Retail Sales Improve in October on Price Increases;

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Retail sales (measured by prices) ROSE 0.26 percent or $1.4 billion in October;
  • Retail sales for September were revised downward to show a 0.32 percent decline from August instead of the originally reported 0.25 percent drop
  • Sales improved at furniture stores (up 1.1 percent) and at gasoline stations (also up 1.1 percent). The average price of a gallon of gasoline rose 1.4 percent in October;
  • Sales declined at clothing stores, sporting goods stores and at restaurants;
  • Non-store retailers (essentially online sales) accounted for 12.9 percent of all retail activity in October, up from 12.8 percent in September and 12.2 percent a year ago;
  • Auto sales ROSE $562 million or 0.5 percent in October;
  • All retail activity was up 3.1 percent year-year in October – compared with 4.1 percent in September — while the Consumer Price Index rose 1.8 percent from October 2018 to October 2019 but real average annual earnings (prices less earnings) fell 0.2 percent

Trends:

  • Total retail sales have increased in seven of the last eight months with September the only negative month;
  • BLS reported the number of retail jobs ROSE in October for the second straight month (after six straight months of decline),

Data source: Census Bureau

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Consumer spending – measured by retail sales – perked up in October after an unexpected decline in September. The pick-up in sales made October a little less scary, Halloween notwithstanding. Indeed, Halloween sales are exceeded by end-of-year holiday shopping as the busiest times of the year for retailers. Who knew there was that much candy!

The Census Bureau report on retail activity is not adjusted for price changes which means an increase in prices shows up as an increase in sales, assuming no change in volume. Witness gasoline station sales which rose 1.1 percent in October as the average price of a gallon of gasoline rose 1.4 percent suggesting consumers may have reacted to the increase in prices by cutting back on driving.

The increase in furniture store sales (up 1.1 percent) in October, followed back-to-back monthly increases in existing home sales in July and August and an August increase in new home sales. Appliance store sales, which also react to home sales, slipped in October though they had increased in September.

The increase in sales also reflects higher prices from tariff increases in the Administration’s ongoing efforts to improve the nation’s trade deficit by hiking tariffs on goods (and materials) especially those from China.

Consumer spending represents about two-thirds of the economy and retail sales about 55 percent of consumer activity. The retail report suggests good news for fourth-quarter GDP as retailers head into the holiday shopping season though many large retailers have already announced cutbacks.

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 Jump to Five-month High;

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 225,000 1st-time claims for unemployment insurance for the week ended November 9, 2019, an INCREASE of14,000from the previous week’s unrevised 211,000;
  • The four-week moving average of initial claims ROSE 1.750 to 215,250;
  • Four-week moving average represented 0.138 percent of employment, UP from 0.137 percent one week earlier;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,683,000 for the week ended November 2, DOWN 10,000 from the previous week’s UPWARDLY REVISED 1,693,000 (from 1,689,000)
  • The four-week moving average of continued claims REMAINED at 1,687,750.

Trends:

  • The increase in first-time claims for unemployment insurance was the largest one-week jump since the week ended April 20;
  • The level of initial claims filings was the highest in five months;
  • The decline in continued claims for unemployment insurance was the largest since the week ended August 27;
  • The four-week moving average of continued claims, which was unchanged, has not dropped for six straight weeks.

Data Source: Department of Labor

First-time claims for unemployment insurance rose to the highest level since June as recession tremors continue to roil the economy.

Despite the increase, the long-time caveat remains that despite recent volatility in claims, the overall numbers remain near historic lows and remain vulnerable to extraneous factors which, because the overall numbers are low, exaggerate any movement.

The 225,000 filings for the week ended November 9 represented a 6.6 percent week-week increase, the largest since a 19.2 percent surge for the week ended April 20 – to 230,000.

Claims could likely climb again next week with normal flows interrupted by the Veterans Day holiday for workers who process claims filed electronically.

One factor which may have affected unemployment claims last week was the California wildfires. The increase in claims filed in California represented about one-sixth of the increase nationwide according to data reported by the Department of Labor which is not adjusted for seasonal factors. A couple of states, notably Illinois and Pennsylvania, attribute the recent increase in claims in those states to layoffs in  the construction sector as housing continues to struggle.

