by Calculated Risk on 10/16/2015 10:09:00 AM

From the BLS: Job Openings and Labor Turnover Summary

The number of job openings decreased to 5.4 million on the last business day of August, the U.S. Bureau of Labor Statistics reported today. The number of hires and separations was little changed at 5.1 million and 4.8 million, respectively. Within separations, the quits rate was 1.9 percent for the fifth month in a row, and the layoffs and discharges rate was unchanged at 1.2 percent. ...
...
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. ... There were 2.7 million quits in August, little changed from July. The number of quits has held between 2.7 million and 2.8 million for the past 12 months after increasing steadily since the end of the recession.
emphasis added

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 August, the most recent employment report was for September.

Click on graph for larger image.


Note that hires (dark blue) and total separations (red and light blue columns stacked) are pretty close each month. This is a measure of labor market turnover.  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 August to 5.370 million from 5.668 million in July.

The number of job openings (yellow) are up 9% year-over-year compared to August 2014.

Quits are up 9% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

This is a decent report.  Even though Job Openings decreased, this was from the record high in July - and Openings are still up 9% year-over-year.

by Calculated Risk on 10/16/2015 09:25:00 AM

From the Fed: Industrial production and Capacity Utilization

Industrial production decreased 0.2 percent in September after edging down 0.1 percent in August. The decline in August is smaller than previously reported. In September, manufacturing output moved down 0.1 percent for a second consecutive monthly decrease; the index for mining fell 2.0 percent, while the index for utilities rose 1.3 percent. For the third quarter as a whole, total industrial production rose at an annual rate of 1.8 percent, and manufacturing output increased 2.5 percent. A strong gain for motor vehicles and parts contributed substantially to the quarterly increases. At 107.1 percent of its 2012 average, total industrial production in September was 0.4 percent above its year-earlier level. Capacity utilization for the industrial sector fell 0.3 percentage point in September to 77.5 percent, a rate that is 2.6 percentage points below its long-run (1972–2014) average.
emphasis added

Click on graph for larger image.

This graph shows Capacity Utilization. This series is up 10.6 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 77.5% is 2.6% below the average from 1972 to 2012 and below the pre-recession level of 80.8% 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 decreased 0.2% in September to 107.1. This is 22.8% above the recession low, and 1.8% above the pre-recession peak.

This was above expectations of a 0.3% decrease and August was revised up. A decent report given the weakness in oil and the strong dollar.

by Calculated Risk on 10/15/2015 09:01:00 PM

Commercial real estate prices are increasing significantly, from CoStar: CCRSI: Commercial Property Price Growth Continued To Heat Up In August

While construction is rising in many markets, aggregate demand across the major property types continues to outstrip supply, resulting in tighter vacancy rates and rent growth, which in turn, continues to drive strong investor interest in commercial real estate. In August 2015, the two broadest measures of aggregate pricing for commercial properties within the CCRSI—the value-weighted U.S. Composite Index and the equal-weighted U.S. Composite Index—increased by 1.3% and 1%, respectively, and 12.6% and 11.4%, respectively, in the 12 months ended August 2015.

These are repeat sales indexes - like Case-Shiller for residential - but this is based on far fewer pairs.

Friday:
• At 9:15 AM ET, the Fed will release Industrial Production and Capacity Utilization for September. The consensus is for a 0.3% decrease in Industrial Production, and for Capacity Utilization to decrease to 77.4%.

• At 10:00 AM, Job Openings and Labor Turnover Survey for August from the BLS. Jobs openings increased in July to 5.753 million from 5.323 million in June. The number of job openings were up 22% year-over-year, and Quits were up 6% year-over-year.

• Also at 10:00 AM, the University of Michigan's Consumer sentiment index (preliminary for October). The consensus is for a reading of 89.5, up from 87.2 in September.

by Calculated Risk on 10/15/2015 06:00:00 PM

Note: There were some large swings in LA area port traffic earlier this year due to labor issues that were settled in late February. Port traffic surged in March as the waiting ships were unloaded (the trade deficit increased in March too), and port traffic declined in April.

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

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).

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 was down 0.6% compared to the rolling 12 months ending in August.   Outbound traffic was down 0.6% compared to 12 months ending in August.

The recent downturn in exports might be due to the strong dollar and weakness in China.

