by Calculated Risk on 2/05/2016 09:05:00 AM

From the BLS:

Total nonfarm payroll employment rose by 151,000 in January, and the unemployment rate was little changed at 4.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in several industries, led by retail trade, food services and drinking places, health care, and manufacturing. Employment declined in private educational services, transportation and warehousing, and mining.
...
The change in total nonfarm payroll employment for November was revised from +252,000 to +280,000, and the change for December was revised from +292,000 to +262,000. With these revisions, employment gains in November and December combined were 2,000 lower than previously reported.
...
In January, average hourly earnings for all employees on private nonfarm payrolls increased by 12 cents to $25.39. Over the year, average hourly earnings have risen by 2.5 percent.
...
[Annual Benchmark Revision] The total nonfarm employment level for March 2015 was revised downward by 206,000 ... The effect of these revisions on the underlying trend in nonfarm payroll employment was minor. For example, the over-the-year change in total nonfarm employment for 2015 was revised from 2,650,000 to 2,735,000,
emphasis added

Click on graph for larger image.

The first graph shows the monthly change in payroll jobs, ex-Census (meaning the impact of the decennial Census temporary hires and layoffs is removed - mostly in 2010 - to show the underlying payroll changes).

Total payrolls increased by 151 thousand in January (private payrolls increased 158 thousand).

Payrolls for November and December were revised down by a combined 2 thousand.

This graph shows the year-over-year change in total non-farm employment since 1968.

In January, the year-over-year change was 2.67 million jobs.  A solid gain.


The third graph shows the employment population ratio and the participation rate.

The Labor Force Participation Rate increased in January to 62.7%. This is the percentage of the working age population in the labor force.   A large portion of the recent decline in the participation rate is due to demographics.

The Employment-Population ratio increased to 59.6% (black line).

I'll post the 25 to 54 age group employment-population ratio graph later.

The fourth graph shows the unemployment rate.

The unemployment rate was declined in January to 4.9%.

This was below expectations of 188,000 jobs ... but overall still a decent report.

I'll have much more later ...

by Calculated Risk on 2/05/2016 08:37:00 AM

From the BLS:

Total nonfarm payroll employment rose by 151,000 in January, and the unemployment rate was little changed at 4.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in several industries, led by retail trade, food services and drinking places, health care, and manufacturing. Employment declined in private educational services, transportation and warehousing, and mining.
...
The change in total nonfarm payroll employment for November was revised from +252,000 to +280,000, and the change for December was revised from +292,000 to +262,000. With these revisions, employment gains in November and December combined were 2,000 lower than previously reported.
...
In January, average hourly earnings for all employees on private nonfarm payrolls increased by 12 cents to $25.39. Over the year, average hourly earnings have risen by 2.5 percent.
...
[Annual Benchmark Revision] The total nonfarm employment level for March 2015 was revised downward by 206,000 ... The effect of these revisions on the underlying trend in nonfarm payroll employment was minor. For example, the over-the-year change in total nonfarm employment for 2015 was revised from 2,650,000 to 2,735,000,
emphasis added

Note: I'll post graphs soon - the data is being updated due to the annual benchmark revision.

by Calculated Risk on 2/04/2016 07:02:00 PM

Employment previews:

CR: Preview: Employment Report for January

Goldman Payroll Preview: 170K Forecast

Tim Duy: Jobs Day

Friday:
• At 8:30 AM ET, Employment Report for January. The consensus is for an increase of 188,000 non-farm payroll jobs added in January, down from the 292,000 non-farm payroll jobs added in December. The consensus is for the unemployment rate to be unchanged at 5.0%.

• Also at 8:30 AM, Trade Balance report for December from the Census Bureau. The consensus is for the U.S. trade deficit to be at $43.0 billion in December from $42.4 billion in November.

• At 3:00 PM, Consumer Credit for December from the Federal Reserve. The consensus is for an increase of $16.5 billion in credit.

by Calculated Risk on 2/04/2016 04:44:00 PM

From the U.S. Courts: Bankruptcy Filings Drop 10 Percent in Calendar Year 2015

During the 12-month period ending December 31, 2015, 844,495 cases were filed in federal bankruptcy courts, down from the 936,795 bankruptcy cases filed in calendar year 2014—a 9.9 percent drop in filings. This is the lowest number of bankruptcy filings for any 12-month period since 2007, and the fifth consecutive calendar year that filings have fallen.

