by Calculated Risk on 2/04/2021 09:30:00 PM

My January Employment Preview

Goldman January Payrolls Preview

Friday:
• At 8:30 AM ET, Employment Report for January.   The consensus is for 50 thousand jobs added, and for the unemployment rate to be unchanged at 6.7%.  There were 140 thousand jobs lost in December, and the unemployment rate was at 6.7%.

Click on graph for larger image.

This graph shows the job losses from the start of the employment recession, in percentage terms through November.

The current employment recession was by far the worst recession since WWII in percentage terms, and the worst in terms of the unemployment rate.

• Also at 8:30 AM, Trade Balance report for December from the Census Bureau. The consensus is the trade deficit to be $65.7 billion.  The U.S. trade deficit was at $68.1 billion in November.

by Calculated Risk on 2/04/2021 07:09:00 PM

SPECIAL NOTE: The Covid Tracking Project will end daily updates on March 7th. Heroes that filled a critical void! Quality government data will be available soon.

From Bloomberg on vaccinations as of Feb 4th.

"In the U.S., more Americans have now received at least one dose than have tested positive for the virus since the pandemic began. So far, 32.7 million doses have been given, according to a state-by-state tally. In the last week, an average of 1.34 million doses per day were administered."

Also check out the graphs at COVID-19 Vaccine Projections The site has several interactive graphs related to US COVID vaccinations including a breakdown of how many have had one shot, and how many have had both shots.

The US is now averaging close to 1.5 million tests per day. Based on the experience of other countries, for adequate test-and-trace (and isolation) to reduce infections, the percent positive needs to be under 5% (probably close to 1%), so the US has far too many daily cases - and percent positive - to do effective test-and-trace.

There were 1,678,444 test results reported over the last 24 hours.

There were 123,907 positive tests.

Almost 14,000 US deaths have been reported in February. See the graph on US Daily Deaths here.

This data is from the COVID Tracking Project.

And check out COVID Act Now to see how each state is doing. (updated link to new site)

Click on graph for larger image.

This graph shows the 7 day average of positive tests reported and daily hospitalizations.

The percent positive over the last 24 hours was 7.4%.  The percent positive is calculated by dividing positive results by total tests (including pending).

It seems likely cases and hospitalizations have peaked, but are declining from a very high level.   

by Calculated Risk on 2/04/2021 03:41:00 PM

A few brief excerpts from a note by Goldman Sachs economist Spencer Hill:

We estimate nonfarm payrolls rose 200k ... We also expect fewer seasonal layoffs of retail, leisure, and temp help workers, due to already-depressed employment levels in those industries ... We estimate an unchanged unemployment rate at 6.7%.
emphasis added

CR Note: The consensus is for 50 thousand jobs added, and for the unemployment rate to be unchanged at 6.7%.

by Calculated Risk on 2/04/2021 01:06:00 PM

From CoStar: STR: Top 25 Markets Notch Lower Occupancies

U.S. weekly hotel occupancy remained relatively flat from the previous week, according to STR‘s latest data through Jan. 30.

Jan. 24-30, 2021 [percentage change from comparable week in 2020]:

• Occupancy: 40.4% [-29.6%]
• Average daily rate [ADR]: US$89.62 [-29.8%]
• Revenue per available room [RevPAR]: US$36.23 [-50.6%]
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 2021, black is 2020, blue is the median, and dashed light blue is for 2009 (the worst year since the Great Depression for hotels prior to 2020).

Even when occupancy increases to 2009 levels, hotels will still be hurting.

Seasonally we'd expect that business travel would start to pick up in the new year, but there will probably not be much pickup early in 2021.

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

by Calculated Risk on 2/04/2021 11:08:00 AM

On Friday at 8:30 AM ET, the BLS will release the employment report for January. The consensus is for 50 thousand jobs added, and for the unemployment rate to be unchanged at 6.7%.

• ADP Report: The ADP employment report showed a gain of 174,000 private sector jobs, well above the consensus estimate of 45 thousand jobs added.  The ADP report hasn't been very useful in predicting the BLS report, but this suggests the BLS report could be stronger than expected.

• ISM Surveys: The ISM manufacturing employment index increased in January to 52.6%, up from 51.7% last month.   This would suggest essentially approximately 5,000 manufacturing jobs lost in January. ADP showed 1,000 manufacturing jobs added.

The ISM Services employment index increased in January to 55.2%, from 48.7% in December. This would suggest around 215,000 service jobs added in January. Combined, the ISM surveys suggest around 210,000 private sector jobs added in January. The ISM surveys haven't been as useful as usual during the pandemic, but this does suggest the report could be stronger than expected.

• Unemployment Claims: The weekly claims report showed a high number of total continuing unemployment claims during the reference week, although this might not be very useful right now. If we did a "Rip Van Winkle", and saw the weekly claims report this morning, we'd think the economy was in a deep recession! In general, weekly claims have been lower than expected, and this suggests the employment report could be stronger than expected.

• Weather: Weather is a wildcard every year during the winter. A mild winter can lead to a stronger jobs report, and it appears January 2021 was mild, suggesting a stronger than expected jobs report. After the report is released, the SF Fed will update their Weather-Adjusted Employment Change

• Seasonal Factor: The pandemic has caused problems with the seasonal factor, and the January report might be impacted significantly.  Every January, the economy loses about 2.9 million jobs (NSA), and the seasonal factor accounts for those expected job losses. However, it seems likely that fewer jobs were lost (NSA) this January, and that would boost the headline number (seasonally adjusted). This is something to watch.

