by Calculated Risk on 8/16/2019 11:21:00 AM

From Merrill Lynch:

The data boosted our 3Q GDP tracking estimate by 0.4pp to 2.1% qoq saar. 2Q was unchanged at 1.8%. [Aug 15 estimate]
emphasis added

From Goldman Sachs:

we left our Q3 GDP tracking estimate unchanged on a rounded basis at +2.1% (qoq ar). [Aug 16 estimate]

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at 1.8% for 2019:Q3. [Aug 16 estimate].

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2019 is 2.2 percent on August 16, unchanged from August 15 after rounding. After this morning's new residential construction report from the U.S. Census Bureau, the nowcast of third-quarter real residential investment growth increased from -1.2 percent to 0.7 percent. [Aug 16 estimate]

CR Note: These early estimates suggest real GDP growth will be around 2% annualized in Q3.

by Calculated Risk on 8/16/2019 10:45:00 AM

From the BLS: Regional and State Employment and Unemployment Summary

Unemployment rates were lower in July in 6 states, higher in 2 states, and stable in 42 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today. Three states had jobless rate decreases from a year earlier, 1 state had an increase, and 46 states and the District had little or no change. The national unemployment rate, 3.7 percent, was unchanged over the month and little changed from July 2018.
...
Vermont had the lowest unemployment rate in July, 2.1 percent. The rates in Alabama (3.3 percent), Arkansas (3.4 percent), Maine (3.0 percent), and New Jersey (3.3 percent) set new series lows. (All state series begin in 1976.) Alaska had the highest jobless rate, 6.3 percent.
emphasis added

Click on graph for larger image.

This graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 1976.

At the worst of the great recession, there were 11 states with an unemployment rate at or above 11% (red).

Currently only one state, Alaska, has an unemployment rate at or above 6% (dark blue).  Note that Alaska is at the series low (since 1976).  Two states and the D.C. have unemployment rates above 5%; Alaska and Mississippi.

A total of nine states are at a series low: Alabama, Alaska, Arkansas, California, Maine, New Jersey, Oregon, Texas and Vermont.

by Calculated Risk on 8/16/2019 08:56:00 AM

Earlier: Housing Starts decline to 1.191 Million Annual Rate in July

Total housing starts in July were below expectations, and starts for May and June were revised down.  The weakness was in the volatile multi-family sector.

The housing starts report showed starts were down 4.0% in July compared to June, and starts were up 0.6% year-over-year compared to July 2018.

Single family starts were up 1.9% year-over-year, and multi-family starts were down 4.7% YoY.

This first graph shows the month to month comparison for total starts between 2018 (blue) and 2019 (red).

Click on graph for larger image.

Starts were up 0.6% in July compared to July 2018.

Year-to-date, starts are down 3.1% compared to the same period in 2018.

Last year, in 2018, starts were strong early in the year, and then fell off in the 2nd half - so the early comparisons this year were the most difficult.

My guess was starts would be down slightly year-over-year in 2019 compared to 2018, but nothing like the YoY declines we saw in February and March. Now it is possible starts will be up slightly in 2019 compared to 2018.

Below is an update to the graph comparing multi-family starts and completions. Since it usually takes over a year on average to complete a multi-family project, there is a lag between multi-family starts and completions. Completions are important because that is new supply added to the market, and starts are important because that is future new supply (units under construction is also important for employment).

These graphs use a 12 month rolling total for NSA starts and completions.

The blue line is for multifamily starts and the red line is for multifamily completions.

The rolling 12 month total for starts (blue line) increased steadily for several years following the great recession - but turned down, and has moved sideways recently.  Completions (red line) had lagged behind - then completions caught up with starts.

As I've been noting for a few years, the significant growth in multi-family starts is behind us - multi-family starts peaked in June 2015 (at 510 thousand SAAR).

The second graph shows single family starts and completions. It usually only takes about 6 months between starting a single family home and completion - so the lines are much closer. The blue line is for single family starts and the red line is for single family completions.

Note the relatively low level of single family starts and completions.  The "wide bottom" was what I was forecasting following the recession, and now I expect some further increases in single family starts and completions.

by Calculated Risk on 8/16/2019 08:38:00 AM

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately‐owned housing starts in July were at a seasonally adjusted annual rate of 1,191,000. This is 4.0 percent below the revised June estimate of 1,241,000, but is 0.6 percent above the July 2018 rate of 1,184,000. Single‐family housing starts in July were at a rate of 876,000; this is 1.3 percent above the revised June figure of 865,000. The July rate for units in buildings with five units or more was 303,000.

