Thursday, November 07, 2013

Friday: Employment Report, Personal Income and Outlays, Consumer Sentiment

by Calculated Risk on 11/07/2013 08:43:00 PM

Last year I spoke to some builders who were concerned about a shortage of lots in prime areas. Here are two deals from Carolyn Said at the San Francisco Chronicle: Toll Brothers buys Shapell's homebuilding business

[H]ome builder Toll Brothers agreed to pay Shapell Industries $1.6 billion for its homebuilding business, primarily consisting of 5,200 sites in affluent coastal California markets, including the Bay Area, Los Angeles, Orange County and Carlsbad.
More than 97 percent of the Shapell sites are entitled, meaning they have received local permits for construction to proceed.  ... "The key word there is 'entitlement,' " said Christopher Thornberg, principal of Beacon Economics.
In the Bay Area, the deal includes 1,500 lots at Shapell's Gale Ranch master-planned community in San Ramon, 350 lots at Alamo Creek in Danville, and a few dozen lots in Gilroy, San Jose and Orinda. In Southern California, Porter Ranch in Los Angeles with more than 1,700 lots is the largest community included.
In another major deal this week, Tri Pointe Homes Inc. of Irvine (Orange County) bought Weyerhaeuser Corp.'s homebuilding division for $2.7 billion. That purchase included 27,000 lots, about 16,000 of them in California, primarily southern California.
"Entitlements" are valuable! I expect these builders will ramp up production fairly quickly.

• At 8:30 AM ET, the Employment Report for October. The consensus is for an increase of 120,000 non-farm payroll jobs in October, down from the 148,000 non-farm payroll jobs added in September. The consensus is for the unemployment rate to increase to 7.3% in October, although the rate could spike higher to 7.4% or 7.5% due to the government shutdown based on the BLS method.

There will probably also be a significant increase in the number of people working part time for economic reasons. Any sharp increase in the unemployment rate - and part time for economic reasons - due to the shutdown should be reversed in the November report.

• Also at 8:30 AM, the Personal Income and Outlays report for October. The consensus is for a 0.3% increase in personal income, and for a 0.2% increase in personal spending. And for the Core PCE price index to increase 0.1%.

• At 10:00 AM, the Reuter's/University of Michigan's Consumer sentiment index (preliminary for November). The consensus is for a reading of 75.0, up from 73.2 in October.