by Calculated Risk on 9/11/2012 10:00:00 AM

From the BLS: Job Openings and Labor Turnover Summary

There were 3.7 million job openings on the last business day of July, little changed from June, the U.S. Bureau of Labor Statistics reported today.
...
The level of total nonfarm job openings in July was up from 2.4 million at the end of the recession in June 2009.
...
In July, the quits rate was unchanged for total nonfarm, total private, and government. The number of quits was 2.2 million in July, up from 1.8 million at the end of the recession in June 2009. ... Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs.

The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

This series started in December 2000.

Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for July, the most recent employment report was for August.

Click on graph for larger image.

Notice that hires (dark blue) and total separations (red and light blue columns stacked) are pretty close each month. When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

Jobs openings decreased in July to 3.664 million, down from 3.722 million in June. The number of job openings (yellow) has generally been trending up, and openings are up about 9% year-over-year compared to July 2011.

Quits increased slightly in July, and quits are up about 8% year-over-year. These are voluntary separations and more quits might indicate some improvement in the labor market. (see light blue columns at bottom of graph for trend for "quits").

All current employment graphs

by Calculated Risk on 9/11/2012 08:30:00 AM

The Department of Commerce reported:

[T]otal July exports of $183.3 billion and imports of $225.3 billion resulted in a goods and services deficit of $42.0 billion, up from $41.9 billion in June, revised. July exports were $1.9 billion less than June exports of $185.2 billion. July imports were $1.8 billion less than June imports of $227.1 billion.

June was revised down from $42.9 billion. The trade deficit was below the consensus forecast of $44.3 billion.

The first graph shows the monthly U.S. exports and imports in dollars through July 2012.

Click on graph for larger image.

Both exports and imports decreased in July. Exports are 10% above the pre-recession peak and up 3% compared to July 2011; imports are just below the pre-recession peak, and up about 1% compared to July 2011.

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

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.

Oil averaged $93.83 in July, down from $100.13 per barrel in June, and the lowest level since early 2011. Import oil prices will probably start increasing again in August. The trade deficit with China increased to $29.4 billion in July, up from $27.0 billion in July 2011. Once again most of the trade deficit is due to oil and China.

The trade deficit with the euro area was $10.2 billion in July, up from $7.7 billion in July 2011.

by Calculated Risk on 9/10/2012 09:11:00 PM

A couple of interesting stories ...

From the NY Times: Chinese Leader’s Absence Stokes Rumor Mills

Over the past week, the new leader, Xi Jinping, has missed at least three scheduled meetings with foreign dignitaries, including Secretary of State Hillary Rodham Clinton last Wednesday and the prime minister of Denmark on Monday. So far officials have declined to provide an explanation for his absences.

That set off furious speculation on the Internet that the 59-year-old Mr. Xi’s health, either physical or political, has taken a turn for the worse. Some diplomats say they have heard that Mr. Xi suffered a pulled muscle while swimming or playing soccer. One media report, since retracted, had it that Mr. Xi was hurt in an auto accident when a military official tried to injure or kill him in a revenge plot. A well-connected political analyst in Beijing said in an interview that Mr. Xi might have had a mild heart attack.

Whatever the actual reason, Mr. Xi’s unexplained absences are conspicuous on the eve of what is supposed to be China’s once-in-a-decade transfer of power.

I heard he was spotted standing in line waiting for the iPhone 5!

And on Apple, from Catherine Rampell at the NY Times Economix: How the iPhone 5 Could Bolster the G.D.P.

Michael Feroli, the chief United States economist at JPMorgan Chase, did a back-of-the-envelope calculation and estimated that the upcoming release of what is expected to be the iPhone 5 could add one-quarter to one-half of a percentage point to the annualized growth rate of America’s gross domestic product next quarter.

• At 8:30 AM, the Trade Balance report for July will be released. The consensus is for the U.S. trade deficit to increase to $44.3 billion in July, up from from $42.9 billion in June. Export activity to Europe will be closely watched due to economic weakness.

• At 10:00 AM, the BLS will released the Job Openings and Labor Turnover Survey for July from the BLS. This survey has been showing an increase in job openings; in June openings were up about 16% year-over-year compared to June 2011.


Another question for the September economic contest:

by Calculated Risk on 9/10/2012 06:04:00 PM

A couple more graphs based on the August employment report. The first graph below shows the number of total construction payroll jobs in the U.S. including both residential and non-residential since 1969.

Construction employment increased by only 1 thousand jobs in August, and so far is down for the year.

Unfortunately this graph is a combination of both residential and non-residential construction employment. The BLS only started breaking out residential construction employment fairly recently (residential specialty trade contractors in 2001).

Click on graph for larger image.

