by Calculated Risk on 4/02/2016 08:09:00 AM

This will be a light week for economic data.

The key economic report is the trade balance on Tuesday.

Also the quarterly Reis surveys for office, apartment and malls will be released this week.

----- Monday, April 4th -----
Early: Reis Q1 2016 Office Survey of rents and vacancy rates.

10:00 AM ET: The Fed will release the monthly Labor Market Conditions Index (LMCI).

----- Tuesday, April 5th -----
Early: Reis Q1 2016 Apartment Survey of rents and vacancy rates.

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

This graph shows the U.S. trade deficit, with and without petroleum, through January. 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.

The consensus is for the U.S. trade deficit to be at $46.2 billion in February from $45.7 billion in January.

10:00 AM: Job Openings and Labor Turnover Survey for February from the BLS.

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

Jobs openings increased in January to 5.541 million from 5.281 million in December.

The number of job openings (yellow) were up 11% year-over-year, and Quits were up 1% year-over-year.

10:00 AM: the ISM non-Manufacturing Index for March. The consensus is for index to increase to 54.0 from 53.4 in February.

----- Wednesday, April 6th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

Early: Reis Q1 2016 Mall Survey of rents and vacancy rates.

2:00 PM: The Fed will release the FOMC Minutes for the Meeting of March 15-16, 2016

----- Thursday, April 7th -----
8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 272 thousand initial claims, down from 276 thousand the previous week.

3:00 PM: Consumer credit from the Federal Reserve.  The consensus is for a $14 billion increase in credit.

----- Friday, April 8th -----
10:00 AM: Monthly Wholesale Trade: Sales and Inventories for February. The consensus is for a 0.2% decrease in inventories.

by Calculated Risk on 4/01/2016 07:33:00 PM

By request, here is another update of an earlier post through the March 2016 employment report including all revisions.

NOTE: Several readers have asked if I could add a lag to these graphs (obviously a new President has zero impact on employment for the month they are elected). But that would open a debate on the proper length of the lag, so I'll just stick to the beginning of each term.

Note: We frequently use Presidential terms as time markers - we could use Speaker of the House, or any other marker.

Important: There are many differences between these periods. Overall employment was smaller in the '80s, however the participation rate was increasing in the '80s (younger population and women joining the labor force), and the participation rate is generally declining now.  But these graphs give an overview of employment changes.

First, here is a table for private sector jobs. The top two private sector terms were both under President Clinton.  Reagan's 2nd term saw about the same job growth as during Carter's term.  Note: There was a severe recession at the beginning of Reagan's first term (when Volcker raised rates to slow inflation) and a recession near the end of Carter's term (gas prices increased sharply and there was an oil embargo).

Term	Private Sector Jobs Added (000s)
Carter	9,041
Reagan 1	5,360
Reagan 2	9,357
GHW Bush	1,510
Clinton 1	10,884
Clinton 2	10,082
GW Bush 1	-811
GW Bush 2	415
Obama 1	1,921
Obama 2	8,2971
138 months into 2nd term: 10,480 pace.

The first graph shows the change in private sector payroll jobs from when each president took office until the end of their term(s). President George H.W. Bush only served one term, and President Obama is in the third year of his second term.

Mr. G.W. Bush (red) took office following the bursting of the stock market bubble, and left during the bursting of the housing bubble. Mr. Obama (blue) took office during the financial crisis and great recession. There was also a significant recession in the early '80s right after Mr. Reagan (yellow) took office.

There was a recession towards the end of President G.H.W. Bush (purple) term, and Mr Clinton (light blue) served for eight years without a recession.

Click on graph for larger image.

The first graph is for private employment only.

The employment recovery during Mr. G.W. Bush's (red) first term was sluggish, and private employment was down 811,000 jobs at the end of his first term.   At the end of Mr. Bush's second term, private employment was collapsing, and there were net 396,000 private sector jobs lost during Mr. Bush's two terms. 

Private sector employment increased slightly under President G.H.W. Bush (purple), with 1,510,000 private sector jobs added.

Private sector employment increased by 20,966,000 under President Clinton (light blue), by 14,717,000 under President Reagan (yellow), and 9,041,000 under President Carter (dashed green).

There were only 1,921,000 more private sector jobs at the end of Mr. Obama's first term.  Thirty eight months into Mr. Obama's second term, there are now 10,218,000 more private sector jobs than when he initially took office.

 A big difference between the presidencies has been public sector employment.  Note the bumps in public sector employment due to the decennial Census in 1980, 1990, 2000, and 2010. 

