by Calculated Risk on 11/16/2018 11:00:00 AM

From the Kansas City Fed: Growth in Tenth District Manufacturing Activity Edged Higher

he Federal Reserve Bank of Kansas City released the November Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that growth in Tenth District manufacturing activity edged higher, while expectations for future activity moderated slightly.

“Firms reported a pickup in orders, production, and shipments in November, following some slowing in recent months” said Wilkerson.
...
The month-over-month composite index was 15 in November, up from 8 in October and 13 in September. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The increase in factory growth was driven by both durable and nondurable goods producers, particularly metals, aircraft, food, and plastics. Most month-over-month indexes rose modestly. The production, shipments, new orders, and order backlog indexes all increased to their highest levels since the middle of the year. The new orders for exports index inched up from 3 to 6, while the employment index eased somewhat.
emphasis added

by Calculated Risk on 11/16/2018 10:05:00 AM

From the BLS: Regional and State Employment and Unemployment Summary

Unemployment rates were lower in October in 6 states, higher in 2 states, and stable in 42 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today. Eighteen states had jobless rate decreases from a year earlier and 32 states and the District had little or no change.
...
Hawaii had the lowest unemployment rate in October, 2.3 percent. The rates in Texas (3.7 percent) and Washington (4.3 percent) set new series lows. (All state series begin in 1976.) Alaska had the highest jobless rate, 6.4 percent.
emphasis added

Click on graph for larger image.

This graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 1976.

At the worst of the great recession, there were 11 states with an unemployment rate at or above 11% (red).

Currently only one state, Alaska, has an unemployment rate at or above 6% (dark blue).

by Calculated Risk on 11/16/2018 09:22:00 AM

From the Fed: Industrial Production and Capacity Utilization

Industrial production edged up 0.1 percent in October, as a gain for manufacturing outweighed decreases elsewhere. As a result of upward revisions primarily in mining, the overall index is now reported to have advanced at an annual rate of 4.7 percent in the third quarter, appreciably above the gain of 3.3 percent reported initially. Hurricanes lowered the level of industrial production in both September and October, but their effects appear to be less than 0.1 percent per month. In October, manufacturing output rose 0.3 percent for its fifth consecutive monthly increase, while the indexes for mining and for utilities declined 0.3 percent and 0.5 percent, respectively. At 109.1 percent of its 2012 average, total industrial production was 4.1 percent higher in October than it was a year earlier. Capacity utilization for the industrial sector was 78.4 percent, a rate that is 1.4 percentage points below its long-run (1972–2017) average.
emphasis added

Click on graph for larger image.

This graph shows Capacity Utilization. This series is up 11.7 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 78.4% is 1.4% below the average from 1972 to 2017 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 increased in October to 108.5. This is 25% above the recession low, and 4% above the pre-recession peak.

The increase in industrial production was below the consensus forecast, however the previous months were revised up.  Capacity utilization was above consensus.

by Calculated Risk on 11/15/2018 07:07:00 PM

Friday:
• At 9:15 AM ET, The Fed will release Industrial Production and Capacity Utilization for October. The consensus is for a 0.2% increase in Industrial Production, and for Capacity Utilization to increase to 78.2%.

• At 10:00 AM, State Employment and Unemployment (Monthly) for October 2018

• At 11:00 AM, From the NY Fed: Q3 Quarterly Report on Household Debt and Credit

• Also at 11:00 AM, the Kansas City Fed manufacturing survey for November.

by Calculated Risk on 11/15/2018 02:53:00 PM

The CAR reported: Homebuyers continue to wait it out in October as market uncertainties linger

As market uncertainties continue to linger, California home sales declined for the sixth straight month in October and remained below the 400,000-level sales benchmark for the third consecutive month, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 397,060 units in October, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2018 if sales maintained the October pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

October’s sales figure was up 3.8 percent from the revised 382,550 level in September and down 7.9 percent compared with home sales in October 2017 of 431,070. October marked the third month in a row that sales were below 400,000, which hasn’t occurred since February 2015.

