by Calculated Risk on 9/02/2020 07:00:00 PM

The US is now mostly reporting over 700,000 tests per day (fewer recently). Based on the experience of other countries, the percent positive needs to be well under 5% to really push down new infections, so the US still needs to increase the number of tests per day significantly (or take actions to push down the number of new infections).

There were 644,842 test results reported over the last 24 hours.

There were 30,409 positive tests.

See the graph on US Daily Deaths here.

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 4.7% (red line).

For the status of contact tracing by state, check out testandtrace.com.

And check out COVID Exit Strategy to see how each state is doing.

The second graph shows the 7 day average of positive tests reported.

The dashed line is the June low.

Note that there were very few tests available in March and April, and many cases were missed (the percent positive was very high - see first graph).

By June, the percent positive had dropped below 5% (lower than today).  If people stay vigilant, the number of cases might drop to the June low by the end of September (that would still be a large number of new cases, but progress).

by Calculated Risk on 9/02/2020 01:25:00 PM

UPDATE: The NY Times has an article on this too: The Labor Department will start counting unemployment claims in a new way.

The DOL has announced that they are changing the seasonal adjustment for unemployment claims:

Beginning with the Unemployment Insurance (UI) Weekly Claims News Release issued Thursday, September 3, 2020, the methodology used to seasonally adjust the national initial claims and continued claims will reflect additive factors as opposed to multiplicative factors.

This makes sense since the huge increase in weekly claims has been due to the pandemic.

However, the DOL will not revise prior weeks, from Ben Casselman:

@USDOL says initial claims for 8/22 will NOT be revised to reflect the new adjustment methodology. So we should expect to see a big, artificial drop in claims from 8/22 to 8/29.

Currently this is the a low season for initial claims, so the seasonal factor is below 100 (see data and seasonal factors here).

For example, for the week ending August 22nd, initial weekly claims were 1,006,000 Seasonally Adjusted (SA), and 821,591 NSA. The seasonal factor was 81.7.

The formula is (NSA Claims) * 100 / Seasonal Factor = Seasonally Adjusted Claims. So 821,591 * 100 / 81.7 = 1,006,000 (rounded to nearest 1,000).

Switching to additive factors, my guess is the DOL would have added about 40,000 to the NSA number to report the SA number.  So instead of reporting 1,006,000 for the week ending August 22nd, the DOL would have reported 862,000.

As Ben Casselman notes, the DOL will not revise prior weeks using the additive factor.   Since the seasonal factor for the week ending Aug 29th (to be reported tomorrow) is also 81.7, this means the number of SA claims would decline significantly, even with the same level of NSA claims.

What this means is we cannot compare the SA number to previous weeks.   However, since the seasonal factor was the same for both the week ending August 22nd, and the week ending Aug 29th, we can directly compare the NSA number for both weeks to see if claims were increasing or decreasing.

by Calculated Risk on 9/02/2020 10:40:00 AM

The following graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the August 2020 seasonally adjusted annual sales rate (SAAR).

Heavy truck sales really collapsed during the great recession, falling to a low of 180 thousand SAAR in May 2009.  Then heavy truck sales increased to a new all time high of 575 thousand SAAR in September 2019.

However heavy truck sales started declining late last year due to lower oil prices.

Note: "Heavy trucks - trucks more than 14,000 pounds gross vehicle weight."


Click on graph for larger image.

Heavy truck sales really declined towards the end of March due to COVID-19 and the collapse in oil prices.

Heavy truck sales are now back to March 2020 levels.

Heavy truck sales were at 395 thousand SAAR in August, up from 379 thousand SAAR in July, but down 26% from 534 thousand SAAR in August 2019.

by Calculated Risk on 9/02/2020 08:20:00 AM

From ADP:

Private sector employment increased by 428,000 jobs from July to August according to the August ADP National Employment Report®. ... The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis.

“The August job postings demonstrate a slow recovery,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Job gains are minimal, and businesses across all sizes and sectors have yet to come close to their pre-COVID-19 employment levels.

This was well below the consensus forecast for 900 thousand private sector jobs added in the ADP report.

The BLS report will be released Friday, and the consensus is for 1.4 million non-farm payroll jobs added in August. Of course the ADP report has not been very useful in predicting the BLS report.

by Calculated Risk on 9/02/2020 07:00:00 AM

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey

— Mortgage applications decreased 2.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 28, 2020.

... The Refinance Index decreased 3 percent from the previous week and was 40 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 0.2 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 28 percent higher than the same week one year ago.