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

1st-time Unemployment Insurance Claims Drop;

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 211,000 1st-time claims for unemployment insurance for the week ended November 2, 2019, a DECREASE of 8,000from the previous week’s upwardly revised 219,000 (from 218,000);
  • The four-week moving average of initial claims INCREASED 250 to 215,250;
  • Four-week moving average represented 0.138 percent of employment, UNCHANGED from one week earlier;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,689,000 for the week ended October 26, DOWN 3,000 from the previous week’s UPWARDLY REVISED 1,692,000 (from 1,690,000)
  • The four-week moving average of continued claims REMAINED at 1,86,750.

Trends:

  • First-time claims for unemployment insurance fell for the third time in the last five weeks;
  • The number of continued claims has increased year-year for five straight weeks for the first time in 10 years;
  • The four-week moving average of continued claims which was unchanged has not dropped five straight weeks.

Data Source: Department of Labor

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Despite another decline in the number of first-time claims for unemployment insurance, the weekly Labor Department report continues to reflect a weakness in the labor market by detailing that those collecting unemployment benefits are unable to find jobs.

The report offered evidence to support the interpretation of the Job Opening and Labor Turnover Survey (JOLTS) earlier this week. The JOLTS data showed the number of job openings fell to the lowest level in 18 months (in September) in part responsible for the relatively weak report on new October jobs.

But the decline in job openings also means those on unemployment rolls have new challenges in finding new jobs, thus the number of continued claims has not been dropping.

The two reports together underscore a skills mismatch especially as in some industry sectors the number of unemployed is rising along with the number of job openings.

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

Job Openings Fall to 18-month Low in September

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Layoffs and discharges ROSE 8.2 percent or 152,000 in September to 1.96 million5.95 million
  • Job openings at the end of September FELL 3.8 percent to 7.02 million;
  • Hiring in September rose 0.8 percent to 5.9 million;
  • The ratio of job openings per unemployed ROSE to 1.22 in September from 1.21 in August.

Trends:

  • Job openings at the end of September dropped to 7.02 million, the lowest level since March 2018 (6.9 million
  • Job openings were down year-year for the fourth straight month for the first time in 10 years

Data Source: Bureau of Labor Statistics

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There were more warning signs about the job market Tuesday in the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS) report.

While employers in September hired 50,000 more people than they had in August, other measures tracked in the JOLTS report were far from bullish.

The number of job openings fell as layoffs and discharges increased suggesting employers are  trying to stay one step ahead of a coming economic downturn.

As concerning, unemployment fell overall in September – to 5.8 million from slightly over 6 million in August, unemployment was up in several key industry sectors as job openings in those sectors fell.

Case in point, in professional and business services, a broad sector, the number of unemployed inched up 3,000 but job openings fell 42,000 according to the JOLTS data.

And then in some sectors though unemployment fell, job openings rose pointing to a skills mismatch and a shortage of qualified. In the construction sector, for example, unemployment fell 11.6 percent in September but job openings rose 6.7 percent. The trend is even more dramatic on a year-year comparison. Unemployment in the construction sector is down 22.6 percent year-year but job openings have increased 21.9 percent in the same period.

The number of unemployed in the financial services sector fell 29.2 percent from September 2018 to September 2019 as the number of job openings jumped 55.7 percent.

A third category would be sectors which appear to be cutting back. In the Information sector, which includes broadcasting, the number of individuals unemployed went up 75.8 percent from September to September while job openings in the sector fell 8.3 percent.

According to the September JOLTS data, hiring this year is on a pace to exceed 2018 hiring by about 1.6 percent.  At the same time though, the JOLTS data extrapolates to a 2.3 percent increase in total separations in 2019 over 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.

