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.

Continued Claims Average Drops as 1st Time Claims for Unemployment Insurance Fall

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 232,000 1st time claims for unemployment insurance for the week ended August 12, 12,000 FEWER than the previous week;
  • The number of initial claims for the week ended August 5 was UNCHANGED at 244,000;
  • The four-week moving average of first time claims FELL 500 to 240,500 or 0.157 percent of total employment;
  • The number of continued claims – reported on a one-week lag – for the week ended August 5 was 1,953,000, 3,000 lower than the previous week;
  • The four-week moving average of continuing claims DROPPED 6,000 to 1,960.250, the first decline in 11 weeks

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Claims for unemployment insurance continued their downward march last week, with first time claims for the week ended August 12 dropping 12,000 from the previous week. The decline brought the total number of initial claims to its lowest level since late April, Department of Labor reported Thursday.

The number of continued claims for the week ended August 5 also declined, dropping 3,000 to 1,953,000. The average for continued claims dropped for the first time since the week ended May 20, easing concerns about hiring.

The continued claims series is a rough surrogate for hiring since getting a job is one of only three ways an individual drops out of the tally of those collecting unemployment insurance. The other reasons are that benefits or the individual expires. Since the rates of benefit expirations and death rates have been relatively constant, getting a new job is the most likely reason for the drop in continued claims.

The initial claims data for the week ending the 12th corresponds to the week used by the Bureau of Labor Statistics for the monthly Employment Situation release. Since mid-July, the number of first time claims for unemployment insurance declined 2,000 and the four-week moving average of first-time claims dropped 3,500. Both data points suggest another strong Employment Situation report.

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.

Housing Construction Activity Dips in July

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The rate of housing starts in July FELL 5.6 percent to a seasonally adjusted annual rate (SAAR) of 1.16 million units
  • The rate of single-family home starts in July was virtually unchanged, DROPPING 0.5 percent to an SAAR of 856,000 units;
  • The rate of starts for multi-family homes improved: DROPPED 15.3 percent to 299,000 units (SAAR), the lowest level since last September;
  • The rate of housing permits FELL 4.1 percent in July to an SAAR of 1.22 million, completely attributable to a drop in multi-family activity;
  • The number of single family permits was unchanged at 811,000 (SAAR) while multi-family permits FELL 11.2 percent to an SAAR of 412,000 units;
  • The rate of home completions in July DROPPED 6.2 percent from June with for both single- and multi-family completions.

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Even as homebuilders were more optimistic, according to the Nation Association of Home Builders builder confidence index, the apace of new home construction slowed in July as the pace of both housing permits and starts declined from June, the Census Bureau and Department of Housing and Urban Development reported Wednesday.

Change since June 2017

Permits Starts Completions
Total      ↓
Single-Family      ↓
Multi-Family      ↓

 

 

 

 

The Bureau of Labor Statistics earlier this month reported the number of residential jobs, including specialty trade contractors, increased by 7,200 in July to .2.7 million.

To one extent, the drop in permits and starts is not surprising given the flagging home sales, specifically new home sales which make up about 10 percent of all home sales. New home sales, though up in June (the most recent reporting period), grew by less than one percent from June.

The NAHB’s gauge of builder confidence increased in August recovering ground lost in July, perhaps a response to the weak numbers released today. Builders could see what was going on around them…and didn’t like it.

The government data on home completions added more woes as the pace of completions – which generally add to the inventory of unsold homes – exceeded home sales in July by 217,000, matching December for the widest gap between completions and sales since February, 2016.

We can expect the relatively weak permit-and-start data to show up in the Employment Situation release for August (due out September 1).

Even within the down residential construction report there was a smattering of good news as single-family construction activity outpaced multi-family activity. Single-family permits represented 66.3 percent of all permits and 74.1 percent of all starts, the last the largest percentage of starts since December 2011.

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

Builder Confidence Shows Strongest Gain Since March

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Housing Market Index ROSE four points in August to 68 (out of 100);
  • All three components of the Index IMPROVED in August;
  • By region, builder confidence INCREASED in July in all four census regions.

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With government data showing an increase in housing permits and starts in June, builder confidence jumped in August, reversing declines in June and July the National Association of Home Builders (NAHB) reported Tuesday. The NAHB’s Housing Market Index (HMI) rose four points to 68, the strongest month-month gains since March when the index was up six points from February.

The improvement in the index also followed two straight months of increase in new home sales in June and July.