“Both conventional and government refinancing activity decreased last week, despite 30-year fixed and 15-year fixed mortgage rates declining to near historical lows. Mortgage rates have remained below 3.5 percent for five months now, and it’s possible that refinance demand may be slowing and will not significantly increase again without another notable drop in rates,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Purchase applications were essentially unchanged over the week and were 28 percent higher than a year ago – the 15th straight week of year-over-year increases. Lenders are reporting that the strong demand for homebuying is coming from delayed activity from the spring, as well as households seeking more space in less densely populated areas.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.08 percent from 3.11 percent, with points decreasing to 0.36 from 0.38 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.


The first graph shows the refinance index since 1990.

The refinance index has been very volatile recently depending on rates and liquidity.

But with record low rates, the index is up significantly from last year.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is up 28% year-over-year.

Note: Red is a four-week average (blue is weekly).

by Calculated Risk on 9/01/2020 08:45:00 PM

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

• At 8:15 AM, The ADP Employment Report for August. This report is for private payrolls only (no government). The consensus is for 900,000 payroll jobs added in August, up from 167,000 added in July.

by Calculated Risk on 9/01/2020 07:43:00 PM

The US is now mostly reporting over 700,000 tests per day (fewer recently). Based on the experience of other countries, the percent positive needs to be well under 5% to really push down new infections, so the US still needs to increase the number of tests per day significantly (or take actions to push down the number of new infections).

There were 698,161 test results reported over the last 24 hours.

There were 42,401 positive tests.

TSee the graph on US Daily Deaths here.

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 6.1% (red line).

For the status of contact tracing by state, check out testandtrace.com.

And check out COVID Exit Strategy to see how each state is doing.

The second graph shows the 7 day average of positive tests reported.

The dashed line is the June low.

Note that there were very few tests available in March and April, and many cases were missed (the percent positive was very high - see first graph).

By June, the percent positive had dropped below 5% (lower than today).  If people stay vigilant, the number of cases might drop to the June low by the end of September (that would still be a large number of new cases, but progress).

by Calculated Risk on 9/01/2020 06:35:00 PM

Wards estimated light vehicle sales of 15.19 million SAAR in August 2020 (Seasonally Adjusted Annual Rate), up 4.6% from the July sales rate, and down 11.0% from August 2019.

Click on graph for larger image.

This graph shows light vehicle sales since 2006 from the BEA (blue) and an estimate for August from Wards 2020 (red).

The impact of COVID-19 was significant, and April was the worst month.

Since April, sales have increased, but are still down 11.0% from last year.

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

Note: dashed line is current estimated sales rate of 15.19 million SAAR.

I'll have more when the BEA releases their August estimate tomorrow.

by Calculated Risk on 9/01/2020 12:00:00 PM

Here is another monthly update on framing lumber prices.   Lumber prices are up 150% year-over-year.

This graph shows two measures of lumber prices: 1) Framing Lumber from Random Lengths through August 28, 2020, and 2) CME framing futures.

Click on graph for larger image in graph gallery.

Right now Random Lengths prices are up 156% from a year ago, and CME futures are up 144% year-over-year.

There is a seasonal pattern for lumber prices, and usually prices will increase in the Spring, and peak around May, and then bottom around October or November - although there is quite a bit of seasonal variability.

Clearly there has been a surge in demand for lumber and the mills are struggling to meet demand.

This is the highest price for both Random Lengths lumber and futures.

by Calculated Risk on 9/01/2020 10:20:00 AM

From the Census Bureau reported that overall construction spending decreased in June:

Construction spending during July 2020 was estimated at a seasonally adjusted annual rate of $1,364.6 billion, 0.1 percent above the revised June estimate of $1,362.8 billion. The July figure is 0.1 percent below the July 2019 estimate of $1,366.0 billion.
emphasis added

Private spending increased and public spending decreased:

Spending on private construction was at a seasonally adjusted annual rate of $1,013.5 billion, 0.6 percent above the revised June estimate of $1,007.2 billion. ...

In July, the estimated seasonally adjusted annual rate of public construction spending was $351.1 billion, 1.3 percent below the revised June estimate of $355.6 billion.

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.

Residential spending is 19% below the previous peak.

Non-residential spending is 12% above the previous peak in January 2008 (nominal dollars).

Public construction spending is 8% above the previous peak in March 2009, and 34% 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 mostly unchanged. Non-residential spending is down 4.3% year-over-year. Public spending is up  5.1% year-over-year.

This was below consensus expectations of a 1.0% increase in spending, however construction spending for the previous two months was revised up slightly.

Construction was considered an essential service in most areas and did not decline sharply like many other sectors, but it seems likely that non-residential and public spending will be under pressure.