by Calculated Risk on 12/02/2013 01:59:00 PM

From the National Restaurant Association: Restaurant Performance Index Hit a Four-Month High in October

Fueled by stronger same-store sales and traffic and a more optimistic outlook among restaurant operators, the National Restaurant Association’s Restaurant Performance Index (RPI) rose to a four-month high in October. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 100.9 in October, up 0.7 percent from September and the strongest level since June. In addition, the RPI stood above 100 for the eighth consecutive month, which signifies expansion in the index of key industry indicators.

“The RPI’s October gain was driven by broad-based gains in the index components, most notably solid improvements in same-store sales and customer traffic,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association.
...
The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 100.9 in October – up 1.0 percent from a level of 99.9 in September and the highest level in five months.

A majority of restaurant operators reported higher same-store sales in October, and the results were a solid improvement over September’s performance. ... Restaurant operators also reported stronger customer traffic levels in October.
emphasis added

Click on graph for larger image.

The index increased to 100.9 in October, up from 100.2 in September. (above 100 indicates expansion).

Restaurant spending is discretionary, so even though this is "D-list" data, I like to check it every month. 

by Calculated Risk on 12/02/2013 11:31:00 AM

Note: The release today was for both September and October.  Construction spending decreased in September and increased in October (October was up from August).

The Census Bureau reported that overall construction spending increased in October:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during October 2013 was estimated at a seasonally adjusted annual rate of $908.4 billion, 0.8 percent above the September estimate of $901.2 billion. The October figure is 5.3 percent above the October 2012 estimate of $863.1 billion.
...
Spending on private construction was at a seasonally adjusted annual rate of $625.7 billion, 0.5 percent below the September estimate of $629.0 billion. ...

In October, the estimated seasonally adjusted annual rate of public construction spending was $282.7 billion, 3.9 percent above the September estimate of $272.2 billion.

Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

There has been a "pause" in residential construction spending, but the level is still very low and I expect residential spending to continue to increase.  Private residential spending is 52% below the peak in early 2006, and up 43% from the post-bubble low.

Non-residential spending is 28% below the peak in January 2008, and up about 33% from the recent low.

Public construction spending is now 13% below the peak in March 2009 and up about 7% from the recent low.

The second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is now up 17%. Non-residential spending is down 3% year-over-year. Public spending is up 2% year-over-year.

To repeat a few key themes:
1) Private residential construction is usually the largest category for construction spending, and is now the largest category once again.  Usually private residential construction leads the economy, so this is a good sign going forward.

2) Private non-residential construction spending usually lags the economy.  There was some increase this time for a couple of years - mostly related to energy and power - but the key sectors of office, retail and hotels are still at very low levels.  Based on the architecture billings index, I expect private non-residential to start to increase.

3) Public construction spending increased in October and is now 7% above the low in April.  It appears that the drag from public construction spending is over.  Public spending has declined to 2006 levels (not adjusted for inflation) and was a drag on the economy for 4 years. In real terms, public construction spending has declined to 2001 levels.

Looking forward, construction spending should continue to increase. Residential spending is still very low, non-residential should start to pickup, and public spending appears to have bottomed.

by Calculated Risk on 12/02/2013 10:00:00 AM

The ISM manufacturing index indicated faster expansion in November. The PMI was at 57.3% in November, up from 56.4% in October. The employment index was at 56.5%, up from 53.2%, and the new orders index was at 63.6%, up from 60.6% in October.

From the Institute for Supply Management: November 2013 Manufacturing ISM Report On Business®

Economic activity in the manufacturing sector expanded in November for the sixth consecutive month, and the overall economy grew for the 54th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The PMI™ registered 57.3 percent, an increase of 0.9 percentage point from October's reading of 56.4 percent. The PMI™ has increased progressively each month since June, with November's reading reflecting the highest PMI™ in 2013. The New Orders Index increased in November by 3 percentage points to 63.6 percent, and the Production Index increased by 2 percentage points to 62.8 percent. The Employment Index registered 56.5 percent, an increase of 3.3 percentage points compared to October's reading of 53.2 percent. This reflects the highest reading since April 2012 when the Employment Index registered 56.8 percent. With 15 of 18 manufacturing industries reporting growth in November relative to October, the positive growth trend characterizing the second half of 2013 is continuing."
emphasis added

Click on graph for larger image.