The Census Bureau and Department of Housing and Urban Development will report tomorrow on new housing permits and starts (albeit for July) which will indicate whether builder attitudes are affecting or affected by their optimism.

Builder confidence in home sales six months out improved five points to 78, matching last December, March and May for the strongest reading since June 2005. The index reading for current new home sales rose four points to 74, still down from its most recent high of 77 in March. The index of buyer traffic rose one point to 49.

Regionally, the gains in all four census regions were led by a 7-point improvement in the South to 70. The confidence index in all four census regions improved in August for the first time since March.

The improvement in the index coincided with recent jumps in average weekly earnings which were up $3.10 in July after a $4.35 increase in June. Year over year, average weekly earnings are up 2.8 percent, an improvement from 2016 when weekly earnings rose an average 2.0 percent per month.

Would-be homebuyers continue to face challenges from increasing interest rates and heavy student loan burdens – both of which influence a builder’s decision of whether the break ground on a new project.

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

Retail Sales Up 0.6% in July, Sharpest Increase This year

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • July retail sales – measured by prices – INCREASED $2.9 billion or 0.6 percent from June, strongest increase since last December;
  • Increase was led by non-store retailers (UP 1.3 percent) and automobile supply and garden equipment (each UP 1.2 percent);
  • The initial report that June sales had dropped 0.2 percent from May was revised up to show a 0.3 percent INCREASE;
  • Year-year total sales ROSE 4.2 percent in July, slightly below the average 4.5 percent year-year gain for the first six months of the year;
  • With a 4.7¢ per gallon or 2.0 percent DROP gasoline prices in July, sales at gasoline stations fell $130 million or 0.4 percent for the month;

Image result for retail salesThe increase in average weekly hourly and earnings in July translated into a sharp increase in retail activity for the month, according to the Census Bureau.

Indeed, the 0.6 percent increase in sales came in a month in which retailers scaled back, as the number of retail payroll jobs rose just 900 in July after an increase of 1,800 in June, Overall, employment in the retail sector is down 0.3 percent since the end of last year, per reports from the Bureau of Labor Statistics.

The Census report is not adjusted for inflation so any reported increase in sales are as likely to be the result of price increase as increased sales activity

Prices were up in virtually every category of stores except electronics stores, clothing stores and gasoline stations.

Non-store or online retailers registered the strongest gain, up $696 million or 1.3 percent in July followed closely by automobile showrooms and building and garden supply stores. Auto sale might have been influenced by end-of-model-year activity.

The strong report suggested retailers shrugged off the ¼ point increase in the target federal funds rate in June voted by the Federal Open Market Committee. That increase directly affects credit card interest rates and to a lesser extent auto loan rates. Indeed, when the FOMC increased the fed funds rate in December, retail activity as reported by the Census Bureau, rose 0.9 percent.

Retail activity is about 55 percent of personal consumption spending which is about two-thirds of GD so any cut in retail spending could be a tap on the brakes for the total US economy.

Average hourly earnings rose 9¢ in July after increasing 5¢ in June. Average weekly earnings were up $3.10 in July after a $4.35 increase in June. Year over year, average weekly earnings are up 2.8 percent, an improvement from 2016 when weekly earnings rose an average 2.0 percent per month.

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

 

 

Continued Claims Average Up 10th Straight Week;

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 244,000 1st time claims for unemployment insurance for the week ended August 5, 3,000 more than the previous week;
  • The number of initial claims for the week ended July 29 was REVISED UP 1,000 to 241,000;
  • The four-week moving average of first time claims FELL 1,000 to 241,000 or 0.157 percent of total employment;
  • The number of continued claims – reported on a one-week lag – for the week ended July 29 was 1,951,000, 16,000 lower than the previous week;
  • The four-week moving average of continuing claims ROSE 500 to 1,965.000.

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There’s a certain persistence to the numbers in the Labor Department’s weekly report on initial and continued claims for unemployment insurance: the four week moving average of continued claims, doggedly keeps going up, increasing for the 10th straight week for the week ended July 29., fell slightly but remained at a relatively high level according to the Labor Department,

The average for continued claims rose even as the actual number of continued claims dropped but, as a harbinger, new claims for unemployment insurance rose as they have seven time in the last 12 weeks with weekly increases ranging from 2,000 to 20,000 (the last an anachronistic increase due to United Auto Workers members being furloughed as auto plants retooled for the new model year).

