by Calculated Risk on 5/02/2024 08:48:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Lawler: Update on Mortgage Rates and Spreads and also New / Renewal Rents

A brief excerpt:

As I’ve written about before, that “new” vs. “renewal” rent growth gap has been observed by publicly-traded companies that are in the residential rental business.

On that score, here are some data from Invitation Homes quarterly earnings supplement on rent growth trends.

Note that while rent increases on new leases were extremely low over the last two quarter, rents on renewals, while down from 2022, were still rising at a relatively rapid pace.

There is much more in the article.

by Calculated Risk on 5/02/2024 08:46:00 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 $69.4 billion in March, down $0.1 billion from $69.5 billion in February, revised.

March exports were $257.6 billion, $5.3 billion less than February exports. March imports were $327.0 billion, $5.4 billion less than February imports.
emphasis added

Click on graph for larger image.

Both exports imports decreased in March.

Exports are unchanged year-over-year; imports are up 3.1% year-over-year.

Both imports and exports decreased sharply due to COVID-19 and then bounced back - imports and exports have generally increased recently.

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 $17.2 billion from $16.6 billion a year ago.

by Calculated Risk on 5/02/2024 08:30:00 AM

The DOL reported:

In the week ending April 27, the advance figure for seasonally adjusted initial claims was 208,000, unchanged from the previous week's revised level. The previous week's level was revised up by 1,000 from 207,000 to 208,000. The 4-week moving average was 210,000, a decrease of 3,500 from the previous week's revised average. The previous week's average was revised up by 250 from 213,250 to 213,500.
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 210,000.

The previous week was revised up.

Weekly claims were lower than the consensus forecast.

by Calculated Risk on 5/01/2024 08:57:00 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 210 thousand initial claims, up from 207 thousand last week.

• Also at 8:30 AM: Trade Balance report for March from the Census Bureau. The consensus is the trade deficit to be $68.8 billion.  The U.S. trade deficit was at $68.9 billion in February.

by Calculated Risk on 5/01/2024 07:33:00 PM

Wards Auto released their estimate of light vehicle sales for April: U.S. Light-Vehicle Sales Trudge Along with Tepid Growth in April (pay site).

Affordability continued to dominate the sales mix as gains in entry-price CUV and car segments more than offset downturns recorded in most other segments. While the SAAR and the daily selling rate were up, raw volume declined year-over-year due to April 2024 having one fewer selling day than in 2023. Sales in the first four months of 2024 totaled 5.1 million units, up 3% from January-April 2023’s 4.9 million.

Click on graph for larger image.

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

Sales in April (15.74 million SAAR) were up 1.6% from March, and up 0.4% from April 2023.

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

Sales in April were slightly above the consensus forecast.

by Calculated Risk on 5/01/2024 02:57:00 PM

From the Census Bureau reported that overall construction spending increased:

Construction spending during March 2024 was estimated at a seasonally adjusted annual rate of $2,083.9 billion, 0.2 percent below the revised February estimate of $2,087.8 billion. The March figure is 9.6 percent above the March 2023 estimate of $1,901.4 billion.
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Private spending decreased and public spending increased:

Spending on private construction was at a seasonally adjusted annual rate of $1,600.8 billion, 0.5 percent below the revised February estimate of $1,608.5 billion. ...

In March, the estimated seasonally adjusted annual rate of public construction spending was $483.1 billion, 0.8 percent above the revised February estimate of $479.3 billion

Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Residential (red) spending is 8.8% below the recent peak in 2022.

Non-residential (blue) spending is 1.1% below the peak two months ago.

Public construction spending is 1.1% below the peak three months ago.

The second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is up 4.4%. Non-residential spending is up 11.1% year-over-year. Public spending is up 17.9% year-over-year.

This was below consensus expectations for 0.3% increase in spending, and total construction spending for the previous two months was revised down.  This is probably just the start of weakness for private non-residential construction.

by Calculated Risk on 5/01/2024 02:00:00 PM

FOMC Statement:

Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have remained strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated. In recent months, there has been a lack of further progress toward the Committee's 2 percent inflation objective.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals have moved toward better balance over the past year. The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.