Here is a long term graph of the ISM manufacturing index.

This was above expectations of 55.2% and suggests manufacturing expanded at a faster pace in November.

by Calculated Risk on 12/02/2013 09:00:00 AM

The Markit PMI is at 54.7 (above 50 is expansion). This was up from 51.8 in October, and up from the November flash reading of 54.3.

From Markit: PMI jumps to highest reading since January

The final Markit U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) registered 54.7 in November, signalling the strongest improvement in manufacturing business conditions since January. The headline index was up sharply from 51.8 in October (a one-year low) and above the earlier flash estimate of 54.3.
...
Firms linked the marked rise in output to a stronger increase in new work intakes. Notably, new order growth was strong and accelerated to one of the fastest rates for over one-and-a-half years. [New orders were at 56.2 up from 52.7]
...
Employment in the U.S. manufacturing sector increased for the fifth consecutive month in November. However, the rate of job creation slowed to a modest pace that was weaker than the average for 2013 so far.

“The U.S. manufacturing sector has shown surprising resilience in the face of the government shutdown. The average PMI reading so far in the fourth quarter is unchanged on the average seen in the third quarter and the survey is consistent with production growing at an annualised rate of approximately 2.5%." [said Chris Williamson, Chief Economist at Markit]

“One of the most encouraging trends we are seeing, however, is a surge in the production of capital goods such as plant and machinery, which is growing at the fastest rate since the financial crisis, fuelled by rising domestic demand. This is a great sign that companies are feeling sufficiently confident to be boosting investment.”
emphasis added

The ISM PMI for November will be released at 10 AM ET today.

by Calculated Risk on 12/01/2013 07:56:00 PM

Note: Several Google employees have offered to help with my minor blog issue - thanks so much - and I'm sure the issue will be resolved.

This will be a very busy week for economic data!

Monday:
• At 9:00 AM ET, The Markit US PMI Manufacturing Index for November. The consensus is for an increase to 54.2 from 51.8 in October.

• At 10:00 AM, the ISM Manufacturing Index for November. The consensus is for a decrease to 55.5 from 56.4 in October.

• Also a 10:00 AM, Construction Spending for September and October. The consensus is for a 0.5% increase in September, and a further 0.5% increase in October construction spending.

Weekend:
• Schedule for Week of December 1st

The Nikkei is down slightly.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are up slightly and DOW futures are up 20 (fair value).

Oil prices are mixed with WTI futures down to $92.82 per barrel and Brent at $109.69 per barrel.  The spread is back big time!

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices have decreased recently to $3.25 per gallon.  If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com

by Calculated Risk on 12/01/2013 05:16:00 PM

This is weird.

In 2008, I purchased a custom URL from Google / Blogger. Every year Google charges my credit card to pay for the URL. No worries.

My credit card expired this year - as credit cards do - and Google notified me that I'd have to update my payment information to pay for the URL. No problem. I updated the information in my Blogger / Google account, but Google doesn't seem to recognize this. They keep sending me emails saying that my credit card has expired - and that the information needs to be updated before December 6th.

I've tried contacting Google, posting messages in Blogger and Google forums, and I've received no response. Help at Google tells me I'm a "free account" (even though I pay Google every year) and there is no help for me.

I'll keep trying - maybe someone at Google could help?

best wishes to all

by Calculated Risk on 12/01/2013 10:45:00 AM

I expect the CoreLogic index - the index is Not Seasonally Adjusted (NSA) - to decline month-to-month in the October report.  The Case-Shiller index (NSA) will probably turn negative month-to-month in the November report.  This will not be a sign of impending doom - or another collapse in house prices - it is just the normal seasonal pattern.

Even in normal times house prices tend to be stronger in the spring and early summer, than in the fall and winter. Currently there is a stronger than normal seasonal pattern because conventional sales are following the normal pattern (more sales in the spring and summer), but distressed sales (foreclosures and short sales) happen all year. So distressed sales have a larger negative impact on prices in the fall and winter.

Click on graph for larger image.