The steady increase in the continued claims average says something about slower hiring even as the number of payroll jobs rises. But the slow upward claim of continued claims – and the message — may be consistent with the increase in the number of job openings as reported earlier this week by the Bureau of Labor Statistics in the Job Openings and Labor Turnover Survey (JOLTS) reports. Those openings, in the face of more people remaining unemployed say something –not positive – about the labor market.

Ironically, the Federal Reserve earlier this week announced plans to discontinue its own measure of labor conditions – its Labor Market Conditions Index. The index is derived from 19 labor market indicators, designed to gauge the strength of the jobs market. The index includes the unemployment rate and private payrolls as well as the labor-force participation rate and data on wages, hiring and dismissals. The index was released on the first business day after the Labor Department issues its jobs report. A reading above 0.0 indicates improving labor market activity, below indicates deteriorating activity. The last release, in July showed the index at 1.5, down from 3.3 in June.

The Fed said it decided to stop updating the LMCI “because we believe it no longer provides a good summary of changes in U.S. labor market conditions” but the “measurement of some indicators in recent years changed in ways that significantly degraded“ the index.The Fed said also including average hourly earnings as an indicator did not provide a meaningful link between labor market conditions and wage growth.

The loss of one more statistical measure shouldn’t slow down commentary on labor conditions.

That said, the higher level of initial claims without any special factors has a psychological impact which could affect consumer confidence.

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.

Job Openings Hit Record High in June; Hiring Pace Would Top 2016

 

By Mark Lieberman

Managing Director and Senior Economist

 

Highlights:

  • Job openings hit a RECORD HIGH at the end of June: up 461,000 from May to 6.16 million
  • Hiring FELL 1.9 percent in June or 103,000 to 5.36 million
  • The ratio of unemployed to job opening in June FELL to 1.13 from 1.20 in May

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While the economy added 231,000 jobs in June, the number of job openings jumped to a record high, the Bureau of Labor Statistics reported Tuesday in its monthly Job Openings and Labor Turnover Survey (JOLTS).  Despite the record number of job openings, the jobs report for July showed a smaller payroll increase, 209,000.

The explanation might be the distinction of how job openings are reported to the BLS: only those positions which a company plans to fill within 30 days are considered job “openings”

That the number of job openings at the end of May (5.7 million) exceeded the number of June (5,4 million) may be a sign employers are having difficulty finding candidates for available jobs. The logic would suggest higher wages in the offing. But, at the same time in June the number of “quits” declined – albeit slightly an indicator perhaps of latent softness in the labor market t as workers were not as confident in June in their ability to get a new job as they were in May.

The JOLTS report tracks the ins and outs of the labor market as contrasted with the BLS Employment Situation report which reports net changes. Differences can result though as the same individual can be counted in more than one category.

According to the BLS, a “job opening” means a specific position exists and there is work available for that position, full-time or part-time. The job can be permanent, short-term, or seasonal and there is active recruiting for workers from outside the establishment location that has the opening.

 

Job hires through June are on a pace to total 63.7 million, about 1.4 percent more than the 62.8 million hires in 2016, and the most since the JOLTS survey began in 2001.

 

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 Added 209k Jobs in July; Unemployment Rate Ticks Back Down to 4.3%; Earnings Rise

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Unemployment rate FELL in July to 4.3 percent, matching May for the lowest unemployment rate since May 2001;
  • Number of jobs rose 209,000 in July;
  • About 30.1 percent of new jobs were in two lowest salaried occupation categries: retail and leisure and hospitality (including 53,000 new restaurant hires)
  • Prior month job totals had offsetting revisions: May from 152k new jobs to 145k, June from 222k new jobs to 231k;
  • Private sector payrolls ROSE 205,000 in July; Government payrolls GREW 4,000;
  • Unemployment in July was virtually flat to June, up 4,000 to 6,981,000;
  • Average weekly hours in July REMAINED at 34.5;
  • Average weekly earnings ROSE $3.10 from June, a year-year pace of 2.8 percent;
  • Average hourly earnings ROSE 9¢ in July, a 2.5 percent year-year gain;
  • The number of persons working full-time workers DECLINED 54,000 in July; the number of part-time workers INCREASED 393,000;
  • Number of multiple jobholders increased 50,000 in July and is up 228,000 in the last year, about 10.6 percent of new jobs in the last year;
  • Labor force participation rate IMPROVED 0.1 percentage point in July to 62.9 percent, second straight month-month increase;
  • Employment-Population (E-POP) ratio ROSE to 0.1 percentage point in July to 60.2 percent; when the E-POP was 62.9 percent when the recession began in December 2007

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For the fourth time since Donald Trump assumed the presidency, monthly payrolls expanded by more than 200,000 in July with 209,000 new jobs, the Bureau of Labor Statistics reported Friday. The President lost no time hailing the results, patting himself on the back in a tweet just moments after the BLS report was released. (In doing so, the President violated a protocol under which the Executive Branch had agreed not to comment on government statistical releases for 60 minutes after release.)

