by Calculated Risk on 11/16/2010 04:11:00 PM

From DataQuick: Southland Home Sales Fall, Prices Flat

Southern California home sales dropped in October to their lowest level in three years amid doubts about the drawn-out market recovery, tight mortgage lending policies and expired government incentives.
...
A total of 16,744 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 7.4 percent from 18,091 in September, and down 24.3 percent from 22,132 for October 2009, according to MDA DataQuick of San Diego.
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Foreclosure resales accounted for 34.7 percent of the resale market last month, up from a revised 33.6 percent in September and down from 40.4 percent a year ago.

In October 2009, existing home sales were boosted by the home buyer tax credit, and the NAR reported sales of 5.98 million on a Seasonally adjusted annual rate (SAAR) basis.

Sales are down close to 25% year-over-year just about everywhere, and the initial estimate for national sales in October is about 4.5 million SAAR with about 10.4 months-of-supply.

by Calculated Risk on 11/16/2010 12:51:00 PM

Update: The Guardian is providing updates: Ireland's debt crisis - live coverage (ht Tommy)

From the Financial Times: Dublin in talks to resolve crisis

“We are discussing with both the ECB and the IMF and of course the Irish,” Mr [Rehn, the EU’s economic and monetary affairs commissioner] told reporters in Brussels on Tuesday. “The real problems are in the banking sector,” not with the government, “but these are connected”.
excerpt with permission

The WSJ has details of the proposed bailout: U.K. Support Sought for Ireland Bailout

A package of aid for Irish banks could be worth €45 billion to €50 billion, while a broader package designed to restore confidence in Ireland's public finances as well could range from €80 billion to €100 billion ... In any deal, the IMF would likely contribute half as much aid as the EU and U.K. combined.

And Irish leaders are still saying they have not asked for help, but they are now acknowledging the talks:

“Given the current market conditions, there have been on-going contacts at official level with our international partners,” [Taoiseach Brian Cowen] said.
...
“This is not an insurmountable challenge and, through working together with our partners in a calm and rational manner, we can resolve these issues and underpin financial stability in the medium and longer term," he said. “It is in all of our interests that we find a credible, efficient and above all workable solution that will provide assurance to the markets and thereby restore confidence and stability."

Some reports suggest a tentative deal could be reached very soon (perhaps as early as tomorrow).

by Calculated Risk on 11/16/2010 10:00:00 AM

The National Association of Home Builders (NAHB) reports the housing market index (HMI) was at 16 in November. This is a 1 point increase from the revised 15 in October (revised down from 16). This is the highest level since June. The record low was 8 set in January 2009, and 16 is still very low ...

Note: any number under 50 indicates that more builders view sales conditions as poor than good.

Click on graph for larger image in new window.

This graph compares the NAHB HMI (left scale) with single family housing starts (right scale). This includes the November release for the HMI and the September data for starts (October housing starts will be released tomorrow).

This shows that the HMI and single family starts mostly move in the same direction - although there is plenty of noise month-to-month.

Press release from the NAHB: Builder Confidence Improves Slightly in November

Builder confidence in the market for newly built, single-family homes improved slightly in November, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The HMI rose one notch to 16 from a downwardly revised level of 15 in the previous month.
...
Two out of three of the HMI's component indexes registered improvement in November, while the third component held steady. The component gauging sales expectations in the next six months rose two points to 25, the component gauging traffic of prospective buyers rose one point to 12, and the component gauging current sales conditions held unchanged at 16.

This was slightly below expectations of an increase to 17.

by Calculated Risk on 11/16/2010 09:15:00 AM

From the Fed: Industrial production and Capacity Utilization

Industrial production was unchanged in October after having fallen 0.2 percent in September. ... The capacity utilization rate for total industry was flat at 74.8 percent, a rate 6.6 percentage points above the low in June 2009 and 5.8 percentage points below its average from 1972 to 2009.

Click on graph for larger image in new window.

This graph shows Capacity Utilization. This series is up 9.7% from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 74.8% is still far below normal - and well below the pre-recession levels of 81.2% in November 2007.

Note: y-axis doesn't start at zero to better show the change.

The second graph shows industrial production since 1967.

Industrial production was unchanged in October, and production is still 7.3% below the pre-recession levels at the end of 2007.

This was below consensus expectations of a 0.3% increase in Industrial Production, and an increase to 74.9% for Capacity Utilization.

by Calculated Risk on 11/15/2010 11:35:00 PM

An overview from the NY Times: Europe Fears That Debt Crisis Is Ready to Spread

European officials, increasingly concerned that the Continent’s debt crisis will spread, are warning that any new rescue plans may need to cover Portugal as well as Ireland to contain the problem they tried to resolve six months ago.
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Of paramount concern to policy makers in Europe is Spain, which is struggling to close its own deficit of 9 percent of G.D.P. at a time when unemployment is more than 20 percent and the economy is failing to grow.

Officials of both Ireland and Portugal are saying they are not asking for help - Ireland is funded until mid-2011. So this crisis might simmer for some time ...

by Calculated Risk on 11/15/2010 07:40:00 PM

Notes: this data is not seasonally adjusted. There is a very distinct seasonal pattern for imports, but not for exports. LA area ports handle about 40% of the nation's container port traffic.

