by Calculated Risk on 9/05/2017 09:16:00 AM

Notes: This CoreLogic House Price Index report is for July. The recent Case-Shiller index release was for June. The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA).

From CoreLogic: CoreLogic US Home Price Report Shows Prices Up 6.7 Percent in July 2017

Home prices nationally increased year over year by 6.7 percent from July 2016 to July 2017, and on a month-over-month basis, home prices increased by 0.9 percent in July 2017 compared with June 2017, according to the CoreLogic HPI.
...
“In July, home price growth in the Pacific Northwest and mountain states led the nation with the highest appreciation rates,” said Dr. Frank Nothaft, chief economist for CoreLogic. “The sharp increase in prices in Washington and Utah has been especially striking, with home price growth in both states accelerating by 3 percentage points since the beginning of this year.”
emphasis added

Click on graph for larger image.

This graph from Corelogic shows the YoY change in the national CoreLogic HPI data since 2002.

The YoY increase had been moving sideways over the last two years, but might have picked up recently (the recent pickup could be revised away).

The year-over-year comparison has been positive for over five consecutive years since turning positive year-over-year in February 2012.

by Calculated Risk on 9/04/2017 08:15:00 PM

Tuesday:
• At 10:00 AM ET, The CoreLogic House Price index for July.

Note: On Wednesday, the BLS will release the Preliminary Benchmark Revision for the 2017 Current Employment Statistics (CES). From the BLS:

"Each year, the Current Employment Statistics (CES) survey estimates are benchmarked to comprehensive counts of employment from the Quarterly Census of Employment and Wages (QCEW) for the month of March. These counts are derived from state unemployment insurance (UI) tax records that nearly all employers are required to file. On September 6, 2017 at 10:00 a.m. the Bureau of Labor Statistics (BLS) will release the preliminary estimate of the upcoming annual benchmark revision to the establishment survey employment series. ... The final benchmark revision will be issued with the publication of the January 2018 Employment Situation news release in February. "

The preliminary estimate is usually pretty close to the annual revision. The following table shows the benchmark revisions since 2006.

Employment Benchmark Revisions (000s)
Year	Revision
2006	752
2007	-293
2008	-89
2009	-902
2010	-378
2011	162
2012	424
2013	-119
2014	67
2015	-172
2016	-81

by Calculated Risk on 9/04/2017 11:13:00 AM

Last week, in my employment preview, I noted "My sense (mostly based on history) is that job gains will be below consensus in August." Sure enough.

Here is a table of revisions for August since 2005.  Note that most of the revisions have been up.   This doesn't mean that the August 2017 revision will be up, but it does seem likely.   I'm not sure why the BLS has underestimated job growth in August (possibly because of the timing of seasonal teacher hiring and the end of the summer jobs).

August Employment Report (000s)
Year	Initial	Revised	Revision
2005	169	196	+27
2006	128	183	55
2007	-4	-20	-16
2008	-84	-267	-183
2009	-216	-213	3
2010	-54	-36	18
2011	0	110	110
2012	96	177	81
2013	169	261	92
2014	142	230	88
2015	173	157	-16
2016	151	176	25
2017	156	---	---

Note: In 2008, the BLS significantly under reported job losses. That wasn't surprising since the initial models the BLS used missed turning points (something I wrote about in 2007). The BLS has since improved this model.

by Calculated Risk on 9/03/2017 07:20:00 PM

On Monday, all US markets will be closed in observance of the Labor Day holiday.

Weekend:
• Schedule for Week of Sept 3, 2017

An update on Q3 GDP forecasts, from the Altanta Fed: GDPNow

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2017 is 3.2 percent on September 1, down from 3.3 percent on August 31.

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at 2.2% for 2017:Q3.

From Merrill Lynch:

[Recent] data chopped 0.4pp from our 3Q GDP tracking estimate, bringing it down to 2.7% qoq saar.

From CNBC: Pre-Market Data and Bloomberg futures: S&P 500 are down 10, and DOW futures are down 60 (fair value).

Oil prices were down slightly over the last week with WTI futures at $47.38 per barrel and Brent at $52.45 per barrel.  A year ago, WTI was at $45, and Brent was at $47 - so oil prices are up year-over-year.