In the first six months of the Trump Administration, the nation’s economy added 1.074 million jobs compared with a loss of 2.659 million jobs in the same period of the Obama Administration as the country was still in the throes of a recession. (The country did not begin to add jobs until the Obama Administration was 14 months old and ended up adding 12.2 million jobs through Obama’s terms in office.)

The July jobs report was notable in that unemployment, as defined by BLS, barely grew: up just 4,000 while employment spurted up by 345,000.

There was also a positive sign in average weekly earnings which grew $3.10 and is now up 2.8 percent year-year for the second straight month, the strongest was growth since March 201 to February 2011 when weekly wages grew 2.9 percent.

Holding back wage growth was the distribution of the new July jobs: 62,900, about 30 percent of the total in the low-paying retail and leisure hospitality industry categories (or super-sectors in BLS-speak). That’s the largest share since May 2016 when the two super-sectors combined for 41.4 percent of that month’s new jobs.

Average weekly earnings in the retail sector are $463.27 and in the leisure-and-hospitality sector (which includes restaurant workers) $331.08. The average weekly earnings for all private sector workers, according to the BLS report is $744.77.

The leading job producer in July was the professional and business services sector which added 49,000 jobs followed closely by the health care sector which added 45,000 jobs. Included in the professional and business jobs were 14,700 temp jobs. Combined with the growth of 393,000 part time jobs, the report continues to show businesses reluctant to make permanent staffing additions.

In another sign of continuing labor market stress, the number of voluntary jobs leavers or “quits” was down 40,000 in July. “Quits” are usually interpreted as a sign of confidence in the labor market, confidence in the ability to leave one job and find another. But, as the growth in weekly reports on “continued claims” for unemployment insurance suggests, getting that “next” is proving elusive.

Overall, the labor force (the sum of employed and unemployed” grew 349,000 in July and the number of persons not in the labor force dropped 156,000, the second straight month-month decline. Nonetheless, the labor force participation rate rose to 62,9 percent, back to where it was in April.

The unemployment rate for individuals without a high school diploma rose 0.5 percentage points to 6.9 percent while the unemployment rate for high school graduates dipped to 4.5 percent from 4.6 percent in June. The unemployment rate for college graduates was unchanged in July at 2.4 percent.

With an uptick in houses under contract, the number of construction sector jobs increased 6,000 including 7,300 new residential construction jobs. The number of manufacturing jobs increased 13,000 in July including 1,600 auto manufacturing jobs. There was also an increase of 3,800 jobs at auto dealerships.

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.

 

Continued Claims for Unemployment Insurance Rise Again

By Mark Lieberman

Managing Director and Senior Economist

Highlight

  • 240,000 1st time claims for unemployment insurance for the week ended July 29, 5,000 FEWER than the prior week;
  • Number of filings for week ended July 22 revised UP from 244,000 to 245,000\
  • Four-week moving average of first time claims DOWN from 2,500 prior week to 241,750;
  • Moving average for week ended July 29 was .0158 percent of total employment, DOWN from .0160 percent in the previous week;
  • 1,968,000 continued claims for unemployment insurance for week ended July 22, 4,000 MORE than the previous week;
  • Continued claims for week ended July 15 REVISED UP 1,000 to 1,965,000
  • Four-week moving average of continued claims INCREASED 750 to 1,96,750.

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While new filings for unemployment insurance dropped last week, the number of individuals on unemployment rolls keeps climbing, the Labor Department  reported Thursday.

Indeed, continued claims for unemployment insurance – tracking the number of individuals who remain out-of-work – have been increasing steadily for two months, adding 49,250 over the last eight weeks. That increase signals its becoming more difficult for unemployed individuals to find new jobs. Following that progression, we could see people dropping out of the labor force and affecting the unemployment rate.

