by Calculated Risk on 5/03/2012 09:00:00 PM

The focus Friday will be on the April employment report from the Bureau of Labor Statistics (BLS).

• The employment report will be released at 8:30 AM ET. The consensus is for an increase of 165,000 non-farm payroll jobs in April, up from the 120,000 jobs added in March.

The consensus is for the unemployment rate to remain unchanged at 8.2%.

Earlier today I posted a preview of the report.

From Patti Domm at CNBC: Wall Street Has Lowered the Bar for April's Jobs Report

Deutsche Bank chief U.S. economist Joseph LaVorgna ... expects to see 175,000 nonfarm payrolls were added in April.

Goldman Sachs economists expect to see only 125,000 nonfarm payrolls added in April, and they also see weather as a factor. But Goldman Economist Andrew Tilton agrees that if there’s a surprise, it may be in retail. In the employment reports in February and March, retail showed total layoffs of about 80,000 workers in the general apparel category. About 50,000 of those were in March — a record level — according to Tilton.

• European elections: On Sunday, France and Greece will hold elections. In France, François Hollande is expected to replace Nicolas Sarkozy as President of the French Republic. Hollande is expected to push for more of a growth agenda, as opposed to austerity only.

No party will win a majority in Greece, and many of the minor parties are expected to get a boost from the anti-auserity vote. However New Democracy will probably receive the most votes, and Pasok will probably finish second. There are some weird rules in Greece - see Greek elections from the Financial Times Alphaville - but it sounds like New Democracy and Pasok will be able to form a government that supports the terms of the recent bailout - although I expect New Democracy will push for some sort of growth agenda.

by Calculated Risk on 5/03/2012 07:12:00 PM

This was released earlier ... from Freddie Mac: Fixed Mortgage Rates Average New All-Time Record Lows

Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates finding new all-time record lows ... The 30-year fixed averaged 3.84 percent, down from its previous all-time record low of 3.87 percent last registered on February 9, 2012. The 15-year fixed averaged 3.07 percent, also dropping below its previous all-time record low of 3.11 percent set April 12 of this year. The 1-year ARM also averaged a new all-time record low in the PMMS at 2.70 percent.

30-year fixed-rate mortgage (FRM) averaged 3.84 percent with an average 0.8 point for the week ending May 3, 2012, down from last week when it averaged 3.88 percent. Last year at this time, the 30-year FRM averaged 4.71 percent.

Click on graph for larger image.

This graph shows the 15 and 30 year fixed rates from the Freddie Mac survey. The Primary Mortgage Market Survey® started in 1971 (15 year in 1991).

The Ten Year treasury yield is near a record low at 1.92%.

by Calculated Risk on 5/03/2012 04:25:00 PM

From the National Federation of Independent Business (NFIB): Job Creation Weakens in April but Prospects Improve

April was another tenuous month for small businesses, sending mixed signals about what the future holds.

“On the job creation front, the news was only fair. The net change in employment per firm (seasonally adjusted) came in at 0.1; this is down from March but still positive.
...
“The percent of owners reporting hard to fill job openings rose 2 points to 17 percent, one point below the January 2012 reading which is the highest we’ve reported since June 2008. Hard-to-fill job openings are a strong predictor of the unemployment rate, making the gain in openings a welcome development. The net percent of owners planning to create new jobs is 5 percent, a 5 point increase after taking a plunge in March ...

“Overall, the April NFIB survey anticipates some strength in the job creation number with little change in the unemployment rate. With job creation plans rebounding, the outlook is a bit more optimistic for the second quarter ..."

Note: Small businesses have a larger percentage of real estate and retail related companies than the overall economy.

Click on graph for larger image.

This graph shows the small business hiring plans index since 1986. Hiring plans increased in April with the index at 5% compared to 0% in March.