The following graph shows the loaded inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container). Although containers tell us nothing about value, container traffic does give us an idea of the volume of goods being exported and imported.

Click on graph for larger image in new window.

Loaded inbound traffic was up 15% compared to October 2009.

Loaded outbound traffic was up 12% from October 2009.

For imports, there is a clear seasonal pattern and frequently a double peak - first in late summer, and then in October as retailers build inventory for the holiday season - so this was an unusual decrease in October compared to September.

For exports there is no clear seasonal pattern, and exports increased to just above the level in May. This suggests that the trade deficit with China (and other Asian countries) might have declined slightly in October (seasonally adjusted).

by Calculated Risk on 11/15/2010 05:05:00 PM

From Jon Prior at HousingWire: S&P predicts more home price declines through 2011

Standard & Poor's analysts believe home prices will drop between 7% and 10% through 2011 ...

"Low mortgage rates ...influence on home buying activities has been limited due to the weak housing market and a lack of demand," S&P credit analyst Erkan Erturk said. ...

Prices will continue to be pressed down as long as the market works through a backlog of distressed properties that remains elevated.

This gives me an excuse to update the graph on house prices and months-of-supply. The following graph shows existing home months-of-supply (left axis), and Case-Shiller composite 20 house prices (right axis, inverted).

Click on graph for larger image in new window.

House prices are through August using the composite 20 index (a three month average of June, July and August). Months-of-supply is through September. The preliminary data indicates that months-of-supply was still in double digits in October.

This is one of the reasons I expect house prices to fall another 5% to 10% - and it looks like S&P is now forecasting about the same price declines.

Note: there have been periods with high months-of-supply and rising house prices (see: Lawler: Again on Existing Home Months’ Supply: What’s “Normal?” ) so this is just a guide.

by Calculated Risk on 11/15/2010 02:35:00 PM

This is interesting because these forecasters are still catching up with the slowdown.

From the Philly Fed: Forecasters Predict Further Slowdown in Economic Recovery

The pace of recovery in output and employment in the U.S. economy looks a little slower now than it did three months ago, according to 43 forecasters surveyed by the Federal Reserve Bank of Philadelphia. The panel expects real GDP to grow at an annual rate of 2.2 percent this quarter, down from the previous estimate of 2.8 percent. [CR Note: I'll take the under for Q4]
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The forecasters predict real GDP will grow 2.5 percent in 2011, 2.9 percent in 2012, and 3.0 percent in 2013.
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The forecasters also predict weaker recovery in the labor market. Unemployment is projected to be an annual average of 9.7 percent in 2010, before falling to 9.3 percent in 2011, 8.7 percent in 2012, and 7.9 percent in 2013. These estimates are higher than the projections in the last survey. On the employment front, the forecasters have revised downward the growth in jobs over the next four quarters. The forecasters see nonfarm payroll employment growing at a rate of 86,600 jobs per month this quarter and 104,200 jobs per month next quarter.
...
The current outlook for the headline and core measures of CPI and PCE inflation in 2011 and 2012 is lower than it was in the last survey.

The real GDP projections and the unemployment rate forecasts are a little inconsistent. If GDP grows at these rates, the unemployment rate will probably be higher than these projections through 2013.

by Calculated Risk on 11/15/2010 10:14:00 AM

From the NY Fed:

The Empire State Manufacturing Survey indicates that conditions deteriorated in November for New York State manufacturers. For the first time since mid-2009, the general business conditions index fell below zero, declining 27 points to -11.1. The new orders index plummeted 37 points to -24.4, and the shipments index also fell below zero. The indexes for both prices paid and prices received declined, with the latter falling into negative territory. The index for number of employees remained above zero but was well below its October level, and the average workweek index dropped to -13.0.

I'll have more when the Philly Fed index is released on Thursday, but this was far below the expectations of a reading of 15.

And from the Census Bureau: September 2010 Manufacturing and Trade Inventories and Sales report

Inventories. Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,402.9 billion, up 0.9 percent (±0.1%) from August 2010 and up 6.3 percent (±0.4%) from September 2009.

Inventories/Sales Ratio. The total business inventories/sales ratio based on seasonally adjusted data at the end of September was 1.27.

Expectations were for a 0.8% increase in inventories.

by Calculated Risk on 11/15/2010 08:30:00 AM

On a monthly basis, retail sales increased 1.2% from September to October (seasonally adjusted, after revisions), and sales were up 7.3% from October 2009.

Retail sales increased 0.4% ex-autos - about at expectations.

Click on graph for larger image in new window.

This graph shows retail sales since 1992. This is monthly retail sales, seasonally adjusted (total and ex-gasoline).

Retail sales are up 11.2% from the bottom, and only off 1.8% from the pre-recession peak.

The second graph shows the year-over-year change in retail sales (ex-gasoline) since 1993.

Retail sales ex-gasoline increased by 6.6% on a YoY basis (7.3% for all retail sales).

Here is the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for October, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $373.1 billion, an increase of 1.2 percent (±0.5%) from the previous month, and 7.3 percent (±0.7%) above October 2009.