by Calculated Risk on 10/07/2011 08:30:00 AM

From the BLS:

Nonfarm payroll employment edged up by 103,000 in September, and the unemployment rate held at 9.1 percent, the U.S. Bureau of Labor Statistics reported today. The increase in employment partially reflected the return to payrolls of about 45,000 telecommunications workers who had been on strike in August.
...
The change in total nonfarm payroll employment for July was revised from +85,000 to +127,000, and the change for August was revised from 0 to +57,000

The following graph shows the employment population ratio, the participation rate, and the unemployment rate.

Click on graph for larger image in graph gallery.

The unemployment rate was unchanged at 9.1% (red line).

The Labor Force Participation Rate increased to 64.2% in September (blue line). This is the percentage of the working age population in the labor force. The participation rate is well below the 66% to 67% rate that was normal over the last 20 years, although some of the decline is due to the aging population.

The Employment-Population ratio increased to 58.3% in September (black line).

Note: the household survey showed a strong gain in jobs, and that is why the unemployment rate could hold steady with few payroll jobs added - and the participation rate increase.

The second graph shows the job losses from the start of the employment recession, in percentage terms. The dotted line is ex-Census hiring.

The red line is moving sideways - and I'll need to expand the graph soon.

This was still a weak report, but better than August (although the 45,000 Verizon workers made a big difference). There were decent upwards revisions to the July and August reports too. I'll have much more soon ...

by Calculated Risk on 10/07/2011 12:17:00 AM

From Reuters: U.S. mall Q3 vacancy rate at 11-year high -report

Preliminary figures by real estate research firm Reis Inc show the average vacancy rate at regional malls rose to 9.4 percent in the third quarter, the highest level since Reis began tracking regional mall vacancy rates in 2000 and up from 9.3 percent in the second quarter.
...
The vacancy rate at ... local retail strips was 11 percent, flat with the second quarter, Reis said. ... "With demand remaining so weak and more new completions anticipated to come online in the remainder of 2011, there is still a good chance that the vacancy rate will match the 11.1 percent record high observed in 1990 sometime later this year," Reis senior economist Ryan Severino said.

Click on graph for larger image in graph gallery.

The vacancy rate for regional malls is the highest on record, and the vacancy rate for strip malls is just below the record set in 1990. It is still very ugly for malls ...

• On the employment report tomorrow: Employment Situation Preview: Another Weak Report

Earlier:
• CoreLogic: Home Price Index declined 0.4% in August
• Weekly Initial Unemployment Claims increase to 401,000
• Reis: Apartment Vacancy Rate falls to 5.6% in Q3

by Calculated Risk on 10/06/2011 07:18:00 PM

Note: NFIB’s monthly small business survey for September will be released on Tuesday, October 11, 2011.

From the National Federation of Independent Business (NFIB): NFIB Jobs Statement: No News is Bad News; More Jobs Lost

“There is no good news to report. Until sales improve, until it becomes cost-effective to hire new workers, we cannot expect small-business owners to take advantage of new hiring tax credits and increase their employee rolls. ... For the fourth month in a row, small-business owners reported an overall reduction in employment, posting an average reduction of 0.3 workers per firm." [said William C. Dunkelberg, Chief economist for (NFIB)]
...
And looking ahead, 11 percent plan to increase employment (unchanged) over the next three months, while 12 percent plan to reduce their workforce (also unchanged), yielding a seasonally adjusted net 4 percent of owners planning to create new jobs, one point lower than August and far below the double digit readings that are typical during an expansion.

Note: Small businesses have a larger percentage of real estate and retail related companies than the overall economy.

Here is a graph of the net hiring plans for the next three months since 1986.

Hiring plans were still low in September, but still positive and the trend is up.

It is no surprise that small businesses are struggling due to the high concentration of real estate related companies in the survey. But as Dunkelberg noted, until sales improve (lack of demand) small business hiring will remain weak.