For imports, August was the all time inbound record, so some of September probably arrived in August (might be related to timing of Labor Day).

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

Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March (depending on the timing of the Chinese New Year).

Imports were down 6% year-over-year in September; exports were down 7% year-over-year.

For the July through September period, imports were up 3.5% year-over-year.

This data suggests a slightly smaller trade deficit with Asia in September than in August.

by Calculated Risk on 10/15/2015 03:19:00 PM

From the Philly Fed: October Manufacturing Survey

Manufacturing conditions in the region continued to weaken in October, according to firms responding to this month’s Manufacturing Business Outlook Survey. The indicator for general activity remained negative, while the new orders and shipments indexes turned negative this month. Labor market indicators also weakened.
...
he diffusion index for current activity remained negative for the second consecutive month, although it edged slightly higher from -6.0 in September to -4.5...

The survey’s indicators for labor market conditions suggest slightly weaker employment. The percentage of firms reporting declines in employment (15 percent) was slightly greater than the percentage reporting increases (13 percent). The employment index declined nearly 12 points, from 10.2 to -1.7.
emphasis added

This was below the consensus forecast of a reading of -1.0 for October.

From the NY Fed: October 2015 Empire State Manufacturing Survey

Business activity declined for a third consecutive month for New York manufacturers, according to the October 2015 survey. The general business conditions index edged up three points to -11.4, marking three straight months of readings below -10, the first such occurrence since 2009.

The index for number of employees fell for a fourth consecutive month, slipping two points to -8.5 in a sign that employment levels were lower. The average workweek index remained negative at -7.6, pointing to shorter workweeks.

Click on graph for larger image.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index. The yellow line is an average of the NY Fed (Empire State) and Philly Fed surveys through October. The ISM and total Fed surveys are through September.

The average of the Empire State and Philly Fed surveys increased in September, but was still negative.  This suggests another weak reading for the ISM survey.

by Calculated Risk on 10/15/2015 12:06:00 PM

The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning:

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.3% (3.4% annualized rate) in September. The 16% trimmed-mean Consumer Price Index rose 0.2% (2.6% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics' (BLS) monthly CPI report.

Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers fell 0.2% (-1.8% annualized rate) in September. The CPI less food and energy rose 0.2% (2.6% annualized rate) on a seasonally adjusted basis.

Note: The Cleveland Fed has the median CPI details for September here. Motor fuel was down sharply again in September.

Click on graph for larger image.

This graph shows the year-over-year change for these four key measures of inflation. On a year-over-year basis, the median CPI rose 2.5%, the trimmed-mean CPI rose 1.8%, and the CPI less food and energy rose 1.9%. Core PCE is for August and increased 1.2% year-over-year.

On a monthly basis, median CPI was at 3.4% annualized, trimmed-mean CPI was at 2.6% annualized, and core CPI was at 2.6% annualized.

On a year-over-year basis these measures suggest inflation remains below the Fed's target of 2% (median CPI is above 2%).

Inflation is still low, but mostly moving up a little.

by Calculated Risk on 10/15/2015 09:10:00 AM

With the release of the CPI report this morning, we now know the Cost of Living Adjustment (COLA), and the contribution base for 2016.

Currently CPI-W is the index that is used to calculate the Cost-Of-Living Adjustments (COLA). Here is a discussion from Social Security on the current calculation (no increase) and a list of previous Cost-of-Living Adjustments. Note: this is not the headline CPI-U.

The contribution and benefit base will be unchanged at $118,500 in 2016.

The National Average Wage Index increased to $46,481.52 in 2014, up 3.55% from $44,888.16 in 2013 (used to calculate contribution base).  However, by law, since COLA was unchanged, the contribution base will be unchanged in 2016.

by Calculated Risk on 10/15/2015 08:30:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.2 percent in September on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index was essentially unchanged before seasonal adjustment.

The energy index fell 4.7 percent in September, with all major component indexes declining. The gasoline index continued to fall sharply and was again the main cause of the seasonally adjusted all items decrease. The indexes for fuel oil, electricity, and natural gas declined as well.

In contrast to the energy declines, the indexes for food and for all items less food and energy both accelerated in September. The food index rose 0.4 percent, its largest increase since May 2014. The index for all items less food and energy rose 0.2 percent in September.
emphasis added

I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI. This was at the consensus forecast of a 0.2% decrease for CPI, and above the forecast of a 0.1% increase in core CPI.

