by Calculated Risk on 9/05/2024 03:47:00 PM

On Friday at 8:30 AM ET, the BLS will release the employment report for August. The consensus is for 164,000 jobs added, and for the unemployment rate to decreased to 4.2%.

There were 114,000 jobs added in July, and the unemployment rate was at 4.3%.

From Goldman Sachs:

We are below consensus on payroll growth at 155k but in line on the unemployment rate at 4.2%.

We are below consensus on payroll growth because August payrolls have exhibited a consistent negative bias in initial prints over the last decade, Big Data indicators continued to slow, and the immigration boost to labor force and employment growth should be slowing (although still well above trend). On the positive side, we should see some rebound from severe weather in July.

We expect the unemployment rate fell 0.1pp on a rounded basis to 4.2%, a low hurdle from an unrounded 4.25% in July, reflecting the reversal of some of the temporary layoffs in July linked to summer auto plant retooling shutdowns or extreme heat.
emphasis added

• ADP Report: The ADP employment report showed 99,000 private sector jobs were added in August.  This was below consensus forecasts and suggests job gains below consensus expectations, however, in general, ADP hasn't been very useful in forecasting the BLS report.

• ISM Surveys: Note that the ISM indexes are diffusion indexes based on the number of firms hiring (not the number of hires).  The ISM® manufacturing employment index increased to 46.0%, up from 43.4% the previous month.   This would suggest about 40,000 jobs lost in manufacturing. The ADP report indicated 8,000 manufacturing jobs lost in August.

The ISM® services employment index decreased to 50.2%, from 51.1%. This would suggest 80,000 jobs added in the service sector. Combined this suggests 40,000 jobs added in August, far below consensus expectations.

• Unemployment Claims: The weekly claims report showed fewer initial unemployment claims during the reference week at 233,000 in July compared to 245,000 in July.  This suggests fewer layoffs in August compared to July.

• Conclusion: My guess is employment gains will be below consensus expectations.

by Calculated Risk on 9/05/2024 12:16:00 PM

Today, in the CalculatedRisk Real Estate Newsletter: Calculated Risk Returns! Existing Home Sales Increased to 3.95 million SAAR in July

Excerpt:

I'm back from Africa! I’ll be catching up on recent data over the next week, and I’ll post some photos / videos from my trip.
...
Sales Year-over-Year and Not Seasonally Adjusted (NSA)

The fourth graph shows existing home sales by month for 2023 and 2024.

Sales declined 2.5% year-over-year compared to July 2023. This was the thirty-fifth consecutive month with sales down year-over-year.

by Calculated Risk on 9/05/2024 10:04:00 AM

(Posted with permission). The ISM® Services index was at 51.5%, up from 51.4% last month. The employment index decreased to 50.2%, from 51.1%. Note: Above 50 indicates expansion, below 50 in contraction.

From the Institute for Supply Management: Services PMI® at 51.5% August 2024 Services ISM® Report On Business®

Economic activity in the services sector expanded for the second consecutive month in August, say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®. The Services PMI® registered 51.5 percent, indicating sector expansion in six of eight months in 2024. This month’s reading indicates sector expansion for the 48th time in 51 months.

The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In August, the Services PMI® registered 51.5 percent, 0.1 percentage point higher than July’s figure of 51.4 percent. The reading in August marked the sixth time the composite index has been in expansion territory in 2024. The Business Activity Index registered 53.3 percent in August, which is 1.2 percentage points lower than the 54.5 percent recorded in July and indicated continuing expansion after one month of contraction in June. The New Orders Index expanded to 53 percent in August, 0.6 percentage point higher than July’s figure of 52.4 percent. The Employment Index expanded for the third time in 2024; the reading of 50.2 percent is a 0.9-percentage point decrease compared to the 51.1 percent recorded in July.
emphasis added

The PMI was slightly above expectations.

by Calculated Risk on 9/05/2024 08:30:00 AM

The DOL reported:

In the week ending August 31, the advance figure for seasonally adjusted initial claims was 227,000, a decrease of 5,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 231,000 to 232,000. The 4-week moving average was 230,000, a decrease of 1,750 from the previous week's revised average. The previous week's average was revised up by 250 from 231,500 to 231,750.
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 230,000.

