled $71 million;
  • BLS reported the number of retail jobs FELL 6,100 in February, a decrease of 0.4 percent from January;
  • The number of retail jobs at appliance, personal care and general merchandise stores dropped in February according to the BLS;

Data source: Census Bureau

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Continuing to track moribund home sales, retail activity – as measured by prices – dropped for the third time in four months in February, dragging retail employment down with it.

Even though existing home sales rebounded in February with a month-month-month 11.8 percent increase – the strongest month-month jump on over three years – sales (closings) remained down year-year for the 12th straight month. And, the strong February sales nearly wiped out inventories. The months’ supply of homes for sale fell to 3.5, the lowest since last March.

And, the Pending Home Sales Index fell again in February, the fourth decline in the last five months and the ninth month-month decline since the December 2017 tax law changes which capped the tax advantages of home ownership. The impact on retail sales of the tax law changes accelerated in recent months, with sales down in five of the last seven months.

The most obvious is the impact slower home sales is having on furniture and appliance stores where sales have dropped for five straight months and in eight of the 14 months since the tax changes kicked in. Appliance stores have seen a similar drop-off, falling in five of the last six months and down 3.2 percent in the last year.

That retail activity increased more rapidly than Consumer Price Index prices reflects the improvement in earnings as reported by the Bureau of Labor Statistics in its Employment Situation release.

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

New Home Sales Improve in February

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Pace of contracts for new home sales ROSE 4.9 percent in February to 667,000;
  • The unsold inventory of new homes DROPPED 2,000 in February to 640,000;
  • The months’ supply of new homes for sale FELL to 6.1 in February from 6.5 in January;
  • Median price of a new home ROSE $11,200, 3.8 percent, from January to $315,300; but year-year the median price was off $11,900 or 3.6 percent;

Trends:

  • The number of contracts for the sale of new homes is at its highest level since last March (2018);
  • The pace of new home sales in January was revised up to 636,000 from 607,000 turning the initially reported decline into a gain;
  • The year-year drop in the median price of a new home was fourth consecutive monthly decline;

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

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The Census-HUD report on new homes (contracts for sale) offered some explanation for the steady optimism of home builders as sales rose fort eh second straight month in February.

The trend Census-HUD report is in marked contrast to the parallel pending home sales report issued Thursday by the National Association of Realtors which showed a 1 percent decline in contracts for sale of existing single-family homes in February. Unlike the NAR, the government does not report on completed sales which typically occur one-to-two months after contracts are signed.

(Friday’s report means the Census Bureau and Department of Housing and Urban Development has caught up with monthly reports delayed because of the partial government shutdown.)

The National Association of Home Builders reported last week its Housing Market Index, often referred to as builder confidence, remained at a solid 62 in March (based on February since the survey is conducted in the first 10 days of the month). There had seemed to be no data supporting the solid showing but now there is with the reversal of January’s decline and another strong month in February. It was the first time the sales rate increased in two straight months since February-March 2018.

The outlook could even be brighter as, according to the weekly Freddie Mac mortgage rate survey, the rate for a 30-year fixed rate loan fell 22 basis points last week, the largest week-week decline since June 2009 when rates fell 21 basis points.

Typically, though when rates start to drop buyers hold back expecting even further declines. While that may not help builder profits as much, it will help furniture and appliance retailers and swell the number of construction jobs. Earlier this month, the Bureau of Labor statistics reported the number of residential construction jobs fell 11,000 in February, the largest month-month decline since October 2010 during the Great Recession.

Earlier this week, the Bureau of Economic Analysis reported residential fixed investment spending dropped 7.3 billion in the fourth quarter and for all of 2018 was off 23.3 percent from a year earlier. Residential fixed investment (essentially home building) accounts for about 3.3 percent of total Gross Domestic Product.

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.

