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 Drop to 45-Year Low

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 220,000 1st time claims for unemployment insurance for the week ended January 13, a DROP of 41,000 from the prior week;
  • The number of initial claims for the week ended January 6 was UNCHANGED at 261,000
  • The four-week moving average of first time claims FELL 6,250 to 244,500;
  • Four week moving average represented 0.159percent of employment, DOWN from 0.163 percent one week earlier;
  • The number of continued claims – reported on a one-week lag – for the week ended January 6 was 1,952,000, UP 76,000 from the previous week;
  • The four-week moving average of continuing claims INCREASED 4,000 to 1,921,000;

Data Source: Department of Labor

Trends

  • 1st time claims for unemployment insurance dropped top their lowest level in 44 years: week ended February 24, 2973 when 218,000 were filed;
  • The 41,000 week-week decline was the largest since the week ended February 6, 2010 when the number of filings fell 42,000 from the previous week.

With most holiday related layoffs behind them employers could turn back to the concept of right-sizing which would mean holding onto experienced, accomplished staff.

That seems to be exactly what happened in the first full week of 2018 – with one caveat: the week included a run-up to a three-day weekend, never the best time to make personnel moves.

Holidays do of course complicate economic data reports so again, we don’t expect labor movements to be easy to interpret for a few weeks.

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 Starts, Permits Slow in December

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The rate of housing permit filings in December EDGED DOWN 0.1 percent to a seasonally adjusted annual rate (SAAR) of 1.302 million units;
  • The rate of permits for single-family home starts in December INCREASED 1.8 percent to an SAAR of 881,000 units, highest level since August 2007 (916.000)
  • The rate of permits for multi-family homes FELL 3.9 percent in December to 421,000 units (SAAR);
  • The rate of all housing starts DROPPED 8.2 percent in December to an SAAR of 1.192 million;
  • Single-family starts FELL 11.8 percent to an SAAR of 836,000 while multi-family starts IMPROVED 1.4 percent to an SAAR of 356,000;
  • The rate of home completions in December INCREASED 2.2 percent from November; Single-family completions GREW 4.3 percent while multi-family homes declined

Trends:

  • The pace of all permits has dropped for three of the last four months but is still 2.8 percent ahead of 2016;
  • Single-family permits were up for the fourth straight months; multi-family permits were down for the third time in the last four months;
  • The rate of housing starts has fallen month-month eight times in 2017 and the December pace was off 6.1 percent from December 2016;
  • Virtually all the decline in housing starts was due to a fall in the pace of single-family starts which was down 11.8 percent in December;
  • The SAAR of home completions rose in December for only the second time in the last six months.

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

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The slowdown in housing activity in December calls into question the strong endorsement of the Republican tax law changes which over time are likely to have a negative impact on the nation’s housing market.

The caps on the home mortgage interest deduction and local property tax deduction should, if basic economic laws haven’t also been changed, increase the net cost of homeownership which will bring values and prices down.

Home building was already under some price pressures in the wake of rebuilding following fall hurricanes which raised the prices of building materials and labor.  While builders could recapture those higher costs with higher prices, the tax law changes might undercut those efforts.

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

Builder Confidence Dips in December But Remains Strong

By Mark Lieberman

Managing Director and Senior Economist

Data Highlights:

  • Housing Market Index SLIPPED two points in January to 72;
  • The index of current sales FELL one point to 79, the index of future (six months hence) sales also DROPPED one point to 78 and buyer traffic FELL four points to 54;
  • By region, builder confidence Fell in three of the four Census regions, improving only in the Northeast.

Trends:

  • The drop in confidence was the first since last September;
  • At 72, the index is at its second highest level since June 2005
  • The index has been over the tipping point of 50 for 56 straight months and has been up year-year for four straight months;
  • The increase in the index in the Northeast reversed an eight-point decline in the index for that region in December.

Data Source: National Association of Home Builders

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The National Association of Home Builders (NAHB) Housing Market Index (HMI) offered the first glimpse into the impact of the changes in the changes in the federal tax laws and the early reading is slightly negative.

While the index (also considered a measure of builder confidence) slipped slightly, the decline may be too small to offer any deep read on the immediate impact of the tax changes on the nation’s housing market.

To be sure, the tax bill signed into law just before Christmas, removes or limits some of the incentives of home buying by capping the amount of real estate taxes and mortgage interest that can be deducted on federal tax returns.

What is apparent is the tax changes did little to slow building activity – at least according to survey participants – who may not learn for a while whether the market has changed. After all, this survey is based on builder not buyer attitudes.

The Census Bureau and Department of Housing and Urban Development will report tomorrow on new housing permits and starts albeit for December.