Construction employment appears to be moving sideways, although I expect this will change soon (and I'd expect some upward revisions to construction employment). The preliminary annual Benchmark Revision will be released on September 27, 2012.

Note: When housing was collapsing, one of the mysteries was why construction employment wasn't declining - and then finally employment started falling sharply. I think we are seeing a similar "mystery" now, and I expect BLS reported construction employment will start increasing soon.

Unemployment by Education
This graph shows the unemployment rate by four levels of education (all groups are 25 years and older).

Unfortunately this data only goes back to 1992 and only includes one previous recession (the stock / tech bust in 2001). Clearly education matters with regards to the unemployment rate - and it appears all four groups are generally trending down - although the unemployment rate for 'high school grads, no college' has increased recently.

Note: This says nothing about the quality of jobs - as an example, a college graduate working at minimum wage would be considered "employed".

by Calculated Risk on 9/10/2012 02:17:00 PM

On Saturday, I wrote: I expect QE3 on Sept 13th

From the WSJ: UBS: Bernanke Will Unleash QE3 This Week

More and more market prognosticators are calling for the Fed to unveil a third round of quantitative easing this week UBS is the latest to join the fray ...

“We now anticipate an announcement of another round of quantitative easing at the FOMC meeting on Sept. 13,” UBS economists wrote in a note to clients.

The QE3 parameters will likely entail a six-month program of at least $500 billion, primarily focused on buying Treasurys, UBS predicts, while also anticipating the Fed will extend its ultra-low rate guidance into 2015.

The QE3 view isn't unanimous, from the WSJ:

One of the outliers not calling for more Fed stimulus is Nomura Securities. ... The disappointing jobs report “is not weak enough to compel the Fed to deliver anouther round of quantitative easing at next week’s meeting,” Nomura said on Friday.

I think a combination of lengthening the low rate guidance and some sort of Large Scale Asset Purchases (LSAP, aka QE3) is very likely.

by Calculated Risk on 9/10/2012 10:43:00 AM

This is an interesting piece from David Keohane at FT Alphaville: German domino theory and book-cooking

There are two fairly important bits to this story in Der Spiegel.

One, that Merkel wants to avoid a Grexit for the time being and two, that the upcoming Troika report might be massaged to make that a reality.

From Der Spiegel (with our emphasis):

In reality, Merkel has already made up her mind. After long hesitation, she has sided with French President François Hollande and the European Commission. The report from the troika — which consists of the European Commission, the International Monetary Fund (IMF) and the European Central Bank (ECB) and which departed on its fact-finding tour last week — will undoubtedly conclude that Greece can remain in the euro zone.

The change in mind-set is down to domino theory.

Where once the chancellor saw Greece as the weakest link in a chain which would be stronger without it, now she sees it as a domino which, if toppled, would put the rest of the set in danger ...

Keohane goes on to discuss domino theory and the key word: "undoubtedly". The story makes it sound like the outcome of the troika's audit is preordained.

by Calculated Risk on 9/10/2012 08:45:00 AM

LPS released their Mortgage Monitor report for July today. According to LPS, 7.03% of mortgages were delinquent in July, down from 7.14% in June, and down from 7.80% in July 2011.

LPS reports that 4.08% of mortgages were in the foreclosure process, down slightly from 4.09% in June, and down slightly from 4.11% in July 2011.

This gives a total of 11.12% delinquent or in foreclosure. It breaks down as:

• 1,960,000 loans less than 90 days delinquent.
• 1,560,000 loans 90+ days delinquent.
• 2,042,000 loans in foreclosure process.

For a total of ​5,562,000 loans delinquent or in foreclosure in July. This is down from 5,663,000 last month.

This following graph shows the total delinquent and in-foreclosure rates since 1995.

Click on graph for larger image.

The total delinquency rate has fallen to 7.03% from the peak in July 2010 of 10.57%. A normal rate is probably in the 4% to 5% range, so there is a long ways to go.

The in-foreclosure rate was at 4.08%. There are still a large number of loans in this category (about 1.96 million).

The second graph shows new problem loans by equity position.

From LPS:

“The July mortgage performance data shows a continuing correlation between negative equity and new problem loans,” explained Herb Blecher, senior vice president, LPS Applied Analytics.

The third graph shows percent negative equity by state.