Pending Home Sales Index Down Again in February

Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • National Association of Realtors’ February Pending Home Sales Index (PHSI) FELL 1.0 percent from January to 101.9;
  • January index was revised down to 102.9 from 103.2
  • Year-year the index was DOWN 4.9 percentage points;

Trends:

  • The February decrease was the fourth in the last five months;
  • Index is down year-year for 14 straight months;

Data Source: National Association of Realtors (NAR)

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In another blow to home sales the NAR’s pending home sales index dropped again in February the fourth decline in the last five months. The drop in the NAR forecasting tool followed the Census Bureau report earlier this month that new home sales for January (contracts for sale) were off 6.9 percent. The report on new home sales for February I scheduled for release tomorrow.

The NAR report is yet another blow for an already beleaguered home sales market. Which has seen this key indicator for year-year for 14 straight months. The drop in the PHSI often presages a decline in existing home sales. The index fell in seven of the last 12 months and existing home sales dropped nine times, not a perfect match, but very close.

Adding to the already know explanations for the drop – heavy student loan burdens by younger buyers, fear of being burned as homeowners were in the Great Recession and slow increases in earnings, there’s now another concern with louder and more prolonged discussion of a coming recession.

The one positive sign is interest rates. With the decision by the Federal Open Market Committee at its meeting this month to now raise the benchmark Fed Funds rate, mortgage rates continue to trend downward reinforced by the FOMC indications it may be done raising rates for this year.

Still, the Fed Funds rate has little to do with mortgage rates which are tied usually to the London Interbank Offering Rate (LIBOR) and not the prime rate which is determined by the Fed Funds rate.

But reforms from the Great Recession / mortgage crisis have altered the lending landscape, eliminating easier to qualify low- and no-doc loans, the type that consigned many financial institutions to the dustbins of history and tightened lending requirements.

The PHSI data followed by just a few days President Trump’s announcement of plans to revamp the nation’s housing finance system, by, among other things, noting the importance of preserving the 30-year, fixed-rate mortgage, a bedrock housing finance.

The president’s announcement followed two days of hearings before the Senate Banking Committee

The next step is for Congress to move this process forward to revamp the housing finance system in a way that won’t interrupt the flow of credit.

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

1st-time Unemployment Insurance Drop to 6-Month Low

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • 211,000 1st time claims for unemployment insurance for the week ended March 16, a DECLINE of 5.000 from the prior week’s downwardly revised 216,000 (originally 221,000);
  • The four-week moving average of first-time claims FELL 3,250 to 217,250;
  • Four week moving average represented 0.138 percent of employment, DOWN from 0.140 the previous week;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,760,000 for the week ended March 9, UP 13,000 from the previous week’s downwardly REVISED 1,743,000 (from 1,750,000)
  • The four-week moving average of continued claims DROPPED 4,250 to 1,751,250.

Trends:

  • First -time claims fell to the lowest level since last September (28 weeks)
  • Initial claims have now fallen for three weeks in a row for only the second time since last May
  • The four-week moving average of continued claims fell for the first time since last December

Data Source: Department of Labor

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With revisions dating back to 2014, the Department of Labor painted a rosier picture of the jobs market showing a lower level of initial (and continued) claims for unemployment insurance than had previously been reported.

And, indeed, data for the most recent week also suggested a calming in the labor market, free of the noise from the partial government shutdown. With the numbers looking better, the Labor Department data showed the first decline in continued claims since December and only the second since last fall. A drop in continued claims typically means stronger hiring – even stronger than we’ve seen in recent months

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

Residential Construction Activity Slips in February

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Home building activity, measured by housing permits and starts SLIPPED in February, as both starts and permits fell;
  • The seasonally adjusted annual rate of permits DIPPED 1.6 percent to a seasonally adjusted annual rate of 1.296 million; all the decline came in multi-family (about 37 percent of the total) which fell 4.3 percent;
  • The pace of starts FELL 8.7 percent or 111,000 to 1.162 million. Single-family starts DROPPED 17.0 percent or 165,000 while the rate of multi-family starts IMPROVED 54,000 or 17.8 percent;
  • The rate of total housing completions ROSE 56,000 or 4.5 percent. Single-family completions DROPPED 91,000 or 10 percent, while the pace multi-family completion ROSE 147,000 or 43.2 percent.

