by Calculated Risk on 4/17/2012 09:30:00 AM

From the Fed: Industrial production and Capacity Utilization

Industrial production was unchanged in March for a second month but rose at an annual rate of 5.4 percent in the first quarter of 2012. Manufacturing output declined 0.2 percent in March but jumped 10.4 percent at an annual rate in the first quarter. The gain in manufacturing output in the first quarter was broadly based: Even excluding motor vehicles and parts, which jumped at an annual rate of nearly 40 percent, manufacturing output moved up at an annual rate of 8.3 percent and output for all but a few major industries increased 5 percent or more. In March, production at mines rose 0.2 percent and the output of utilities gained 1.5 percent. For the quarter, however, the output of utilities dropped at an annual rate of 13.8 percent, largely as a result of unseasonably warm temperatures over the past several months, while the output of mining fell 5.4 percent. At 96.6 percent of its 2007 average, total industrial production for March was 3.8 percent above its year-earlier level. The rate of capacity utilization for total industry edged down to 78.6 percent, a rate 2.1 percentage points above its level from a year earlier but 1.7 percentage points below its long-run (1972--2011) average.

Click on graph for larger image.

This graph shows Capacity Utilization. This series is up 11.8 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 78.6% is still 1.7 percentage points below its average from 1972 to 2010 and below the pre-recession levels of 81.3% in December 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 March at 96.6; however February was revised up from 96.2.

The consensus was for a 0.3% increase in Industrial Production in March, and for a decrease to 78.6% (from 78.7%) for Capacity Utilization. Although below consensus, with the February revisions, this was close to expectations.

All current manufacturing graphs

by Calculated Risk on 4/17/2012 08:30:00 AM

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately-owned housing starts in March were at a seasonally adjusted annual rate of 654,000. This is 5.8 percent (±15.6%)* below the revised February estimate of 694,000, but is 10.3 percent (±14.6%)* above the March 2011 rate of 593,000.

Single-family housing starts in March were at a rate of 462,000; this is 0.2 percent (±12.6%)* below the revised February figure of 463,000. The March rate for units in buildings with five units or more was 178,000.

Building Permits:
Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 747,000. This is 4.5 percent (±1.1%) above the revised February rate of 715,000 and is 30.1 percent (±1.6%) above the March 2011 estimate of 574,000.

Single-family authorizations in March were at a rate of 462,000; this is 3.5 percent (±1.1%) below the revised February figure of 479,000. Authorizations of units in buildings with five units or more were at a rate of 262,000 in March.

Click on graph for larger image.

Total housing starts were at 654 thousand (SAAR) in March, down 5.8% from the revised February rate of 694 thousand (SAAR). Note that February was revised down from 698 thousand.

Single-family starts declined 0.2% to 462 thousand in March. February was revised up to 463 thousand from 457 thousand.

The second graph shows total and single unit starts since 1968.

This shows the huge collapse following the housing bubble, and that total housing starts have been increasing lately after sideways for about two years and a half years.

Total starts are up 37% from the bottom, and single family starts are up 31% from the low.

This was well below expectations of 700 thousand starts in March, but mostly because of multi-family starts.

All Housing Investment and Construction Graphs

by Calculated Risk on 4/16/2012 07:49:00 PM

The following graphs are for 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).

Container traffic gives us an idea about the volume of goods being exported and imported - and possibly some hints about the trade report for March. LA area ports handle about 40% of the nation's container port traffic.

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.

Click on graph for larger image.

On a rolling 12 month basis, inbound traffic is up 0.9% from February, and outbound traffic is up 0.2%.

The rolling 12 months of imports started declining last year - and exports seemed to stall. But it now appears both imports and exports are increasing again (slightly).

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

For the month of March, loaded outbound traffic was up 2.6% compared to March 2011, and loaded inbound traffic was up 12.8% compared to March 2011.

This is a new record for exports (just above the pre-recession peak).

Note: Every year imports decline in February mostly because of the Chinese New Year and rebounds in March. February 2012 was an especially steep decline, and some of the February traffic was probably pushed into March.

All current trade graphs

by Calculated Risk on 4/16/2012 04:59:00 PM

CR Note: Some interesting comments from Tom Lawler ...

From economist Tom Lawler: Early Read on Existing Home Sales in March: Not Much Change (SAAR) from February, but Aggregate Numbers Miss Strengthening Market

While I’m missing reports from several key markets, my current estimate based on regional tracking is that US existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 4.59 million in March, unchanged from February’s pace, and up 7.7% from last March’s seasonally adjusted pace. While the “flattish” sales in March relative to February (on a SAAR basis) might seem surprising to some given various anecdotal stories of strengthening markets, the “flat” reading does NOT negate the validity of many of these reports. Rather, a major reason for the “disappointing” sales readings for March (and February) relative to a year ago is the substantial decline in REO/foreclosure sales, which to a large extent is the result of sharply lower REO properties for sale.

