1st-time Unemployment Insurance Claims Fall to 3 Month Low

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 206,000 1st-time claims for unemployment insurance for the week ended July 20, 2013, a DECREASE of 10,000 from the previous week’s unrevised 216,000;
  • The four-week moving average of initial claims DROPPED 5,750 to 213,000;
  • Four-week moving average represented 0.136 percent of employment, DOWN from the previous week’s 0.139 percent;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,676,000 for the week ended July 13, DOWN 13,000 from the previous week’s UPWARDLY REVISED 1,689,000; (from 1,686,000)
  • The four-week moving average of continued claims FELL 4,500 to 1,677,250.

Trends:

  • The four-week moving average of initial claims as a percentage of total employment fell for the ninth straight week
  • The number of initial claims was the lowest in 14 weeks (week ended April 13, 193,000)
  • Four-week moving average of continued claims FELL for the first time in five weeks (week ended June 8, down 4,250)

Data Source: Department of Labor

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The weekly report on initial and continuing claims for unemployment insurance continued to offer mixed signals about the nation’s labor market.

The report on 1st-time claims strongly suggested another possible decline in the unemployment rate while the data on continued claims offered a hint of a slowdown in hiring when the Bureau of Labor Statistics releases the Employment Situation report for July on August 2.

The suggestion of a slowdown in hiring came from a comparison of the four-week moving average of continued claims from mid-June to mid-July. In that stretch, the average grew by 9,000, suggesting it was a bit more difficult for those already collecting unemployment insurance to get off the rolls by getting a job. And the drop in first-time claims supported that view with employers not resorting to layoffs.

All that said, the weekly unemployment claims data continue to point to a strong labor market, proving a basis for the Federal Open Market Committee to perhaps cut rates when it meets next week. A rate cut by the FOMC next week would the first since December 2008 when the FOMC lowered the fed funds rate to 0.25 percent (from 1.00 percent) and kept it at that level until December 2015 when the Committee raised the rate to 0.50 percent. At its last meeting in June, the FOMC re-affirmed the target fed funds rate at 2.5 percent where it has been since December 2018.

In Thursday’s report, all but four states reported the number of first-time unemployment insurance claims (not seasonally adjusted) fell from the week ended July 13 through the week ended July 20. The only outliers were California, Illinois, Michigan, and Nebraska.

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

New Home Sales Bounce Back in June

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Pace of contracts for new home sales ROSE 7.0 percent in June to a seasonally adjusted annual rate (SAAR) of 646,000;
  • The May sales pace originally reported as 626,000 was REVISED DOWN to 604,000
  • The unsold inventory of new homes EDGED UP 2,000 or 0.6 percent in June to 338,000;
  • With the faster sales rate, the months’ supply of new homes for sale FELL to 6.3 in June from 6.7 in May;
  • Median price of a new home ROSE $6,900, or 2.3 percent, from May to $310,400. Year-year the median price of a new home is DOWN $100.

Trends:

  • The median price of a new home has been following an alternating pattern since last October: down in odd numbered months an up in even-numbered months;
  • The increase in the number of new homes sold in June was exaggerated by the downward revision of May sales;
  • New home sales have improved month-month in four of the six months of reporting this year and are up 14.5 percent since December;
  • In its separate report on new home completions, the Census Bureau, said last week builders had finished 870,000 single-family homes in June – 224,000 more than sales.

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

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The one-point increase in builder confidence reported by the National Association of Home Builders was explained by the latest data on new home sales reported by the Census Bureau and Department of Housing and Urban Development Wednesday.

The NAHB’s Housing Market Index (HMI) hasn’t generally tracked the home sales data so the combination in June (and July’s HMI) is a pleasant surprise.

That new single-family home sales rose in June put the market for new homes on a different path than the market for existing homes. The National Association of Realtors reported Tuesday existing home sales slipped 1.7 percent in June after improving in May. The May results were revised upward.

Existing home sales were down year-year for the 16th straight month. The median price of an existing single-family home rose for the firth month in a row and the supply of existing homes on the market rose for the sixth month in a row.

The reports on new and existing home sales aren’t strictly comparable. The report on new homes tracks contracts while the report on existing home reflects closings. The NAR will report on pending home sales – contracts of sale for existing homes – next week.