Building Permits:
Privately‐owned housing units authorized by building permits in July were at a seasonally adjusted annual rate of 1,336,000. This is 8.4 percent above the revised June rate of 1,232,000 and is 1.5 percent above the July 2018 rate of 1,316,000. Single‐family authorizations in July were at a rate of 838,000; this is 1.8 percent above the revised June figure of 823,000. Authorizations of units in buildings with five units or more were at a rate of 453,000 in July.
emphasis added

Click on graph for larger image.

The first graph shows single and multi-family housing starts for the last several years.

Multi-family starts (red, 2+ units) were down sharply in July compared to June.   Multi-family starts were down 2.8% year-over-year in July.

Multi-family is volatile month-to-month, and  has been mostly moving sideways the last several years.

Single-family starts (blue) increased in July, and were up 1.9% year-over-year.

The second graph shows total and single unit starts since 1968.

The second graph shows the huge collapse following the housing bubble, and then eventual recovery (but still historically low).

Total housing starts in July were below expectations, and starts for May and June were revised down.   The weakness was in the multi-family sector.

I'll have more later …

by Calculated Risk on 8/15/2019 06:55:00 PM

Friday:
• At 8:30 AM ET: Housing Starts for July. The consensus is for 1.260 million SAAR, up from 1.253 million SAAR in June.

• At 10:00 AM: University of Michigan's Consumer sentiment index (Preliminary for August).

• At 10:00 AM: State Employment and Unemployment (Monthly) for July 2019

by Calculated Risk on 8/15/2019 04:44:00 PM

Earlier from the Philly Fed: August 2019 Manufacturing Business Outlook Survey

Manufacturing activity in the region continued to grow, according to results from the August Manufacturing Business Outlook Survey. The survey's broad indicators remained positive, although their movements were mixed this month: The general activity, shipments, and employment indicators decreased from their readings last month, but the indicator for new orders increased. The survey’s future activity indexes remained positive, suggesting continued optimism about growth for the next six months.

The diffusion index for current general activity fell 5 points this month to 16.8, after increasing 22 points in July
emphasis added

Earlier from the NY Fed: Empire State Manufacturing Survey

Business activity increased modestly in New York State, according to firms responding to the August 2019 Empire State Manufacturing Survey. The headline general business conditions index was little changed at 4.8. New orders increased after declining for the prior two months, and shipments continued to expand. Unfilled orders fell, delivery times were steady, and inventories increased. The employment and average workweek indexes were both slightly below zero, pointing to sluggishness in labor market conditions.

This was above the consensus forecasts for both surveys.  Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Click on graph for larger image.

The New York and Philly Fed surveys are averaged together (yellow, through August), and five Fed surveys are averaged (blue, through July) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through July (right axis).

These early reports suggest the ISM manufacturing index will probably increase in August.

by Calculated Risk on 8/15/2019 02:29:00 PM

The CAR reported: California home sales perk up in July for first time in more than a year, C.A.R. reports

The lowest mortgage interest rates in nearly three years helped jump start California’s housing market to post the first year-over-year sales gain and highest sales level in 15 months, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 411,630 units in July, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2019 if sales maintained the July pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

July’s sales figure was up 5.6 percent from the 389,730 level in June and up 1.1 percent from home sales in July 2018 of 407,030.

“Mortgage rates that dipped to the lowest level in nearly three years has helped reduce monthly mortgage payments for the past five consecutive months, giving buyers more purchasing power,” said C.A.R. President Jared Martin. “The boost in demand gave the housing market its first yearly gain since April 2018.”
...
Active listings, which had been increasing year-over-year for the past 15 months, fell 2.1 percent from a year ago.

The decrease in active listings and an increase in home sales contributed to a year-over-year decline in unsold inventory for the first time in 15 months. The Unsold Inventory Index (UII), which is a ratio of inventory over sales, was 3.2 months in July, down from 3.4 months in June and down from 3.3 months in July 2018. The index measures the number of months it would take to sell the supply of homes on the market at the current sales rate.
emphasis added

Here is some inventory data from the NAR and CAR (ht Tom Lawler).   Note that this is the first YoY decrease in inventory since early 2018.