Consider, e.g., sales reports from the Vegas, Phoenix, Sacramento, Minneapolis, Mid-Atlantic, and Orlando markets broken out by short sales, foreclosure sales, and “non-distressed” sales, shown on the table below.

MLS-Reported Home Sales
		Mar-12	Mar-11	% chg
Phoenix	Total	8869	9933	-10.7%
	Short Sales	2275	1899	19.8%
	Bank-Owned Sales	1872	4576	-59.1%
	Non-Distressed Sales	4722	3458	36.6%
Las Vegas	Total	4386	4316	1.6%
	Short Sales	1167	1019	14.5%
	Bank-Owned Sales	1786	2054	-13.0%
	Non-Distressed Sales	1433	1243	15.3%
Sacramento	Total	1858	1914	-2.9%
	Short Sales	638	427	49.4%
	Bank-Owned Sales	570	927	-38.5%
	Non-Distressed Sales	750	560	33.9%
Mid-Atlantic	Total	7902	8059	-1.9%
	Short Sales	1040	1057	-1.6%
	Bank-Owned Sales	1162	2123	-45.3%
	Non-Distressed Sales	5700	4879	16.8%
Minneapolis	Total	3523	3253	8.3%
	Short Sales	438	417	5.0%
	Bank-Owned Sales	1296	1497	-13.4%
	Non-Distressed Sales	1789	1343	33.2%
Orlando	Total	2327	2613	-10.9%
	Short Sales	768	762	0.8%
	Bank-Owned Sales	593	1215	-51.2%
	Non-Distressed Sales	966	636	51.9%

Note that all of the above markets, save for Vegas, saw this March’s home sales come in below last March’s (and by more than the one-fewer-business day would have implied for a “flat” seasonally adjusted reading), and Vegas’ YOY gain was only 1.6%. Yet ALL of these markets saw double-digit YOY gains in non-distressed sales. For all of these markets combined, total home sales were down (YOY) by 4.1%; short sales were up 13.3%; foreclosure sales were down 41.3%; and non-distressed sales were up 26.7%.

Of course, the surge in “non-distressed” sales overstates the overall strength of many of these markets – folks, especially looking for a home to live in, who last year might have purchased a “distressed” home found the available inventory smaller and unattractive, and instead purchased a “non-distressed” home.

Still, the increase in “non-distressed” sales is an encouraging sign.

Below are a few other reports from associations/MLS that either only report “distressed” vs. “non-distressed,” or in Memphis’ case only report bank-owned vs. non-bank-owned sales (the Memphis report is based on property records, not MLS sales).

		Mar-12	Mar-11	% Chg
Northeast Florida	Total	1419	1529	-7.2%
	Distressed Sales	567	857	-33.8%
	Non-Distressed Sales	852	672	26.8%
Hampton Roads	Total	1547	1605	-3.6%
	Distressed Sales	519	695	-25.3%
	Non-Distressed Sales	1028	910	13.0%
Memphis (Existing)	Total	1229	1014	21.2%
	Bank-Owned Sales	393	377	4.2%
	Non-Bank Sales	836	637	31.2%

Flipping back to estimates for the NAR EHS release, a decent number of associations/MLS (though by no means all) reported a monthly increase in listings for March, and “seasonally” listings typically increase significantly. Translating local data into NAR inventory estimates, however, is “tricky;” e.g., the NAR’s existing home inventory estimate in February was up 4.3% from January, WAY above what any inventory tracker would have “guessed” (NAR showed a monthly jump in the inventory of existing condos for sale in February of 27.3%!) I can’t tell ya why, but rather than trying to foot to the monthly changes regardless of past monthly “discrepancies,” I’m going with a YOY estimate based on tracking, which would suggest a YOY inventory drop of about 20.5%, and would imply a very slight monthly decline relative to February (though I expect February to be revised down).

Finally, on the median sales price side a much higher % of realtor associations/MLS reported YOY increases in median sales prices in March relative to any period since 2010, in many (but not all) cases likely because of the significant drop in the foreclosure share of home sales. Net, I expect that the NAR median existing SF home sales price in March will be 3.0 to 3.5% above last March’s MSP.

