by Calculated Risk on 3/06/2025 07:10:00 PM

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

Friday:
• At 8:30 AM ET, Employment Report for February.   The consensus is for 158,000 jobs added, and for the unemployment rate to be unchanged at 4.0%.

• At 12:30 PM: Speech, Fed Chair Jerome Powell, Economic Outlook, At The University of Chicago Booth School of Business 2025 U.S. Monetary Policy Forum, New York, N.Y.

by Calculated Risk on 3/06/2025 02:34:00 PM

On Friday at 8:30 AM ET, the BLS will release the employment report for February. The consensus is for 158,000 jobs added, and for the unemployment rate to be unchanged at 4.0%.

From Goldman Sachs:

We estimate nonfarm payrolls rose by 170k in February, slightly above consensus of +160k but below the three-month average of +237k. Alternative measures of employment growth indicated a firm pace of job creation, and we expect continued, albeit moderating, contributions from catch-up hiring and the recent surge in immigration. ... We estimate that the unemployment rate was unchanged on a rounded basis at 4.0%
emphasis added

From BofA:

Feb non-farm payrolls are likely to print at a robust 185k. Government jobs are expected to come in at a slightly smaller than average 25k due to the federal hiring freeze. Given the muted claims data in the survey week, we do not expect DOGE driven job cuts to be a sizable drag on Feb data. Although, the colder than average weather could pose some downside risks. We expect the u-rate to remain at 4.0%.

• ADP Report: The ADP employment report showed 77,000 private sector jobs were added in February.  This was well 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 decreased to 47.6%, down from 50.3% the previous month.   This would suggest about 30,000 jobs lost in manufacturing. The ADP report indicated 18,000 manufacturing jobs added in February.

The ISM® services employment index increased to 53.9%, from 52.3%. This would suggest 180,000 jobs added in the service sector. Combined this suggests 150,000 jobs added, close to consensus expectations.  (Note: The ISM surveys have been way off recently)

• Unemployment Claims: The weekly claims report showed about the same initial unemployment claims during the reference week at 215,000 in February compared to 213,500 in January.  This suggests layoffs in February were about the same as in January.

• Conclusion: Over the last year, employment gains averaged 168 thousand per month - and that is probably the current trend.  With some bounce back from the cold weather in January, my guess is headline employment gains will be above consensus in February.

by Calculated Risk on 3/06/2025 11:50:00 AM

Today, in the Calculated Risk Real Estate Newsletter: 1st Look at Local Housing Markets in February

A brief excerpt:

NOTE: The tables for active listings, new listings and closed sales all include a comparison to February 2019 for each local market (some 2019 data is not available).

This is the first look at a few early reporting local markets in February. I’m tracking over 40 local housing markets in the US. Some of the 40 markets are states, and some are metropolitan areas. I’ll update these tables throughout the month as additional data is released.

Closed sales in February were mostly for contracts signed in December and January when 30-year mortgage rates averaged 6.72% and 6.96%, respectively (Freddie Mac PMMS). This was an increase from the average rate for homes that closed in January, and up slightly from the average rate of 6.7% in December 2023 and January 2024.
...
In February, sales in these markets were down 4.8% YoY. Last month, in January, these same markets were up 7.2% year-over-year Not Seasonally Adjusted (NSA).

Note that most of these early reporting markets have shown stronger year-over-year sales than most other markets for the last several months.

Important: There was one fewer working day in February 2025 (19) as compared to February 2024 (20). So, the year-over-year change in the headline SA data will be above the change in the NSA data (there are other seasonal factors).
...
This was just a few early reporting markets. Many more local markets to come!

There is much more in the article.

by Calculated Risk on 3/06/2025 08:52:00 AM

The Census Bureau and the Bureau of Economic Analysis reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $131.4 billion in January, up $33.3 billion from $98.1 billion in December, revised.

January exports were $269.8 billion, $3.3 billion more than December exports. January imports were $401.2 billion, $36.6 billion more than December imports.
emphasis added

Click on graph for larger image.