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 in December, Led by Online Activity

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • December retail sales – measured by prices – ROSE $1.7 billion or 0.4 percent from November when they were UP $4.2 billion or 0.9 percent (revised from the originally reported 0.8 percent increase);
  • Every category of sales, except electronics, clothing and sporting goods stores saw an increase in December; sales at clothing stores were off 0.3 percent attributable to unseasonably warm temperatures;
  • Gasoline station sales increased 0.03 percent in December even as the price of a gallon of gasoline fell 3.4 percent from $2.564 to $2.477.

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Trends:

  • Year-year total sales ROSE 5,2 percent in December, the strongest December-December growth since 2011 when sales were up 6.1 percent;
  • Non-store sales represented 11.2 percent of total sales, a record high;
  • With the Bureau of Labor Statistics reporting a scant 0.1 percent increase in prices in December; the jump in retail sales reflects demand, not price changes;

Data source: Census Bureau  

The Census Bureau’s report on retail sales was good news for the nation’s retailers who saw (or heard) cash registers ringing up stronger sales without reflecting price changes.

{The Census Bureau retail sales report states clearly that it is not adjusted for price changes which means if the same item which sold for $1 in one is sold for $2 the next month, the report would show a 100 percent increase.]

With increases in take-home pay because of the GOP tax changes it would not be unexpected to see retail sales continuing to climb.

But the report came just a day after Walmart announced plans to shutter 63 Sam’s Club discount warehouse stores, adding to a growing list of retailers reducing their brick-and-mortar operations. The Walmart announcement came the same day the retail giant said it was raising the hourly pay of its “associates” and paying bonuses.

The bonus payments accompanied by layoffs is similar to what AT&T did shortly after the tax bill was passed.

In addition to accounting for an increasing share of total sales, non-store retailers also saw a 12.2 percent year-year increase in activity, the strongest of any store category,

Last week, the Bureau of Labor Statistics reported the number of retail jobs fell 20,300 in December from November. The number of retail jobs dropped 66,500 from December 2016 to December 2017.

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 @foxeconomics.  

1st Time Unemployment Claims Increase as Holiday Jobs Ends

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 261,000 1st time claims for unemployment insurance for the week ended January 6, an INCREASE of 11,000 from the prior week;
  • The number of initial claims for the week ended December 30 was UNCHANGED at 225,000
  • The four-week moving average of first time claims ROSE 9,000 to 250,750;
  • Four week moving average represented 0.163 percent of employment, UP from 0.157 percent one week earlier;
  • The number of continued claims – reported on a one-week lag – for the week ended December 30 was 1,867,000, DOWN 35,000 from the previous week;
  • The four-week moving average of continuing claims DECREASED 5,500 to 1,913,250;

Data Source: Department of Labor

Trends

  • 1st time claims for unemployment insurance have increased for four straight weeks with weekly filings increasing 36,000 in that period;
  • The four-week moving average rose for the third consecutive week, up 14,000 or 5.9 percent over that period
  • Four-week moving average of first time claims as a percentage of total employment rose to its highest level since the beginning of October;
  • Continued claims fell to the lowest level in almost 45 years;

The turn of the calendar typically brings with a slight bump up in unemployment insurance claims as those who were hired for the holiday season lose their jobs. The phenomenon also makes the claims data somewhat unreliable at this time of the year.

Compounding the analytical challenge for January claims data will be the Martin Luther King Day observance next week. Although claims can be filed electronically, state workers will have one day less to process those claims.

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.

Economy Adds 148k Jobs in December; Unemployment Rate remains 4.1% Earnings Growth Falters

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Number of payroll jobs INCREASED 148,000 in December compared with working age population growth of 160,000 per Bureau of Labor Statistics report for December;
  • Prior month job totals REVISED DOWN net 11,000: DOWN 17,000 in November to a gain of 211,000 (from the initial report of a 228,000 increase) but UP 6,000 in October to a revised growth of 252,000 jobs (from 244,000);
  • Average weekly earnings ROSE $3.11 to $918.74, a 2.8 percent year-year gain DOWN from November’s 3.0 percent year-year growth;
  • Unemployment rate in December remained at 4.1 percent;
  • The number of persons holding multiple jobs ROSE 305,000 in December after a gain of 133,000 in November;
  • The labor force (the sum of employed and unemployed) ROSE 64,000 in December;
  • Labor force participation rate – a key determinant of economic growth – was UNCHANGED from November at 62.7 percent
  • Employment GREW 104,000 in December; unemployment DECREASED 40,000;
  • The number of persons not in the labor force ROSE 96,000 in December;
  • Average workweek REMAINED at 34.5 hours unchanged from November;
  • Private sector payrolls ROSE 146,000 in November;
  • Employment-Population ratio remained at 60.1 percent;
  • Number of construction jobs INCREASED 30,000, with 17,000 new residential construction jobs continuing to reflect the rebuild following hurricanes Harvey and Irma;
  • Health care and leisure-hospitality jobs each INCREASED 29,000 in December;
  • Number of retail jobs FELL 20,000 – following an increase of 16,000 in November;
  • Number of temporary jobs INCREASED 7,000 in December.