In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. Beginning in June, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion. The Committee will maintain the monthly redemption cap on agency debt and agency mortgage‑backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities. The Committee is strongly committed to returning inflation to its 2 percent objective.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Thomas I. Barkin; Michael S. Barr; Raphael W. Bostic; Michelle W. Bowman; Lisa D. Cook; Mary C. Daly; Philip N. Jefferson; Adriana D. Kugler; Loretta J. Mester; and Christopher J. Waller.
emphasis added

by Calculated Risk on 5/01/2024 10:11:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Freddie Mac House Price Index Increased in March; Up 6.6% Year-over-year

A brief excerpt:

On a year-over-year basis, the National FMHPI was up 6.6% in March, up from up 6.5% YoY in February.  The YoY increase peaked at 19.1% in July 2021, and for this cycle, bottomed at up 0.9% YoY in April 2023. ...

As of March, 11 states and D.C. were below their previous peaks, Seasonally Adjusted. The largest seasonally adjusted declines from the recent peak were in West Virginia (-3.1%), D.C. (-2.9%), North Dakota (-2.0%), and Idaho (-1.0%).

For cities (Core-based Statistical Areas, CBSA), here are the 30 cities with the largest declines from the peak, seasonally adjusted. Austin continues to be the worst performing city.

There is much more in the article.

by Calculated Risk on 5/01/2024 10:09:00 AM

From the BLS: Job Openings and Labor Turnover Summary

The number of job openings changed little at 8.5 million on the last business day of March, the U.S. Bureau of Labor Statistics reported today. Over the month, the number of hires changed little at 5.5 million while the number of total separations decreased to 5.2 million. Within separations, quits (3.3 million) and layoffs and discharges (1.5 million) changed little.
emphasis added

The following graph shows job openings (black line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

This series started in December 2000.

Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for March; the employment report this Friday will be for April.

Click on graph for larger image.

Note that hires (dark blue) and total separations (red and light blue columns stacked) are usually pretty close each month. This is a measure of labor market turnover.  When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

The spike in layoffs and discharges in March 2020 is labeled, but off the chart to better show the usual data.

Jobs openings decreased in March to 8.49 million from 8.81 million in February.

The number of job openings (black) were down 12% year-over-year. 

Quits were down 13% year-over-year. These are voluntary separations. (See light blue columns at bottom of graph for trend for "quits").

by Calculated Risk on 5/01/2024 10:00:00 AM

(Posted with permission). The ISM manufacturing index indicated expansion. The PMI® was at 49.2% in April, down from 50.3% in March. The employment index was at 48.6%, up from 47.4% the previous month, and the new orders index was at 49.1%, down from 51.4%.

From ISM: anufacturing PMI® at 49.2% April 2024 Manufacturing ISM® Report On Business®

Economic activity in the manufacturing sector contracted in April after one month of expansion following 16 consecutive months of contraction, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee:

“The Manufacturing PMI® registered 49.2 percent in April, down 1.1 percentage points from the 50.3 percent recorded in March. The overall economy continued in expansion for the 48th month after one month of contraction in April 2020. (A Manufacturing PMI® above 42.5 percent, over a period of time, generally indicates an expansion of the overall economy.) The New Orders Index moved back into contraction territory after one month of expansion, registering 49.1 percent, 2.3 percentage points lower than the 51.4 percent recorded in March. The April reading of the Production Index (51.3 percent) is 3.3 percentage points lower than March’s figure of 54.6 percent. The Prices Index registered 60.9 percent, up 5.1 percentage points compared to the reading of 55.8 percent in March. The Backlog of Orders Index registered 45.4 percent, down 0.9 percentage point compared to the 46.3 percent recorded in March. The Employment Index registered 48.6 percent, up 1.2 percentage points from March’s figure of 47.4 percent.
emphasis added

This suggests manufacturing contracted slightly in April.  This was below the consensus forecast.