Realtors have been complaining about the absence of inventory and the impact the low inventories are having on sales. With six straight months of increasing inventory however, that explanation no longer holds.

What does continue though are the headwinds potential buyers face, especially those younger buyers who are saddled with heavy layers of student debt.  Studies have shown a strong correlation between college graduation and homeownership.

That said, lenders have eased rates which could help the home sale market. The average rate for a 30-year fixed rate loan has fallen from 4.52 percent a year ago to 3.81 percent last week. That change reduces the monthly payment on a 30-year $300,000 loan by almost $124 per month.

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.

1st-time Unemployment Insurance Claims Jump After Largest Drop in Two Months

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 216,000 1st-time claims for unemployment insurance for the week ended July 13, an INCREASE of8,000from the previous week’s upwardly revised 208,000 (from 209,000);
  • The four-week moving average of initial claims DROPPED 250 to 218,750;
  • Four-week moving average represented 0.139 percent of employment, UNCHANGED from the previous week;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,686,000 for the week ended July 6, DOWN 42,000 from the previous week’s UPWARDLY REVISED 1,728,000; (from 1,723,000)
  • The four-week moving average of continued claims ROSE 5,000 to 1,701,000.

Trends:

  • The four-week moving average of initial claims as a percentage of total employment fell for the eighth straight week
  • The week-week drop in continued claims was the largest in 13 weeks (week ended April 6, down 62,000)
  • Four-week moving average of continued claims ROSE for the fourth straight week

Data Source: Department of Labor

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Offering a look forward to the July Employment Situation release on August 2, the weekly report on unemployment insurance claims suggests the unemployment rate could remain at its current 3.7 percent when the data for July are published.

The unemployment rate (taken out one additional digit) rose from 3.62 percent to 3.67 percent in June.

From mid-June to mid-July, the reference weeks used by the Bureau of Labor Statistics for the unemployment rate, first-time unemployment claims barely budged, down just 1,000 and the four-week moving average of initial claims was even more stable, down just 250. Reference week comparisons for continued claims won’t be available until next week since continuing claims information is published on a one-week lag.

The Federal Reserve’s Beige Book, released Wednesday, said employment grew at a modest pace, from May 24 through July 8, the period covered by the anecdotal report, “slightly slower than the previous reporting period.”  Labor markets, the Beige Book said, “remained tight, with contacts across the country experiencing difficulties filling open positions.” The report, the Beige Book added, “noted continued worker shortages across most sectors, especially in construction, information technology, and health care.” That said, the Beige Book also indicated “some manufacturing and information technology firms in the Northeast reduced their number of workers

The “news” from the unemployment claims report was the sharp drop in continued claims for unemployment, only the third week-week decline in the last two months and the largest week-week drop since early April. Continued claims are seen as a surrogate for hiring since there are only three ways for continued claims to decline: if benefits expire (unlikely in a time of high employment), if the claimant becomes ineligible for unemployment insurance due to injury or death, or if the individual; gets a job. The decline in continued claims reflects the return to work of furloughed UAW members who collect benefits while they are laid off as auto plants retool for a new model year.

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

Housing Construction Drops in June; Single-family Gains Stem Deeper Decline

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Home building activity, measured by housing permits and starts SLIPPED in June with permits falling to a 27-month low;
  • The seasonally adjusted annual rate of total permits DROPPED 6.1 percent to a seasonally adjusted annual rate (SAAR) of 1.22 million;  
  • The SAAR of all housing starts FELL 0.9 percent;
  • Single-family permits ROSE a scant 0.4 percent, but single-family starts JUMPED 3.5 percent;
  • The rate of total housing completions FELL 4.8 percent in June; The SAAR of single-family completions DIPPED 1.8 percent while the pace of multi-family completions FELL12.9 percent.

Trends:

  • Total housing permits were down year-year for the sixth straight month; single-family starts have been down year-year for nine straight months;
  • Single-family starts were down year-year for the fifth straight month and the eighth time in the last nine months;
  • Total starts rose sharply in the Northeast and Midwest while falling in the South and West

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

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Housing sector weakness continued in June as construction activity, measured by housing permits and starts fell leaving the nation’s construction sector in a continuing struggle.

The Census and Housing and Urban Development data came just one day after the National Association of Home Builders (NAHB) reported its Housing Market Index rose slightly with builders seeing improvement in all three components of the index: current home sales, home sales six months out and buyer traffic.