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Trends

  • Average monthly increase in payroll jobs in 2017 was 171,000, down from 187,000 in 2016 signaling a slowdown in labor growth.
  • Average number of new entrants to the labor force was 692,000 in 2017, down from 819.000 in 2016; Number of re-entrants 2,078 in 2017, down from 2,039 in 2016 suggesting a tighter labor market;
  • Average monthly increase in weekly wages was $2.09 in 2017, up from $1.85 in 2016, due to slower increase in low-paying retail and leisure and hospitality jobs in 2017.
  • Number of new payroll jobs grew faster than the working age population in seven of the 12 months in 2017; jobs grew faster than population in only five months of 2016;
  • Average monthly growth in employment was 149,000 in 2017, down from 192,000 in 2016;
  • Average monthly growth in full-time employment was 206,000 in 2017, up from 137,000 in 2016;

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 Claims Flat Leading to Christmas

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 245,000 1st time claims for unemployment insurance for the week ended December 23, UNCHANGED from the prior week after four straight wee-week declines;
  • The number of initial claims for the week ended December 16 was also UNCHANGED;
  • The four-week moving average of first time claims ROSE 1,750 to 237,750;
  • Four week moving average represented 0.155 percent of employment, UP from 0.153 percent one week earlier;
  • The number of continued claims – reported on a one-week lag – for the week ended December 16 was 1,943,000, UP 7,000 from the previous week;
  • The four-week moving average of continuing claims DECREASED 4,250 to 1,919,750.

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Some 245,000 workers found coal in their stockings in the week leading up to Christmas, the Department of Labor reported Thursday with its weekly report on first-time claims for unemployment insurance.

And, the pre-Christmas week wasn’t good for unemployed jobseekers as the number of continued claims rose 7,000 from the previous week indicating employers weren’t dipping into unemployment ranks to add to payrolls.

The weeks leading up to Christmas are historically not a good time for the labor market. Last year, for example, first time claims for unemployment insurance rose a net 13,000 in the two weeks leading to Christmas and continued claims rose 77,000. In 2015, initial claims were up 15,000 and continued claims rose 40,000.

About the only “good news” the labor market received was President Trump signing the tax cut bill. Starting in February, when new withholding tables kick in, salaried workers could start seeing an improvement in take-home pay. Though the higher take home pay will likely be temporary at best, putting more cash in workers’ pockets could flip the polling on the tax bill to being more positive.

Of course, other aspects of the bill – a greater tax break for the top 1 percent, the cap on the deductibility of state and local taxes as a deduction – will also go into effect next week, but will not be felt until April 2019 (conveniently after the November 2081 congressional elections).

As to unemployment insurance claims, we should expect to see greater volatility than normal over the next few weeks as temporary employees hired for end-of-year sales are gradually removed from payrolls. At the same time, holidays will also disrupt the smooth flow of unemployment, despite the application of seasonal adjustments.

All that said, the numbers are providing mixed signals for the Bureau of Labor Statistics’ Employment Situation report for December to be released January 5.

Initial claims for unemployment insurance rose 5,000 from mid-November to mid-December but the four-week moving average of first-time claims fell 4,000 in the same period. The increase would suggest a higher number of unemployed in the January 5 report, but the decrease in the moving average suggests just the opposite.

Continued claims dropped 17,000 from mid-November to mid-December pointing to improved hiring but the four-week moving average of continued claims rose 8,000 in the same period suggesting limited hiring.

 

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 Rise Sharply; Largest Jump in Three Months.

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 245,000 1st time claims for unemployment insurance for the week ended December 16, an increase of 20,000 from the prior week, the largest week-week jump since the beginning of September when claims were affected by storms;
  • The number of initial claims for the week ended December 9 was UNCHANGED at 225,000
  • The four-week moving average of first time claims ROSE 1,250 to 236,000;
  • Four week moving average represented 0.153 percent of employment, unchanged from one week earlier;
  • The number of continued claims – reported on a one-week lag – for the week ended December 9 was 1,932,000, UP 43,000 from the previous week;
  • The four-week moving average of continuing claims INCREASED 4,250 to 1,923,000, the highest level since the end of September.

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Layoffs jumped in mid-December as employers assessed the strength of end of year activity and as a result initial claims for unemployment insurance saw their largest jump in more than two months, the Department of Labor reported Thursday.