YOY % Change, Existing SF Homes for Sale
	NAR (National)	CAR (California)
Sep-17	-8.4%	-11.2%
Oct-17	-10.4%	-11.5%
Nov-17	-9.7%	-11.5%
Dec-17	-11.5%	-12.0%
Jan-18	-9.5%	-6.6%
Feb-18	-8.6%	-1.3%
Mar-18	-7.2%	-1.0%
Apr-18	-6.3%	1.9%
May-18	-5.1	8.3%
Jun-18	-0.5%	8.1%
Jul-18	0.0%	11.9%
Aug-18	2.1%	17.2%
Sep-18	1.1%	20.4%
Oct-18	2.8%	28%
Nov-18	4.2%	31%
Dec-18	4.8%	30.6%
Jan-19	4.6%	27%
Feb-19	3.2%	19.2%
Mar-19	1.8%	13.4%
Apr-19	1.7%	10.8%
May-19	2.1%	7.4%
Jun-19	0.0%	2.4%
Jul-19	NA	-2.1%

by Calculated Risk on 8/15/2019 10:04:00 AM

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 66 in August, up from 65 in July. Any number above 50 indicates that more builders view sales conditions as good than poor.

From NAHB: Builder Confidence Trending Higher as Interest Rates Move Lower

Builder confidence in the market for newly-built single-family homes rose one point to 66 in August, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today. Sentiment levels have held at a solid 64-to-66 level for the past four months.

“Even as builders report a firm demand for single-family homes, they continue to struggle with rising construction costs stemming from excessive regulations, a chronic shortage of workers and a lack of buildable lots,” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn.

“While 30-year mortgage rates have dropped from 4.1 percent down to 3.6 percent during the past four months, we have not seen an equivalent higher pace of building activity because the rate declines occurred due to economic uncertainty stemming largely from growing trade concerns,” said NAHB Chief Economist Robert Dietz. “Although affordability headwinds remain a challenge, demand is good and growing at lower price points and for smaller homes.”
…
The HMI index gauging current sales conditions increased two points to 73 and the component measuring traffic of prospective buyers rose two points to 50. The measure charting sales expectations in the next six months fell one point to 70.

Looking at the three-month moving averages for regional HMI scores, the South moved one point higher to 69, the West was also up one point to 73 and the Midwest inched up a single point to 57. The Northeast fell three points to 57.
emphasis added

Click on graph for larger image.

This graph show the NAHB index since Jan 1985.

This was at the consensus forecast.

by Calculated Risk on 8/15/2019 09:21:00 AM

From the Fed: Industrial Production and Capacity Utilization

Industrial production declined 0.2 percent in July. Manufacturing output decreased 0.4 percent last month and has fallen more than 1-1/2 percent since December 2018. In July, mining output fell 1.8 percent, as Hurricane Barry caused a sharp but temporary decline in oil extraction in the Gulf of Mexico. The index for utilities rose 3.1 percent. At 109.2 percent of its 2012 average, total industrial production was 0.5 percent higher in July than it was a year earlier. Capacity utilization for the industrial sector decreased 0.3 percentage point in July to 77.5 percent, a rate that is 2.3 percentage points below its long-run (1972–2018) average.
emphasis added

Click on graph for larger image.

This graph shows Capacity Utilization. This series is up 10.8 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 77.5% is 2.3% below the average from 1972 to 2017 and below the pre-recession level of 80.8% in December 2007.

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

The second graph shows industrial production since 1967.

Industrial production was unchanged in July at 109.2. This is 25% above the recession low, and 3.7% above the pre-recession peak.

The change in industrial production and decrease in capacity utilization were below consensus.

by Calculated Risk on 8/15/2019 08:43:00 AM

On a monthly basis, retail sales increased 0.7 percent from June to July (seasonally adjusted), and sales were up 3.4 percent from July 2018.

From the Census Bureau report:

Advance estimates of U.S. retail and food services sales for July 2019, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $523.5 billion, an increase of 0.7 percent from the previous month, and 3.4 percent above July 2018. … The May 2019 to June 2019 percent change was revised from up 0.4 percent to up 0.3 percent.
emphasis added

Click on graph for larger image.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

Retail sales ex-gasoline were up 0.6% in July.

The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail and Food service sales, ex-gasoline, increased by 3.7% on a YoY basis.

The increase in July was above expectations. Sales in June were revised down, and sales in May revised up.  Overall a solid report.