• On the employment report tomorrow: Employment Situation Preview: Another Weak Report

Earlier:
• CoreLogic: Home Price Index declined 0.4% in August
• Weekly Initial Unemployment Claims increase to 401,000
• Reis: Apartment Vacancy Rate falls to 5.6% in Q3

by Calculated Risk on 10/06/2011 03:40:00 PM

The first three stories are more evidence for sluggish growth in the U.S. economy. Also the ECB is offering more liquidity, and protests spread in the U.S.

• From MasterCard: SpendingPulse September 2011 U.S. Retail Sector Report: Momentum Continues With Strong Results in Most Sectors

... Most sectors reported positive year-over-year sales results, with particularly strong results in the Apparel, Hardware, and Department Store sectors.

According to Michael McNamara, VP of Research and Analysis for MasterCard Advisors SpendingPulse, the results showed the continuing resilience of the U.S. consumer, even in the face of a lackluster labor environment and volatile financial markets. “The US consumer continues to spend across multiple sectors outside of the sectors tied to the housing market. This resilience in retail sales growth has been impressive in spite of disruptive weather, high gasoline prices and generally negative economic news,” he observed.

McNamara suggested that some of the boost in year-over-year results may be due to the aftermath of Hurricane Irene back in August, particularly in stores with a strong presence on the East Coast. The strong performance in Hardware may reflect some repair work, and September’s Apparel sales may have been boosted by delayed back-to-school shopping. Meanwhile, the poor housing market continues to be reflected in declines in Furniture, Furnishings, and Electronics and Appliances.

• From the WSJ: September Retail Sales Are Solid Ahead of Holiday Push

The 23 retailers tracked by Thomson Reuters reported a 5.1% rise in stores open more than a year, or same-store sales. The figure beat expectations for 4.6% and compares with 2.7% growth last year.

• From the Association of American Railroads: AAR Reports Gains for September Rail Traffic

The Association of American Railroads (AAR) today reported ... U.S. railroads originating 1,195,671 carloads, up 1.1 percent [from September 2010], and 949,606 trailers and containers, up 2.3 percent.
...
“Carloads have been closely tracking last year’s levels for six months, and intermodal continues to grow, though more moderately than earlier this year,” said AAR Senior Vice President John T. Gray. “Rail traffic is consistent with an economy that is probably still growing, but far more slowly than any of us would want.”

• From Reuters: ECB gears up crisis measures, tussles over rates

The European Central Bank reinstated some of its ... crisis-fighting tools on Thursday ... but opted to keep interest rates at 1.5 percent despite some of the bank's policymakers calling for cuts.
...
[Jean-Claude Trichet] said [the ECB] will offer struggling banks two new injections of ultra-cheap 1-year funding and buy another 40 billion euros ($54 billion) of 'covered bonds' -- assets backed by mortgage loans or public sector lending and perceived as safe to own.

"The economic outlook remains subject to particularly high uncertainty and intensified downside risks," Trichet told a news conference, offering a more gloomy prognosis than last month when he merely talked of downside risks.

• From Reuters: Wall St protests spread

Protests that began in New York against U.S. economic inequality spread around America on Thursday ...

Dallas Fed President Richard Fisher told a group of business people in Fort Worth, Texas: "I am somewhat sympathetic - that will shock you."

The anger and frustration is understandable, and I'm definitely sympathetic. The economy needs to benefit everyone.