The builders were perhaps encouraged by a bump up in single-family housing starts in June, according to the Census-HUD report but sales of new home remain weak according to the most recent data for May. (June new home sales will be reported next week.)

Perhaps the only positive to come out of the construction activity report was a drop in completions which could start to whittle away at costly home inventories. Builders in the past resorted to costly incentives to unload unsold new homes. Those efforts might not be necessary as mortgage rates continue to fall and completions of new single-family homes declines.

The most recent Census-HUD report on permits and starts suggested a shift back to single-family homes though the percentage of activity represented by single-family permits and starts remains below where it had been a year ago.

Single-family permits have represented about 63 percent of all permits in the first six months of this year, down from 64 percent in 2018 and almost 65 percent in 2017. Single-family starts this year have averaged about 68 percent of all housing starts, down from 69 percent a year ago and 70 percent in 2017.

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 Edges Up in July

By Mark Lieberman

Managing Director and Senior Economist

Data Highlights:

  • Housing Market Index ROSE one point in June to 65 (out of 100);
  • All three index components IMPROVED by one point each;
  • The measure of buyer traffic (to model homes) was revised down one point for June
  • The total index remained down year-year
  • By region, builder confidence FELL in the Northeast and Midwest but improved in the South and West.

Trends:

  • The overall Index was down year-year for the ninth straight month
  • Two index components – the measure of current sales and of sales six months out – remained down year-year for the 10th straight month;
  • The index for the West rose to 75, its highest level since May 2018

Data Source: National Association of Home Builders

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Builder sentiment continues to outpace the reality of weak new home sales, improving again in July although new home sales for May (the last reporting month) fell and new home sales sit at their lowest point of the year.

Perhaps builders are encouraged by uptick in employment for residential construction, up 6,000 in June and up 78,000 (2.8 percent) in the last year. With the June increase, residential construction jobs are at the highest level since March 2008.

The May sales data also showed inventories of unsold homes rose to 333,000 in May, an increase of 1,000 over April. New data for residential construction – housing permits and starts – are scheduled for release tomorrow.

The median price of a new home fell 8.1 percent in May to $308,000 it’s lowest level since January. The month-month decline in the median price was the largest percentage decline since the median price fell 8.3 percent in July 2016.

The weakness in new home sales is spilling over to other facets of the economy. The Census Bureau reported Tuesday sales at appliance stores slipped in June, partly due to the decline in home sales and part to the higher prices resulting from increased tariffs on aluminum and steel.

Despite those headwinds, builders look to lower interest rates for a boost to sales and thus construction. According to Freddie Mac, the average rate for a 30-year fixed-rate loan has fallen to 3.75 percent from 4.53 percent a year ago. That decline would reduce the monthly payment on a $300,000 30-year loan by about $1,358.

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 June for Fourth Straight Month

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • March retail sales ROSE 0.4 percent or $2.2 billion in June matching May’s upwardly revised 4.0 percent (from 3.0 percent) gain;
  • Sales at gasoline station FELL 2.8 percent — $1.2 billion — as the price of a gallon of gasoline dropped 5.0 percent in June;
  • Other than gasoline stations, the only store categories to show a decline in sales was electronics/appliance stores where sales FELL 0.3 percent ($24 million) from May;
  • Online sales (sales at non-store retailers) jumped 1.7 percent and ROSE to 12.4 percent of all retail sales;
  • All retail activity was up 3.4 percent year-year in June – matching May — while the Consumer Price Index rose 1.6 percent from June 2018 to June 2019.

Trends:

  • Total retail sales have increased for four straight months, the longest stretch since 2017 when sales were up for seven straight months from June through December;
  • BLS reported the number of retail jobs FELL in June and have fallen for five straight months; The number of retail jobs fell in June to the lowest level since December 2015;

Data source: Census Bureau

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Falling gasoline prices gave consumers some extra spending cash in June and they used it to send retail sales up for the fourth straight month, according to the Census Bureau. Indeed, sales at virtually every retail category improved in June, the same month in which the Consumer Price Index showed a 1.6 percent year-year increase. The Census Bureau report is not adjusted for price changes which means an increase in prices will translate into an increase in retail activity, all else being equal.