It was the first increase in initial claims since mid-November.

At the same time, the Labor Department reported a sizable jump in continued claims suggesting employers may have put the brakes on hiring even as layoffs increased.

The report offered mixed signals for the December Employment Situation report to be released January 5; from mid-November to mid-December initial claims increased 5,000 but the four-week moving average of first-time claims dropped 4,000. An increase in the number of claims generally suggests an increase in the number of people unemployed and the unemployment rate.

Since the data on continued claims is reported with a one-week lag, mid-month to mid-month comparisons will not be available for another week.

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 Starts Improve in November but Permits Fall

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The rate of housing permit filings in November DROPPED 1.4 percent to a seasonally adjusted annual rate (SAAR) of 1.298 million units;
  • The rate of permits for single-family home starts in November INCREASED 1.4 percent to an SAAR of 862,000 units, highest level since August 2007 (916.000)
  • The rate of permits for multi-family homes FELL 6.4 percent in November to 436,000 units (SAAR);
  • The rate of housing starts INCREASED 3,3 percent in November to an SAAR of 1.297 million;
  • Single-family starts ROSE 5.3 percent to an SAAR of 930,000 while multi-family starts DIPPED 1.6 percent to an SAAR of 367,000;
  • The rate of home completions in November FELL 6.1 percent from October with completions for both single-family and multi-family homes decreasing

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Even as builder confidence, according to the National Association of Home Builders, climbed to its highest level since 1999,  permits for new homes slipped in November, according to a report by the Census Bureau and Department of Housing and Development  released Tuesday.

Change since October 2017

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

 

 

 

 

The report on permits and starts was largely influenced by single family activity as the pace of multi-family permits and starts in November dropped from October. Home building remains precarious in the wake of the new tax bill which removes incentives for homeownership by limiting the deductibility of mortgage interest and property tax payments.

Starts and permits improved in the South, a reflection of building activity following hurricanes Harvey and Irma.

The improvement in residential construction activity came in the same month in which the number of housing construction jobs increased to 2.73 million, the highest level since September 2008. Residential construction jobs have increased in nine of the last 12 months.

According to the report, completions of new homes declined in November, both for single-family and multi-family housing. The decline in single-family completions will exacerbate inventory concerns. According to the most recent government report on new home sales, the months’ supply of new homes for sale dropped in 4.9 in October from 5.2 in September and 5.9 in August.

Completions in October exceeded new home sales by a seasonally adjust annual rate of 103,000, the narrowest margin since March 2015 when completions exceeded sales by 95,000.

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

Builder Confidence Jumps in December to Eight-month High

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Housing Market Index SURGED five points in December to 74, its highest level in more than 17 years
  • All three index components IMPROVED led by an eight-point gain in buyer traffic to 58, its highest level since the index began in 1985;
  • By region, builder confidence ROSE 11 points in the Midwest eight points in the West

Image result for home building

Even as Congress inches toward passage of a tax bill with potentially devastating consequences for housing, builder confidence jumped in December to its highest level since June 1999, reaching 74, a five-point gain from October, the National Association of Home Builders (NAHB) reported Monday.

The tax bill, which threatens to upend government incentives for home ownership is expected to be voted on by Congress Tuesday. Under the bill, deductions for mortgage interest and property tax payments would be sharply curtailed, increasing the net cost of owning a home.

Without those incentives, home prices are expected to drop which could explain builder optimism as new homes become more affordable even as the cost of ownership loses its tax advantages.

Builders appeared buoyant, improving their assessment of the near-term market for home buying and the market six months hence. Indeed, the survey, conducted at the beginning of each month, indicated buyer traffic to model homes had improved and was at its highest level since the NAHB survey began in 1985.

It remains difficulty to classify the purchase of a home: is it an investment or do the ongoing expenses of mortgage and tax payments represent the monthly purchase of shelter. The tax treatment of mortgage interest and real estate taxes has historically served to reduce the net burden of those expenses.

But, the NAHB seemed to ignore the negative aspects the tax bill might have on homeownership when it endorsed the conference committee version of the bill: “NAHB fully supports the final conference report on tax reform legislation and commends the work of House-Senate conferees,” the association said in a weekend statement. “This comprehensive overhaul of the nation’s tax code will help middle-class families, maintain the nation’s commitment to affordable housing and ensure that small businesses are treated fairly relative to large corporations. Lower tax rates and a fair tax code will spur economic growth and increase competitiveness, and that is good for housing. We urge the House and Senate to move quickly to pass this legislation.”

The Census Bureau and Department of Housing and Urban Development will report tomorrow on new housing permits and starts albeit for November.

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