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Friday, November 21, 2014

DOT: Vehicle Miles Driven increased 2.3% year-over-year in September

by Calculated Risk on 11/21/2014 01:33:00 PM

The Department of Transportation (DOT) reported:

Travel on all roads and streets changed by 2.3% (5.6 billion vehicle miles) for September 2014 as compared with September 2013.

Travel for the month is estimated to be 246.6 billion vehicle miles

Cumulative Travel for 2014 changed by 0.7% (16.7 billion vehicle miles).
The following graph shows the rolling 12 month total vehicle miles driven.

The rolling 12 month total is slowly moving up, after moving sideways for a few years.


Vehicle Miles Click on graph for larger image.

In the early '80s, miles driven (rolling 12 months) stayed below the previous peak for 39 months.

Currently miles driven has been below the previous peak for 82 months - almost 7 years - and still counting.  Currently miles driven (rolling 12 months) are about 1.8% below the previous peak.

The second graph shows the year-over-year change from the same month in the previous year.

Vehicle Miles Driven YoY In September 2014, gasoline averaged of $3.48 per gallon according to the EIA.  That was down from September 2013 when prices averaged $3.60 per gallon.

Prices will really be down year-over-year in October and November too.

As we've discussed, gasoline prices are just part of the story.  The lack of growth in miles driven over the last 7 years is probably also due to the lingering effects of the great recession (lack of wage growth), the aging of the overall population (over 55 drivers drive fewer miles) and changing driving habits of young drivers.

With all these factors, it might take a few more years before we see a new peak in miles driven - but it does seem like miles driven is now increasing.

Kansas City Fed: Regional Manufacturing "Activity Expanded Further" in November

by Calculated Risk on 11/21/2014 11:47:00 AM

From the Kansas City Fed: Growth in Tenth District Manufacturing Activity Expanded Further

The Federal Reserve Bank of Kansas City released the November Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity expanded at a slightly faster pace in November, and producers’ expectations for future activity increased further.

“Regional factory growth improved somewhat in November, although many contacts reported that the cost to retain or hire quality employees is rising, said Wilkerson. The majority of firms expected activity to improve considerably in the next six months.”

The month-over-month composite index was 7 in November, up from 4 in October and 6 in September. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes.... The employment index decreased from 16 to 10 ...

The future composite index moved higher from 17 to 22, and the future production, shipments, and order backlog indexes also rose. The future employment index jumped from 16 to 31, its highest level in almost nine years. In contrast, the future new orders index eased from 26 to 24, and the future capital expenditures index also edged lower.
emphasis added
The last regional Fed manufacturing surveys for November will be released next week (the Dallas and Richmond Fed surveys). So far the regional surveys have indicated solid growth in November - suggesting another strong reading for the ISM manufacturing survey - and significant optimism about the future.

BLS: Thirty-four States had Unemployment Rate Decreases in October

by Calculated Risk on 11/21/2014 10:14:00 AM

From the BLS: Regional and State Employment and Unemployment Summary

Regional and state unemployment rates were generally little changed in October. Thirty-four states and the District of Columbia had unemployment rate decreases from September, 5 states had increases, and 11 states had no change, the U.S. Bureau of Labor Statistics reported today.
...
Georgia had the highest unemployment rate among the states in October, 7.7 percent. North Dakota again had the lowest jobless rate, 2.8 percent.
State Unemployment Click on graph for larger image.

This graph shows the current unemployment rate for each state (red), and the max during the recession (blue). All states are well below the maximum unemployment rate for the recession.

The size of the blue bar indicates the amount of improvement. 

The states are ranked by the highest current unemployment rate. Georgia, at 7.7%, had the highest unemployment rate for the third consecutive month.

State UnemploymentThe second graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 2006. At the worst of the employment recession, there were 10 states with an unemployment rate at or above 11% (red).