The previous week was revised up.

Weekly claims were lower than the consensus forecast.

by Calculated Risk on 9/05/2024 08:15:00 AM

From ADP: ADP National Employment Report: Private Sector Employment Increased by 99,000 Jobs in August; Annual Pay was Up 4.8%

Private sector employment increased by 99,000 jobs in August and annual pay was up 4.8 percent year-over-year, according to the July ADP® National Employment ReportTM produced by the ADP Research Institute® in collaboration with the Stanford Digital Economy Lab (“Stanford Lab”). ...

“The job market's downward drift brought us to slower-than-normal hiring after two years of outsized growth,” said Nela Richardson, chief economist, ADP. “The next indicator to watch is wage growth, which is stabilizing after a dramatic post-pandemic slowdown.”
emphasis added

This was below the consensus forecast of 144,000. The BLS report will be released Friday, and the consensus is for 164,000 non-farm payroll jobs added in August.

by Calculated Risk on 9/04/2024 08:04:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Thursday:
• 8:15 AM: The ADP Employment Report for August. This report is for private payrolls only (no government).

• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for 238 thousand initial claims, up from 233 thousand last week.



I'm back from a two-week trip to Africa. It was amazing!

I'll post some pictures and videos soon. This lion walked right past us in the Serengeti National Park in Tanzania.

by Calculated Risk on 9/04/2024 05:55:00 PM

Wards Auto released their estimate of light vehicle sales for August: August U.S. Light-Vehicle Sales Rise 4%, Ending Two Straight Declines (pay site).

Growth was solid in August despite the period’s results equaling a 7-month-low SAAR. However, after rising 3.4% year-over-year in the first five months of 2024, demand over the three months since then has been nearly flat. Calendar-year 2024 sales through August totaled 10.5 million units, 2.2% above like-2023’s 10.3 million.

Click on graph for larger image.

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

Sales in August (15.13 million SAAR) were down 4.3% from July, and down 1.1% from August 2023.

Sales in August were below the consensus forecast of 15.4 million.

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

by Calculated Risk on 8/31/2024 08:11:00 AM

I'll be out of contact from August 20th until Sept 4th.

I'll be back for the August employment report.

The key report this week is the August employment report on Friday.

Other key indicators include the August ISM manufacturing index, August auto sales, and Trade Deficit for July.

----- Monday, September 2nd -----
All US markets will be closed in observance of the Labor Day holiday.

----- Tuesday, September 3rd -----
10:00 AM: ISM Manufacturing Index for August.

10:00 AM: Construction Spending for July.

All Day: Light vehicle sales for August.

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the sales rate for last month.

----- Wednesday, September 4th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.




8:30 AM: Trade Balance report for July from the Census Bureau.

This graph shows the U.S. trade deficit, with and without petroleum, through the most recent report. 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.

10:00 AM: the ISM Services Index for August.

10:00 AM Job Openings and Labor Turnover Survey for July from the BLS.

This graph shows job openings (yellow line), hires (purple), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

Jobs openings decreased in June to 8.18 million from 8.23 million in May.

The number of job openings (black) were down 10% year-over-year and Quits were down 12% year-over-year.

2:00 PM: the Federal Reserve Beige Book, an informal review by the Federal Reserve Banks of current economic conditions in their Districts.

----- Thursday, September 5th -----
8:15 AM: The ADP Employment Report for August. This report is for private payrolls only (no government).

8:30 AM: The initial weekly unemployment claims report will be released. 

----- Friday, September 6th -----
8:30 AM: Employment Report for August.