According to NFIB: “Not seasonally adjusted, 18 percent plan to increase employment at their firm (up 3 points), and 5 percent plan reductions (unchanged from March)." This is still very low.

by Calculated Risk on 5/03/2012 01:44:00 PM

Tomorrow the BLS will release the April Employment Situation Summary at 8:30 AM ET. Bloomberg is showing the consensus is for an increase of 165,000 payroll jobs in April, and for the unemployment rate to remain unchanged at 8.2%.

Note on weather:
• The weather was mild in January and February, and it is possible that some hiring was pulled forward. I looked back at previous years with mild weather (using the BLS "not at work, bad weather" measurement), and employment gains in March and April didn't seem to exhibit much "payback" following the mild weather during January and February. However Goldman Sachs analysts think there will be some payback in the April report, they note: "[O]ur current best guess is that weather has boosted the level of payrolls by around 100,000 as of February, and may have shaved about 20,000 from the March report. Going forward, we currently expect payback of about 50,000 in April and the remaining 30,000 in May."

Here is a summary of recent data:

• The ADP employment report showed an increase of 119,000 private sector payroll jobs in April. Although ADP seems to track the BLS over time, the ADP report hasn't been very useful in predicting the BLS report. There has been some discussion about ADP reporting fewer payroll jobs added than the BLS report over the last two years (April 2010 and April 2011) - the argument being that that may happen again. However, in earlier years (2006 - 2009) ADP showed more jobs added (or fewer jobs lost) in April than the BLS, so I'm not sure there is a seasonal pattern.

• The ISM manufacturing employment index increased to 57.3% from 56.1% in March. A historical correlation between the ISM index and the BLS employment report for manufacturing, suggests that private sector BLS reported payroll jobs for manufacturing increased about 22,000 in April.

The ISM service employment index decreased to 54.2% from 56.7% in March. Based on a historical correlation between the ISM non-manufacturing employment index and the BLS employment report for service, this reading suggests the gain of around 170,000 private payroll jobs for services in April.

Combined the ISM surveys suggest an employment report somewhat above the consensus.

• Initial weekly unemployment claims averaged about 384,000 in April, up from 369,000 average in January , February and March.

For the BLS reference week (includes the 12th of the month), initial claims were at 389,000; the highest level this year and about the level of last November when the economy added 157,000 payroll jobs.

• The final April Reuters / University of Michigan consumer sentiment index increased to 76.4, up slightly from the March reading of 76.2. This is frequently coincident with changes in the labor market, but also strongly related to gasoline prices and other factors. This suggests a weak but slightly improving labor market.

• The small business index from Intuit showed 40,000 payroll jobs added, down from 65,000 in March.

• And on the unemployment rate from Gallup: Gallup Seasonally Adjusted U.S. Unemployment Rate Up in April

U.S. unemployment, as measured by Gallup without seasonal adjustment, showed a modest decline to 8.3% in April from 8.4% in March. However, applying the government's historical April adjustment to Gallup's unadjusted number yields a seasonally adjusted April estimate of 8.6%, up from 8.1% in March.

Note: Gallup only recently has been providing a seasonally adjusted estimate for the unemployment rate, so use with caution (Gallup provides some caveats), but this does suggest an increase in the headline unemployment rate in April.

• Conclusion: There seems to be a growing sense that the employment report will disappoint tomorrow based on higher initial weekly unemployment claims during the reference period, the weaker than expected ADP employment report, and the weaker than expected ISM services index. Also there could be some "payback" from hiring during the winter due to the mild weather. However the combined ISM reports suggest the consensus is close. On the positive side, Goldman also noted that the retail sector was hit particularly hard over the last two months (possibly due to some large retailer layoffs), and that will probably not happen in April

There always seems to be some randomness to the employment report, but this month I'll take the under (under 165,000 payroll jobs), and I think an increase in the unemployment rate is possible (this depends on the participation rate and if discouraged workers return to the labor force).

by Calculated Risk on 5/03/2012 10:28:00 AM

This is an interesting new asking price monitor from Trulia. Usually people report median asking prices, but unfortunately the median is impacted by the mix of homes. However Trulia adjusts the asking prices both for the mix of homes listed for sale and for seasonal factors. Of course this is just asking prices, not sales prices, but this might provide an early hint at changes in house prices.