The public sector grew during Mr. Carter's term (up 1,304,000), during Mr. Reagan's terms (up 1,414,000), during Mr. G.H.W. Bush's term (up 1,127,000), during Mr. Clinton's terms (up 1,934,000), and during Mr. G.W. Bush's terms (up 1,744,000 jobs).

However the public sector has declined significantly since Mr. Obama took office (down 497,000 jobs). This has been a significant drag on overall employment.

And a table for public sector jobs. Public sector jobs declined the most during Obama's first term, and increased the most during Reagan's 2nd term.

Term	Public Sector Jobs Added (000s)
Carter	1,304
Reagan 1	-24
Reagan 2	1,438
GHW Bush	1,127
Clinton 1	692
Clinton 2	1,242
GW Bush 1	900
GW Bush 2	844
Obama 1	-708
Obama 2	2111
138 months into 2nd term, 267 pace

Looking forward, I expect the economy to continue to expand through 2016 (at least), so I don't expect a sharp decline in private employment as happened at the end of Mr. Bush's 2nd term (In 2005 and 2006 I was warning of a coming down turn due to the bursting of the housing bubble - and I predicted a recession in 2007).

For the public sector, the cutbacks are clearly over.  Right now I'm expecting some increase in public employment during Obama's 2nd term, but nothing like what happened during Reagan's second term.

Below is a table of the top three presidential terms for private job creation (they also happen to be the three best terms for total non-farm job creation).

Clinton's two terms were the best for both private and total non-farm job creation, followed by Reagan's 2nd term.

Currently Obama's 2nd term is on pace to be the 2nd best ever for private job creation.  However, with very few public sector jobs added, Obama's 2nd term is only on pace to be the fourth best for total job creation.

Note: Only 211 thousand public sector jobs have been added during the first thirty eight months of Obama's 2nd term (following a record loss of 708 thousand public sector jobs during Obama's 1st term).  This is about 15% of the public sector jobs added during Reagan's 2nd term!

Top Employment Gains per Presidential Terms (000s)
Rank	Term	Private	Public	Total Non-Farm
1	Clinton 1	10,884	692	11,576
2	Clinton 2	10,082	1,242	11,312
3	Reagan 2	9,357	1,438	10,795
	Obama 21	8,297	211	7,871
	Pace2	10,480	267	10,747
138 Months into 2nd Term 2Current Pace for Obama's 2nd Term

The last table shows the jobs needed per month for Obama's 2nd term to be in the top three presidential terms. Right now it looks like Obama's 2nd term will be in the top 3 for private employment, but not for total employment gains.

Average Jobs needed per month (000s) for remainder of Obama's 2nd Term
to Rank	Private	Total
#1	259	307
#2	179	282
#3	106	229

by Calculated Risk on 4/01/2016 03:31:00 PM

Based on an estimate from WardsAuto, light vehicle sales were at a 16.45 million SAAR in March.

That is down about 4% from March 2015, and down about 6% from the 17.43 million annual sales rate last month.


Click on graph for larger image.

This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for March (red, light vehicle sales of 16.45 million SAAR from WardsAuto).

This was well below the consensus forecast of 17.6 million SAAR (seasonally adjusted annual rate).

The second graph shows light vehicle sales since the BEA started keeping data in 1967.

Note: dashed line is current estimated sales rate.

This was below expectations, however sales for 2016 - through the first three months - are still up about 3% from the comparable period last year.

by Calculated Risk on 4/01/2016 12:35:00 PM

The Census Bureau reported that overall construction spending decreased 0.5% in February compared to January:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during February 2016 was estimated at a seasonally adjusted annual rate of $1,144.0 billion, 0.5 percent below the revised January estimate of $1,150.1 billion. The February figure is 10.3 percent above the February 2015 estimate of $1,037.5 billion.

Both private and public spending decreased in February:

Spending on private construction was at a seasonally adjusted annual rate of $846.2 billion, 0.1 percent below the revised January estimate of $847.2 billion. ...

In February, the estimated seasonally adjusted annual rate of public construction spending was $297.8 billion, 1.7 percent below the revised January estimate of $302.8 billion.
emphasis added

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.

Private residential spending has been increasing, but is 34% below the bubble peak.

Non-residential spending is only 4% below the peak in January 2008 (nominal dollars).

Public construction spending is now 9% below the peak in March 2009.

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

On a year-over-year basis, private residential construction spending is up 11%. Non-residential spending is up 11% year-over-year. Public spending is up 9% year-over-year.

Looking forward, all categories of construction spending should increase in 2016. Residential spending is still very low, non-residential is increasing (except oil and gas), and public spending is also increasing after several years of austerity.