This graph shows the month-to-month change in the CoreLogic and NSA Case-Shiller Composite 20 index over the last several years (both through September 2013). The CoreLogic index will probably turn negative in the October report (CoreLogic is a 3 month weighted average, with the most recent month weighted the most). Case-Shiller NSA will probably turn negative month-to-month in the November report (also a three month average, but not weighted).


The second graph shows the month-to-month change since January 2000.  Notice the seasonal patterns were much smaller prior to the collapse of the housing bubble.

At some point the large seasonal differences should diminish as the volume of distressed sales continues to decline.

Note: The Zillow index already indicated a slight month-to-month decline in October (Zillow excludes foreclosures, so the seasonal swings are not as large as for the Case-Shiller NSA and CoreLogic indexes):

Zillow’s October Real Estate Market Reports ... show that national home values declined 0.1% from September to October to $162,800. On a year-over-year basis, home values were up 5.2% from October 2012 ... These annual and monthly trends are in line with a broad and robust housing recovery that is starting to slow down as home value appreciation rates fall back to more sustainable growth levels.

by Calculated Risk on 11/30/2013 01:11:00 PM

This will be a very busy week for economic data with several key reports including the November employment report on Friday, New Home sales for September and October on Wednesday, and the 2nd estimate of Q3 GDP on Thursday.

Other key reports include the ISM manufacturing index on Monday, November vehicle sales on Tuesday, the ISM service index on Wednesday, and the October trade deficit report on Wednesday.

----- Monday, December 2nd -----
9:00 AM ET: The Markit US PMI Manufacturing Index for November.  The consensus is for an increase to 54.2 from 51.8 in October.

10:00 AM ET: ISM Manufacturing Index for November. The consensus is for a decrease to 55.5 from 56.4 in October.

Here is a long term graph of the ISM manufacturing index.

The ISM manufacturing index indicated expansion in October at 56.4%. The employment index was at 53.2%, and the new orders index was at 60.6%.

10:00 AM: Construction Spending for September and October. The consensus is for a 0.5% increase in September, and a further 0.5% increase in October construction spending.

----- Tuesday, December 3rd -----
>All day: Light vehicle sales for November. The consensus is for light vehicle sales to increase to 15.7 million SAAR in November (Seasonally Adjusted Annual Rate) from 15.2 million SAAR in October.

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the October sales rate.

----- Wednesday, December 4th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:15 AM: The ADP Employment Report for November. This report is for private payrolls only (no government). The consensus is for 185,000 payroll jobs added in November, up from 130,000 in October.  

8:30 AM: Trade Balance report for October from the Census Bureau.

Imports increased and exports decreased slightly in September.

The consensus is for the U.S. trade deficit to decrease to $40.2 billion in October from $41.8 billion in September.

10:00 AM: New Home Sales for September and October from the Census Bureau.

This graph shows New Home Sales since 1963. The dashed line is the August sales rate.

The consensus is for an increase in sales to 425 thousand Seasonally Adjusted Annual Rate (SAAR) in October from 421 thousand in August. 

10:00 AM: ISM non-Manufacturing Index for November. The consensus is for a reading of 55.5, up from 55.4 in October. Note: Above 50 indicates expansion, below 50 contraction.

10:00 AM: Trulia Price Rent Monitors for November. This is the index from Trulia that uses asking house prices adjusted both for the mix of homes listed for sale and for seasonal factors.

2:00 PM: Federal Reserve Beige Book, an informal review by the Federal Reserve Banks of current economic conditions in their Districts.

----- Thursday, December 5th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to increase to 322 thousand from 316 thousand last week.

8:30 AM: Q3 GDP (second estimate). This is the second estimate of Q3 GDP from the BEA. The consensus is that real GDP increased 3.1% annualized in Q3, revised up from the advance estimate of 2.8%.

10:00 AM: Manufacturers' Shipments, Inventories and Orders (Factory Orders) for October. The consensus is for a 1.2% decrease in October orders.

----- Friday, December 6th -----
8:30 AM: Employment Report for November. The consensus is for an increase of 180,000 non-farm payroll jobs in November, down from the 204,000 non-farm payroll jobs added in October.