This has the advantage of giving a much earlier look at prices than the repeat sales indexes. As an example, the recent Case-Shiller report was for "February". But that was really a three month average of December, January and February, and since the index is based on closing prices, some of this index was based on contracts signed last October. That is 6 or even 7 months ago.

From Trulia: Strong Housing Demand and Tightening Inventories Spark Nearly 2 Percent Rise in Asking Prices over Previous Quarter

Asking prices on for-sale homes–which lead sales prices by approximately two or more months–were 0.5 percent higher in April than in March, seasonally adjusted. Together with increases in March and February, asking prices in April rose nationally 1.9 percent quarter over quarter (Q-o-Q), seasonally adjusted. The price increase unadjusted for seasonality was even higher: 4.8 percent Q-o-Q, since prices typically jump in springtime. Year over year (Y-o-Y), asking prices rose 0.2 percent nationally.
...
“Housing prices have already bottomed with asking prices on the rise for three straight months. Aside from a stumble in December, asking prices have been stable or rising for the last eight months,” said Jed Kolko, Trulia’s Chief Economist. “Prices have joined the recovery, alongside sales and construction. But foreclosures threaten prices, especially in judicial-foreclosure states like Florida, New Jersey, Illinois and New York, where many more distressed sales are still to come.”

Click on graph for larger image.

This graph from Trulia shows the month over month prices changes (seasonally adjusted) as reported by the monitor. This shows asking prices were falling for most of 2011, but have turned up in early 2012.

Here is a list of price and rent changes for the 100 largest metro areas.

This is a small year-over-year increase, up from a 0.7% year-over-year decrease in March. Since asking prices tend to lead the repeat sales indexes by two or more months, this suggests that the repeat sales indexes might turn positive year-over-year in June or July (of course the June index will not be released until the end of August).

by Calculated Risk on 5/03/2012 10:00:00 AM

The April ISM Non-manufacturing index was at 53.5%, down from 56.0% in March. The employment index decreased in April to 54.2%, down from 56.7% in March. Note: Above 50 indicates expansion, below 50 contraction.

From the Institute for Supply Management: March 2012 Non-Manufacturing ISM Report On Business®

Economic activity in the non-manufacturing sector grew in April for the 28th consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®.

The report was issued today by Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee. "The NMI registered 53.5 percent in April, 2.5 percentage points lower than the 56 percent registered in March. This indicates continued growth this month, but at a slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 54.6 percent, which is 4.3 percentage points lower than the 58.9 percent reported in March, reflecting growth for the 33rd consecutive month. The New Orders Index decreased by 5.3 percentage points to 53.5 percent, and the Employment Index decreased by 2.5 percentage points to 54.2 percent, indicating continued growth in employment at a slower rate. The Prices Index decreased 10.3 percentage points to 53.6 percent, indicating prices increased at a significantly slower rate in April when compared to March. According to the NMI, 15 non-manufacturing industries reported growth in April. Respondents' comments affirm the slowing rate of growth. In addition, they remain concerned about rising fuel costs and the impact on shipping, transportation and petroleum-based product costs."

Click on graph for larger image.

This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index.

This was below the consensus forecast of 55.9% and indicates slower expansion in April than in March.

by Calculated Risk on 5/03/2012 08:37:00 AM

The DOL reports:

In the week ending April 28, the advance figure for seasonally adjusted initial claims was 365,000, a decrease of 27,000 from the previous week's revised figure of 392,000. The 4-week moving average was 383,500, an increase of 750 from the previous week's revised average of 382,750.

The previous week was revised up to 392,000 from 388,000.

The following graph shows the 4-week moving average of weekly claims since January 2000.

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 383,500.

This is the highest level for the 4-week moving average since last December.

And here is a long term graph of weekly claims:


This was below the consensus of 378,000. However, even though weekly claims declined, the 4-week average has increased for four straight weeks and is at the highest level this year.

