by Calculated Risk on 5/09/2015 10:01:00 AM

The key economic report this week is April Retail sales on Wednesday.

For manufacturing, the April Industrial Production and Capacity Utilization report, and the May NY Fed (Empire State) survey will be released this week. 

----- Monday, May 11th -----
At 10:00 AM ET: The Fed will release the monthly Labor Market Conditions Index (LMCI).

----- Tuesday, May 12th -----
9:00 AM: NFIB Small Business Optimism Index for April.

10:00 AM: Job Openings and Labor Turnover Survey for March 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 increased in February to 5.133 million from 4.965 million in January. This was the highest level for job openings since January 2001.

The number of job openings (yellow) were up 23% year-over-year, and Quits were up 10% year-over-year.

11:00 AM: The New York Fed will release their Q1 2015 Household Debt and Credit Report

----- Wednesday, May 13th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM ET: Retail sales for April will be released.

This graph shows retail sales since 1992 through March 2015. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). On a monthly basis, retail sales increased 0.9% from February to March (seasonally adjusted), and sales were up 1.3% from March 2014.

The consensus is for retail sales to increase 0.2% in April, and to increase 0.5% ex-autos.

10:00 AM: Manufacturing and Trade: Inventories and Sales (business inventories) report for March.  The consensus is for a 0.2% increase in inventories.

----- Thursday, May 14th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to increase to 276 thousand from 265 thousand.

8:30 AM ET: The Producer Price Index for April from the BLS. The consensus is for a 0.2% increase in prices, and a 0.1% increase in core PPI.

----- Friday, May 15th -----
8:30 AM: NY Fed Empire State Manufacturing Survey for May. The consensus is for a reading of 5.0, up from -1.2 last month (above zero is expansion).

9:15 AM: The Fed will release Industrial Production and Capacity Utilization for April.

This graph shows industrial production since 1967.

The consensus is for no change in Industrial Production, and for Capacity Utilization to be unchanged at 78.4%.

10:00 AM: University of Michigan's Consumer sentiment index (preliminary for May). The consensus is for a reading of 95.8, down from 95.9 in April.

by Calculated Risk on 5/08/2015 06:35:00 PM

From the FDIC: Republic Bank of Chicago, Oak Brook, Illinois, Assumes All of the Deposits of Edgebrook Bank, Chicago, Illinois

As of March 31, 2015, Edgebrook Bank had approximately $90.0 million in total assets and $90.0 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $16.8 million. Compared to other alternatives, ... Edgebrook Bank is the fifth FDIC-insured institution in the nation to fail this year, and the second in Illinois. The last FDIC-insured institution closed in the state was Highland Community Bank, Chicago, on January 23, 2015.

This is the first bank closing since February, and it looks like failures might be in single digits this year (lowest since 2007 when 3 banks failed).  Last year 18 banks were closed by regulators.

by Calculated Risk on 5/08/2015 04:36:00 PM

Housing economist Tom Lawler sent me this updated table of builder results for Q1.

For these nine builders, net orders were up 20.3% year-over-year.  Although cancellations are handled differently, this is about the same year-over-year increase for Q1 as for New Home sales as reported by the Census Bureau.

The average closing price is only up slightly this year following a sharp increase in 2014.

From Tom Lawler:

Below is a table with some summary statistics for nine large publicly-traded home builders for the first calendar quarter of 2015. While results varied across builders, the general themes were significantly higher unit sales, but lower home building margins, relative to the comparable quarter of 2014.

Net orders per community for these combined nine builders combined were up 13.2% YOY, and their combined order backlog at the end of March was up 14.8% from last March.

	Net Orders			Settlements			Average Closing Price
Qtr. Ended:	3/15	3/14	% Chg	3/15	3/14	% Chg	3/15	3/14	% Chg
D.R. Horton	11,135	8,569	29.9%	8,243	6,194	33.1%	$281,305	271,230	3.7%
PulteGroup	5,139	4,863	5.7%	3,365	3,436	-2.1%	$323,000	317,000	1.9%
NVR	3,926	3,325	18.1%	2,534	2,211	14.6%	$371,000	361,400	2.7%
The Ryland Group	2,389	2,186	9.3%	1,463	1,470	-0.5%	$343,000	327,000	4.9%
Beazer Homes	1,698	1,390	22.2%	936	977	-4.2%	$305,800	272,400	12.3%
Standard Pacific	1,571	1,311	19.8%	972	995	-2.3%	$528,000	483,000	9.3%
Meritage Homes	1,979	1,525	29.8%	1,335	1,109	20.4%	$387,000	366,000	5.7%
MDC Holdings	1,593	1,236	28.9%	909	873	4.1%	$414,800	364,900	13.7%
M/I Homes	1,108	982	12.8%	717	732	-2.0%	$325,000	299,000	8.7%
Total	30,538	25,387	20.3%	20,474	17,997	13.8%	$330,848	$318,886	3.8%

by Calculated Risk on 5/08/2015 02:31:00 PM

Fannie and Freddie reported results this week. Here is some information on Real Estate Owned (REOs).

