by Calculated Risk on 2/27/2014 11:00:00 AM

From the Kansas City Fed: Growth in Tenth District Manufacturing was Slightly Positive

Growth in Tenth District manufacturing activity was slightly positive in February, and although producers’ expectations moderated somewhat they remained at solid levels overall. Several contacts continued to cite delays and slowdowns caused by severe winter weather issues. Price indexes were mostly stable or slightly lower.

The month-over-month composite index was 4 in February, similar to the reading of 5 in January and up from -3 in December ... The new orders, employment, and capital expenditures indexes were mostly unchanged.

“The story in February was similar to January. Regional factory activity was held back somewhat by unusually harsh weather, but still managed to grow modestly.” [said Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City]
emphasis added

This is the last of the regional 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 (dashed green, through February), and five Fed surveys are averaged (blue, through February) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through January (right axis).

This suggests another weak reading for the February ISM survey to be released Monday, March 3rd.

by Calculated Risk on 2/27/2014 09:31:00 AM

According to Black Knight (formerly LPS) First Look report for January, the percent of loans delinquent decreased in January compared to November, and declined by more than 10% year-over-year.

Also the percent of loans in the foreclosure process declined further in January and were down 31% over the last year.

Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) decreased to 6.27% from 6.47% in December. The normal rate for delinquencies is around 4.5% to 5%.

The percent of loans in the foreclosure process declined to 2.35% in January from 2.48% in December.   The is the lowest level since late 2008.

The number of delinquent properties, but not in foreclosure, is down 365,000 properties year-over-year, and the number of properties in the foreclosure process is down 528,000 properties year-over-year.

Black Knight will release the complete mortgage monitor for January in early March.

Black Knight: Percent Loans Delinquent and in Foreclosure Process
	January 2014	December 2013	January 2013
Delinquent	6.27%	6.47%	7.03%
In Foreclosure	2.35%	2.48%	3.41%
Number of properties:
Number of properties that are 30 or more, and less than 90 days past due, but not in foreclosure:	1,851,000	1,964,000	1,974,000
Number of properties that are 90 or more days delinquent, but not in foreclosure:	1,289,000	1,280,000	1,531,000
Number of properties in foreclosure pre-sale inventory:	1,175,000	1,244,000	1,703,000
Total Properties	4,315,000	4,488,000	5,208,000

by Calculated Risk on 2/27/2014 08:35:00 AM

The DOL reports:

In the week ending February 22, the advance figure for seasonally adjusted initial claims was 348,000, an increase of 14,000 from the previous week's revised figure of 334,000. The 4-week moving average was 338,250, unchanged from the previous week's revised average.

The previous week was revised down from 336,000.

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 was unchanged at 338,250.

This was above the consensus forecast of 335,000.  Mostly moving sideways ...

by Calculated Risk on 2/26/2014 08:13:00 PM

From Kris Hudson at the WSJ: Builder Borrowing Picks Up

Bank lending for land development and construction is turning up after hitting a 14-year low early last year, a sign that the supply crunch for new homes could ease in coming months.

Data released Wednesday by the Federal Deposit Insurance Corp. show that the outstanding balance on loans for land acquisition, development and construction rose in the fourth quarter to $209.9 billion, compared with $206 billion in the third quarter. While that's a relatively small gain, economists note that if the overall balance is growing it means that originations of new loans are likely rising even faster. It was the third consecutive quarter of growth.

An increase in lending would spur additional home construction and possibly put downward pressure on prices, which have been rising rapidly over the past two years and weighing on the housing recovery.

In 2013, homebuilders pushed prices. I think prices for new homes will increase less this year (possibly flat or down in some areas), and the builders will deliver more homes.

Thursday:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 335 thousand from 336 thousand.

• Also at 8:30 AM, Durable Goods Orders for January from the Census Bureau. The consensus is for a 1.0% decrease in durable goods orders.

• At 10:00 AM, Testimony, Fed Chair Janet Yellen, Semiannual Monetary Policy Report to the Congress, Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate

• At 11:00 AM, the Kansas City Fed manufacturing survey for February. This is the last of the regional Fed surveys for February.

by Calculated Risk on 2/26/2014 04:55:00 PM

Note: The automakers will report January vehicle sales on Monday, March 3rd.

Here are a couple of forecasts:

From Kelley Blue Book: New-Car Sales To Report Sixteenth Consecutive Month Above 15 Million SAAR According To Kelley Blue Book

New-vehicle sales are expected to hit a total of 1.19 million units, and an estimated 15.3 million seasonally adjusted annual rate (SAAR), according to Kelley Blue Book ... While a 15.3 million SAAR is flat compared to February 2013, it marks the sixteenth month in a row above 15 million.

"For the second consecutive month, winter storms and unusually cold weather in many parts of the country are expected to negatively impact sales," said Alec Gutierrez, senior analyst for Kelley Blue Book. "However, it is likely these purchases have only been delayed and many lost sales will be recorded in March or April."

From J.D. Power: Healthy New-Vehicle Demand Exists Despite Severe Winter Weather

"Although severe weather impacted sales in early February, the negative effect should be somewhat mitigated since the majority of vehicle sales occur in the second half of the month," said John Humphrey, senior vice president of the global automotive practice at J.D. Power. "The industry is on track to reach its highest-ever average transaction price for the month of February, with prices exceeding $29,000. This beats the previous record from February 2013 by more than $400."

In addition to forecasting a record transaction price for the month of February, the firms expect new-vehicle sales to increase 5% over the same month in 2013. LMC Automotive is also holding steady its prediction that annual sales will reach 16.2 million units, despite the bitterly cold winter weather and slow start to the year. However, LMC Automotive does note that all automakers except for Subaru are experiencing bloated inventories. If they are unsuccessful at resolving the situation by summer, production cuts may loom during the second half of the year.

It appears sales in February were OK.