The consensus is for the unemployment rate to decrease to 7.2% in November from 7.3% in October.  A key will be if the participation rate increases too, reversing the sharp decline last month.

The following graph shows the percentage of payroll jobs lost during post WWII recessions through October.

The economy has added 7.8 million private sector jobs since employment bottomed in February 2010 (7.2 million total jobs added including all the public sector layoffs).

There are still almost 1.0 million fewer private sector jobs now than when the recession started in 2007.

8:30 AM ET: Personal Income and Outlays for October. The consensus is for a 0.3% increase in personal income, and for a 0.3% increase in personal spending. And for the Core PCE price index to increase 0.1%.

9:55 AM: Reuter's/University of Michigan's Consumer sentiment index (preliminary for December). The consensus is for a reading of 75.5, up from 75.1 in November.

3:00 PM: Consumer Credit for October from the Federal Reserve. The consensus is for credit to increase $15.0 billion in October.

by Calculated Risk on 11/30/2013 09:20:00 AM

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for November 29, 2013.

Changes and comments from surferdude808:

The FDIC released details of its enforcement action activity through October 2013. For the week, there were nine removals that lower the Unofficial Problem Bank List to 645 with assets of $221.2 billion. At the end of November last year, the list held 856 institutions with assets of $326.4 billion. For the month, the list declined from 670 to 645 after one failure, six unassisted mergers, and 18 action terminations. It was the first month that an institution was not added to the list since its first publication in August 2009.

FDIC terminated actions against First State Financial, Inc., Pineville, KY ($363 million); EvaBank, Eva, AL ($321 million); First Bank, Clewiston, FL ($243 million); Commerce Bank, Geneva, MN ($155 million); Farmers Exchange Bank, Louisville, AL ($135 million); American Heartland Bank and Trust, Sugar Grove, IL ($110 million); Security First Bank, Fresno, CA ($98 million Ticker: SFRK); and Integrity First Bank, Wausau, WI ($78 million). The other removal was The Wilton Bank, Wilton, CT ($75 million Ticker: WIBW), which found a merger partner.

Earlier in the week, the FDIC released third quarter industry results including figures of 515 institutions with assets of $174 billion on the Official Problem Bank List. The difference between the official and unofficial lists narrowed to 130 institutions and $47.2 billion of assets from 148 institutions and $58.6 billion of assets last quarter. For five quarters during 2009 and 2010, the official list had a higher count and more assets but subsequently the official list has declined at a faster pace. We anticipated the institution count difference could narrow to around 120. Still, the narrowing by 18 was the second most since the first quarter of 2013.

by Calculated Risk on 11/29/2013 08:49:00 PM

A month ago I asked Will the Fed "Taper" in December? Although the consensus is the Fed will wait until 2014 to start to taper asset purchases, December is still possible.

From a month ago:

There are many key releases right at the beginning of December, and we know the Fed is "data dependent".  So here is what the FOMC would like to see to start tapering: 1) the unemployment rate fall to 7.2% in the November report, 2) Employment up about 2.2 million year-over-year in November, 3) inflation increasing toward 2% target, and 4) some sort of fiscal agreement by Dec 13th.  All possible.

• The unemployment rate criteria should probably be expanded - not only would the Fed like to see the unemployment rate decline in November, they'd like to see the participation rate increase (the participation rate declined sharply in October to 62.8% from 63.2% in September, and I suspect the Fed will like to see some of that reversed in the November report). The unemployment report will be released next Friday, and the consensus is the unemployment rate will decline to 7.2%.

• Following the solid October employment report, it will be pretty easy for total employment to be up 2.2 million year-over-year in November (employment was up 2.33 million year-over-year in October).  The Fed will probably be looking for November job growth in line with the consensus of 180 thousand.

• Inflation is probably the key right now.  Core PCE was up 1.2% year-over-year in September, and the Fed would like to see this increasing towards their 2.0% target.   PCE prices for October will be released next Friday, and the consensus is for core PCE prices to only be up 1.1% year-over-year.  Low inflation might stop the Fed from tapering in December.

• Some sort of fiscal agreement looks likely now since Congress is playing "small ball". Of course you never know with Congress.

Right now the key is inflation.