• And on the employment report tomorrow: Employment Situation Preview: Another Weak Report

by Calculated Risk on 10/06/2011 12:21:00 PM

Another record ... from Freddie Mac: 30-Year Fixed Mortgage Rate Falls Below 4 Percent

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing the average rate for the conventional 30-year fixed mortgage dropping below 4 percent for the first time in history amid increasing global economic concerns. The 15-year fixed, a popular refinancing option, also fell to the lowest level on record for the sixth consecutive week.
...
"Average 30-year conventional fixed mortgage rates fell below 4 percent for the first time in history this week following a sharp drop in 10-year Treasuries early in the week as concerns over a global recession grew. Average 15-year fixed rates fell to a record low in the PMMS as well. Interest rates for 1-year ARMs, however, rose, as the Fed began replacing $400 billion of its short-term Treasury securities, which serve as benchmarks for many ARMs." [said Frank Nothaft, vice president and chief economist, Freddie Mac]
...
30-year fixed-rate mortgage (FRM) averaged 3.94 percent with an average 0.8 point for the week ending October 6, 2011, down from last week when it averaged 4.01 percent. Last year at this time, the 30-year FRM averaged 4.27 percent.

15-year FRM this week averaged 3.26 percent with an average 0.8 point, down from last week when it averaged 3.28 percent. A year ago at this time, the 15-year FRM averaged 3.72 percent.

by Calculated Risk on 10/06/2011 10:19:00 AM

Notes: This CoreLogic Home Price Index report is for August. The Case-Shiller index released last week was for July. Case-Shiller is currently the most followed house price index, but CoreLogic is used by the Federal Reserve and is followed by many analysts. The CoreLogic HPI is a three month weighted average of June, July and August (August weighted the most) and is not seasonally adjusted (NSA).

From CoreLogic: CoreLogic® August Home Price Index Shows Month-Over-Month and Year-Over-Year Decline

CoreLogic ... today released its August Home Price Index (HPI) which shows that home prices in the U.S. decreased 0.4 percent on a month-over-month basis, the first monthly decline in four months. According to the CoreLogic HPI, national home prices, including distressed sales, also declined on a year-over-year basis by 4.4 percent in August 2011 compared to August 2010. This follows a decline of 4.8 percent in July 2011 compared to July 2010. Excluding distressed sales, year-over-year prices declined by 0.7 percent in August 2011 compared to August 2010 and by 1.7 percent in July 2011 compared to July 2010. ...

“Although the calendar says August, the end of the summer traditionally marks the beginning of ‘fall’ for the housing market as it begins to prepare for ‘winter.’ So the slight month-over-month decline was predictable, particularly given the renewed concerns over a double-dip recession, high negative equity, and the persistent levels of shadow inventory. The continued bright spot is the non-distressed segment of the market, which is only marginally lower than a year ago and continues to exhibit relative strength,” said Mark Fleming, chief economist for CoreLogic.

Click on graph for larger image in graph gallery.

This graph shows the national CoreLogic HPI data since 1976. January 2000 = 100.

The index was down 0.4% in August, and is down 4.4% over the last year, and off 30.4% from the peak - and up 4.8% from the March 2011 low.

As Mark Fleming noted, some of this decrease is seasonal (the CoreLogic index is NSA). Month-to-month prices changes will probably remain negative through February or March 2012 - the normal seasonal pattern. It is likely that there will be new post-bubble lows for this index late this year or early in 2012.

by Calculated Risk on 10/06/2011 08:30:00 AM

The DOL reports:

In the week ending October 1, the advance figure for seasonally adjusted initial claims was 401,000, an increase of 6,000 from the previous week's revised figure of 395,000. The 4-week moving average was 414,000, a decrease of 4,000 from the previous week's revised average of 418,000.

The following graph shows the 4-week moving average of weekly claims since January 2000 (there is a longer term graph in graph gallery).

Click on graph for larger image in graph gallery.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims declined this week to 414,000.

This is the lowest level for the 4-week average of weekly claims since August, and this was below the consensus forecast of 410,000. Still elevated, but some improvement.

by Calculated Risk on 10/06/2011 12:04:00 AM

Reis reported that the apartment vacancy rate (82 markets) fell to 5.6% in Q3 from 6.0% in Q2. The vacancy rate was at 7.1% in Q2 2010 and peaked at 8.0% at the end of 2009.

