by Calculated Risk on 4/03/2025 04:27:00 PM

On Friday at 8:30 AM ET, the BLS will release the employment report for March. The consensus is for 135,000 jobs added, and for the unemployment rate to be unchanged at 4.1%.

From Goldman Sachs:

We estimate nonfarm payrolls rose by 150k in March, slightly above consensus ... We estimate that the unemployment rate was unchanged on a rounded basis at 4.1%.
emphasis added

From BofA:

Nonfarm payrolls are likely to increase by a robust 185k in March, higher than consensus expectations of 135k, due to payback in leisure & hospitality for cold weather in Jan and Feb. Government job growth is expected to come in at just 10k due to the federal hiring freeze/DOGE. Given the muted claims data in the survey week, we do not expect DOGE driven job cuts to be a sizable drag, although risks are to the downside. We expect the u rate to remain at 4.1%.

• ADP Report: The ADP employment report showed 155,000 private sector jobs were added in March.  This was above consensus forecasts and suggests job gains above consensus expectations, however, in general, ADP hasn't been very useful in forecasting the BLS report.

• ISM Surveys: Note that the ISM indexes are diffusion indexes based on the number of firms hiring (not the number of hires).  The ISM® manufacturing employment index decreased to 44.7%, down from 47.6% the previous month.   This would suggest about 50,000 jobs lost in manufacturing. The ADP report indicated 21,000 manufacturing jobs added in March.

The ISM® services employment index decreased to 46.2%, from 53.5%. This would suggest 30,000 jobs lost in the service sector. Combined this suggests 80,000 jobs added, well below consensus expectations.  (Note: The ISM surveys have been way off recently)

• Unemployment Claims: The weekly claims report showed about the same initial unemployment claims during the reference week at 225,000 in March compared to 224,000 in February.  This suggests layoffs in March were about the same as in February.

• Conclusion: Over the last year, employment gains averaged 155 thousand per month - and that is probably the current trend.  It seems early for the government related layoffs to significantly impact employment.  Also, although the ISM employment indexes were weak this month, my guess is headline employment gains will be above consensus in March.

Weekly Schedule

by Calculated Risk on 4/03/2025 03:35:00 PM

From STR: U.S. hotel results for week ending 29 March

On the positive side of the Easter calendar shift, the U.S. hotel industry reported increases across the key performance metrics, according to CoStar’s latest data through 29 March. ...

23-29 March 2025 (percentage change from comparable week in 2024):

• Occupancy: 65.1% (+4.4%)
• Average daily rate (ADR): US$161.65 (+2.5%)
• Revenue per available room (RevPAR): US$105.19 (+7.0%)
emphasis added

The following graph shows the seasonal pattern for the hotel occupancy rate using the four-week average.

Click on graph for larger image.

The red line is for 2025, blue is the median, and dashed light blue is for 2024.  Dashed purple is for 2018, the record year for hotel occupancy. 

The 4-week average of the occupancy rate is tracking last year and is lower than the median rate for the period 2000 through 2024 (Blue).

Note: Y-axis doesn't start at zero to better show the seasonal change.

The 4-week average will mostly move sideways until the summer travel season.  We might see a hit to occupancy during the summer months due to less international tourism.

by Calculated Risk on 4/03/2025 10:00:00 AM

(Posted with permission). The ISM® Services index was at 50.8%, down from 53.5% last month. The employment index decreased to 46.2%, from 53.5%. Note: Above 50 indicates expansion, below 50 in contraction.

From the Institute for Supply Management: Services PMI® at 50.8% March 2025 Services ISM® Report On Business®

Economic activity in the services sector expanded for the ninth consecutive month in March, say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®. The Services PMI® registered 50.8 percent, indicating expansion for the 55th time in 58 months since recovery from the coronavirus pandemic-induced recession began in June 2020.

The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In March, the Services PMI® registered 50.8 percent, 2.7 percentage points lower than the February figure of 53.5 percent. The Business Activity Index registered 55.9 percent in March, 1.5 percentage points higher than the 54.4 percent recorded in February. This is the index’s 58th consecutive month of expansion. The New Orders Index recorded a reading of 50.4 percent in March, 1.8 percentage points lower than the February figure of 52.2 percent. The Employment Index dropped into contraction territory for its first time in six months; the reading of 46.2 percent is a 7.7-percentage point decrease compared to the 53.9 percent recorded in February.
emphasis added

This was below consensus expectations.

by Calculated Risk on 4/03/2025 08:49:00 AM

The Census Bureau and the Bureau of Economic Analysis reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $122.7 billion in February, down $8.0 billion from $130.7 billion in January, revised. .

February exports were $278.5 billion, $8.0 billion more than January exports. February imports were $401.1 billion, less than $0.1 billion less than January imports.
emphasis added

Click on graph for larger image.

Exports increased and imports decreased in February.

Exports were up 4.8% year-over-year; imports were up 19.7% year-over-year.