“Homebuyers continued to put their homeownership plans on hold in October and wait out the market,” said 2019 C.A.R. President Jared Martin. “With mortgage rates at seven-year highs making homeownership more expensive and home prices beginning to flatten, this phenomenon will likely continue for the near term as buyers wait for further price adjustments and for interest rates to stabilize.”
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Statewide active listings rose for the seventh consecutive month after nearly three straight years of declines, increasing 28 percent from the previous year. October’s listings increase was the largest in four years.
emphasis added

Here is some inventory data from the NAR and CAR (ht Tom Lawler).  Notice inventory is really increasing year-over-year in California.

YOY % Change, Existing SF Homes for Sale
	NAR (National)	CAR (California)
Sep-17	-8.4%	-11.2%
Oct-17	-10.4%	-11.5%
Nov-17	-9.7%	-11.5%
Dec-17	-11.5%	-12.0%
Jan-18	-9.5%	-6.6%
Feb-18	-8.6%	-1.3%
Mar-18	-7.2%	-1.0%
Apr-18	-6.3%	1.9%
May-18	-5.1	8.3%
Jun-18	-0.5%	8.1%
Jul-18	0.0%	11.9%
Aug-18	2.1%	17.2%
Sep-18	1.1%	20.4%
Oct-18	---	28.0%

by Calculated Risk on 11/15/2018 09:37:00 AM

Earlier: From the NY Fed: Empire State Manufacturing Survey

Business activity continued to grow at a solid clip in New York State, according to firms responding to the November 2018 Empire State Manufacturing Survey. The headline general business conditions index edged up two points to 23.3.
…
The index for number of employees moved up five points to 14.1, and the average workweek index climbed nine points to 9.2, indicating increases in both employment levels and hours worked.
emphasis added

From the Philly Fed: November 2018 Manufacturing Business Outlook Survey

Growth in manufacturing activity slowed in November, according to results from this month’s Manufacturing Business Outlook Survey. The survey’s broad indicators for general activity, new orders, shipments, employment, and work hours remained positive but fell from their readings last month. The firms remained generally optimistic about future growth.

The diffusion index for current general activity decreased from 22.2 in October to 12.9 in November, its lowest reading since August … The firms continued to report overall higher employment. Almost 25 percent of the responding firms reported increases in employment this month, while 8 percent of the firms reported decreases in employment. The current employment index remained positive but declined 3 points to 16.3. The current workweek index fell nearly 15 points to 6.3, its lowest reading in two years.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Click on graph for larger image.

The New York and Philly Fed surveys are averaged together (yellow, through November), and five Fed surveys are averaged (blue, through October) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through October (right axis).

This suggests the ISM manufacturing index will show solid expansion again in November, but will likely be lower than in October.

by Calculated Risk on 11/15/2018 08:48:00 AM

On a monthly basis, retail sales increased 0.8 percent from September to October (seasonally adjusted), and sales were up 4.6 percent from October 2017.

From the Census Bureau report:

Advance estimates of U.S. retail and food services sales for October 2018, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $511.5 billion, an increase of 0.8 percent from the previous month, and 4.6 percent above October 2017.

Click on graph for larger image.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

Retail sales ex-gasoline were up 0.5% in October.

The second 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 3.6% on a YoY basis.

The increase in October was above expectations, however sales in August and September were revised down.

by Calculated Risk on 11/15/2018 08:35:00 AM

The DOL reported:

In the week ending November 10, the advance figure for seasonally adjusted initial claims was 216,000, an increase of 2,000 from the previous week's unrevised level of 214,000. The 4-week moving average was 215,250, an increase of 1,500 from the previous week's unrevised average of 213,750.
emphasis added

The previous week was unrevised.

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 increased to 215,250.

This was slightly higher than the consensus forecast. The low level of claims suggest few layoffs.

by Calculated Risk on 11/14/2018 09:29:00 PM

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for 215 thousand initial claims, up from 214 thousand the previous week.

• Also at 8:30 AM, Retail sales for October will be released.  The consensus is for a 0.5% increase in retail sales.

• Also at 8:30 AM, The New York Fed Empire State manufacturing survey for November. The consensus is for a reading of 20.0, down from 21.1.

• Also at 8:30 AM, the Philly Fed manufacturing survey for November. The consensus is for a reading of 20.0, down from 22.2.

by Calculated Risk on 11/14/2018 07:27:00 PM

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 up 1.5% compared in October to the rolling 12 months ending in September.   Outbound traffic was up 0.7% compared to the rolling 12 months ending in September.

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.

In general imports have been increasing, and exports have mostly moved sideways over the last 6 or 7 years.