All current Employment Graphs

by Calculated Risk on 5/02/2012 09:21:00 PM

The focus tomorrow will be on initial weekly unemployment claims, the ISM service index, and the ECB post-meeting press conference.

• Initial weekly unemployment claims will be released at 8:30 AM ET on Thursday. The four week average of weekly claims has been increasing over the last three weeks, possibly indicating some renewed weakness in the labor market, or possibly just noise. The consensus is for claims to decline to 378,000 from 388,000 last week.

• At 10:00 AM, the ISM non-Manufacturing Index (Serives) for April will be released. The consensus is for a slight decline in the index to 55.9 from 56.0 in March (over 50 is expansion). Given the weakness in the Chicago PMI, this index might disappoint (but the ISM service index doesn't move markets like the ISM manufacturing index).

• Also at 10:00 AM, the Trulia House Price & Rent Monitors for April will be released. This is a new index from Trulia that uses asking prices adjusted both for the mix of homes listed for sale and for seasonal factors. For those looking for signs of an inflection point for house prices this is an important index. Asking prices tend to lead the repeat sales indexes by two or more months. This index increased in both February and March (seasonally adjusted), but asking prices were still down 0.7% year-over-year in March. It will be an important change if this index is up year-over-year in April.

• Other data include Productivity and Costs for Q1, and the Ceridian-UCLA Pulse of Commerce Index™, a measure of diesel fuel index consumption for April.

• The European Central Bank (ECB) is meeting tomorrow and no change is expected to interest rates. However the post-meeting briefing might be interesting as ECB President Mario Draghi will probably be asked to clarify his recent support for a "growth pact".

by Calculated Risk on 5/02/2012 06:39:00 PM

Note: This is not Mortgage Equity Withdrawal (MEW) data from the Fed. The last MEW data from Fed economist Dr. Kennedy was for Q4 2008.

The following data is calculated from the Fed's Flow of Funds data and the BEA supplement data on single family structure investment. This is an aggregate number, and is a combination of homeowners extracting equity - hence the name "MEW", but there is little MEW right now - and normal principal payments and debt cancellation.

For Q4 2011, the Net Equity Extraction was minus $64 billion, or a negative 2.2% of Disposable Personal Income (DPI). This is not seasonally adjusted.

Click on graph for larger image in new window.

This graph shows the net equity extraction, or mortgage equity withdrawal (MEW), results, using the Flow of Funds (and BEA data) compared to the Kennedy-Greenspan method.

There are smaller seasonal swings right now, perhaps because there is a little actual MEW (this is heavily impacted by debt cancellation right now).

The Fed's Flow of Funds report showed that the amount of mortgage debt outstanding declined sharply in Q4. Mortgage debt has declined by $777 billion over the last four years. This decline is mostly because of debt cancellation per foreclosures and short sales, and some from modifications. There has also been some reduction in mortgage debt as homeowners paid down their mortgages so they could refinance. Note: most homeowners pay down their principal a little each month unless they have an IO or Neg AM loan, so with no new borrowing, equity extraction would always be slightly negative.

For reference:

Dr. James Kennedy also has a new method for calculating equity extraction: "A Simple Method for Estimating Gross Equity Extracted from Housing Wealth". Here is a companion spread sheet (the above uses my simple method).

For those interested in the last Kennedy data included in the graph, the spreadsheet from the Fed is available here.

by Calculated Risk on 5/02/2012 02:31:00 PM

From economist Tom Lawler:

Standard Pacific Homes, the 12th largest US home builder in 2010, reported that net home orders (excluding jvs) in the quarter ended March 31st totaled 934, up 43.3% from the comparable quarter of 2011. SPF’s sales cancellation rate, expressed as a % of gross orders, was 13% last quarter, down from 14% a year ago. The company said that its average community count last quarter was up 14.5% from a year ago. Home deliveries (ex jvs) last quarter totaled 642, up 46.2% from the comparable quarter of 2011. The company’s order backlog on 3/31/12 was 973, up 55.2% from last March. The company’s CEO said that “(a)fter a strong finish to 2011, we are pleased to report that the positive momentum has continued into the first quarter,” and that “(w)e believe our solid first quarter results reflect the execution of our strategy and suggest that there may be some stabilization in the economy and the overall housing market." The company’s average selling price was up 4.9% from a year ago, which the company attributed to “general price increases and a product mix shift to move-up home deliveries.” Standard Pacific is one of several builder reporting moderate gains in pricing in some markets.