It could wind up a major problem in keeping the expansion on track although the nation’s economy is due for a correction as the length of the current expansion/recovery. The persistence of the continued claims data suggests a skills mismatch which, if taken to its logical conclusion would mean higher wages for those fortunate enough to land new jobs, but put a damper on new enterprises. It might also show up in two other categories as broken down by the monthly Employment Situation report: multiple job holders and self-employed. Both could see increases.

The number of multiple jobholders rose 50,000 in June and was up 432,000 year-year (adding to the view that some of the “new” jobs being created are not going to unemployed individuals which would contribute to a steady increase in continued claims for unemployment insurance. The increase in the number of multiple jobholders in the last 12 months is almost 20 percent of the increase in the number of new jobs).

The number of self-employed individuals rose 188,00 in June but is down 41,000 from June 2016, itself suggesting a slowdown in new business creation.

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. Tomorrow, Friday August 4, you can hear him at a special time: 8:45 am on the Morning Briefing and 12:05 pm on the Midday Briefing. You can follow him on Twitter at @foxeconomics.

Pending Home Sales Index Up After Three Down Months

Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • National Association of Realtors’ Pending Home Sales Index (PHSI) INCREASED 1.5 percentage points in June to 110.2;
  • PHSI for May was revised up 0.9 percentage points
  • Year-year the index IMPROVED 0.5 percentage points.

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Buyers may be trickling back to the housing market, according to a new report Monday by the National Association of Realtors which showed its Pending Home Sale Index (PHSI) improved 1.5 percent in June the first improvement four months.

The report, which tracks signed contracts for existing or used homes, is the equivalent of the government’s new home sales report which last week showed a 0.8 percent improvement for June.

The suggested bump in home sales couldn’t come at a better time for realtors who’ve seen sales of existing homes dribbling down to the lowest level since February as the median price of an existing single family home continues to rise.

A pending home sale is a necessary precursor to a completed sale. As pending home sales dipped in April, closed home sales fell in June; with another dip in pending sales in May closings could fall again in July.

Closinga edged up in May despite a decline in the PHSI for March as homebuyers tried to accelerate closings in anticipation of an increase in interest rates by the Federal Open Market Committee. The FOMC actions on the fed funds rate don’t directly affect mortgage rates, they contribute to a general market movement which ultimately moves rates for home loans.

The main culprit for the sluggish home sales has been an absence of inventory as empty-nesters appear reluctant to put their homes on the market just as 25-34 years olds, the prime homebuying age cohort, have themselves been trending away from home buying.

The steady increase in the median price of an existing single family home should spark an increase in inventory but recent data on homeownership suggests a lack of enthusiasm for homeownership. The homeownership rate improved slightly in the second quarter but the number of households declined reducing demand. He higher prices – and higher rates – could make homeownership even less affordable.

An increase in home sales, as suggested by the NAR and government reports, would be welcome news for the real estate and construction sectors but higher prices are a two-edged sword as earnings continue to increase very slowly. With inflation creeping up as well, along with interest rates, prospective buyers could be caught in a dollar squeeze.

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.

Homeownership Rate Edges UP in 2Q; Household Formations Slow; Homes for Sale Fall

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Homeownership rate in 2Q 2017 was 63.7 percent, UP from 63.6 percent in 1Q and 62.6 percent a year ago;
  • 160,000 more household owned homes in 2Q than in 1Q
  • 91,000 FEWER vacant homes for sale in 2Q than in 1Q
  • 277,000 FEWER households at end of 2Q than 1Q

Image result for homeownership

The nation’s housing market improved slightly in the second quarter with an increase in the homeownership rate, the Census Bureau and Department of Housing and Urban Development reported Thursday.

The homeownership rate has been moving sideways in a relatively narrow range for the last years, as high as 63.7 percent and as low as 63.5 percent.  The report noted a sharp, 28.0 percent, increase in the number of rentals suggesting a change in the “American Dream: of homeownership.

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 last year.

The National Association of Realtors (NAR) reported another drop in sales of existing single-family homes in June, the third month-month decline this year while the government reported a slight uptick in the sale of new homes for the same month. The NAR data tracks closings while the government reports on contracts for sale.

The decline in the number of households means there might be fewer buyers of homes – new or used – and continues to reflect a trend of millennials struggling to strike out on their own either because they can’t find jobs or because the jobs they do find make living on their own, as a new household, a financial challenge. The decline in the number of homes for sale also points to a weaker housing market.

As the report Thursday also showed a decline in the inventory of homes for sale, it also showed an increase the number of units available for rental, another reflection of changing attitudes toward homeownership.

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.