Both exports and imports increased in January.

Exports were up 4.1% year-over-year; imports were up 23.1% year-over-year.

Both imports and exports have generally increased recently.  

The second graph shows the U.S. trade deficit, with and without petroleum.

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.

Note that net, exports of petroleum products are positive and have been increasing.

The trade deficit with China increased to $31.7 billion from $23.7 billion a year ago.  

The surge in imports in January happened as some importers were avoiding the coming tariffs.

by Calculated Risk on 3/06/2025 08:30:00 AM

The DOL reported:

In the week ending March 1, the advance figure for seasonally adjusted initial claims was 221,000, a decrease of 21,000 from the previous week's unrevised level of 242,000. The 4-week moving average was 224,250, an increase of 250 from the previous week's unrevised average of 224,000.
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 increased to 224,250.

The previous week was unrevised.

Weekly claims were lower than the consensus forecast.

by Calculated Risk on 3/05/2025 07:45:00 PM

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

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released. The consensus is for 234 initial claims down from 242 thousand last week.

• Also, at 8:30 AM, U.S. International Trade in Goods and Services for January from the Census Bureau. The consensus is for a record U.S. trade deficit of $128.3 billion from $98.4 billion in December. Many importers were racing to beat potential tariffs.

by Calculated Risk on 3/05/2025 03:25:00 PM

Notes: This CoreLogic House Price Index report is for January. The recent Case-Shiller index release was for December. The CoreLogic HPI is a three-month weighted average and is not seasonally adjusted (NSA).

From CoreLogic: CoreLogic: Home Price Growth Largely Flat in January

U.S. home price growth in January 2025 was largely flat at 3.3% year over year. Although prices are expected to eek out gains in the coming year, with our economists predicting a 3.6% increase from January 2025 to January 2026, there are stark differences between regions.

The Northeast continues to buck overall national trends, remaining unbothered by slower job growth, elevated interest rates, and ongoing affordability concerns. Meanwhile, in the Mountain West, prices are the furthest from their record highs. In Hawaii, prices declined by 4.4%.

Despite this, national single-family home prices are forecast to reach a new peak in March 2025. Currently, the median sales price for all single-family homes in the U.S. is $375,000.

“Flattening home price changes over the last six months suggest further price deceleration is ahead,” said Dr. Selma Hepp, CoreLogic Chief Economist. “More importantly, compressed monthly changes highlight the general lack of home-buying demand that continues to characterize the current housing market. While this year's cold winter and large natural disasters play a role in dampening demand, falling consumer sentiment suggests potential homebuyers are wary of the short-term economic outlook and future inflation. Nevertheless, with the spring home buying season upon us, the recent improvements in mortgage rates may help invite homebuyers back into the market.”
emphasis added

This was the smaller YoY increase as reported for December.

This map is from the report.

• CoreLogic analysis suggests that Florida markets are continuing to fall out of favor while western New York is gaining popularity.

• Our economists anticipate further price deceleration in 2025, although recent improvements in mortgage rates may spur homebuying this spring.

• National home price growth is flat on a monthly basis. Annual home price growth is tracking just above inflation.

• Florida and Arizona top the charts for markets where the risk of price decline is very high.

by Calculated Risk on 3/05/2025 02:00:00 PM

Fed's Beige Book

Overall economic activity rose slightly since mid-January. Six Districts reported no change, four reported modest or moderate growth, and two noted slight contractions. Consumer spending was lower on balance, with reports of solid demand for essential goods mixed with increased price sensitivity for discretionary items, particularly among lower-income shoppers. Unusual weather conditions in some regions over recent weeks weakened demand for leisure and hospitality services. Vehicle sales were modestly lower on balance. Manufacturing activity exhibited slight to modest increases across a majority of Districts. Contacts in manufacturing, ranging from petrochemical products to office equipment, expressed concerns over the potential impact of looming trade policy changes. Banking activity was slightly higher on balance among Districts that reported on it. Residential real estate markets were mixed, and reports pointed to ongoing inventory constraints. Construction activity declined modestly for both residential and nonresidential units. Some contacts in the sector also expressed nervousness around the impact of potential tariffs on the price of lumber and other materials. Agricultural conditions deteriorated some among reporting Districts. Overall expectations for economic activity over the coming months were slightly optimistic.