As always, of course, median sales prices are heavily influenced by the mix of sales – and by that I don’t mean just “distressed” vs. “non-distressed” – and one can’t really “translate” median sales price changes to changes in repeat-transactions home price indexes. By the same token, however, repeat-transactions HPIs that include all distressed sales do appear to be affected by the distressed sales share of home sales, and as such these HPIs should show a CONSIDERABLE YOY improvement using March transactions. In addition, in some markets there does appear to be overall home price improvement gains. As such, there is a pretty decent chance that many widely followed HPIs may show YOY gains. Of course, the most widely watched monthly HPIs – S&P/Case-Shiller – is really a 3-month moving average HPI, and as such one wouldn’t expect to see a YOY gain in the March report. But the April or May report just might!

by Calculated Risk on 4/16/2012 04:03:00 PM

Catching up: This was released earlier from the NY Fed: April's Empire State Manufacturing Survey indicates manufacturing activity in New York State improved modestly

April’s Empire State Manufacturing Survey indicates that manufacturing activity in New York State improved modestly. Although the general business conditions index fell fourteen points, it remained positive at 6.6. The new orders and shipments indexes also remained positive, but showed only a small increase in orders and shipments. The prices paid index inched downward but remained high, and the prices received index climbed six points to 19.3. The index for number of employees rose to its highest level in nearly a year, indicating a significant increase in employment levels, while the average workweek index fell to a level that indicated only a small increase in hours worked. Future indexes remained quite positive, suggesting a strong and persistent degree of optimism about the six month outlook.

The general business index was down sharply to 6.56 from 20.21 in March, and was significantly below the consensus forecast of 18.

The employment index was up to 19.28 from 13.58 in March.

by Calculated Risk on 4/16/2012 12:24:00 PM

From BuildFax:

Residential remodels authorized by building permits in the United States in February were at a seasonally-adjusted annual rate of 2,894,000. This is 3 percent above the revised January rate of 2,811,000 and is 23 percent above the February 2011 estimate of 2,362,000.

"February 2012 is the first month over the past twelve to show significant increases in residential remodeling activity across all U.S. regions," said Joe Emison, Vice President of Research and Development at BuildFax.

The BuildFax Remodeling Index (BFRI) is based on construction permits for residential remodeling projects filed with local building departments across the country. The index estimates the number of properties permitted. The national and regional indexes are based upon a subset of representative building departments in the U.S. and population estimates from the U.S. Census. The BFRI is seasonally-adjusted using the X12 procedure.

Click on graph for larger image.

This graph shows the Remodeling Index since January 2000 on a seasonally adjusted basis.

Remodeling is below the peak levels of the housing boom - with all the equity extraction - but up 25% from the bottom in May 2009.

Note: Permits are not adjusted by value, so this doesn't mean there is more money being spent, just more permit activity. Also some smaller remodeling projects are done without permits and the index will miss that activity.

The second graph shows the regional indexes. From BuildFax:

Seasonally-adjusted annual rates of remodeling across the country in February 2012 are estimated as follows: Northeast, 627,000 (up 24% from January and up 33% from February 2011); South, 1,194,000 (up 3% from January and up 25% from February 2011); Midwest, 516,000 (up 4% from January and up 22% from February 2011); West, 830,000 (up 9% from January and up 21% from February 2011).

Some of the increase in February could be weather related (the index is seasonally adjusted, and the weather in February was warmer than normal). This might especially be true in the Northeast.

For overall residential investment, multi-family construction and home improvement have already picked up, and it appears single family construction will increase in 2012.

by Calculated Risk on 4/16/2012 10:00:00 AM

The National Association of Home Builders (NAHB) reports the housing market index (HMI) declined 3 points in April to 25. Any number under 50 indicates that more builders view sales conditions as poor than good.

From the NAHB: Builder Confidence Slips Three Notches in April

Builder confidence in the market for newly built, single-family homes declined for the first time in seven months this April, sliding three notches to 25 on the National Association of Home Builders/Wells Fargo Housing Market Index, released today. The decline brings the index back to where it was in January, which was the highest level since 2007.

"Although builders in many markets are noting increased interest among potential buyers, consumers are still very hesitant to go forward with a purchase, and our members are realigning their expectations somewhat until they see more actual signed sales contracts,” noted Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla.

“What we’re seeing is essentially a pause in what had been a fairly rapid build-up in builder confidence that started last September,” said NAHB Chief Economist David Crowe. “This is partly because interest expressed by buyers in the past few months has yet to translate into expected sales activity, but is also reflective of the ongoing challenges that are slowing the housing recovery – particularly tight credit conditions for builders and buyers, competition from foreclosures and problems with obtaining accurate appraisals.”
...
Each of the index’s components registered declines in April. The component gauging current sales conditions and the component gauging sales expectations in the next six months each fell three points, to 26 and 32, respectively, while the component gauging traffic of prospective buyers fell four points to 18. (Note, the overall index and each of its components are seasonally adjusted.)

