by Calculated Risk on 3/11/2018 10:23:00 AM

From HotelNewsNow.com: STR: US hotel results for week ending 3 March

The U.S. hotel industry reported positive year-over-year results in the three key performance metrics during the week of 25 February through 3 March 2018, according to data from STR.

In comparison with the week of 26 February through 4 March 2017, the industry recorded the following:

• Occupancy: +1.7% to 65.9%
• Average daily rate (ADR): +2.3% to US$126.06
• Revenue per available room (RevPAR): +4.1% to US$83.04
emphasis added

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

Click on graph for larger image.

The red line is for 2018, dash light blue is 2017 (record year due to hurricanes), blue is the median, and black is for 2009 (the worst year since the Great Depression for hotels).

Currently the occupancy rate, to date, is fifth overall - and slightly ahead of the record year in 2017 (2017 finished strong due to the impact of the hurricanes).

Data Source: STR, Courtesy of HotelNewsNow.com

by Calculated Risk on 3/10/2018 08:11:00 AM

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

For manufacturing, February industrial production, and the March New York, and Philly Fed manufacturing surveys, will be released this week.

----- Monday, Mar 12th -----
10:00 AM: State Employment and Unemployment (Monthly) for January 2018

----- Tuesday, Mar 13th -----
6:00 AM ET: NFIB Small Business Optimism Index for February.

8:30 AM: The Consumer Price Index for February from the BLS. The consensus is for a 0.2% increase in CPI, and a 0.2% increase in core CPI.

----- Wednesday, Mar 14th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM ET: Retail sales for February will be released.  The consensus is for a 0.4% increase in retail sales.

This graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993. Retail and Food service sales, ex-gasoline, increased by 3.5% on a YoY basis.

8:30 AM: The Producer Price Index for February from the BLS. The consensus is a 0.2% increase in PPI, and a 0.2% increase in core PPI.

10:00 AM: Manufacturing and Trade: Inventories and Sales (business inventories) report for January.  The consensus is for a 0.5% increase in inventories.

----- Thursday, Mar 15th -----
8:30 AM ET: The initial weekly unemployment claims report will be released.  The consensus is for 230 thousand initial claims, down from 231 thousand the previous week.

8:30 AM: the Philly Fed manufacturing survey for March. The consensus is for a reading of 23.3, down from 25.8.

8:30 AM ET: The New York Fed Empire State manufacturing survey for March. The consensus is for a reading of 14.6, up from 13.1.

10:00 AM: The March NAHB homebuilder survey. The consensus is for a reading of  72, unchanged from 72 in February. Any number above 50 indicates that more builders view sales conditions as good than poor.

----- Friday, Mar 16th -----
8:30 AM: Housing Starts for February.

This graph shows single and total housing starts since 1968.

The consensus is for 1.284 million SAAR, down from 1.326 million SAAR.

9:15 AM: The Fed will release Industrial Production and Capacity Utilization for February.

This graph shows industrial production since 1967.

The consensus is for a 0.3% increase in Industrial Production, and for Capacity Utilization to increase to 77.7%.

10:00 AM ET: Job Openings and Labor Turnover Survey for January 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 decreased in December to 5.811 million from 5.978 in November.

The number of job openings (yellow) were up 4.9% year-over-year, and Quits were up 5.6% year-over-year.

10:00 AM: University of Michigan's Consumer sentiment index (Preliminary for March). The consensus is for a reading of 98.5, down from 99.7.

by Calculated Risk on 3/09/2018 06:38:00 PM

From the Association of American Railroads (AAR) Rail Time Indicators. Graphs and excerpts reprinted with permission.

Total U.S. rail carloads were down 0.3% (2,753 carloads) in February 2018 from February 2017. In what unfortunately seems to have become a pattern, the decline in overall carloads in February was due mainly to declines for coal (down 1.7%, or 5,801 carloads), grain (down 5.3%, or 4,712 carloads), and motor vehicles and parts (down 4.5%, or 3,283 carloads). ... February was another great month for intermodal: weekly average volume was 276,000 containers and trailers, the second highest weekly average for any month in history (behind only October 2017) and easily the highest ever for February.

Click on graph for larger image.

This graph from the Rail Time Indicators report shows U.S. average weekly rail carloads (NSA).  Light blue is 2018.

Rail carloads have been weak over the last decade due to the decline in coal shipments.

Total U.S. rail carloads were down 0.3%, or 2,753 carloads, in February 2018 from February 2017. It’s a decline, but it’s a big improvement from January’s 3.4% decline. Total carloads averaged 257,035 per week in February 2018; since 1988, when our U.S. data begin, only 2016 had a lower weekly average in February. For the first two months of 2018, total carloads were down 2.0%, or 45,184 carloads, to 2.245 million, the lowest January-February total since 1988 other than 2016.