Beazer Homes, the 9th largest US home builder in 2010, reported that net home orders (including discontinued operations) in the quarter ended March 31sr totaled 1,511, up 26.0% from the comparable quarter of 2011. The company’s sales cancellation rate, expressed as a % of gross orders, was 22.5% last quarter, up from 20.0% a year ago. Home deliveries last quarter totaled 845, up 44.9% from the comparable quarter of last year. The company’s order backlog on 3/31/12 was 1,975, up 39.5% from last March. The company CEO said that the YOY increase in orders and closings reflected “both the initial operational benefits of our path-to-profitability strategies and gradually improving conditions in the housing market,” and he remains “hopeful, but cautious, about the prospects for a sustained market recovery.”

MDC Holdings, the 11th largest US home builder in 2010, reports results for the quarter ended 3/31/12 tomorrow.

Here is a summary of some stats reported by publicly traded home builders for last quarter.

	Settlements			Net Orders			Backlog
	3/2012	3/2011	3/2010	3/2012	3/2011	3/2010	3/2012	3/2011	3/2010
D.R. Horton	4,240	3,516	4,260	5,899	4,943	6,438	6,189	5,281	6,314
NVR	1,924	1,634	1,919	3,157	2,403	2,940	4,909	3,685	4,552
PulteGroup	3,117	3,141	3,795	4,991	4,345	4,320	5,798	5,188	6,456
The Ryland Group	848	688	984	1,357	966	1,167	2,023	1,465	1,915
Meritage Homes	759	678	808	1,144	840	1,064	1,300	940	1,351
M/I Homes	507	439	475	764	654	765	933	747	936
Beazer Homes	854	583	852	1,511	1,199	1,673	1,975	1,416	1,781
Standard Pacific	642	439	537	934	652	759	973	627	821
Total	12,891	11,118	13,630	19,757	16,002	19,126	24,100	19,349	24,126
YOY % change	15.9%	-18.4%		23.5%	-16.3%		24.6%	-19.8%

In the March New SF Home Sales Report, the Census Bureau’s preliminary estimate of new SF home sales in the quarter ended March 31st was up 16.0% (not seasonally adjusted) from the comparable quarter of 2011.

In looking at some history of Census new SF home sales and builder reports, it appears as if the timing of the “recording” of a sale by builders may be slightly ahead of the timing reported to Census as a sale. Stated another way, Census new SF home sales appear to be “correlated” to builder sales reported both in the current quarter and one quarter lagged.

While I’ll update this estimate following tomorrow’s MDC report, right now I estimate that revisions will lift Census’s estimates of new SF home sales last quarter from an average seasonally adjusted annual rate of 337,000 to a SAAR of 350,000.

CR Note: This was from housing economist Tom Lawler.

by Calculated Risk on 5/02/2012 12:32:00 PM

From Jack Ewing at the NY Times: Unemployment Reaches Record High in Euro Zone

Unemployment in the euro zone rose to a new high in March, according to figures released Wednesday, which come a few days before crucial elections in France and Greece, and which are likely to intensify calls for an easing of the region’s austerity drive.

Unemployment in the 17 countries that belong to the euro zone rose to 10.9 percent in March from 10.8 percent in February, according to Eurostat, the European Union’s statistics agency. In March 2011, the rate was 9.9 percent, a number that illustrates the deterioration of the area’s economy during the past year.

Here is the Eurostat data.

Germany seems to be doing OK, but Atrios asks the key question: "I wonder who will buy German manufacturing goods when nobody else in Europe has any money."