CR Note: For Q4, bankruptcy filings were down about 8% compared to Q4 2014. At that pace of improvement, fiscal 2016 for the Court system (ends Sept 30th) will see the fewest bankruptcy filings since fiscal 1990.

by Calculated Risk on 2/04/2016 12:38:00 PM

From housing economist Tom Lawler:

Below is a table showing some selected operating statistics from large, publicly-traded home builders for the quarter ending December 31, 2015.

Combined net home orders for these seven home builders last quarter were up 11.7% from the comparable quarter of 2014, while home deliveries were up 6.3% YOY. For the group as a whole deliveries were a bit lower (as were revenues and earnings) than one would have expected based on order backlogs, which mainly reflected longer-than-normal construction timelines in several markets (as opposed to sales cancellations, which in aggregate were down slightly from a year ago). The combined order backlog for these builders at the end of last year was up 18.3% from a year earlier. Net orders per active community for the group were up 8.7% YOY.

	Net Orders			Settlements			Average Closing  Price ($000s)
Qtr. Ended:	12/15	12/14	% Chg	12/15	12/14	% Chg	12/15	12/14	% Chg
D.R. Horton	8,064	7,370	9.4%	8,061	7,973	1.1%	290	281	3.3%
PulteGroup	3,659	3,232	13.2%	5,662	5,316	6.5%	353	334	5.7%
NVR	3,100	2,713	14.3%	4,010	3,469	15.6%	382	376	1.6%
Beazer Homes	923	966	-4.5%	1,049	885	18.5%	321	296	8.6%
Meritage Homes	1,568	1,272	23.3%	1,919	1,863	3.0%	397	369	7.6%
MDC Holdings	1,020	887	15.0%	1,275	1,242	2.7%	435	397	9.5%
M/I Homes	897	773	16.0%	1,253	1,105	13.4%	360	322	11.8%
Total	19,231	17,213	11.7%	23,229	21,853	6.3%	343	326	5.4%

D.R. Horton reported that net orders for its “Express” brand, targeted for the “entry-level” home buyer, represented 25% of its total orders (in units) last quarter, compared to 13% in the comparable quarter of 2014, while the Express share of deliveries increased to 22% from 10%. The average selling price for Express deliveries last quarter was $199,400, compared to $168,900 a year earlier. A major reason for the sharp jump in the average Express selling price was an increase in the share of deliveries in higher-priced markets (including California).

While LGI Homes has not yet released its earnings report for last quarter, the company does release monthly home closings (in units). For the quarter ended December 31, 2015 LGI Home delivered 946 homes, up 45.1% from the comparable quarter of 2014. LGI had 54 active communities in December, up from 39 a year earlier. LGI focuses heavily (though not exclusively) on entry-level/first-time home buyers, and its average sales price in the quarter ended September 30, 2015 was about $186,000. LGI also reported that its home closings totaled 232 in January, up 51.6% from the previous January, and that it had 54 active communities in January compared to 42 a year ago.

Earlier this month the Commerce Department estimated that new single-family home sales last quarter totaled 112,000, up 7.7% from the comparable quarter of 2014.

by Calculated Risk on 2/04/2016 11:03:00 AM

Note: Yesterday I wrote: Preview: Employment Report for January

A few excerpts from a research piece by Goldman Sachs economist Daan Struyven:

January Payrolls Preview We expect a 170k gain in nonfarm payroll employment in January, below consensus expectations of 190k. ... We expect the unemployment rate to remain unchanged at 5.0% in January on a rounded basis ... However, we see some risk that the unemployment rate will round down to 4.9% given our expectation for a strong employment gain and the possibility of a slight decline in participation ...

We expect average hourly earnings for all workers to rise 0.4% (mom) in January following a 0.04% decline in December. Our expectation for a firmer than usual rise in average hourly earnings growth is primarily due to favorable calendar effects. In addition, we estimate that minimum wage increases in about a dozen states could boost aggregate average hourly earnings by about 0.05%. However, even a 0.4% increase in January would result in a decline in the year-on-year rate to 2.3% due to unfavorable base effects.

Struyven also mentions that the annual benchmark revision will be released tomorrow, and the revision will probably show about 200 thousand fewer jobs added over the last year than previously estimated. As I noted yesterday, the preliminary annual benchmark revision showed a downward adjustment of 208,000 jobs, and the preliminary estimate is usually pretty close to final revision.

by Calculated Risk on 2/04/2016 08:33:00 AM

The DOL reported:

In the week ending January 30, the advance figure for seasonally adjusted initial claims was 285,000, an increase of 8,000 from the previous week's revised level. The previous week's level was revised down by 1,000 from 278,000 to 277,000. The 4-week moving average was 284,750, an increase of 2,000 from the previous week's revised average. The previous week's average was revised down by 250 from 283,000 to 282,750.