• Permanent Job Losers: Something to watch in the employment report will be "Permanent job losers". While there has been a strong bounce back in total employment, from the shutdown in March and April, permanent job losers had been increasing, but declined in December.

This graph shows permanent job losers as a percent of the pre-recession peak in employment through the December report.

This data is only available back to 1994, so there is only data for three recessions. In December, the number of permanent job losers decreased to 3.370 million from 3.718 million in November.   This is good news.

• Conclusion: Most of the indicators suggest a stronger report in January. My guess is the report will be higher than the consensus.

by Calculated Risk on 2/04/2021 08:40:00 AM

The DOL reported:

In the week ending January 30, the advance figure for seasonally adjusted initial claims was 779,000, a decrease of 33,000 from the previous week's revised level. The previous week's level was revised down by 35,000 from 847,000 to 812,000. The 4-week moving average was 848,250, a decrease of 1,250 from the previous week's revised average. The previous week's average was revised down by 18,500 from 868,000 to 849,500.
emphasis added

This does not include the 348,912 initial claims for Pandemic Unemployment Assistance (PUA) that was down from 403,590 the previous week.

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 increased to 848,250.

The previous week was revised down.

The second graph shows seasonally adjust continued claims since 1967 (lags initial by one week).

At the worst of the Great Recession, continued claims peaked at 6.635 million, but then steadily declined.

Regular state continued claims decreased to 5,188,141 (SA) from 5,446,993 (SA) the previous week and will likely stay at a high level until the crisis abates.

Note: There are an additional 7,217,713 receiving Pandemic Unemployment Assistance (PUA) that decreased from 7,343,682 the previous week (there are questions about these numbers). This is a special program for business owners, self-employed, independent contractors or gig workers not receiving other unemployment insurance. 

by Calculated Risk on 2/03/2021 06:36:00 PM

From Bloomberg on vaccinations as of Feb 3rd.

"In the U.S., more Americans have now received at least one dose than have tested positive for the virus since the pandemic began. So far, 32.7 million doses have been given, according to a state-by-state tally. In the last week, an average of 1.34 million doses per day were administered."

Also check out the graphs at COVID-19 Vaccine Projections The site has several interactive graphs related to US COVID vaccinations including a breakdown of how many have had one shot, and how many have had both shots.

The US is now averaging close to 1.5 million tests per day. Based on the experience of other countries, for adequate test-and-trace (and isolation) to reduce infections, the percent positive needs to be under 5% (probably close to 1%), so the US has far too many daily cases - and percent positive - to do effective test-and-trace.

There were 1,442,998 test results reported over the last 24 hours.

There were 116,960 positive tests.

Almost 9,000 US deaths have been reported in February. See the graph on US Daily Deaths here.

This data is from the COVID Tracking Project.

And check out COVID Act Now to see how each state is doing. (updated link to new site)

Click on graph for larger image.

This graph shows the 7 day average of positive tests reported and daily hospitalizations.

The percent positive over the last 24 hours was 8.1%.  The percent positive is calculated by dividing positive results by total tests (including pending).

It seems likely cases and hospitalizations have peaked, but are declining from a very high level.   

by Calculated Risk on 2/03/2021 03:42:00 PM

The bounce back in gasoline prices made me take another look at the mix of vehicles being sold.

This graph shows the percent of light vehicle sales between passenger cars and trucks / SUVs through January 2021.

Click on graph for larger image.

Over time the mix has changed more and more towards light trucks and SUVs.

Only when oil prices are high, does the trend slow or reverse.

The percent of light trucks and SUVs was at 77.7% in January 2021.

by Calculated Risk on 2/03/2021 11:48:00 AM

The BEA released their estimate of light vehicle sales for January this morning. The BEA estimates sales of 16.63 million SAAR in January 2021 (Seasonally Adjusted Annual Rate), up 2.5% from the December sales rate, and down 1.5% from January 2020.

This was above the consensus estimate of 16.3 million SAAR.

Click on graph for larger image.

This graph shows light vehicle sales since 2006 from the BEA (blue) and the BEA's estimate for January (red).

The impact of COVID-19 was significant, and April was the worst month.

Since April, sales have increased, but are still down  year-over-year,

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

Note: dashed line is current estimated sales rate of 16.63 million SAAR.

This was the highest sales rate since before the start of the pandemic, and a solid start for 2021 (although down year-over-year).

by Calculated Risk on 2/03/2021 10:05:00 AM

The December ISM Services index was at 58.7%, up from 57.7% last month. The employment index increased to 55.2%, from 48.7%. Note: Above 50 indicates expansion, below 50 contraction.

From the Institute for Supply Management: Services PMI® at 58.7%; January 2021 Services ISM® Report On Business®

Economic activity in the services sector grew in January for the eighth month in a row, say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®.

The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: "The Services PMI® registered 58.7 percent, 1 percentage point higher than the seasonally adjusted December reading of 57.7 percent. This reading is the highest since February 2019 (58.8 percent) and indicates the eighth straight month of growth for the services sector, which has expanded for all but two of the last 132 months.
emphasis added

This was above expectations, and solid improvement for the employment index.