This reminds me of a quote from someone at Volkswagen last year on the possible end of the euro: “The conclusion is that overall the impact would not be so negative to our company, as we are mainly an exporter ..."

My response was: Export to whom?

by Calculated Risk on 5/02/2012 09:15:00 AM

Note: U.S. District Court Judge Collyer approved the consent orders for the mortgage servicer settlement on April 5th, so we still have to wait a little longer to see the impact of the agreement on delinquencies.

LPS released their Mortgage Monitor report for March today.

According to LPS, 7.09% of mortgages were delinquent in March, down from 7.57% in February, and down from 7.78% in March 2011.

LPS reports that 4.14% of mortgages were in the foreclosure process, up slightly from 4.13% in February, and down slightly from 4.15% in March 2011.

This gives a total of 11.23% delinquent or in foreclosure. It breaks down as:

• 1,888,000 loans less than 90 days delinquent.
• 1,643,000 loans 90+ days delinquent.
• 2,060,000 loans in foreclosure process.

For a total of 5,591,000 loans delinquent or in foreclosure in March. This is down from 6,333,000 in March 2011.

This following graph shows the total delinquent and in-foreclosure rates since 1995.

Click on graph for larger image.

The total delinquency rate has fallen to 7.09% from the peak in January 2010 of 10.97%. A normal rate is probably in the 4% to 5% range, so there is a long ways to go.

The in-foreclosure rate was at 4.14%, down from the record high in October 2011 of 4.29%. There are still a large number of loans in this category (about 2.06 million).

Most of the decline in the delinquency rate was part of the normal seasonal pattern.

Every year some people fail to pay their mortgage during the holidays, and then they catch up by March. This graph shows the usual decline in the delinquency rate from December to March, and the decline in 2012 was about normal (in percentage terms).

The third graph shows the break down of loans "in foreclosure" by process (judicial vs. non-judicial).

The foreclosure inventory in judicial states is still near record highs.

The foreclosure inventory in non-judicial states is much lower and has been slowly declining.

The last graph (all provided by LPS Applied Analytics) shows foreclosure starts and sales.

Foreclosure starts increased in March, but are still down 31.1% year over year.

Foreclosure sales were at their lowest point since December of 2010.

This was before the mortgage servicer settlement was approved in early April, so it is still too early to see the impact of the settlement.

There is much more in the Mortgage Monitor report.

by Calculated Risk on 5/02/2012 08:18:00 AM

ADP reports:

Employment in the U.S. nonfarm private business sector increased by 119,000 from March to April on a seasonally adjusted basis. The estimated gain from February to March was revised down modestly, from the initial estimate of 209,000 to a revised estimate of 201,000.

Employment in the private, service-providing sector increased 123,000 in April, after rising 158,000 in March. Employment in the private, goods-producing sector declined 4,000 jobs in April. Manufacturing employment dropped 5,000 jobs, the first loss since September of last year.

This was significantly below the consensus forecast of an increase of 178,000 private sector jobs in April. The BLS reports on Friday, and the consensus is for an increase of 165,000 payroll jobs in April, on a seasonally adjusted (SA) basis.

Note: ADP hasn't been very useful in predicting the BLS report, but this suggests a weaker than consensus report.

by Calculated Risk on 5/01/2012 08:09:00 PM

I mentioned this announcement two weeks ago - Kathleen Pender at the San Francisco Chronicle has more: New guidelines are a tall order for short sales

Fannie Mae and Freddie Mac have issued new guidelines designed to speed up short sales and make them more consistent, but real estate agents question whether they are achievable in the real world.
...
Under the new guidelines, which take effect June 15, servicers have 30 days to review and respond to short sale offers or requests. If they need more than 30 days, they must provide the borrower weekly updates and a final response within 60 days.