This was below the consensus forecast of a 0.2% increase for February, however construction spending for December and January were revised up.  Overall construction spending is up 10.3% year-over-year,  a solid increase.

by Calculated Risk on 4/01/2016 10:06:00 AM

The ISM manufacturing index indicated expansion in March after five months of contraction. The PMI was at 51.8% in March, up from 49.5% in February. The employment index was at 48.1%, down slightly from 48.5% in February, and the new orders index was at 58.3%, up sharply from February.

From the Institute for Supply Management: March 2016 Manufacturing ISM® Report On Business®

Economic activity in the manufacturing sector expanded in March for the first time in the last six months, while the overall economy grew for the 82nd 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® (ISM®) Manufacturing Business Survey Committee. "The March PMI® registered 51.8 percent, an increase of 2.3 percentage points from the February reading of 49.5 percent. The New Orders Index registered 58.3 percent, an increase of 6.8 percentage points from the February reading of 51.5 percent. The Production Index registered 55.3 percent, 2.5 percentage points higher than the February reading of 52.8 percent. The Employment Index registered 48.1 percent, 0.4 percentage point below the February reading of 48.5 percent. Inventories of raw materials registered 47 percent, an increase of 2 percentage points above the February reading of 45 percent. The Prices Index registered 51.5 percent, an increase of 13 percentage points above the February reading of 38.5 percent, indicating higher raw materials prices for the first time since October 2014. Manufacturing registered growth in March for the first time since August 2015, as 12 of our 18 industries reported sector growth, and 13 of our 18 industries reported an increase in new orders in March."
emphasis added

Click on graph for larger image.

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

This was above expectations of 50.5%, and suggests manufacturing expanded in March.

by Calculated Risk on 4/01/2016 09:36:00 AM

This was another solid employment report.

Earlier: March Employment Report: 215,000 Jobs, 5.0% Unemployment Rate

A few numbers:  Total employment is now 5.3 million above the previous peak.  Total employment is up 14.0 million from the employment recession low.

Private payroll employment increased 195,000 in March, and private employment is now 5.6 million above the previous peak. Private employment is up 14.4 million from the recession low.

In March, the year-over-year change was 2.80 million jobs.

Employment-Population Ratio, 25 to 54 years old

Since the overall participation rate has declined recently due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

In the earlier period the participation rate for this group was trending up as women joined the labor force. Since the early '90s, the participation rate moved more sideways, with a downward drift starting around '00 - and with ups and downs related to the business cycle.

The 25 to 54 participation rate increased in March to 81.4%, and the 25 to 54 employment population ratio increased to 78.0%.  The participation rate and employment population ratio for this group has increased sharply over the last several months.

The participation rate for this group might increase a little more (or at least stabilize for a couple of years) - although the participation rate has been trending down for this group since the late '90s.

Average Hourly Earnings

This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation.

On a monthly basis, wages increased at a 3.4% annual rate in March.

The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees.  Nominal wage growth was at 2.3% YoY in March.  This series is noisy, however overall wage growth is trending up.

Note: CPI has been running under 2%, so there has been real wage growth.

Part Time for Economic Reasons

From the BLS report:

The number of persons employed part time for economic reasons (also referred to as involuntary part-time workers) was about unchanged in March at 6.1 million and has shown little movement since November. These individuals, who would have preferred full-time employment, were working part-time because their hours had been cut back or because they were unable to find a full-time job.

The number of persons working part time for economic reasons increased in March. This level suggests slack still in the labor market.

These workers are included in the alternate measure of labor underutilization (U-6) that increased to 9.8% in March.

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 2.213 million workers who have been unemployed for more than 26 weeks and still want a job. This was up from 2165 million in February.

This is generally trending down, but is still high.

There are still signs of slack (as example, part time workers for economic reasons and elevated U-6), but there also signs the labor market is tightening.  Overall this was another solid employment report.

by Calculated Risk on 4/01/2016 08:42:00 AM

From the BLS:

Total nonfarm payroll employment rose by 215,000 in March, and the unemployment rate was little changed at 5.0 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in retail trade, construction, and health care. Job losses occurred in manufacturing and mining.
...
The change in total nonfarm payroll employment for January was revised from +172,000 to +168,000, and the change for February was revised from +242,000 to +245,000. With these revisions, employment gains in January and February combined were 1,000 less than previously reported.
...
In March, average hourly earnings for all employees on private nonfarm payrolls increased by 7 cents to $25.43, following a 2-cent decline in February. Over the year, average hourly earnings have risen by 2.3 percent.
emphasis added

Click on graph for larger image.

The first graph shows the monthly change in payroll jobs, ex-Census (meaning the impact of the decennial Census temporary hires and layoffs is removed - mostly in 2010 - to show the underlying payroll changes).

Total payrolls increased by 215 thousand in March (private payrolls increased 230 thousand).