Currently no state has an unemployment rate at or above 8% (light blue); Eight states and D.C. are still at or above 7% (dark blue).

Black Knight: Mortgage Delinquencies decreased in October, Lowest in Seven Years

by Calculated Risk on 11/21/2014 07:31:00 AM

According to Black Knight's First Look report for October, the percent of loans delinquent decreased in October compared to September, and declined by 12% year-over-year.  Mortgage delinquencies are at the lowest level since November 2007.

Also the percent of loans in the foreclosure process declined further in October and were down 33% over the last year.  Foreclosure inventory was at the lowest level since February 2008.

Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 5.44% in October, down from 5.67% in September. The normal rate for delinquencies is around 4.5% to 5%.

The percent of loans in the foreclosure process declined to 1.69% in October from 1.76% in September.

The number of delinquent properties, but not in foreclosure, is down 393,000 properties year-over-year, and the number of properties in the foreclosure process is down 418,000 properties year-over-year.

Black Knight will release the complete mortgage monitor for October in early December.

Black Knight: Percent Loans Delinquent and in Foreclosure Process
  Oct
2014
Sept
2014
Oct
2013
Oct
2012
Delinquent5.44%5.67%6.28%7.40%
In Foreclosure1.69%1.76%2.54%3.87%
Number of properties:
Number of properties that are 30 or more, and less than 90 days past due, but not in foreclosure:1,658,0001,760,0001,869,0001,957,000
Number of properties that are 90 or more days delinquent, but not in foreclosure:1,101,0001,118,0001,283,0001,543,000
Number of properties in foreclosure pre-sale inventory:858,000893,0001,276,0001,800,000
Total Properties3,617,0003,771,0004,427,0005,300,000

Thursday, November 20, 2014

Friday: State Employment, October Mortgage Delinquencies

by Calculated Risk on 11/20/2014 08:43:00 PM

A few excerpts from a research piece on wages by economist Nathan Harris at Merrill Lynch:

After the deep freeze last winter, the labor market has steadily recovered over the last 10 months. Payrolls have averaged about 240,000 and the unemployment rate has dropped mainly for “good reasons”—because of solid jobs rather than falling participation. While it is very hard to pin down the inflation neutral (NAIRU) unemployment rate in real time, we seem to be in the neighborhood of NAIRU. At 5.8%, the official U-3 measure has dipped below its 30-year average of 6.1% and is approaching estimates of NAIRU from the FOMC (5.2 to 5.5%) and the Congressional Budget Office (5.5%). We like to focus on the broader U-6 measure. If the rate of decline over the last year continues, it will hit its historical average by next year and its pre-crisis average by early 2016.

What is missing from this labor lullaby is some sign of normal wage growth. There have been a number of head fakes—jumps in erratic second-tier indicators and pockets of pressure that never expanded. However, the two best gauges of pressure, total average hourly earnings (AHE) and the employment cost index (ECI) have shown few signs of life.

The good news is that while AHE are still stuck at 2%, there are now early hints of a pick-up in the ECI. After a very weak 1Q reading the index was solid in both 2Q and 3Q. Moreover, the pick-up is broad-based, including both wages and benefits and increases for most occupational groups and industries. Finally, just maybe, labor compensation is starting to pick up.

Before we get too excited about improved income or inflation, keep in mind that the recovery in both wage and price inflation is likely to be very slow.
...
At this stage, it is not clear whether the long-awaited rise in labor costs has arrived or will start sometime next year. Two things are clear. First, the rise is likely to be very slow. Second, the Fed’s initial response will be to breathe a sigh of relief and they will only view it as a threat to the inflation target if it gets above its historic norm of 3.5%.
Friday:
• Early, the Black Knight Financial Services’ “First Look” at October 2014 Mortgage Data.

• At 10:00 AM ET, the Regional and State Employment and Unemployment (Monthly) report for October 2014.

• At 11:00 AM, the Kansas City Fed manufacturing survey for November.