If the borrower is requesting a short sale under the government's Home Affordable Foreclosure Alternative program, the clock starts ticking when the borrower submits a completed borrower response package requesting consideration of a short sale.
...
If the short sale is not under the government program, the clock starts ticking when the borrower submits a short sale offer from a potential buyer and a completed borrower response package.
...
With the average short sale nationwide taking about six months to complete, real estate agents are happy to see the new timetable but wonder if it's realistic.

This doesn't seem realistic, and there doesn't appear to be any penalty for missing the deadlines. But apparently Fannie and Freddie will track the performance of servicers, and maybe they will introduces penalties.

One of the key reasons for the slow approval process is the servicer wants to make sure the transaction is arms-length, and that there are no under the table consideration (extended lease, cash, etc.) and that the price is somewhat reasonable. And that takes time ...

by Calculated Risk on 5/01/2012 04:30:00 PM

Based on an estimate from Autodata Corp, light vehicle sales were at a 14.42 million SAAR in April. That is up 9.8% from April 2011, and up 0.7% from the sales rate last month (14.3 million SAAR in March 2012).

This was at the consensus forecast of 14.4 million SAAR (seasonally adjusted annual rate).

This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for April (red, light vehicle sales of 14.42 million SAAR from Autodata Corp).

Click on graph for larger image.

April was above the August 2009 rate with the spike in sales from "cash-for-clunkers". Only February had a higher sales rates since early 2008.

Sales are running at over a 14 million annual sales rate through the first four months of 2012, up sharply from the same period of 2011.

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

Note: dashed line is current estimated sales rate.

This shows the huge collapse in sales in the 2007 recession. This also shows the impact of the tsunami and supply chain issues on sales, especially in May and June of last year.

All current Retail Graphs

by Calculated Risk on 5/01/2012 12:09:00 PM

Catching up ... This morning the Census Bureau reported that overall construction spending increased slightly in March:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during March 2012 was estimated at a seasonally adjusted annual rate of $808.1 billion, 0.1 percent (±1.4%) above the revised February estimate of $807.3 billion. The March figure is 6.0 percent (±1.9%) above the March 2011 estimate of $762.6 billion.

Private construction spending increased while public spending decreased:

Spending on private construction was at a seasonally adjusted annual rate of $531.9 billion, 0.7 percent (±1.3%) above the revised February estimate of $528.1 billion. Residential construction was at a seasonally adjusted annual rate of $244.1 billion in March, 0.7 percent (±1.3%) above the revised February estimate of $242.5 billion. Nonresidential construction was at a seasonally adjusted annual rate of $287.8 billion in March, 0.7 percent (±1.3%) above the revised February estimate of $285.7 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.

Private residential spending is 64% below the peak in early 2006, and up 8.4% from the recent low. Non-residential spending is 30% below the peak in January 2008, and up about 18% from the recent low.

Public construction spending is now 15% below the peak in March 2009 and at a new post-bubble low.

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

On a year-over-year basis, both private residential and non-residential construction spending are positive, but public spending is down on a year-over-year basis. The year-over-year improvements in private non-residential are mostly due to energy spending (power and electric).

The year-over-year improvement in private residential investment is an important change (the positive in 2010 was related to the tax credit), and this suggest the bottom is in for residential investment.
All Housing Investment and Construction Graphs

by Calculated Risk on 5/01/2012 10:09:00 AM

PMI was at 54.8% in April, up from 53.4% in March. The employment index was at 57.3%, up from 56.1%, and new orders index was at 58.2%, up from 54.5%.

From the Institute for Supply Management: April 2012 Manufacturing ISM Report On Business®

Economic activity in the manufacturing sector expanded in April for the 33rd consecutive month, and the overall economy grew for the 35th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The PMI registered 54.8 percent, an increase of 1.4 percentage points from March's reading of 53.4 percent, indicating expansion in the manufacturing sector for the 33rd consecutive month. Sixteen of the 18 industries reflected overall growth in April, and the New Orders, Production and Employment Indexes all increased, indicating growth at faster rates than in March. The Prices Index for raw materials remained at 61 percent in April, the same rate as reported in March. Comments from the panel generally indicate stable to strong demand, with some concerns cited over increasing oil prices and European stability."