Auto Strike Weakens Job Growth; Unemployment Rate Edges Up; Earnings Remain Weak

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Unemployment rate in October ROSE to 3.6 percent from 3.5 percent in September;
  • Number of payroll jobs INCREASED 128,000 in October,
  • Average weekly earnings ROSE in October to $969.39, a 2.7 percent year-year gain, up from  the 2.6 percent year-year gain in September;
  • Average hourly earnings ROSE  in October  to $28.18 a 3.0 percent annual increase, up from 2.9 percent in August
  • Private sector jobs INCREASED 131,000; Government payrolls FELL 3,000,led by a decline of 17,000 federal government jobs;
  • Prior month job totals were REVISED UP SIGNIFICANTLY, up 95,000; the number of new jobs in September was revised from 136,000 to 180,000, the number of new jobs in July was revised to 219,000 from 168,000;
  • The Labor Force participation rate rose to 63.3 percent, highest since July 2013;
  • Manufacturing sector LOST 36,000 jobs, principally the auto sector which had 41,600 fewer jobs than in September;
  • The unemployment rate for teenagers FELL to 12.3 percent from 12.5 percent in September but higher than 12.0 percent in October 2018.
  • The unemployment rate for Blacks fell to 5.4 percent, a new record low;
  • The unemployment rate for those over 25 without a high school diploma ROSE sharply to 5.6 percent from a record low 4.8 percent in September;
  • The number of persons not in the labor force DECLINED 118,000 to 95.48 million.

Trends:

  • Payroll jobs were up for the 1098h straight month
  • Low-wage retail and leisure-and-hospitality jobs accounted for 52.4 percent of total jobs gains, highest share since January 2016 (59.1 percent);
  • Retail jobs rose for the second month in a row (after revisions) following seven straight

Data Source: Bureau of Labor Statistics:

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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.

Pending Home Sales Index Rises on Low Mortgage Rates

Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • National Association of Realtors’ Pending Home Sales Index (PHSI) ROSE 1.5 percent in September to 108.7;
  • Year-year the index ROSE 3.7 percent.

Trends:

  • The PHSI ROSE to its highest level since December 2017 (109.8
  • The Index for September ROSE for the fourth time in the last five months;
  • The year-year increase is the largest since December 2015 (4.5 percent).

Data Source: National Association of Realtors (NAR)

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With mortgage rates remaining low, the National Association of Realtors Pending Home Sales rose in September for the fourth time in the last five months.

The NAR’s report came as Standard & Poor’s reported home prices, as measured by its Case Shiller CoreLogic Home Price Index barely budged in August.

At the same time, according to Freddie Mac’s most recent weekly survey of mortgage interest rates showed lending rates remaining at near record lows. The average rate for a 30-year fixed rate loan, according to Freddie Mac’s report last week, was 3.75 percent, down from 4.86 percent a year ago. The drop would reduce the monthly payment on a $300,000 30-year mortgage by almost $200.

The NAR’s pending home sales report –based on contracts for sale – compares with the government’s new home sales report which showed a decline of about 0.7 percent for September.

The two-month boost in pending sales couldn’t come at a better time for realtors who saw closings drop 2.2 percent in September, two months after the PHSI fell 2.5 percent.

While the 1.5 percent September gain was strong, it was made to seem even stronger with the downward revision of the August PHSI from 107.3 to 107.1.

The drift to lower home prices can only last so long before sellers pull back. The inventory of homes for sale which had increased for six straight months has not risen for three months in a row. The last time that happened, existing home sales fell by about 50,000 per month (seasonally adjusted annual rate). That followed a four-month stretch in which the median price of an existing single-family home fell an average of 1.7 percent per month.

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.

Pressure on Home Prices Continues

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Case Shiller CoreLogic indices BARELY BUDGED in August with one of the three indices unchanged;
  • The August 10-city index WAS FLAT to July after increasing just 0.07 percent in July;
  • The 20-city index ROSE 0.04 percent and the National index ROSE 0.20 percent in August compared with increases of 0.16 percent and 0.36 percent respectively in July;
  • Year-year the 10-city index was UP 1.5 percent and the 20-city index ROSE 2.0 percent in July after annual increases of 1.6 percent and 2.2 percent in July;
  • The national index IMPROVED 3.2 percent in year-year in August compared with a 3.1 percent year-year increase in July;
  • Year-year the price growth slowed in 12 cities in July.