From the WSJ: Landlords Push Up Apartment Rents

The vacancy rate for the third quarter, which wraps up the prime leasing season, fell to 5.6% from 7.1% a year earlier. That is the lowest since 2006.

The increased demand follows several years that saw little new apartment development. About 8,200 units came online during the third quarter, one of the lowest quarterly figures since Reis began tracking the data in 1999.
...
Average effective apartment rents, the amount paid after discounting, rose to $1,004 nationwide in the third quarter, up 2.4% from a year earlier ... In the third quarter, 36,000 net units were filled, down from 42,000 in the second quarter.

Click on graph for larger image in graph gallery.

This graph shows the apartment vacancy rate starting in 2005.

Reis is just for large cities, but this decline in vacancy rates is happening just about everywhere.

A few key points we've been discussing:
• Apartment vacancy rates are falling fast.

• A record low number of multi-family units will be completed this year (2011). Only 8,200 apartments came on the market in Q3 (in the Reis survey area).

• Multi-family starts are increasing, and that is helping both GDP and employment growth this year. These new starts will not be completed until 2012 or 2013, so vacancy rates will probably continue to decline.

Earlier:
• Reis: Office Vacancy Rate declines slightly in Q3 to 17.4%
• ADP: Private Employment increased 91,000 in September
• ISM Non-Manufacturing Index indicates expansion in September
• Europe Update: New Stress Tests and Bank Recapitalisation
• Employment Situation Preview: Another Weak Report

by Calculated Risk on 10/05/2011 08:58:00 PM

A rare open thread for discussion - and a few articles on the passing of Steve Jobs ...

• From the LA Times: Steve Jobs: More than a turnaround artist

• From the NY Times: Steve Jobs, Apple’s Visionary, Dies at 56

• From the WSJ: Apple's Steve Jobs Is Dead

• From CNBC: Apple Says Former CEO Steve Jobs Has Passed Away

Earlier:
• Reis: Office Vacancy Rate declines slightly in Q3 to 17.4%
• ADP: Private Employment increased 91,000 in September
• ISM Non-Manufacturing Index indicates expansion in September
• Europe Update: New Stress Tests and Bank Recapitalisation
• Employment Situation Preview: Another Weak Report

by Calculated Risk on 10/05/2011 03:50:00 PM

This sounds like EU policymakers are getting ready for either larger haircuts for private Greek debt holders or a default. And is sounds like they are preparing to force the banks to recapitalize. These tests are going to have be conducted pretty quickly ...

• From the Financial Times: EU banks face new ‘Greek’ stress test

European Union finance ministers have asked the bloc’s leading bank regulator to test the strength of Europe’s banks on the assumption of a big writedown on Greek sovereign debt.

The move, a tacit admission that the European Banking Authority’s two previous rounds of bank stress tests were not sufficiently robust, came as Angela Merkel ... said she was prepared to recapitalise her country’s banks if necessary.
excerpt with permission

The article says Merkel would like to discuss an EU-wide bank support plan at the next EU summit in two weeks.

• From the WSJ: IMF Floats Bond-Buying Proposal in Europe

The International Monetary Fund could create a special financing tool to buy bonds in private markets as a way to help stem the euro zone's debt crisis, a senior IMF official said Wednesday.
...
Such a plan could aid countries such as Spain and Italy, which face rising costs for financing in capital markets.

• From the WSJ: ECB Chief's Legacy Under Fire

Many economists expect the ECB to keep interest rates on hold at Thursday's meeting, despite signs that the euro-zone economy is stagnating and may even slide into recession later this year. ... Mr. Trichet is expected Thursday to unveil new stimulus measures aimed at protecting European banks from short-term funding pressures.

The Greek 2 year yield is up to 66%. The Greek 1 year yield is at 140%. (Obviously expecting a large haircut)

The Portuguese 2 year yield is down to 17.5% and the Irish 2 year yield is at 7.1%.

The Spanish 10 year yield is at 5.1% and the Italian 10 year yield is at 5.5%.