Sales at furniture and appliance stores have been struggling of late reflecting a slowdown in home sales, both new and existing, and sales at electronics and appliance stores slipped in June, the only other category of stores to show a decline in sales in June. Appliance sales have been down year-year for six straight months.

 Although the sales data are not adjusted for price changes, the higher prices on appliances resulting from increased tariffs on aluminum and steel appear to be driving up prices, discouraging consumers. The higher prices brought on by the tariff increases affect parts as well as new machines and have hit the stock prices of major appliance manufacturers.

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.  

1st-time Unemployment Insurance Claims Show Largest Drop in Two Months

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 209,000 1st-time claims for unemployment insurance for the week ended July 6, a DECREASE of13,000from the previous week’s upwardly revised 222,000 (from 221,000);
  • The four-week moving average of initial claims DROPPED 3,250 to 219,250;
  • Four -week moving average represented 0.140 percent of employment, DOWN from 0.142 percent the previous week;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,723,000 for the week ended June 29, UP 27,000 from the previous week’s UPWARDLY REVISED 1,696,000; (from 1,686,000)
  • The four-week moving average of continued claims ROSE 5,750 to 1,694,750.

Trends:

  • The week-week drop in initial claims for unemployment insurance was the largest since initial claims fell 16,000 for the week ended May 11;
  • Four-week moving average of 1st-time claims fell for the first time in five weeks;
  • The week-week increase in continued claims – a surrogate for hiring – was the third in a row and fifth in the last six weeks.

Data Source: Department of Labor

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The report on initial claims for unemployment always gets a bit wonky in and around holiday weeks as workers who process claims (even though they can be filed electronically) take time off surrounding holidays. The analysis of this week’s report was further complicated by annual retooling furloughs at auto plants. Furloughed United Auto Workers (UAW) employees qualify for unemployment insurance for their time off, inflating claims.

That said, the only concern from this week’s Labor Department data might come from the slow but steady increase in continued unemployment insurance claims reflecting those who have been collecting benefits for at least two weeks. A decrease in continued claims suggests an increase in hiring, one of the handful of ways of getting off unemployment rolls while an increase suggests just the opposite.

That data point should turn downward as furloughed workers return to their assembly line posts.

One statistic that remains consistently positive is the tracking claims as a percentage of those employed (a necessary prerequisite for claiming unemployment insurance). That ratio has remained in a minuscule range of 0.129 percent to 0.146 percent this year down dramatically for the depth of the Great Recession 10 years ago when it hovered around 0.48 percent.

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

Job Openings, Hiring Fell in May

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Hiring in May FELL 4.4 percent from its record-setting April pace to 5.73 million
  • Job openings at the end of May FELL 0.7 percent (49,000) to 7.32 million;
  • The ratio of job openings per unemployed SLIPPED to 1.24 in May from 1.27 in April.

Trends:

  • Job openings exceeded unemployed for the 15th month in a row;
  • Job openings fell in May for the second straight month, the first back-to-back monthly declines since December 2016-January 2017;
  • The ratio of “quits” to layoffs and discharges remained at 2:1 signaling continued confidence in the labor market.

Data Source: Bureau of Labor Statistics

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The Bureau of Labor Statistics provided a belated explanation for the surprise drop in jobs in its May Employment Situation report in the most recent Job Openings and Labor Turnover Survey. The JOLTS report detailed a sharp drop in hiring in May, the same month in which, according to the BLS, the nation’s economy added a surprisingly low 72,000 jobs.

The drop in hiring – down 4.4 percent from April – was the steepest month-month decline since January 2016 when hiring fell 6.0 percent from December 2015. That said, the nation remains on a pace for more hires in 2019 than in 2018: 69.4 million, up from 68.9 million in 2018.

Not only do the overall JOLTS numbers show more job openings than unemployed, but every major industry grouping shows a similar phenomenon underscoring the oft-discussed skills mismatch which is keeping some people in the ranks of the unemployed.

Most notably, there are 4.6 openings per unemployed in the professional and business services sector and 3.1 unemployed per job opening in trade jobs, both wholesale and retail. The latter suggests business-(almost)-as-usual despite the ongoing trade war as the Trump Administration continues to use tariffs as a foreign policy tool.