Trends:

  • The growth in the price indices slowed for the fourth straight month;
  • The price index ROSE in 11 cities in August, down from 15 in July;
  • The price index rose for the 20th straight month in Miami while falling for the second straight month in Los Angeles and San Francisco.

Data Source: S&P Case Shiller/Core Logic

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Though home prices continued to increase in August, they did so at an alarmingly weaker pace, according to the monthly Case Shiller-CoreLogic home price index produced by Standard & Poor’s.

The slower increase in home values immediately recalled the slowdown prior to the Great Recession. Price growth, according to the Case Shiller tabulations, slowed in mid-2006 before turning negative for almost three years.

The slower price growth combined with near-record low mortgage interest rates should combine to lead to an increase in home sales, but that hasn’t been the case. The National Association of Realtors reported recently sales of existing single-family homes fell 2.2 percent in September as the price of an existing single-family home dropped for the third straight month. And, last week the government reported sales of new single-family homes slipped 0.7 percent in September as the median price of a new single-family home fell to its lowest level since February 2017.

The Case Shiller report showed a distinct geographic bent with prices falling 0.2 percent in the West but increasing in the other three census regions.

The sharpest increase came in Phoenix (up 0.9 percent in August compared with 0.7 percent in July. Prices were up 0.3 percent in Cleveland, Miami, and Tampa. But prices dropped 0.5 percent in San Francisco, 0.3 percent in Seattle and 0.2 percent in Denver and San Diego.

Year-year, prices fell 0.1 percent in San Francisco, the first year-year price drop there since April 2012. While prices rose year-year in the 19 other cities surveyed, the year-year price increase was lower in 11 cities than it had been in July.

Hear Mark Lieberman this Friday on P.O.T.U.S. radio’s Morning Briefing, Sirius-XM 124, at 6:20 am Eastern Time. You can follow Mark Lieberman on Twitter at @foxeconomics.

New Home Price Drops to 31-Month Low as September Sales Slip

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Pace of contracts for new home sales EDGED DOWN 0.7 percent in September to a seasonally adjusted annual rate (SAAR) of 701,000;
  • The August sales pace originally reported as 713,000 was REVISED DOWN to 706,000
  • The inventory of unsold new homes DIPPED 2,000 in September to 321,000;
  • The months’ supply of new homes for sale REMAINED at 5.5 in September;
  • Median price of a new home TUMBLED $25,800, or 7.9 percent, from August to $299,4000. Year-year the median price of a new home is DOWN 8.8 percent or $28,900.

Trends:

  • The sales pace for new single-family homes fell for the fourth time in the first nine months of 2019 and the sixth time in the last 12 months;
  • The number of homes for sale is at its lowest level since August 2018
  • The median price of a new home fell to its lowest level since February 2017.

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

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The median price of a new single-family home fell to its lowest level in 31 months, February 2017 when it was $298,000, the Census Bureau and Department of Housing and Urban Development reported jointly Thursday.

The price drop didn’t even boost sales which edged down month-month for the fourth time this year though year-year sales are up.

The disappointing government report underscores a troubled housing market. Earlier this week the National Association of Realtors reported existing home sales fell 2.2 percent in September. (The two reports are not precisely comparable however: the NAR data is based on closings and the government statistics track contracts for sale, The NAR report on contracts, pending home sales, is scheduled for release tomorrow.)

The new home sales report is consistent with other data reported by the two agencies showing a decline in permits and starts for single-family homes. In addition, for September the Census Bureau and HUD reported builders had completed 852,000 new homes (seasonally adjusted annual rate) including homes built on speculation and to order. The number of completions was just 151,000 more than sales in September, the smallest “gap” between sales and completions since November 2017 when builders completed just 69,000 homes more than were sold. Since then the average “gap” has been 223,000 more homes completed than sold per month.

The new report adds to troubles in the housing sector which has been hit with rising expenses due to higher tariffs on materials.

Despite the disappointing sales report, builder confidence remains high. According to the National Association of Home Builders, the Housing Market Index which tracks confidence rose three points in the beginning of October to its highest level in 20 with builders reporting a jump in buyer traffic.

The inventory dropped about 45,000 (8.2 percent) from May through November 2007, compared with the decline of 21,000 (6.1 percent) in the most recent seven-month period.