Payrolls for January and February were revised down slightly by a combined 1 thousand.

This graph shows the year-over-year change in total non-farm employment since 1968.

In March, the year-over-year change was 2.80 million jobs.  A solid gain.


The third graph shows the employment population ratio and the participation rate.

The Labor Force Participation Rate increased in March to 63.0%. This is the percentage of the working age population in the labor force.   A large portion of the recent decline in the participation rate is due to demographics.

The Employment-Population ratio increased to 59.9% (black line).

I'll post the 25 to 54 age group employment-population ratio graph later.

The fourth graph shows the unemployment rate.

The unemployment rate was increased in March to 5.0%.

This was slightly above expectations of 210,000 jobs, and is another strong report.

I'll have much more later ...

by Calculated Risk on 3/31/2016 06:56:00 PM

Friday:
• At 8:30 AM ET, Employment Report for March. The consensus is for an increase of 210,000 non-farm payroll jobs added in March, down from the 242,000 non-farm payroll jobs added in February. The consensus is for the unemployment rate to be unchanged at 4.9%.

• At 10:00 AM, the ISM Manufacturing Index for March. The consensus is for the ISM to be at 50.5, up from 49.5 in February. The ISM manufacturing index indicated contraction at 49.5% in February. The employment index was at 48.5%, and the new orders index was at 51.5%.

• Also at 10:00 AM, Construction Spending for February. The consensus is for a 0.2% increase in construction spending.

• Also at 10:00 AM, University of Michigan's Consumer sentiment index (final for March). The consensus is for a reading of 90.9, up from the preliminary reading 91.0.

• All day: Light vehicle sales for March. The consensus is for light vehicle sales to increase to 17.6 million SAAR in March from 17.5 million in February (Seasonally Adjusted Annual Rate).

On Freddie:

Freddie Mac reported that the Single-Family serious delinquency rate decreased in February to 1.26% from 1.33% in January. Freddie's rate is down from 1.81% in February 2015. This is the lowest rate since September 2008.

Freddie's serious delinquency rate peaked in February 2010 at 4.20%.

These are mortgage loans that are "three monthly payments or more past due or in foreclosure". 

Note: Fannie Mae reported yesterday.

Click on graph for larger image

Although the rate is generally declining, the "normal" serious delinquency rate is under 1%. 

The serious delinquency rate has fallen 0.55 percentage points over the last year, and at that rate of improvement, the serious delinquency rate will not be below 1% until the second half of this year.

I expect an above normal level of Fannie and Freddie distressed sales through 2016 (mostly in judicial foreclosure states).

by Calculated Risk on 3/31/2016 01:47:00 PM

On Friday at 8:30 AM ET, the BLS will release the employment report for March. The consensus, according to Bloomberg, is for an increase of 210,000 non-farm payroll jobs in March (with a range of estimates between 175,000 to 241,000), and for the unemployment rate to be unchanged at 4.9%.

The BLS reported 242,000 jobs added in February.

Here is a summary of recent data:

• The ADP employment report showed an increase of 200,000 private sector payroll jobs in March. This was close to expectations of 203,000 private sector payroll jobs added. The ADP report hasn't been very useful in predicting the BLS report for any one month, but in general, this suggests employment growth close to expectations.

• Since the employment report is being released on the 1st of April, the March ISM manufacturing and non-manufacturing employment indexes are not available yet, and will be released after the employment report this month.

• Initial weekly unemployment claims averaged close to 263,000 in March, about the same as in February. For the BLS reference week (includes the 12th of the month), initial claims were at 265,000, up slightly from 262,000 during the reference week in February.

This suggests about the same level of layoffs in March as in February (very few).

• The preliminary March University of Michigan consumer sentiment index decreased to 90.0 from the February reading of 91.7. Sentiment is frequently coincident with changes in the labor market, but there are other factors too - like lower gasoline prices.

• Conclusion: Some of the usual indicators will be released after the employment report this month. The available data suggests job growth in the 200 thousand plus range again in March.

by Calculated Risk on 3/31/2016 11:45:00 AM

A few excerpts from a note by Goldman Sachs economist David Mericle: March Payrolls Preview

We expect a 220k gain in nonfarm payroll employment in March, above consensus expectations for a 205k increase and in line with the average rate of employment growth over the last year. A further decline in jobless claims and improvements in the employment components of most business surveys were the highlights of the overall improvement in labor market indicators in March.

The unemployment rate is likely to remain unchanged at 4.9%, with risks to the downside. Average hourly earnings are likely to rise at a trend-like pace of 0.2% this month, with a rebound from last month’s surprisingly soft print offset by negative calendar effects.