Exports have generally increased recently, and imports increased sharply. 

The second graph shows the U.S. trade deficit, with and without petroleum.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Note that net, exports of petroleum products are positive and have been increasing.

The trade deficit with China increased to $21.1 billion from $19.9 billion a year ago.  

The surge in imports in January and February happened as some importers were avoiding the coming tariffs.

by Calculated Risk on 4/03/2025 08:34:00 AM

The DOL reported:

In the week ending March 29, the advance figure for seasonally adjusted initial claims was 219,000, a decrease of 6,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 224,000 to 225,000. The 4-week moving average was 223,000, a decrease of 1,250 from the previous week's revised average. The previous week's average was revised up by 250 from 224,000 to 224,250.
emphasis added

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 223,000.

The previous week was revised up.

Weekly claims were below the consensus forecast.

by Calculated Risk on 4/02/2025 07:34:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released. The consensus is for 225 initial claims up from 224 thousand last week.

• Also at 8:30 AM, Trade Balance report for February from the Census Bureau. The consensus is the trade deficit to be $110.0 billion.  The U.S. trade deficit was at $131.4 billion in January.

• At 10:00 AM, the ISM Services Index for March.

by Calculated Risk on 4/02/2025 05:38:00 PM

From the Philly Fed:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for January 2025. Over the past three months, the indexes increased in 47 states, decreased in one state, and remained stable in two, for a three-month diffusion index of 92. Additionally, in the past month, the indexes increased in 35 states, decreased in nine states, and remained stable in six, for a one-month diffusion index of 52. For comparison purposes, the Philadelphia Fed has also developed a similar coincident index for the entire United States. The Philadelphia Fed’s U.S. index increased 0.6 percent over the past three months and 0.2 percent in January.
emphasis added

Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:

The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

Click on map for larger image.

Here is a map of the three-month change in the Philly Fed state coincident indicators. This map was all red during the worst of the Pandemic and also at the worst of the Great Recession.

The map is mostly positive on a three-month basis.

Source: Philly Fed.

And here is a graph is of the number of states with one month increasing activity according to the Philly Fed. 

This graph includes states with minor increases (the Philly Fed lists as unchanged).

In January, 36 states had increasing activity including minor increases.

by Calculated Risk on 4/02/2025 01:16:00 PM

This graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the March 2025 seasonally adjusted annual sales rate (SAAR) of 403 thousand.

Heavy truck sales really collapsed during the great recession, falling to a low of 180 thousand SAAR in May 2009.  Then heavy truck sales increased to a new record high of 570 thousand SAAR in April 2019.

Click on graph for larger image.

Note: "Heavy trucks - trucks more than 14,000 pounds gross vehicle weight."

Heavy truck sales declined sharply at the beginning of the pandemic, falling to a low of 288 thousand SAAR in May 2020.  

Heavy truck sales were at 403 thousand SAAR in March, down from 436 thousand in February, and down 12.1% from 459 thousand SAAR in February 2025.  

Year-to-date (NSA) sales are down 10.1%.

Usually, heavy truck sales decline sharply prior to a recession. Perhaps heavy truck sales will be revised up, but this was somewhat weak.

As I mentioned yesterday, light vehicle sales "surged" in March to 17.77 million SAAR as some buyers rushed to beat the tariffs.

The second graph shows light vehicle sales since the BEA started keeping data in 1967.  

Light vehicle sales were at 17.77 million SAAR in March, up 11.0% from February, and up 13.3% from March 2024.

by Calculated Risk on 4/02/2025 09:51:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Moody's: Q1 2025 Apartment Vacancy Rate Highest Since 2010; Office Vacancy Rate at Record High

A brief excerpt:

From Moody’s Analytics Economists: Q1 Moody’s CRE Preliminary Trend Analysis

The national multifamily market has been under supply-side pressure over the past two years. Steady demand finally paused the vacancy climb after a banner year with record-level inventory growth. Average vacancy stalled at 6.3%, the highest since 2010.

Moody’s Analytics reported that the apartment vacancy rate was at 6.3% in Q1 2025, unchanged from an upwardly revised 6.3% in Q4, and up from 5.8% in Q1 2024. This is the highest vacancy rate since 2010.

This graph shows the apartment vacancy rate starting in 1980. (Annual rate before 1999, quarterly starting in 1999). Note: Moody’s Analytics is just for large cities.

There is much more in the article.

by Calculated Risk on 4/02/2025 08:15:00 AM

From ADP: ADP National Employment Report: Private Sector Employment Increased by 155,000 Jobs in March; Annual Pay was Up 4.6%

“Despite policy uncertainty and downbeat consumers, the bottom line is this: The March topline number was a good one for the economy and employers of all sizes, if not necessarily all sectors,” said Nela Richardson, chief economist, ADP.
emphasis added

This was above the consensus forecast of 119,000. The BLS report will be released Friday, and the consensus is for 135,000 non-farm payroll jobs added in March.