Note: When refineries shut down, oil prices tend to decline - since demand for oil falls - and gasoline prices increase - since the supply of gasoline falls.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.63 per gallon - up sharply due the Hurricane Harvey - a year ago prices were at $2.21 per gallon - so gasoline prices are up 41 cents per gallon year-over-year.

by Calculated Risk on 9/03/2017 10:17:00 AM

Note: Hotel occupancy rates increased noticeably following Hurricanes Katrina and Rita in 2005. I expect the overall occupancy rate will also increase following Hurricane Harvey - and stay elevated for several months. This might even push 2017 into record territory.

From HotelNewsNow.com: How Hurricane Harvey could affect US hotel industry

We expect that the room supply number of Texas will decline for at least a year. After Katrina, Louisiana room supply dropped by roughly 25% between September 2005 and August 2006. This equated to a supply loss for the U.S. of 0.5%, in fact negating the slow U.S. supply growth we had reported so that—for the first time in history—the annualized supply growth for the U.S. was negative.

It is still too early to tell which hotels are closed for business. We hope that the number is relatively small, and current industry commentary gives us reason for optimism. But it is not a stretch to assume that the supply decline in and around Houston will affect the national numbers.
...
If a hotel makes it through the storm unscathed or can be re-opened pretty quickly after the event, there is a high likelihood that it will post very strong demand numbers in the months to come. Demand will be generated by multiple sources: displaced residents, FEMA and other federal personnel, insurance adjusters and contractors. Most of these will stay for months in the area keeping room demand numbers artificially high.
...
If the room supply declines, but room demand remains steady, then occupancy is increasing. This could imply that our STR forecast of 0% occupancy growth for 2017 is too low and that we may be able to report a slight occupancy increase this year and through the second half of next year.

And on a happier note: Hotels in path of total eclipse see unprecedented boon

From HotelNewsNow.com: STR: US hotel results for week ending 26 August

The U.S. hotel industry reported positive year-over-year results in the three key performance metrics during the week of 20-26 August 2017, according to data from STR.

In comparison with the week of 21-27 August 2016, the industry recorded the following:

• Occupancy: +3.0% to 69.5%
• Average daily rate (ADR): +3.2% to US$125.57
• Revenue per available room (RevPAR): +6.3% to US$87.28

Among the Top 25 Markets, Nashville, Tennessee, reported the largest year-over-year increases in ADR (+21.7% to US$155.04) and RevPAR (+39.4% to US$126.48). Occupancy in Nashville, a key market in the Great American Eclipse path of totality, was up 14.6% to 81.6%. ... St. Louis, another key market in the band of totality, recorded the largest increase in occupancy (+18.9% to 80.6%).
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, dash light blue is 2016, dashed orange is 2015 (best year on record), blue is the median, and black is for 2009 (the worst year since the Great Depression for hotels).

Currently the occupancy rate is slightly ahead of last year, and behind the record year in 2015.

Seasonally, the occupancy rate has peaked and will decline into the Fall.

Data Source: STR, Courtesy of HotelNewsNow.com

by Calculated Risk on 9/02/2017 08:11:00 AM

The key economic report this week is the trade deficit.

The preliminary annual benchmark revision for the employment report will be released on Wednesday.

----- Monday, Sept 4th -----
All US markets will be closed in observance of the Labor Day holiday.

----- Tuesday, Sept 5th -----
10:00 AM ET: The CoreLogic House Price index for July.

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

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

This graph shows the U.S. trade deficit, with and without petroleum, through June. 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 $44.6 billion in July from $43.6 billion in June.

10:00 AM: 2017 Current Employment Statistics (CES) Preliminary Benchmark Revision. From the BLS:

"Each year, the Current Employment Statistics (CES) survey estimates are benchmarked to comprehensive counts of employment from the Quarterly Census of Employment and Wages (QCEW) for the month of March. These counts are derived from state unemployment insurance (UI) tax records that nearly all employers are required to file. On September 6, 2017 at 10:00 a.m. the Bureau of Labor Statistics (BLS) will release the preliminary estimate of the upcoming annual benchmark revision to the establishment survey employment series. ... The final benchmark revision will be issued with the publication of the January 2018 Employment Situation news release in February. "

10:00 AM: the ISM non-Manufacturing Index for August. The consensus is for index to increase to 55.4 from 53.9 in July.

----- Thursday, Sept 7th -----
8:30 AM ET: The initial weekly unemployment claims report will be released. The consensus is for 239 thousand initial claims, up from 236 thousand the previous week.

