by Calculated Risk on 4/11/2017 01:13:00 PM

“U.S. crude oil production is expected to be higher during the next two years than previously forecast, with annual output in 2018 now forecast to reach 9.9 million barrels per day, exceeding the previous record level of 9.6 million barrels per day reached in 1970.”
U.S. Energy Information Administration Acting Administrator Howard Gruenspecht, April 11, 2017

The EIA released the Short-Term Energy Outlook today. From the STEO:

• U.S. crude oil production averaged an estimated 8.9 million barrels per day (b/d) in 2016. U.S crude oil production is forecast to average 9.2 million b/d in 2017 and 9.9 million b/d in 2018.

• For the 2017 April-through-September summer driving season, U.S. regular gasoline retail prices are forecast to average $2.46/gallon (gal), compared with $2.23/gal last summer. The higher forecast gasoline price is primarily the result of higher forecast crude oil prices. For all of 2017, the forecast average price for regular gasoline is $2.39/gal, which, if realized, would result in the average U.S. household spending about $200 more on motor fuel in 2017 compared with 2016.

• North Sea Brent crude oil spot prices averaged $52 per barrel (b) in March, $3/b lower than the February average. EIA forecasts Brent prices to average $54/b in 2017 and $57/b in 2018. West Texas Intermediate (WTI) crude oil prices are forecast to average $2/b less than Brent prices in both 2017 and 2018.
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by Calculated Risk on 4/11/2017 10:06:00 AM

From the BLS: Job Openings and Labor Turnover Summary

The number of job openings was little changed at 5.7 million on the last business day of February, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were also little changed at 5.3 million and 5.1 million, respectively. ...

The number of quits was essentially unchanged at 3.1 million in February. The quits rate was 2.1 percent. The number of quits was little changed for total private and for government.
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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 February, the most recent employment report was for March.

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 increased in February to 5.743 million from 5.625 million in January.  Job openings are mostly moving sideways at a high level.

The number of job openings (yellow) are up 3% year-over-year.

Quits are up 3% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

This is another solid report.

by Calculated Risk on 4/11/2017 09:49:00 AM

From the National Federation of Independent Business (NFIB): Small Business Optimism Sustained in March

The Index of Small Business Optimism fell 0.6 points to 104.7, sustaining the remarkable surge in optimism that started November 9, 2016, the day after the election.
...
Small business owners reported a seasonally adjusted average employment change per firm of 0.16 workers per firm, a solid showing. ... Sixteen percent of owners cited the difficulty of finding qualified workers as their Single Most Important Business Problem (down 1 point), far more than were concerned with weak sales. Thirty percent of all owners reported job openings they could not fill in the current period, down 2 points but historically high.
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Click on graph for larger image.

This graph shows the small business optimism index since 1986.

The index decreased to 104.7 in March.

by Calculated Risk on 4/10/2017 08:09:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Slightly Higher, But Steady Overall

Mortgage rates rose slightly again today, despite moderate improvement in underlying bond markets. ... All that having been said, mortgage rate movement continues to take place inside an exceptionally narrow range.  For the past 3 weeks, most borrowers would be quoted the exact same NOTE rate from most lenders, with the only variation coming in the form of upfront cost.  The most prevalent top tier conventional 30yr fixed quote remains 4.125%, though several lenders are on either side of that by 0.125%.
emphasis added

Thursday:
• At 6:00 AM ET, NFIB Small Business Optimism Index for March.

• At 10:00 AM, Job Openings and Labor Turnover Survey for February from the BLS. Jobs openings were mostly unchanged in January at 5.626 million compared to 5.539 million in December. The number of job openings were down slightly year-over-year, and Quits were up 11% year-over-year in January.

by Calculated Risk on 4/10/2017 03:25:00 PM

Note: This index is a leading indicator for new non-residential Commercial Real Estate (CRE) investment, except manufacturing.

From Dodge Data Analytics: Dodge Momentum Index Springs Forward in March

The Dodge Momentum Index increased by 0.9% in March to 144.4 (2000=100) from its revised February reading of 143.2. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. The Momentum Index has now risen for six consecutive months, with much of the gain being driven by institutional projects entering planning while commercial projects so far in 2017 have receded slightly. The institutional portion of the Momentum Index rose 3.7% in March, and is 23.0% higher than the end of 2016. Commercial planning meanwhile fell 1.2% in March and is down 2.9% from December 2016. However, the overall Momentum Index, as well as the commercial and institutional components, are well above their year-ago levels. This continues to signal the potential for increased construction activity in 2017 despite the short-term setbacks that are inherent in the volatile month-to-month planning data.
emphasis added

Click on graph for larger image.

This graph shows the Dodge Momentum Index since 2002. The index was at 144.4 in March, up from 143.2 in February.

According to Dodge, this index leads "construction spending for nonresidential buildings by a full year". This suggests further increases in CRE spending over the next year.

by Calculated Risk on 4/10/2017 11:30:00 AM

From the Philly Fed:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for January 2017. Over the past three months, the indexes increased in 46 states, decreased in three, and remained stable in one, for a three-month diffusion index of 86. In the past month, the indexes increased in 38 states, decreased in five, and remained stable in seven, for a one-month diffusion index of 66.

Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:

The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

Click on graph for larger image.

This is a graph is of the number of states with one month increasing activity according to the Philly Fed. This graph includes states with minor increases (the Philly Fed lists as unchanged).

In January 39 states had increasing activity (including minor increases).

The downturn in 2015 and 2016, in the number of states increasing, was mostly related to the decline in oil prices. I'm not sure why this index was weak in January.

Here is a map of the three month change in the Philly Fed state coincident indicators. This map was all red during the worst of the recession, and almost all green now.

Source: Philly Fed. Note: For complaints about red / green issues, please contact the Philly Fed.

by Calculated Risk on 4/10/2017 09:51:00 AM

Here is another update on framing lumber prices. Early in 2013 lumber prices came close to the housing bubble highs.

The price increases in early 2013 were due to a surge in demand (more housing starts) and supply constraints (framing lumber suppliers were working to bring more capacity online).

Prices didn't increase as much early in 2014 (more supply, smaller "surge" in demand).

In 2015, even with the pickup in U.S. housing starts, prices were down year-over-year.  Note: Multifamily starts do not use as much lumber as single family starts, and there was a surge in multi-family starts.  This decline in 2015 was also probably related to weakness in China.

Prices in 2017 are  up year-over-year.

Click on graph for larger image in graph gallery.

This graph shows two measures of lumber prices: 1) Framing Lumber from Random Lengths through March 2017 (via NAHB), and 2) CME framing futures.

Right now Random Lengths prices are up 16% from a year ago, and CME futures are up about 29% year-over-year.

by Calculated Risk on 4/09/2017 07:05:00 PM

Weekend:
• Schedule for Week of Apr 9, 2017

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

• At 4:10 PM, Discussion with Fed Chair Janet Yellen, Discussion with Ford School Dean Susan M. Collins, Gerald R. Ford School of Public Policy: Policy Talk Series, Ann Arbor, Michigan

From CNBC: Pre-Market Data and Bloomberg futures: S&P futures and DOW futures are mostly unchanged (fair value).

Oil prices were up over the last week with WTI futures at $52.52 per barrel and Brent at $55.24 per barrel.  A year ago, WTI was at $40, and Brent was at $41 - so oil prices are up about 30% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.39 per gallon - a year ago prices were at $2.06 per gallon - so gasoline prices are up about 33 cents a gallon year-over-year.

by Calculated Risk on 4/09/2017 12:25:00 PM

After some weakness early in the year, hotel occupancy has picked up in recent weeks.

From HotelNewsNow.com: STR: US hotel results for week ending 1 April

The U.S. hotel industry recorded positive results in the three key performance metrics during the week of 26 March through 1 April 2017, according to data from STR.

STR analysts note that performance was lifted for the second week in a row by an Easter calendar shift (27 March 2016). In comparison with the week of 27 March through 2 April 2016, the industry reported the following in year-over-year comparisons:

• Occupancy: +2.4% to 68.5%
• Average daily rate (ADR): +2.9% to US$126.02
• Revenue per available room (RevPAR): +5.3% to US$86.27
emphasis added

The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

The red line is for 2017, dashed is 2015, blue is the median, and black is for 2009 - the worst year since the Great Depression for hotels.

2015 was the best year on record for hotels.

For hotels, occupancy will now move mostly sideways until the summer travel season.

Data Source: STR, Courtesy of HotelNewsNow.com

by Calculated Risk on 4/08/2017 08:11:00 AM

The key economic reports this week are Retail Sales and the Consumer Price Index (CPI).

----- Monday, Apr 10th -----
10:00 AM ET: The Fed will release the monthly Labor Market Conditions Index (LMCI).

4:10 PM: Discussion with Fed Chair Janet Yellen, Discussion with Ford School Dean Susan M. Collins, Gerald R. Ford School of Public Policy: Policy Talk Series, Ann Arbor, Michigan

----- Tuesday, Apr 11th-----
6:00 AM ET: NFIB Small Business Optimism Index for March.

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 were mostly unchanged in January at 5.626 million compared to 5.539 million in December.

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

----- Wednesday, Apr 12th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

----- Thursday, Apr 13th -----
8:30 AM ET: The initial weekly unemployment claims report will be released.  The consensus is for 243 thousand initial claims, up from 234 thousand the previous week.

8:30 AM: The Producer Price Index for March from the BLS. The consensus is for no change in PPI, and a 0.2% increase in core PPI.

10:00 AM: University of Michigan's Consumer sentiment index (preliminary for April). The consensus is for a reading of 97.0, up from 96.9 in March.

----- Friday, Apr 14th -----
8:30 AM ET: Retail sales for March will be released.  The consensus is for no change in retail sales in March.

This graph shows retail sales since 1992 through February 2017.

8:30 AM: The Consumer Price Index for March from the BLS. The consensus is for no change in CPI, and a 0.2% increase in core CPI.

10:00 AM: Manufacturing and Trade: Inventories and Sales (business inventories) report for February.  The consensus is for a 0.3% increase in inventories.