The DOL reported:

In the week ending October 10, the advance figure for seasonally adjusted initial claims was 255,000, a decrease of 7,000 from the previous week's revised level. The previous week's level was revised down by 1,000 from 263,000 to 262,000. The 4-week moving average was 265,000, a decrease of 2,250 from the previous week's revised average. This is the lowest level for this average since December 15, 1973 when it was 256,750. The previous week's average was revised down by 250 from 267,500 to 267,250.

There were no special factors impacting this week's initial claims.

The previous week was revised down to 262,000.

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.


The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 265,000.  This is the lowest level in over 40 years.

This was below the consensus forecast of 270,000, and the low level of the 4-week average suggests few layoffs.

by Calculated Risk on 10/14/2015 06:21:00 PM

Thursday:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for 270 thousand initial claims, up from 263 thousand the previous week.

• Also at 8:30 AM, the Consumer Price Index for September from the BLS. The consensus is for a 0.2% decrease in CPI, and a 0.1% increase in core CPI.

• Also at 8:30 AM,NY Fed Empire State Manufacturing Survey for October. The consensus is for a reading of -7.0, up from -14.7.

• At 10:00 AM, the Philly Fed manufacturing survey for October. The consensus is for a reading of -1.0, up from -6.0.

From Matthew Graham at Mortgage News Daily: Mortgage Rates Drop After Weak Economic Data

Mortgage rates dropped quickly today, getting them much of the way back to lows seen at the beginning of the month. For context, there has only been one day in the past 5 months with better rates (Friday October 2nd, immediately following the weak jobs data). That means the average lender is quoting conventional 30yr fixed rates between 3.75 and 3.875% on top tier scenarios. A few of the more aggressive lenders are already back down to 3.625%

Here is a table from Mortgage News Daily:

Home Loan Rates

View More Refinance Rates

by Calculated Risk on 10/14/2015 02:03:00 PM

Fed's Beige Book "Prepared at the Federal Reserve Bank of New York and based on information collected on or before October 5, 2015."

Reports from the twelve Federal Reserve Districts point to continued modest expansion in economic activity during the reporting period from mid-August through early October. The pace of growth was characterized as modest in the New York, Philadelphia, Cleveland, Atlanta, Chicago, and St. Louis Districts, while the Minneapolis, Dallas, and San Francisco Districts described growth as moderate. Boston and Richmond reported that activity increased. Kansas City, on the other hand, noted a slight decline in economic activity. Compared with the previous report, the pace of growth is said to have slowed in the Richmond and Chicago Districts. A number of Districts cite the strong dollar as restraining manufacturing activity as well as tourism spending. Business contacts across the nation were generally optimistic about the near-term outlook.

And on real estate:

Residential real estate activity has generally improved since the last report, with almost all Districts reporting rising prices and sales volume. One exception was the Chicago District, where prices and sales volume were generally steady. A number of Districts noted that the market for lower or moderately priced homes has outperformed the high end of the market. The inventory of available homes was reported to be low in the Boston, New York, Richmond, and St. Louis Districts; and San Francisco reported a shortage of available land in some areas. On the other hand, Philadelphia reported adequate inventories, and Dallas noted a fair amount of supply in the pipeline. Boston, New York, and Chicago indicated rising residential rents, while Minneapolis reported sharp declines in rents in energy-producing areas of North Dakota. Residential construction has been mixed but generally stronger in the latest reporting period, with multi-family outpacing single-family construction. Strong multi-family construction was highlighted in the New York, Cleveland, Richmond, and San Francisco Districts, while Atlanta reported strong residential construction generally. However, Minneapolis and Kansas City reported declines in new home construction. Philadelphia mentioned a lack of new construction, while Dallas reported that new construction has been restrained by labor shortages; Chicago indicated little change.

Commercial real estate markets have shown signs of strengthening in all twelve Districts. Most Districts noted improvement across all major segments, though New York and St. Louis noted some increased slack in the market for retail space. Commercial construction was also stronger in most Districts. Boston and St. Louis noted brisk construction in the health sector, including senior care facilities, and Cleveland also indicated strong demand for senior living structures. New York, on the other hand, noted some pullback in new commercial construction, though activity remained fairly brisk.
emphasis added

Positive in real estate.