by Calculated Risk on 11/17/2020 10:06:00 AM

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 90, up from 85 in October. Any number above 50 indicates that more builders view sales conditions as good than poor.

From the NAHB: Sales Growth Lifts Builder Confidence to New Record High

In another sign that housing continues to lead the economy forward, builder confidence in the market for newly-built single-family homes increased five points to 90 in November, shattering the previous all-time of 85 recorded in October, according to the latest NAHB/Wells Fargo Housing Market Index (HMI) released today. Builder confidence levels have hit successive all-time highs over the past three months.

“Historically low mortgage rates, favorable demographics and an ongoing suburban shift for home buyer preferences have spurred demand and increased new home sales by nearly 17% in 2020 on a year-to-date basis,” said NAHB Chairman Chuck Fowke. “Though builders continue to sign sales contracts at a solid pace, lot and material availability is holding back some building activity. Looking ahead to next year, regulatory policy risk will be a key concern given these supply-side constraints.”

“Another record high for the HMI reflects that housing is a bright spot for the economy,” said NAHB Chief Economist Robert Dietz. “However, affordability remains an ongoing concern, as construction costs continue to rise and interest rates are expected to move higher as more positive news emerges on the coronavirus vaccine front. In the short run, the shift of housing demand to lower density markets such as suburbs and exurbs with ongoing low resale inventory levels is supporting demand for home building.”
...
All the HMI indices posted their highest readings ever in November. The HMI index gauging current sales conditions rose six points to 96, the component measuring sales expectations in the next six months increased one point to 89 and the measure charting traffic of prospective buyers rose three points to 77.

Looking at the three-month moving averages for regional HMI scores, the Northeast increased two points to 83, the Midwest jumped six points to 80, the South rose four points to 86 and the West increased four points to 94.

Click on graph for larger image.

This graph show the NAHB index since Jan 1985.

This was above the consensus forecast.

Housing and homebuilding have been one of the best performing sectors during the pandemic.

by Calculated Risk on 11/17/2020 09:27:00 AM

From the Fed: Industrial Production and Capacity Utilization

Industrial production rose 1.1 percent in October. The index has recovered much of its 16.5 percent decline from February to April, but output in October was still 5.6 percent lower than its pre-pandemic February level. After edging up 0.1 percent in September, manufacturing output increased 1.0 percent in October. The output of utilities rose 3.9 percent, while the output at mines declined 0.6 percent to a level that was 14.4 percent below its year-earlier reading. At 103.2 percent of its 2012 average, total industrial production was 5.3 percent lower in October than it was a year earlier. Capacity utilization for the industrial sector increased 0.8 percentage point in October to 72.8 percent, a rate that is 7.0 percentage points below its long-run (1972–2019) average but 8.6 percentage points above its low in April.
emphasis added

Click on graph for larger image.

This graph shows Capacity Utilization. This series is up from the record low set in April, but still well below the level in February 2020.

Capacity utilization at 72.8% is 7.0% below the average from 1972 to 2017.

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  103.2. This is 5.6% below the February 2020 level.

The change in industrial production was close to  consensus expectations, and industrial production in August and September were revised up.

by Calculated Risk on 11/17/2020 08:37:00 AM

On a monthly basis, retail sales increased 0.3 percent from September to October (seasonally adjusted), and sales were up 5.7 percent from October 2019.

From the Census Bureau report:

Advance estimates of U.S. retail and food services sales for October 2020, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $553.3 billion, an increase of 0.3 percent from the previous month, and 5.7 percent above October 2019. Total sales for the August 2020 through October 2020 period were up 5.1 percent from the same period a year ago. The August 2020 to September 2020 percent change was revised from up 1.9 percent to up 1.6 percent.
emphasis added

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 0.2% 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 7.1% on a YoY basis.

The increase in October was below expectations, however sales in August and September were revised up, combined.

by Calculated Risk on 11/16/2020 10:38:00 PM

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

• At 9:15 AM, The Fed will release Industrial Production and Capacity Utilization for October. The consensus is for a 1.0% increase in Industrial Production, and for Capacity Utilization to increase to 72.4%.

• At 10:00 AM, The November NAHB homebuilder survey. The consensus is for a reading of  85, unchanged from 85. Any number above 50 indicates that more builders view sales conditions as good than poor.

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

by Calculated Risk on 11/16/2020 06:50:00 PM

More good news with the initial Moderna vaccine results released today. The end of the pandemic is coming, possibly by Q2 2021! 

Please be careful, especially over the holidays. Thanksgiving, Christmas and New Years will be tough this year, but keep your guard up - plan now to have a safe holiday.