10:00 AM: The Q2 Quarterly Services Report from the Census Bureau.

----- Friday, Sept 8th -----
3:00 PM: Consumer Credit for July from the Federal Reserve.  The consensus is for credit to increase $15.7 billion.

by Calculated Risk on 9/01/2017 07:33:00 PM

A few comments from Steven Kopits of Princeton Energy Advisors LLC on Sept 1, 2017:

• Continued decline in horizontal rig counts

• Total US oil rigs were flat at 759

• Horizontal oil rigs were down 3 at 644
...
• Drilling Info continues to show a widening disparity to Baker Hughes

• Thesis is unchanged: Expect rigs counts to roll off for the next two months or so, with oil prices languishing in the $46-49 range typically

Click on graph for larger image.

CR note: This graph shows the US horizontal rig count by basin.

Graph and comments Courtesy of Steven Kopits of Princeton Energy Advisors LLC.

by Calculated Risk on 9/01/2017 03:23:00 PM

Based on an estimate from WardsAuto, light vehicle sales were at a 16.03 million SAAR in August.

That is down 6% from August 2016, and down 3.9% from last month.


Click on graph for larger image.

This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for August (red, light vehicle sales of 16.03 million SAAR mostly from WardsAuto).

This was well below the consensus forecast of 16.7 million for August (However Hurricane Harvey pushed down sales over the last week - and there will be some bounce back).

After two consecutive years of record sales, vehicle sales will be down in 2017.

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

Note: dashed line is current estimated sales rate.

by Calculated Risk on 9/01/2017 12:31:00 PM

The headline jobs number was below expectations, and there were downward revisions to the previous two months.  And the unemployment increased slightly.   Overall a disappointing report.

Earlier: August Employment Report: 156,000 Jobs, 4.4% Unemployment Rate

In August, the year-over-year change was 2.097 million jobs. This is still decent year-over-year job growth, but this is the lowest year-over-year growth since early 2013.

Note that August has been the second weakest month for job growth over the previous three years; only January has been weaker.  This is the 3rd consecutive August report below 200 thousand jobs:  157 thousand in August 2015, 176 thousand in August 2016, and now 156 thousand in August 2017.   This recent history was a key reason I took the under versus the consensus view.

On the impact of Hurricane Harvey from the BLS:

Hurricane Harvey had no discernable effect on the employment and unemployment data for August. Household survey data collection was completed before the storm. Establishment survey data collection for this news release was largely completed prior to the storm, and collection rates were within normal ranges nationally and for the affected areas.

So the impact from the hurricane on employment will be in the September, and probably October, reports.

Average Hourly Earnings

Click on graph for larger image.

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.

The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees.  Nominal wage growth was at 2.5% YoY in August.

Wage growth has generally been trending up.

Part Time for Economic Reasons

From the BLS report:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 5.3 million in August and has shown little movement in recent months. 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 decreased slightly in August. The number working part time for economic reasons suggests a little slack still in the labor market.

These workers are included in the alternate measure of labor underutilization (U-6) that was unchanged at 8.6% in August.

Unemployed over 26 Weeks

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

According to the BLS, there are 1.74 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 1.79 million in July.

This is generally trending down, but still a little elevated.

Overall this was a disappointing report.

by Calculated Risk on 9/01/2017 11:08:00 AM

Earlier today, the Census Bureau reported that overall construction spending decreased in July:

Construction spending during July 2017 was estimated at a seasonally adjusted annual rate of $1,211.5 billion, 0.6 percent below the revised June estimate of $1,219.2 billion. The July figure is 1.8 percent above the July 2016 estimate of $1,189.8 billion.

Private and public spending both decreased in July:

Spending on private construction was at a seasonally adjusted annual rate of $945.5 billion, 0.4 percent below the revised June estimate of $949.4 billion. ...

In July, the estimated seasonally adjusted annual rate of public construction spending was $266.0 billion, 1.4 percent below the revised June estimate of $269.8 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 still 24% below the bubble peak.

Non-residential spending is now 3% above the previous peak in January 2008 (nominal dollars).

Public construction spending is now 18% below the peak in March 2009, and only slightly above the austerity low in February 2014.

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

On a year-over-year basis, private residential construction spending is up 12%. Non-residential spending is down 4% year-over-year. Public spending is down 6% year-over-year.

This was  well below the consensus forecast of a 0.6% increase for July, however spending for previous months were revised up. Still a disappointing report.