Regionally, the HMI results were somewhat mixed in April, with the Northeast posting a four-point gain to 29 (its highest level since May of 2010), the West posting no change at 32, the South posting a three-point decline to 24 and the Midwest posting an eight-point decline to 23.

Click on graph for larger image.

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

Housing Investment and Construction

by Calculated Risk on 4/16/2012 08:30:00 AM

On a monthly basis, retail sales were up 0.8% from February to March (seasonally adjusted), and sales were up 6.5% from March 2011. From the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for March, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $411.1 billion, an increase of 0.8 percent (±0.5%) from the previous month and 6.5 percent (±0.7%) above March 2011. ... The January to February 2012 percent change was revised from 1.1 percent (±0.5) to 1.0 percent(±0.2%).

Ex-autos, retail sales increased 0.8% in March.

Click on graph for larger image.

Sales for February were revised down from a 1.1% increase to a 1.0% increase.

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

Retail sales are up 23.6% from the bottom, and now 8.6% above the pre-recession peak (not inflation adjusted)

The second graph shows the same data since 2006 (to show the recent changes). Excluding gasoline, retail sales are up 19.6% from the bottom, and now 7.7% above the pre-recession peak (not inflation adjusted).

The third graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail sales ex-gasoline increased by 6.3% on a YoY basis (6.6% for all retail sales). Retail sales ex-gasoline increased 0.7% in March.

This was above the consensus forecast for retail sales of a 0.3% increase in March, and above the consensus for a 0.6% increase ex-auto.



All current retail sales graphs

by Calculated Risk on 4/15/2012 06:35:00 PM

From the Financial Times: Sarkozy breaks silence over ECB role

“Europe must purge its debts, it has no choice. But between deflation and growth, it has no more choice. If Europe chooses deflation it will die. We, the French, will open the debate on the role of the central bank in the support of growth.” [Sarkozy said]
excerpt with permission

Of course, while most of Europe is worried about deflation, Germany is worried about inflation.

And from the NY Times: In Spain and Italy, Signs of a Lingering Crisis for Europe

Neither Spain nor Italy seems a good candidate for meeting the deficit-reduction targets they have agreed to with the European Union, especially if the downturn deepens.
...
While the austerity debate simmers, a more pressing concern is efforts by Italy and Spain to raise financing for government debt they will need to roll over this year. Italy has so far raised only a little more than one-third of the estimated 215 billion euros ($283 billion) it will need this year, according to Reuters calculations. Spain is about half of the way to its goal, the economy minister, Luis de Guindos, said last Tuesday. According to the 2012 budget, the Spanish treasury plans gross issuance of 186 billion euros of debt this year.

The European Central Bank relieved a great deal of pressure with two rounds of cheap, three-year loans to banks in December and February that pumped 1 trillion euros ($1.3 trillion) into the region’s banking system. Many banks, especially in the southern countries like Spain and Italy, turned around and used that money to buy their government’s debt.

That debt-buying is now tapering off, said Guntram Wolff, deputy director at Bruegel, a research organization in Brussels. That raises the question of who might step in to finance these governments. “Investors are starting to express big doubts,” Mr. Wolff said.

And on Greece: the election is scheduled for May 6th, and the smaller parties will probably do very well.

Yesterday:
• Summary for Week Ending April 13th
• Schedule for Week of April 15th

by Calculated Risk on 4/15/2012 02:39:00 PM

From Paul Krugman: Insane in Spain

"the euro crisis is [now] ... centered on Spain — which in a way is a good thing, because now the essential craziness of the orthodox German-inspired diagnosis of the crisis is on full display.

For this is really, really not about fiscal irresponsibility. Just as a reminder, on the eve of the crisis Spain seemed to be a fiscal paragon:"

	Spain	Germany
Budget Balance, % of GDP, 2007	+1.9%	+0.3%
Net Debt, % of GDP, 2007	27%	50%

"What happened to Spain was a housing bubble — fueled, to an important degree, by lending from German banks — that burst, taking the economy down with it. ...

And the policy response is supposed to be even more austerity, with the European Central Bank, natch, obsessing over inflation ...

I’m really starting to think that we’re heading for a crackup of the whole system."

The German argument falls apart when we look at Spain. Instead of focusing on government spending, we could look at capital flows. Oh well.

The ECB's LTRO has bought a little bit of time, but if the policymakers stay focused on austerity, they will fail. A key European analyst pointed out last week that essentially all recent sovereign issuance in the periphery has been purchased by in-country banks, and that was related to the LTRO from the ECB. In other words, there is no private market for peripheral sovereign debt. The key analyst concluded: "The EMU (Economic and Monetary Union) is over".