There were no special factors impacting this week's initial claims.

The previous week was revised down to 277,000.

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 284,750.

This was above the consensus forecast of 275,000. Although initial claims have increased recently, this is still a very low level and the 4-week average suggests few layoffs.

by Calculated Risk on 2/03/2016 06:36:00 PM

From Tim Duy: Resisting Change?

Bottom Line: Fischer is clearly less confident than earlier this month when he claimed that market participants were underestimating the pace of rate hikes. The baseline of four hikes is clearly is doubt; see here for my five potential scenarios. Financial market participants have almost completely discounted any rate hikes this year. This is a recession scenario that I am not enamored with. That said, I suspect market volatility and lack of inflation data keep them on hold in March and maybe April even if the recession does not come to pass. However (although not my baseline), I can tell a story where they feel like the employment data forces their hand. Especially so if they continue to downplay the inflation numbers. A substantial part of their policy still appears directed by a pre-conceived notion of "normal" policy. This I think is the Fed's largest error; the fact that the yield curve stubbornly resists being pushed higher suggests that the Fed's estimates of the terminal fed funds rates is wildly optimistic. There appear to be limits to which the Fed can resist the global pull of zero (or lower) rates.

Thursday:
• 8:30 AM ET, the initial weekly unemployment claims report will be released.  The consensus is for 280 thousand initial claims, up from 278 thousand the previous week.

• 10:00 AM, Manufacturers' Shipments, Inventories and Orders (Factory Orders) for December. The consensus is a 2.8% decrease in orders.

by Calculated Risk on 2/03/2016 04:47:00 PM

A few excerpts from a research piece by Goldman Sachs economists Jan Hatzius and Zach Pandl: Revising our Fed Call

We ... now expect the FOMC to keep policy rates unchanged at the March 15-16 meeting ... financial conditions have tightened meaningfully, and officials sound inclined to take more time ... We therefore expect the next rate increase in June, and see a total of three rate increases this year.

... our forecasts remain well-above market pricing, which now shows only about a 50% chance that the Fed raises rates at all this year, and a 25% chance that the committee lowers rates. The first full rate hike is not priced in until about August 2017.

by Calculated Risk on 2/03/2016 01:15:00 PM

On Friday at 8:30 AM ET, the BLS will release the employment report for January. The consensus, according to Bloomberg, is for an increase of 188,000 non-farm payroll jobs in January (with a range of estimates between 170,000 to 215,000), and for the unemployment rate to be unchanged at 5.0%.

The BLS reported 292,000 jobs added in December.

Note on Revisions: With the January release, the BLS will introduce revisions to nonfarm payroll employment to reflect the annual benchmark adjustment. The preliminary annual benchmark revision showed a downward adjustment of 208,000 jobs, and the preliminary estimate is usually pretty close.

Here is a summary of recent data:

• The ADP employment report showed an increase of 205,000 private sector payroll jobs in January. This was above expectations of 190,000 private sector payroll jobs added. The ADP report hasn't been very useful in predicting the BLS report for any one month, but in general, this suggests employment growth above expectations.

• The ISM manufacturing employment index decreased in January to 45.9%. A historical correlation between the ISM manufacturing employment index and the BLS employment report for manufacturing, suggests that private sector BLS manufacturing payroll jobs decreased about 40,000 in December. The ADP report indicated no change for manufacturing jobs.  Note: Recently the ADP has been a better predictor for BLS reported manufacturing employment than the ISM survey.

The ISM non-manufacturing employment index decreased in December to 52.1%. A historical correlation  between the ISM non-manufacturing employment index and the BLS employment report for non-manufacturing, suggests that private sector BLS non-manufacturing payroll jobs increased about 130,000 in January.

Combined, the ISM indexes suggests employment gains of 90,000.  This suggests employment growth below expectations.

• Initial weekly unemployment claims averaged close to 283,000 in January, up from 275,000 in December. For the BLS reference week (includes the 12th of the month), initial claims were at 294,000, up from 271,000 during the reference week in December.

The increase during the reference suggests more layoffs in January as compared to December.

• The final January University of Michigan consumer sentiment index decreased to 92.0 from the December reading of 92.6. Sentiment is frequently coincident with changes in the labor market, but there are other factors too - like lower gasoline prices.

• Conclusion: Unfortunately none of the indicators above is very good at predicting the initial BLS employment report.  However, based on these indicators, it appears job gains will be below consensus.