The second graph is for intermodal traffic (using intermodal or shipping containers):

In terms of average weekly volume, February 2018 was the second best month in history for U.S. railroads. Total originations in February 2018 were 1,104,001, up 6.9%, or 70,970 containers and trailers, over February 2017. Weekly average intermodal originations in February 2018 were 276,000. Only October 2017 (279,853 units) was higher. Since February is not typically one of the highest volume months of the year for intermodal, it’s reasonable to expect new intermodal records to be set in the months ahead, especially this coming fall.

by Calculated Risk on 3/09/2018 04:11:00 PM

From housing economist Tom Lawler: February Decline in Average Hourly Earnings Growth No Surprise

To the surprise of no one who read either this report or the CalculatedRisk blog (which occasionally reproduces my report), the year-over-year growth in average hourly earnings of all employees on private nonfarm payrolls declined in February to 2.6%, down from the 2.9% shown in the January report (revised down to 2.8%.) Equally unsurprising was that the slowdown in AHE reflected a decline in the growth of AHE of “supervisory” workers (not shown in the BLS report, but derivable from data in the report) following two outsized gains in the previous two months (both of which were revised downward).

Monthly % Change, Average Hourly Earnings of Private NonFarm Workers (SA)
	February Report			January Report
	Total	Prod/Non	Super	Total	Prod/Non	Super
November	0.26%	0.23%	0.26%	0.26%	0.23%	0.26%
December	0.38%	0.36%	0.37%	0.41%	0.36%	0.50%
January	0.26%	0.13%	0.56%	0.34%	0.13%	0.80%
February	0.15%	0.27%	-0.12%
"Prod/Non" is Production/Nonsupervisory, "Super" is Supervisory.

Average Hourly Earnings for production/nonsupervisory employees actually showed a modest acceleration in growth last month, though the overall growth rate remained, at least to some, disappointing.

See Lawler's report from February 9, 2018 for further discussion.

by Calculated Risk on 3/09/2018 02:35:00 PM

Here is another update of tracking employment during Presidential terms.  We frequently use Presidential terms as time markers - we could use Speaker of the House, Fed Chair, or any other marker.

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.

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.

The first graph shows the change in private sector payroll jobs from when each president took office until the end of their term(s). Presidents Carter and George H.W. Bush only served one 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 (dark blue) took office during the financial crisis and great recession. There was also a significant recession in the early '80s right after Mr. Reagan (dark red) took office.

There was a recession towards the end of President G.H.W. Bush (light 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.

Mr. Trump is in Orange (just 13 months).

The employment recovery during Mr. G.W. Bush's (red) first term was sluggish, and private employment was down 804,000 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 391,000 private sector jobs lost during Mr. Bush's two terms. 

Private sector employment increased by 20,964,000 under President Clinton (light blue), by 14,717,000 under President Reagan (dark red), 9,041,000 under President Carter (dashed green), 1,509,000 under President G.H.W. Bush (light purple), and 11,907,000 under President Obama (dark blue).

During the first 13 months of Mr. Trump's term, the economy has added 2,436,000 private sector jobs.

 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 declined significantly while Mr. Obama was in office (down 266,000 jobs).

During the first 13 months of Mr. Trump's term, the economy has added 45,000 public sector jobs.

The third graph shows the progress towards the Trump goal of adding 10 million jobs over the next 4 years.

After 13 months of Mr. Trump's presidency, the economy has added 2,481,000 jobs, about 227,000 behind the projection.

by Calculated Risk on 3/09/2018 11:20:00 AM

The headline jobs number at 313,000 for February was well above consensus expectations of 205 thousand, and the previously two months were revised up a combined 54 thousand.  Overall this was a very strong employment report.

There was probably a boost from weather in February. According to Chicago Fed economist Francois Gourio: "February was significantly warmer than usual - positive weather effect in today's NFP of about 80k according to our state model". Even if weather boosted the NFP report by 80,000 jobs, this was still a strong report. If weather was a factor, we might see some payback in the March report.

Earlier: February Employment Report: 313,000 Jobs Added, 4.1% Unemployment Rate

In February, the year-over-year employment change was 2.281 million jobs. This has been generally trending down, but is still solid year-over-year growth.

Average Hourly Earnings

Wage growth was disappointing in February, and hourly wages for both December and January were revised down. From the BLS:

"In February, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.75, following a 7-cent gain in January. Over the year, average hourly earnings have increased by 68 cents, or 2.6 percent."

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 2.6% YoY in February.

Wage growth had been trending up, although growth has been moving sideways recently.

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 little changed at 5.2 million in February. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut or because they were unable to find full-time jobs."

The number of persons working part time for economic reasons has been generally trending down, however the number increased in February. 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 8.2% in February.

Unemployed over 26 Weeks

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

According to the BLS, there are 1.397 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 1.421 million in January.

This is the lowest level since April 2008.

This is trending down, but remains a little elevated.