From Herb Blecher:

“Nationally, 18 percent of borrowers who are current on their loan payments are ‘underwater’ (owing more on the mortgage than the home’s current market value), ranging from a low of 0.4 percent in Wyoming to nearly 55 percent in Nevada. As negative equity increases, we see corresponding increases in the number of new problem loans. In Nevada and Florida, two of the states with the highest percentage of underwater borrowers, more than three percent of borrowers who were up to date on their payments are 60 or more days delinquent six months later. This suggests that further home price declines – should they occur – could jeopardize recent improvements.”

by Calculated Risk on 9/09/2012 09:24:00 PM

It is time for the next act of the Greek tragedy, from the WSJ: Inspectors Reject Some Cuts Greece Plans

The [European Commission, International Monetary Fund and the European Central Bank — the so-called troika] rejected some €2 billion ($2.6 billion) of proposed spending and revenue measures the government had hoped would help meet budget targets for the next two years ... The troika is demanding €13.5 billion in budget cuts in exchange for its latest €173 billion bailout.

The troika report, to be delivered before a European finance ministers' meeting Oct. 8, will also play a role in determining whether Greece is able to win a sought after two-year extension in meeting tough budget-deficit targets.

The Asian markets are mostly green tonight, although the Nikkei is down 0.2%.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P future are down 2, and the DOW futures down 26 points.

Oil prices are moving mostly unchanged with WTI futures are at $96.27 and Brent is at $114.12 per barrel. Using the calculator at Econbrowser suggests national gasoline prices at about $3.69 per gallon.

Yesterday:
• Summary for Week Ending Sept 7th
• Schedule for Week of Sept 9th
• Analysis: I expect QE3 on Sept 13th

Five more questions for the September economic prediction contest (Note: You can now use Facebook, Twitter, or OpenID to log in).

by Calculated Risk on 9/09/2012 01:41:00 PM

Below are three more graphs based on the August employment report.

For more employment graphs and analysis, see:
• August Employment Report: 96,000 Jobs, 8.1% Unemployment Rate
• Employment: Another Weak Report (more graphs)
• All Employment Graphs

Participation Rate
The following graph shows the changes in the participation rates for men and women since 1960 (in the 25 to 54 age group - the prime working years).

Click on graph for larger image in graph gallery.

The participation rate for women increased significantly from the mid 30s to the mid 70s. This rate was at 75.5% prior to the recession, and declined to a post-recession low of 74.3%. There has been almost no recovery in the participation rate for prime working age women. This rate has mostly flattened out this year, and was still near the low in August at 74.5%.

The participation rate for men has decreased from the high 90s a few decades ago, to a low of 88.3% after the recession. This rate hasn't increased very much, and was at 88.5% in August.

There might be some "bounce back" for both men and women (some of the recent decline is probably cyclical), but the long term trend for men is down.

Duration of Unemployment
This graph shows the duration of unemployment as a percent of the civilian labor force. The graph shows the number of unemployed in four categories: less than 5 weeks, 6 to 14 weeks, 15 to 26 weeks, and 27 weeks or more.

All categories are generally moving down, but there was an increase in the 'less than 5 weeks' and '15 to 26 weeks' categories in August.

Unfortunately the long term unemployed remains very high at 3.3% of the labor force in August, but this is the lowest percentage since 2009.

Diffusion Indexes
Diffusion indexes are a measure of how widespread job gains are across industries. The further from 50 (above or below), the more widespread the job losses or gains reported by the BLS. If there are employment gains, the more widespread, the better - even if job growth is slow. From the BLS:

Figures are the percent of industries with employment increasing plus one-half of the industries with unchanged employment, where 50 percent indicates an equal balance between industries with increasing and decreasing employment.

The BLS diffusion index for total private employment was at 50.2 in August, down from 54.3 in July. For manufacturing, the diffusion index declined to 36.4 from 50.6 in July. This is the lowest level for manufacturing since 2009.

Not only was job growth was weak in August, but job gains were not widespread across industries (another negative).

Yesterday:
• Summary for Week Ending Sept 7th
• Schedule for Week of Sept 9th
• Analysis: I expect QE3 on Sept 13th

by Calculated Risk on 9/09/2012 09:33:00 AM

Coastal California is doing better. And some inland areas are improving (I've mentioned the turnaround in Temecula before - one of the hardest hit areas during the recession). Here is another area doing better ...

From the LA Times: Many signs point to a Bakersfield boom

The state's economic recovery has largely been concentrated on the coast, leaving behind much of the hard-hit San Joaquin Valley. But Bakersfield, perhaps best known for oil, agriculture and country music, has reclaimed an old title: boomtown.

Bakersfield has been adding population and jobs at a brisk pace and is a few thousand jobs from matching its peak employment level of five years ago. ... Employment has grown across many sectors, including manufacturing. Even construction, which suffered mightily statewide during the housing bust, has strengthened. And unlike many struggling municipalities, in Kern County officials have recommended a budget increase that would allow hiring of more than 150 people.

High energy prices have really helped Bakersfield, but it appears the entire economy is growing.

Yesterday:
• Summary for Week Ending Sept 7th
• Schedule for Week of Sept 9th
• Analysis: I expect QE3 on Sept 13th