The US is now averaging over 1 million tests per day. Based on the experience of other countries, for adequate test-and-trace (and isolation) to reduce infections, the percent positive needs to be well under 5% (probably close to 1%), 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 1,251,892 test results reported over the last 24 hours.

There were 148,532 positive tests.  Highest for a Monday.

Almost 16,000 US deaths have been reported so far in November. 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 11.9% (red line is 7 day average).  The percent positive is calculated by dividing positive results by the sum of negative and positive results (I don't include pending).

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 and daily hospitalizations.

The dashed line is the previous hospitalization maximum.

Note that there were very few tests available in March and April, and many cases were missed, so the hospitalizations was higher relative to the 7-day average of positive tests in July. 

• 7-day average cases are at a new record.

• Record Hospitalizations.

by Calculated Risk on 11/16/2020 04:00:00 PM

Note: This is as of November 8th.

From the MBA: Share of Mortgage Loans in Forbearance Decreases to 5.47%

The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased for the 11th week in a row from 5.67% of servicers’ portfolio volume in the prior week to 5.47% as of November 8, 2020 – a 20-basis-point improvement. According to MBA’s estimate, 2.7 million homeowners are in forbearance plans.
...
“Declines in the share of loans in forbearance continued this week, with a significant increase in the rate of forbearance exits – particularly for portfolio and PLS loans,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “More than 76 percent of borrowers in forbearance are now in an extension, as we are well past the six-month point for most borrowers’ forbearance plans.”

Added Fratantoni, “While the rate of new forbearance requests has declined and exits are increasing, homeowners who continue to be impacted by hardships related to the pandemic should contact their servicer for relief.”
...
By stage, 21.68% of total loans in forbearance are in the initial forbearance plan stage, while 76.46% are in a forbearance extension. The remaining 1.86% are forbearance re-entries.
emphasis added

Click on graph for larger image.

This graph shows the percent of portfolio in forbearance by investor type over time.  Most of the increase was in late March and early April, and has been trending down for the last few months.

The MBA notes: "Total weekly forbearance requests as a percent of servicing portfolio volume (#) decreased relative to the prior week: from 0.10% to 0.08%."

There wsan't a pickup in forbearance activity related to the end of the extra unemployment benefits.

by Calculated Risk on 11/16/2020 01:22:00 PM

The headline unemployment rate has fallen to 6.9%, but that significantly understates the current situation.  Note that the headline unemployment rate was 3.5% at the end of 2019.

Here is a table that shows the current number of unemployed and the unemployment rate. Then I calculated the unemployment rate by including the number of people that have left the labor force since February, and the expected growth in the labor force.

As the economy recovers, many of the people that left the labor force will probably return, and there will be more entrants into the labor force.   This will keep the unemployment rate elevated for some time, and suggests the need for more disaster relief.

	Number (000s)	Unemployment Rate
Unemployed	11,061	6.9%
Left Labor Force	3,679	9.0%
Expected Labor Force Growth	938	9.5%

This is just the headline unemployment rate. There are 2.3 million additional involuntary part time workers than a year ago (these workers are included in U-6).

Note: I'd be careful looking at the weekly initial claims report in addition to the BLS report. The weekly claims report suggests there are millions of workers receiving pandemic assistance, but this should be captured in the BLS household surveys (so I wouldn't add the numbers together).

by Calculated Risk on 11/16/2020 09:07:00 AM

From the NY Fed: Empire State Manufacturing Survey

Manufacturing activity in New York State expanded only to a small degree in November. After falling seven points last month, the general business conditions index fell four points to 6.3 this month, indicating that growth continued to slow.
...
The index for number of employees rose two points to 9.4, its highest level in nearly a year, indicating a modest increase in employment levels. After rising sharply last month, the average workweek index fell eleven points to 4.8, its positive value signaling a small increase in hours worked.
emphasis added

This was well below expectations, and showed activity "expanded slightly" in November.

by Calculated Risk on 11/16/2020 08:24:00 AM

These indicators are mostly for travel and entertainment.    It will interesting to watch these sectors recover as the vaccine is distributed.   

IMPORTANT: Be safe now - if all goes well, we could all be vaccinated by Q2 2021.

----- Airlines: Transportation Security Administration -----
The TSA is providing daily travel numbers.

Click on graph for larger image.

This data shows the seven day average of daily total traveler throughput from the TSA for 2019 (Blue) and 2020 (Red).

The dashed line is the percent of last year for the seven day average.

This data is as of Nov 15th.

The seven day average is down 65% from last year (35% of last year).

There has been a slow increase from the bottom, but has been weak lately.

----- Restaurants: OpenTable -----
The second graph shows the 7 day average of the year-over-year change in diners as tabulated by OpenTable for the US and several selected cities.