From Fannie Mae:

We continue to experience disproportionately higher credit losses and serious delinquency rates from single-family loans originated in 2005 through 2008 than from loans originated in other years. Single-family loans originated in 2005 through 2008 constituted 12% of our single-family book of business as of March 31, 2015 but constituted 59% of our seriously delinquent loans as of March 31, 2015 and drove 67% of our credit losses in the first quarter of 2015.
emphasis added

From Freddie Mac:

Our single-family REO acquisitions in the first quarter of 2015 were highest in Florida, Illinois, Ohio, and Michigan, which collectively represented 38% of total single-family REO acquisitions during that period, based on the number of properties, and comprised 38% of our total single-family REO property inventory at March 31, 2015.

Our REO acquisition activity is disproportionately high for certain types of loans, including loans with certain higher-risk characteristics. For example, the percentage of interest-only and Alt-A loans in our single-family credit guarantee portfolio, based on UPB, was approximately 2% and 3%, respectively, at March 31, 2015. The percentage of our REO acquisitions in the first quarter of 2015 that had been financed by either of these loan types represented approximately 20% of our total REO acquisitions, based on loan amount prior to acquisition. In addition, loans from our 2005-2008 Legacy single-family book comprised approximately 71% of our REO acquisition activity during the first quarter of 2015.

Fannie and Freddie are still working through the backlog of loans made during the housing bubble, mostly in judicial foreclosure states.

Click on graph for larger image.

Here is a graph of Fannie and Freddie Real Estate Owned (REO).

REO inventory decreased in Q1 for both Fannie and Freddie, and combined inventory is down 30% year-over-year.   For Freddie, this is the lowest level of REO since Q2 2008.  For Fannie, this is the lowest level since Q3 2009.

Short term delinquencies are at normal levels, but there are still a fairly large number of properties in the foreclosure process with long time lines in judicial foreclosure states.

by Calculated Risk on 5/08/2015 11:52:00 AM

Earlier: April Employment Report: 223,000 Jobs, 5.4% Unemployment Rate

This was a decent employment report with 223,000 jobs added, but February and March were revised down by a combined 39,000 jobs.

However there is still limited wage growth, from the BLS: "In April, average hourly earnings for all employees on private nonfarm payrolls rose by 3 cents to $24.87. Over the past 12 months, average hourly earnings have increased by 2.2 percent." Weekly hours were unchanged.

A few more numbers:  Total employment increased 223,000 from March to April and is now 3.0 million above the previous peak.  Total employment is up 11.7 million from the employment recession low.

Private payroll employment increased 213,000 from March to April, and private employment is now 3.5 million above the previous peak. Private employment is up 12.3 million from the recession low.

In April, the year-over-year change was just under 3.0 million jobs.

Overall this is another positive month ... and moving in the right direction!

Employment-Population Ratio, 25 to 54 years old

Since the overall participation rate declined recently due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, an important graph is the employment-population ratio for the key working age group: 25 to 54 years old.

In the earlier period the participation rate for this group was trending up as women joined the labor force. Since the early '90s, the participation rate moved more sideways, with a downward drift starting around '00 - and with ups and downs related to the business cycle.

The 25 to 54 participation rate increased in April to 81.0%, and the 25 to 54 employment population ratio was unchanged at 77.2%.  As the recovery continues, I expect the participation rate for this group to increase a little more (or at least stabilize for a couple of years) - although the participation rate has been trending down for this group since the late '90s.

Average Hourly Earnings

This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation.

The blue line shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees.  Nominal wage growth increased slightly to 2.2%, however wages were revised down for February and March.  Wages will probably pick up a little this year.

Note: CPI has been running under 2%, so there has been some real wage growth.

Part Time for Economic Reasons

From the BLS report:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed at 6.6 million in April, but is down by 880,000 from a year earlier. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job.

The number of persons working part time for economic reasons decreased in April to 6.58 million from 6.70 million in March.  This suggests slack still in the labor market.  These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 10.8% in April from 10.9% in March. This is the lowest level for U-6 since August 2008.

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 2.525 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 2.563 million in March.

This is trending down - and is at the lowest level since November 2008 - but is still very high.

State and Local Government

This graph shows total state and government payroll employment since January 2007. State and local governments had lost jobs for four straight years. (Note: Scale doesn't start at zero to better show the change.)

In April 2015, state and local governments added 8,000 jobs (after losing 8,000 in March). State and local government employment is now up 132,000 from the bottom, but still 626,000 below the peak.

State and local employment is now generally increasing - slowly.  And Federal government layoffs have slowed (Federal payrolls added 2,000 jobs in April, and Federal employment is unchanged year-to-date).

This was a decent employment report for April (not great, but not terrible).  The year-over-year employment gains are still solid.