There were 114,000 jobs added in July, and the unemployment rate was at 4.3%.

This graph shows the jobs added per month since January 2021.

by Calculated Risk on 8/27/2024 09:09:00 AM

CR Note: On vacation. I will return on Thursday, Sept 5th (If I don't get lost!)

In December 2006, my friend Doris "Tanta" Dungey started writing for Calculated Risk.

From December 2006, until she passed away from ovarian cancer on Nov 30, 2008, Tanta was my co-blogger. Tanta worked as a mortgage banker for 20 years, and we started chatting in early 2005 about the housing bubble and the changes in lending practices. In 2006, Tanta was diagnosed with late stage cancer, and she took an extended medical leave while undergoing treatment. While on medical leave she wrote for this blog, and her writings received widespread attention and acclaim.

If you want to understand the mortgage industry, read Tanta's posts (here is The Compleat UberNerd and a Compendium of Tanta's Posts).

As an example, here is a brief excerpt from Foreclosure Sales and REO For UberNerds

The following is not an exhaustive discussion of all of the issues involved in foreclosures and REO. It’s a start at unpacking some of the concepts and definitions. We have been seeing, and are going to continue to see, a lot of information presented on foreclosure sales, REO sales, and their impacts on existing home transaction volumes and prices in various market areas. As always with “UberNerd” posts, this is long and excruciating. Proceed with typical motivation as you may consider your own best interest in an open market in blog postings.

And an excerpts from Mortgage Servicing for UberNerds

StillLearning asked in the comments about mortgage servicing, and since y’all are nerds, not dummies, here’s my highly-selective occasionally-oversimplified summary for you that skips the boring parts like how your check gets out of the “lockbox” and that stuff. We can discuss extra-credit issues like “excess servicing” and “subservicing” and “SFAS 144 meets MSR” and “negative convexity” and other kinds of inside baseball in the comments. There is a lot that can be said about loan servicing, but let’s start with the basics:

Servicers have two major types of servicing portfolio: loans they service for themselves and loans they service for other investors. In accounting terms, the “compensation” is the same, meaning that even if you are the noteholder, you pay yourself to service the loans in the same way that an outside investor would pay you, and it shows on the books that way. The differences in compensation stem from the basic fact that one is generally more motivated to do a good job servicing (particularly collecting and efficiently liquidating REO) for one’s own investment than for someone else’s.

Also see In Memoriam: Doris "Tanta" Dungey for photos, links to obituaries in the NY Times, Washington Post and much more.

by Calculated Risk on 8/24/2024 11:53:00 AM

I'll be out of contact from August 20th until Sept 4th.

I'll be back for the August employment report.

The key indicators this week include the second estimate of Q2 GDP, Personal Income and Outlays for July, and Case-Shiller house prices for June.

----- Monday, August 26th -----
8:30 AM ET: Chicago Fed National Activity Index for July. This is a composite index of other data.

8:30 AM: Durable Goods Orders for July from the Census Bureau.

10:30 AM: Dallas Fed Survey of Manufacturing Activity for August.

----- Tuesday, August 27th -----
9:00 AM: S&P/Case-Shiller House Price Index for June.

This graph shows the year-over-year change in the seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the most recent report (the Composite 20 was started in January 2000).

The National index was up 5.9% in May, and is expected to slower further in June.

9:00 AM: FHFA House Price Index for June. This was originally a GSE only repeat sales, however there is also an expanded index.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for August. This is the last of the regional Fed manufacturing surveys for August.

----- Wednesday, August 28th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

----- Thursday, August 29th -----
8:30 AM: The initial weekly unemployment claims report will be released. 

8:30 AM: Gross Domestic Product, 2nd quarter 2024 (second estimate).

10:00 AM: Pending Home Sales Index for July. 

----- Friday, August 30th -----
8:30 AM: Personal Income and Outlays, July 2024. 

9:45 AM: Chicago Purchasing Managers Index for August.

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