Click on graph for larger image.

Here is a long term graph of the ISM manufacturing index.

This was above expectations of 53.0%. This suggests manufacturing expanded at a faster rate in April than in March. It appears manufacturing employment expanded faster in April with the employment index at 57.3%.

by Calculated Risk on 5/01/2012 09:32:00 AM

From CoreLogic: CoreLogic® Reports 69,000 Completed Foreclosures Nationally in March

CoreLogic ... today released its National Foreclosure Report for March, which provides monthly data on completed foreclosures, foreclosure inventory and 90+ day delinquency rates. There were 69,000 completed foreclosures in March 2012 compared to 85,000 in March 2011 and 66,000 in February 2012. Through the first quarter of 2012, there were 198,000 completed foreclosures compared to 232,000 through the first quarter of 2011. Since the start of the financial crisis in September 2008, there have been approximately 3.5 million completed foreclosures.

Approximately 1.4 million homes, or 3.4 percent of all homes with a mortgage, were in the national foreclosure inventory as of March 2012 compared to 1.5 million, or 3.5 percent, in March 2011 and 1.4 million, or 3.4 percent, in February 2012. The number of loans in the foreclosure inventory decreased by nearly 100,000, or 6.0 percent, in March 2012 compared to March 2011.

"The overall delinquency level was unchanged in March, remaining at its lowest point since July 2009," said Mark Fleming, chief economist for CoreLogic. "Non-judicial foreclosure markets like Nevada, Arizona, and California are experiencing significant improvements in their shares of delinquent borrowers. Some judicial foreclosure states are also improving, like Florida, but not to the extent of non-judicial markets."
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"Compared to a year ago, the number of completed foreclosures has slowed," said Anand Nallathambi, chief executive officer of CoreLogic. "Since the foreclosure inventory is also coming down, this suggests that loan modifications, short sales, deeds-in-lieu are increasingly being used as an alternative to foreclosures to clear distressed assets in our communities."

This is a new monthly report and will help track the number of completed foreclosures, and to see if the lenders are starting to clear the foreclosure inventory backlog following the mortgage settlement.

So far we haven't seen a surge in completed foreclosures - or a large increase in REO (lender Real Estate Owned) coming on the market. The foreclosure inventory is also declining (properties in the foreclosure process), although the decline is slow according to recent LPS data. My guess is the "surge" in foreclosures will be less than many people expect (see from two weeks ago: Some thoughts on housing and foreclosures).

by Calculated Risk on 5/01/2012 08:37:00 AM

From Retuers: Chrysler April US Sales Jump 20 Percent

Chrysler Group's U.S. new-vehicle sales rose 20 percent last month, marking the best April performance in four years
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The U.S. automaker said it expects the April annual selling rate for the industry to finish at 14.6 million vehicles. That would be stronger than the 14.4 million 41 analysts surveyed by Thomson Reuters had forecast and would also top the March rate of 14.4 million.

The key number for the economy is the seasonally adjusted annual sales rate (SAAR) compared to the last few months, not the year-over-year comparison provided by the automakers. Once all the reports are released, I'll post a graph of the estimated total April light vehicle sales (SAAR) - usually around 4 PM ET.

The consensus is for an increase to 14.4 million SAAR, from 14.3 million in March.

I'll add the reports from the other major auto companies as updates to this post.

by Calculated Risk on 4/30/2012 09:59:00 PM

For the question contest in April, the leaders were:

1) Bill (Calculated Risk)
2) Liye Ma
3) (4 way tie) Billy Forney (Finished 2nd in March)
3) Eggert Ólafsson
3) Makesh Pravin
3) Rik Osmer

Congratulations to all.

For fun I've added a monthly question contest on the right sidebar. It takes a Facebook login. Contestants receive 1 point for each correct answer. At the end of each month, I list the leaders in a post on the blog.

Here are the questions for this week (2 on Tuesday, 1 on Thursday, 2 on Friday):