One of the more encouraging but least explicable data elements according to the JOLTS report was an almost 20 percent jump in construction job openings. The spike came as the number of unemployed construction workers fell by a third from April to May: 439,000 down to 294,000 despite the falling residential building permits and starts.  From April to May the number of single-family housing starts dropped 0.9 percent; year-year single-family housing starts were down almost five percent.

In the “good news” department, the number of job openings in the manufacturing sector jumped to 509,000 in May, the highest level since publication of JOLTS data began in December 2000

If there is any worrisome sign in the May JOLTS data it comes from the drop in the number of job openings: the third month-month drop in the first five months of this year, matching the number of month-month declines in all of 2018.

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.

Pending Home Sales Index Inches Up in May

Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • National Association of Realtors’ May Pending Home Sales Index (PHSI) ROSE 1.1 percent from April to 105.4;
  • Year-year the index was DOWN 0.5 percent.

Trends:

  • The Index remained over 100 for the fifth time this year;
  • Index is down year-year for 17 straight months.

Data Source: National Association of Realtors (NAR)

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Pushing past concerns about rising home prices – and relying more on falling interest rates — the National Association of Realtors’ pending home sales index rose in May after slipping in April.

Still the index — which tracks contracts for sale – remained below year-earlier levels and suggests the home sales market still has hurdles to overcome.

Existing home sales rose 2.5 percent in May even though contracts for sales shot up 3.9 percent two months earlier.

Freddie Mac, meanwhile Thursday, reported the average rate for a 30-year fixed rate mortgage dropped to 3.73 percent from 3.83 percent one week earlier, the lowest rates for a 30-year loan since November 2016.

The Census Bureau and Department of Housing and Urban Development reported earlier this week contracts for the sale of new homes fell 7.8 percent in May.

The lower interest rates should bring more existing homes to market tempting empty-nesters who had been on the sidelines and thus increasing the inventory of “used” homes for sale. The inventory of new homes for sale edged up in May to an annualized rate of 333,000 from 332,000 in April. Realtors have attributed the stagnant market for existing homes to limited inventory.

Still, sellers could be disappointed if buyers are turned away due to an increase in home prices. Case Shiller CoreLogic reported this week its national home price index showed prices continuing to rise, up 0.93 percent in April, the sharpest month-month increase in a year.

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 Claims Show Largest Jump in Two Months

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 227,000 1st-time claims for unemployment insurance for the week ended June 15, AN INCREASE of10,000from the previous week’s upwardly revised 217,000 (from 216,000);
  • The four-week moving average of initial claims ROSE 2,250 to 221,250;
  • Four-week moving average represented 0.146 percent of employment, UP from 0.145 percent the previous week;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,688,000 for the week ended June 15, UP 22,000 from the previous week’s UPWARDLY REVISED 1,666,000; (from 1,662,000)
  • The four-week moving average of continued claims ROSE 6,500 to 1,686,750.

Trends:

  • The week-week increase in initial claims for unemployment insurance was the largest since claims jumped 37,000 for the week ended April 20;
  • Four-week moving average of 1st-time claims rose for the third week in a row;
  • The increase in continued claims – a surrogate for hiring – was the 6th in the last nine weeks since continued claims were flat in mid-April.

Data Source: Department of Labor

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Initial claims for unemployment experienced a slight spike for the last full week of June with no immediate cause for panic. The increase came during an annual retooling at auto plants prepping for a new model year. Under terms of the United Auto Workers (UAW) contract, furloughed production workers can apply for unemployment insurance during their temporary layoff without objection from automakers.

But while the temporary blip up in first time claims can be explained away without cause for alarm, the increase in continued claims – which preceded the upward blip in first-time claims – suggests different issues.

Typically, there are three ways to come off unemployment rolls: getting a job, benefits expiration or if the laid off worker is no longer available for work. The recent history of continued claims – up a net 34,000 or 2 percent, since mid-April –coupled with weak job creation in May and a 2.3 percent drop in job openings since the beginning of the year all suggest a tighter labor market.

The numbers also hint at an increase in the unemployment rate for June when the Bureau of Labor Statistics issues the Employment Situation report next week. Despite a dip in first time claims for unemployment insurance, the preliminary report from the Labor Department hints the 49-year low unemployment rate could be in jeopardy when the Bureau of Labor Statistics releases its June Employment Situation report on July 5 given an increase in first time claims from mid-May to mid-June and only a slight reduction in the smoothing four-week moving average for initial claims since the middle of May.

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