Meanwhile Thursday, Freddie Mac reported the average rate for a 30-year fixed-rate mortgage last week was 3.75 percent, up from 3.69 percent one week ago.

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 Edge Down but Data Hint at Weaker Jobs Report

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 212,000 1st-time claims for unemployment insurance for the week ended October 19, 2019, a DECREASE of6,000from the previous week’s upwardly revised 218,000 (from 214,000);
  • The four-week moving average of initial claims DROPPED 750 to 215,000;
  • Four-week moving average represented 0.137 percent of employment, UNCHANGED from one week earlier;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,682,000 for the week ended October 12, DOWN 1,000 from the previous week’s UPWARDLY REVISED 1,683,000 (from 1,679,000)
  • The four-week moving average of continued claims ROSE 6,500 to 1,677,250;

Trends:

  • The four-week moving average of continued claims fell has increased for three straight weeks
  • The four-week moving average of first-time claims fell for the first time in four weeks;
  • Wee-week, the number of initial claims for unemployment insurance has fallen only twice since mid-August;

Data Source: Department of Labor

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On the strength of declines in first-time claims (not seasonally adjusted) in two auto-manufacturing states, the number of initial claims for unemployment insurance fell for the week ended October 19 according to the Department of Labor.

Despite the week-week improvement though the claims reports (both initial and continued) suggest another weak jobs report from the Bureau of Labor Statistics on November 1.

From mid-month to mid-month, first time claims rose 8,000 and the four-week moving average of initial claims went up 3,000, a sign of increased layoffs, though likely not enough to move the 3.5 percent unemployment rate.

And, on the jobs front, continued claims for unemployment insurance rose 27,000 from mid-September to mid-October while the four-week moving average of continued claims rose 14,000. Both numbers suggest employers are not creating jobs to lift individuals off the unemployment rolls.

The unemployment claims report – more importantly its trend – is another indicator of a weakening economy though the level of both initial and continued claims remains near historic lows.

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

Existing Home Sales Slip in September

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The pace of existing home sales – closed sales – FELL 2.2 percent, 120,000, in September to a seasonally adjusted annual sales rate of 5.38 million;
  • Sales pace for August was revised up 10,000 to 5.5 million;
  • Median price of an existing single-family home FELL 2.4 percent, $6,800, to $272,100;
  • Year-year the median price is up 5.9 percent or $15,200;
  • Number of homes available for sale was UNCHANGED at 1.83 million;
  • With the decline in sales, the months’ supply of homes for sale in September INCREASED 0.1 months to 4.1 months.

Trends:

  • The September decrease in closings was the steepest since March (270,000)
  • Year-year sales were UP 4.5 percent, the third consecutive month of year-to year increases after 16 months of year-year declines;
  • The median price of an existing single-family home FELL for the third straight month;
  • September marked the third straight month of no increase in the inventory of unsold homes.

Data Source: National Association of Realtors: (NAR)

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Despite near record low mortgage rates, housing stumbled in September with existing home sales (closings) falling for just the second time in the last six months. The drop was not entirely unexpected as pending home sales (contracts for sale) had fallen 2,5 percent in July.

The dip in closings in September came after two relatively strong months for home sales: the pace of sales rose 130,000 in July and another 80,000 in August.

The slowdown in sales came despite the third straight month of price declines, though the median price of a used home remains up over a year ago. Mortgage rates remain however low. According to Freddie Mac, the average rate for a 30-year fixed rate loan was 3.61 percent in September compared with 3.62 percent in August and 4.63 percent in September 2018.

Sales of existing single-family homes have been treading water for the last six years with closings remaining in a relatively narrow range between 4.6 million and 5.7 million. Prior to the onset of the Great Recession, from January 200 to December 2006, existing home sales averaged 6.1 million per month, peaking at 7.25 million in September 2005.

The slowdown in housing has a ripple effect on sales at appliance stores and furniture stores.

The three-month decline in the median price of an existing home is likely the cause of the inventory drop as would-be sellers hold out for a higher return on their investment. The weaker inventory in turn gives buyers less of a choice and leads to weaker sales and perhaps further price reductions.

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