The headline jobs number was strong, and the unemployment rate unchanged at a low level, overall a very strong report.

by Calculated Risk on 3/09/2018 08:42:00 AM

From the BLS:

Total nonfarm payroll employment increased by 313,000 in February, and the unemployment rate was unchanged at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in construction, retail trade, professional and business services, manufacturing, financial activities, and mining.
...
The change in total nonfarm payroll employment for December was revised up from +160,000 to +175,000, and the change for January was revised up from +200,000 to +239,000. With these revisions, employment gains in December and January combined were 54,000 more than previously reported.
...
In February, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.75, following a 7-cent gain in January. Over the year, average hourly earnings have increased by 68 cents, or 2.6 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 313 thousand in February (private payrolls increased 287 thousand).

Payrolls for December and January were revised up by a combined 54 thousand.

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

In February the year-over-year change was 2.281 million jobs.

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

The Labor Force Participation Rate was increased in February 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 was increased to 60.4% (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 unchanged in February at 4.1%. 

This was well above the consensus expectations of 205,000 jobs, and the previous two months combined were revised up 54,000.

A strong report.

I'll have much more later ...

by Calculated Risk on 3/08/2018 08:04:00 PM

My February Employment Preview

Goldman: February Payrolls Preview

Friday:
• At 8:30 AM, Employment Report for February. The consensus is for an increase of 205,000 non-farm payroll jobs added in February, up from the 200,000 non-farm payroll jobs added in January. The consensus is for the unemployment rate to decrease to 4.0%.

by Calculated Risk on 3/08/2018 04:41:00 PM

From housing economist Tom Lawler: More on Deaths ...

In discussing available data on deaths earlier this week, I noted that data are deaths are only available with a considerable lag. While that is the case for detailed data on deaths, the National Center for Health Statistics does release provisional estimates for selected indicators of mortality – including both crude and age-adjusted death rates – that are relatively timely. E.g., aggregate crude and age-adjusted death rates are available through the third quarter of 2017, and these data suggested that both crude and age-adjusted death rates increased from 2016 to 2017. For those who track death assumptions in the Census population estimates (which reflect deaths over the 12 month period ending in June), the NCHS provisional death rate estimates imply that US deaths totaled about 2.785 million over the 12-months ended in June 2017, about 41,000 higher than the “Vintage 2017” assumption, and 104,000 above the projection from Census’s 2014 long-term population projection.

If the higher-than-projected death rates remained constant over the next three years (i.e., though 2020), then US deaths over the four-year period ending in 2020 would be over 600,000 higher than the number of deaths assumed in the Census 2014 population projection, with the most of this increase in deaths coming in the 15-44 year old age groups.

US Deaths Per 100,000, 12-month period ending at end of quarter
	Crude	Age Adjusted
Q1/2016	837.5	724.0
Q2/2016	839.3	723.6
Q3/2016	842.0	724.4
Q4/2016	849.3	728.8
Q1/2017	855.7	731.0
Q2/2017	858.4	731.7
Q3/2017	859.2	730.0
Source: NCHS

... And Some Thoughts About Next Week’s Release of Census Long-Term Population Projections

I got confirmation today that Census is on track to release its updated long-term population projections sometime next week. Here are a few things analysts should consider in evaluating/using these projections.

1. The starting point for the projections is “Vintage 2016,” and the latest population estimates (Vintage 2017) are different (though not massively so).

2. The latest data on deaths used for this projection were those for 2015, and I’m guessing the projection does not allow for rising death rates among teenagers and young/middle aged adults that we observed in 2016 and (apparently) 2017. I am guessing that the updated projections may significantly understate deaths for these age groups, and competent analysts should check this.

3. The updated assumptions on net international migration will be “model based,” and will not incorporate any probable or even possible policy changes on immigration. In terms of the immigration component of net international migration, these models look at recent inflows by country relative to their populations, and assume that future immigration will rise proportionately to projections of these countries’ populations. These models will almost certainly over-predict “likely” net international migration over the next few years, and analysts should check the NIM assumptions.

4. My understanding is that Census only plans to release its “baseline” projections next week, but that some alternative scenarios may be released sometime later (though I’m not positive about this).

What I and any competent analyst will do when these new population projections are released is to dig deeply into the key “component of change” assumptions, compare these assumptions either (1) to updated data (e.g., deaths), or (2) to what I believe are “reasonable” assumptions about net international migration, and produce a different set of population projections if the Census assumptions seem “off.” I and competent analysts will also probably produce alternative population projection using different but plausible assumptions about deaths and net international migration.

by Calculated Risk on 3/08/2018 02:15:00 PM

A few brief excerpts from a note by Goldman Sachs economist Spencer Hill:

We estimate that nonfarm payrolls increased 210k in February, 5k above consensus. We believe warmer weather and unseasonably light snow during the survey week boosted job growth in the month. Labor market fundamentals also appear solid and may have improved further, given new cycle records for initial claims and Conference Board job availability.
...
we estimate the unemployment rate fell to 4.0% in February ... We estimate a 0.3% month-over-month increase in average hourly earnings ... we estimate the year-over-year rate fell a tenth to +2.8%. ...
emphasis added