Trends:

  • The pace of new housing permits fell to its lowest level since October;
  • Year-year, the rate of new single-family permits is down for five straight months;
  • The rate of new single-family starts dropped to its lowest level since June 2017;
  • Total starts fell to the lowest level since May 2017.

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

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Housing – most notably home building — continues to struggle as the Census Bureau reported a further slippage in building permits and starts in February.

At the same time, in what might be good news, housing completions declined which means inventories may not swell.

Nonetheless, the slowdown in new home sales (with a couple of month-month exceptions) has not been due to lack of inventory. At the last report fo new home sales, the Census Bureau-HUD said the months’ supply was 6.6, second highest in the last seven years, exceeded only by the 7.2 month supply last October.

In January, completions (9007,000) exceeded new home sales by 300,000 – the second widest gap since December 2008.

Home sales continue to struggle against declining interest by younger buyers who find themselves challenged by student debt burdens. Indeed it is somewhat surprising the real estate industry hasn’t stepped in to offer assistance.

Mortgage interest rates, according to Freddie Mac, have been ticking down and with the recent decision by the Federal Reserve Open Market Committee to hold the target Fed Funds rate, mortgage rates are unlikely to go up anytime soon. Sometimes the fear of higher mortgage rates spurs sales as buyers grow want to close a deal before rates go higher. Not the case now.

The moribund permits and starts data raise questions about why the National Association of Home Builder’ Housing Market Index has remained at relatively high levels  — 62 out of 100 at the last reading.

The index, a measure of builder confidence, while up from 58 at year end, is down from 70 a year ago. And, construction sector jobs – for residential construction workers – fell 11,000 in March, the largest month-month drop since October 2010.

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 Insurance Resume Decline

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • 221,000 1st time claims for unemployment insurance for the week ended March 16, DOWN 9.000 from the prior week’s revised report (229,000 to 230,000);
  • The four-week moving average of first-time claims UP 1,000 to 225000;
  • Four week moving average 0.143 percent of employment, UNCHANGED from the previous week;
  • 1,750,000 continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag for the week ended March 9, DOWN 27,000 from the prior week’s revised report (1,776,000 to 1,777,000)
  • Four-week moving average of continued claims UP 6,000 to 1,772,500.

Trends:

  • First increase in four-week moving average of initial claims since mid-February;
  • The four-week moving average of continued claims rose for 18th time in 19 weeks

Data Source: Department of Labor

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With the temporary government shutdown far in the rear-view mirror, initial claims for unemployment insurance fell for the week ended March 16.

Federal government workers aren’t included in the tabulation of state unemployment insurance claims but employees of government subcontractors (private sector) are. The data suggest those employers may have fully re-stocked.

The largest single state decrease in new claims claim in New York (for the week ended March 9) with fewer layoffs in the transportation and warehousing, accommodation and food service, and educational service industries First-time claims for unemployment insurance fell 16,497 in New York.

The national data suggest yet a further decline in the number of persons unemployed and perhaps in the unemployment rate when the Employment Situation report for March is released April 5. The four-week moving average of first-time claims fell 11,000 from mid-February to mid-March, the largest mid-month to mid-month drop since last May when the four-week moving average fell 18,000 and the unemployment rate dipped to 3.8 percent from 3.9 percent in April as the number of persons unemployed fell 207,000.

The four-week moving average of first time claims and the unemployment rate don’t always however move in lockstep: In January when the four-week moving average fell 2,250 from mid-December to mid-January, the unemployment rate increased from 3.7 percent to 3.9 percent. Individual unemployed for fewer than five weeks typically make up about 40 percent of total unemployment.

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