Thanks to OpenTable for providing this restaurant data:

This data is updated through November 14, 2020.

This data is "a sample of restaurants on the OpenTable network across all channels: online reservations, phone reservations, and walk-ins. For year-over-year comparisons by day, we compare to the same day of the week from the same week in the previous year."

Note that this data is for "only the restaurants that have chosen to reopen in a given market". Since some restaurants have not reopened, the actual year-over-year decline is worse than shown.

Note that dining is generally lower in the northern states - Illinois, Pennsylvania, and New York - and only down slightly in the southern states.

----- Movie Tickets: Box Office Mojo -----
This data shows domestic box office for each week (red) and the maximum and minimum for the previous four years.  Data is from BoxOfficeMojo through November 12th.

Note that the data is usually noisy week-to-week and depends on when blockbusters are released.

Movie ticket sales have picked up slightly over the last couple of months, and were at $13 million last week (compared to usually around $200 million per week in the Fall).

Some movie theaters have reopened (probably with limited seating).
----- Hotel Occupancy: STR -----
This graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

The red line is for 2020, dash light blue is 2019, blue is the median, and black is for 2009 (the worst year since the Great Depression for hotels - prior to 2020).

This data is through November 7th. Hotel occupancy is currently down 35.9% year-over-year.

Notes: Y-axis doesn't start at zero to better show the seasonal change.

Since there is a seasonal pattern to the occupancy rate, we can track the year-over-year change in occupancy to look for any improvement. This table shows the year-over-year change since the week ending Sept 19, 2020:

Week Ending	YoY Change, Occupancy Rate
9/19	-31.9%
9/26	-31.5%
10/3	-29.6%
10/10	-29.2%
10/17	-30.7%
10/24	-31.7%
10/31	-29.0%
11/7	-35.9%

This suggests no improvement over the last 8 weeks, and occupancy might be getting worse.

----- Gasoline Supplied: Energy Information Administration -----
This graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows gasoline supplied compared to the same week last year of .

At one point, gasoline supplied was off almost 50% YoY.

As of November 6th, gasoline supplied was off about 6.0% YoY (about 94.0% of last year).

Note: People driving instead of flying might have boosted gasoline consumption.

----- Transit: Apple Mobility -----
This graph is from Apple mobility. From Apple: "This data is generated by counting the number of requests made to Apple Maps for directions in select countries/regions, sub-regions, and cities." This is just a general guide - people that regularly commute probably don't ask for directions.

There is also some great data on mobility from the Dallas Fed Mobility and Engagement Index. However the index is set "relative to its weekday-specific average over January–February", and is not seasonally adjusted, so we can't tell if an increase in mobility is due to recovery or just the normal increase in the Spring and Summer.

This data is through November 14th for the United States and several selected cities.

The graph is the running 7 day average to remove the impact of weekends.

IMPORTANT: All data is relative to January 13, 2020. This data is NOT Seasonally Adjusted. People walk and drive more when the weather is nice, so I'm just using the transit data.

According to the Apple data directions requests, public transit in the 7 day average for the US is at 51% of the January level. It is at 40% in Chicago, and 55% in Houston - and declining slightly recently.

----- Office Building Occupancy -----
Note: This graph is from Kastle, and the data isn't available online to do a 7-day average. Here is some interesting data from Kastle Systems on office occupancy.

This data is through November 8th.

Currently Office Occupancy appears to be stalling with the 10-city average down to 25.1% from 27.1% the previous week.

"View the average occupancy rate of commercial properties across 10 major U.S. cities, by each municipality and in aggregate, to show the pace of Americans returning to work based on daily unique access entries in Kastle-secured buildings across the nation."

----- New York City Subway Usage -----
Here is some interesting data on New York subway usage (HT BR).

This graph is from Todd W Schneider. This is daily data for this year.

This data is through Friday, November 13th.

Schneider has graphs for each borough, and links to all the data sources.

He notes: "Data updates weekly from the MTA’s public turnstile data, usually on Saturday mornings".

by Calculated Risk on 11/15/2020 09:59:00 PM

Weekend:
• Schedule for Week of November 15, 2020

Monday:
• At 8:30 AM ET, The New York Fed Empire State manufacturing survey for November. The consensus is for a reading of 13.8, up from 10.5.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are up 23 and DOW futures are up 179 (fair value).

Oil prices were up over the last week with WTI futures at $40.47 per barrel and Brent at $43.04 barrel. A year ago, WTI was at $57, and Brent was at $62 - so WTI oil prices are down over 30% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.12 per gallon. A year ago prices were at $2.61 per gallon, so gasoline prices are down $0.49 per gallon year-over-year.