Labor Markets

Employment nudged slightly higher on balance, with four Districts reporting a slight increase, seven reporting no change, and one reporting a slight decline. Multiple Districts cited job growth in health care and finance, while employment declines were reported in manufacturing and information technology. Labor availability improved for many sectors and Districts, though there were occasional reports of a tight labor market in targeted sectors or occupations. Contacts in multiple Districts said rising uncertainty over immigration and other matters was influencing current and future labor demand. Wages grew at a modest-to-moderate pace, which was slightly slower than the previous report, with several Districts noting that wage pressures were easing.

Prices

Prices increased moderately in most Districts, but several Districts reported an uptick in the pace of increase relative to the previous reporting period. Input price pressures were generally greater than sales price pressures, particularly in manufacturing and construction. Many Districts noted that higher prices for eggs and other food ingredients were impacting food processors and restaurants. Reports of substantial increases in insurance and freight transportation costs were also widespread. Firms in multiple Districts noted difficulty passing input costs on to customers. However, contacts in most Districts expected potential tariffs on inputs would lead them to raise prices, with isolated reports of firms raising prices preemptively.
...
This report was prepared at the Federal Reserve Bank of Minneapolis based on information collected on or before February 24, 2025.
emphasis added

by Calculated Risk on 3/05/2025 11:14:00 AM

Today, in the Real Estate Newsletter: ICE Mortgage Monitor: Property Insurance Costs Rose at a Record Rate in 2024

Brief excerpt:

Property Insurance Premiums Increased Sharply in 2024

Here is a chart from the Mortgage Monitor. These increases are largely being driven by losses due to natural disasters.

• The average annual property insurance premium among mortgaged single-family homes rose by a record $276 (+14%) to $2,290 in 2024

• That’s the largest single-year increase on record dating back to 2013 when ICE began tracking the metric, and when stacked on top of the $245 (14%) increase seen in 2023 caps off a 61% ($872) increase over the past 5 years

• Property insurance costs continue to be the fastest-growing subcomponent of monthly home payments compared with principal, interest, and property taxes

• The average total mortgage payment (PITI) rose 6% last year, with the 14% rise in property insurance costs significantly outpacing an 8% rise in interest payments and the 5% rise in property taxes among all outstanding mortgages

• While all other subcomponents rose, the amount of principal paid on the average mortgage held flat from 2023

• Over the past 5 years we’ve seen 21-22% increases in principal, interest, and tax payments among the active mortgage population, roughly a third the rise in property insurance

There is much more in the mortgage monitor.

There is much more in the newsletter.

by Calculated Risk on 3/05/2025 10:00:00 AM

(Posted with permission). The ISM® Services index was at 53.5%, up from 52.8% last month. The employment index increased to 53.9%, from 52.3%. Note: Above 50 indicates expansion, below 50 in contraction.

From the Institute for Supply Management: Services PMI® at 53.5% February 2025 Services ISM® Report On Business®

Economic activity in the services sector expanded for the eighth consecutive month in February, say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®. The Services PMI® registered 53.5 percent, indicating expansion for the 54th time in 57 months since recovery from the coronavirus pandemic-induced recession began in June 2020.

The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In February, the Services PMI® registered 53.5 percent, 0.7 percentage point higher than the January figure of 52.8 percent. The Business Activity Index registered 54.4 percent in February, 0.1 percentage point lower than the 54.5 percent recorded in January. This is the index’s 57th consecutive month of expansion. The New Orders Index recorded a reading of 52.2 percent in February, 0.9 percentage point higher than the January figure of 51.3 percent. The Employment Index remained in expansion territory for the fifth consecutive month; the reading of 53.9 percent is a 1.6-percentage point increase compared to the 52.3 percent recorded in January.
emphasis added

This was close to consensus expectations.