RSS Feed by Calculated Risk on 5/30/2010 12:01:00 PM
Sunday, May 30, 2010
Weekly Summary and a Look Ahead
The key economic report this week will be the May Employment Report to be released on Friday. Note: U.S. and U.K. stock markets will be closed on Monday.
On Tuesday, at 10 AM, the ISM Manufacturing index for May will be released (expectations are for a decrease to 59.5 from 60.4 in April) and Construction Spending for April (consensus is for private spending to be flat).
On Wednesday, the automakers will report vehicle sales for May. Expectations are for about a 11.2 million SAAR for light vehicles in May – or about the same rate as in April. The NAR will release April Pending Home Sales at 10 AM (expect a tax credit related increase). And the American Bankruptcy Institute will probably report personal bankruptcy filings for May on Wednesday too. This will probably show another "surge" in filings.
On Thursday, the closely watched initial weekly unemployment claims will be released. Consensus is for a decline to 450K from 460K last week. Also on Thursday, the ADP employment report will be released (consensus is for an increase of 60K private sector jobs, up from 32K in April). Also on Thursday, the May ISM non-manufacturing report will be released. Consensus is for a slight increase to 55.9 from 55.4 in the service sector. Factory Orders for April will also be released.
And on Friday, the BLS will release the May Employment report at 8:30 AM. The consensus is for a gain of 540K payroll jobs in May, and for the unemployment rate to decline slightly to 9.8% (from 9.9%). Of course the 540K includes a substantial number of temporary hires for Census 2010 (May is the peak month). It will be important to remove the Census hiring to try to determine the underlying trend.
We can estimate the Census hiring using this data from the Census bureau (ht Bob_in_MA). If we subtract the number of Temporary 2010 Census Workers in the 2nd week of May from the number in the second week of April, this suggests the Census boost will be around 417K in May. The Census Bureau will release the actual number with the employment report.
Here are two ex-Census forecasts from MarketWatch: Job growth seen a little less robust in May
David Greenlaw, economist at Morgan Stanley, expects a downshift to 105,000 jobs in May excluding the census workers.This is down from 224,000 ex-Census in April.
Economists at Credit Suisse expect private sector job creation around 130,000 in May.
Also on Friday the FDIC will probably have another busy Friday afternoon ... plus there will be several Fed speeches this week.
And a summary of last week:
Click on graph for larger image in new window.This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.
Sales in April 2010 (5.77 million SAAR) were 7% higher than last month, and were 22.8% higher than April 2009 (4.61 million SAAR).
Sales surged last November when many first-time homebuyers rushed to beat the initial expiration of the tax credit. There will probably be a further increase in May and June this year. Note: existing home sales are counted at closing, so even though contracts must be signed in April to qualify for the tax credit, buyers have until June 30th to close.
The second graph shows nationwide inventory for existing homes.According to the NAR, inventory increased to 4.04 million in April from 3.63 million in March. The all time record high was 4.57 million homes for sale in July 2008.
The next graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Inventory is not seasonally adjusted, so it really helps to look at the YoY change.
Inventory increased 2.7% YoY in April, the first YoY increase since 2008. This increase in the inventory is especially concerning because the reported inventory is already historically very high, and the 8.4 months of supply in April is well above normal. The months of supply will probably decline over the next two months because of the increase in sales due to the tax credit (reported at closing), but this will be something to watch this summer and later this year.
This graph shows the nominal not seasonally adjusted Composite 10 and Composite 20 indices (the Composite 20 was started in January 2000).The Composite 10 index is off 29.8% from the peak, and up slightly in March (SA).
The Composite 20 index is off 29.3% from the peak, and down slightly in March (SA).
This graph shows the price declines from the peak for each city included in S&P/Case-Shiller indices.Prices decreased (SA) in 11 of the 20 Case-Shiller cities in March (SA).
Prices in Las Vegas are off 56% from the peak, and prices in Dallas only off 5.8% from the peak.
The Census Bureau reports New Home Sales in April were at a seasonally adjusted annual rate (SAAR) of 504 thousand. This is an increase from the revised rate of 439 thousand in March (revised from 411 thousand).
The first graph shows monthly new home sales (NSA - Not Seasonally Adjusted).Note the Red columns for 2010. In April 2010, 48 thousand new homes were sold (NSA).
The record low for the month of April was 32 thousand in 1982 and 2009; the record high was 116 thousand in 2005.
The second graph shows New Home Sales vs. recessions for the last 45 years. Sales of new one-family houses in April 2010 were at a seasonally adjusted annual rate of 504,000 ... This is 14.8 percent (±19.5%)* above the revised March rate of 439,000 and is 47.8 percent (±26.0%) above the April 2009 estimate of 341,000.New home sales are counted when the contract is signed, so this pickup in activity is related to the tax credit.
For new home sales, the tax credit selling ended in April and sales will probably decline sharply in May.
Best wishes to all.
