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Thursday, June 05, 2025

Friday: Employment Report

by Calculated Risk on 6/05/2025 08:08:00 PM

Mortgage Rates Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Friday:
• At 8:30 AM ET, Employment Report for May.   The consensus is for 130,000 jobs added, and for the unemployment rate to be unchanged at 4.2%.

Realtor.com Reports Most Actively "For Sale" Inventory since December 2019

by Calculated Risk on 6/05/2025 04:58:00 PM

What this means: On a weekly basis, Realtor.com reports the year-over-year change in active inventory and new listings. On a monthly basis, they report total inventory. For May, Realtor.com reported inventory was up 31.5% YoY, but still down 14.4% compared to the 2017 to 2019 same month levels. 


 Now - on a weekly basis - inventory is up 29.5% YoY.

Realtor.com has monthly and weekly data on the existing home market. Here is their weekly report: Weekly Housing Trends View—Data for Week Ending May 31, 2025
Active inventory climbed 29.5% year over year

The number of homes actively for sale remains on a strong upward trajectory, now 29.5% higher than this time last year. This represents the 82nd consecutive week of annual gains in inventory. There were more than 1 million homes for sale again last week, marking the fourth week in a row over the threshold and the highest inventory level since December 2019.

New listings—a measure of sellers putting homes up for sale—rose 4.2% year over year

New listings rose again last week on an annual basis, up 4.2% compared with the same period last year, though growth slowed compared with the previous week. Monday’s Memorial Day holiday likely affected listing activity for the week. The momentum that began earlier this spring remains strong ...

The median list price was flat year over year

The median list price was flat year over year this week as sticky prices persist into the summer. The median list price per square foot—which adjusts for changes in home size—rose 0.9% year over year.
Realtor YoY Active ListingsHere is a graph of the year-over-year change in inventory according to realtor.com

Inventory was up year-over-year for the 82nd consecutive week.  

New listings increased.

Median list prices were mostly unchanged year-over-year.

Hotels: Occupancy Rate Decreased 1.6% Year-over-year

by Calculated Risk on 6/05/2025 02:59:00 PM

The U.S. hotel industry reported negative year-over-year comparisons, according to CoStar’s latest data through 31 May. ...

25-31 May 2025 (percentage change from comparable week in 2024):

Occupancy: 61.0% (-1.6%)
• Average daily rate (ADR): US$151.48 (-0.3%)
• Revenue per available room (RevPAR): US$92.45 (-1.9%)
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The following graph shows the seasonal pattern for the hotel occupancy rate using the four-week average.

Hotel Occupancy RateClick on graph for larger image.

The red line is for 2025, blue is the median, and dashed light blue is for 2024.  Dashed purple is for 2018, the record year for hotel occupancy. 

The 4-week average of the occupancy rate is tracking behind last year and at the median rate for the period 2000 through 2024 (Blue).

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

The 4-week average will start to increase with the summer travel season.  We will likely see a hit to occupancy during the summer months due to less international tourism.

May Employment Preview

by Calculated Risk on 6/05/2025 01:00:00 PM

On Friday at 8:30 AM ET, the BLS will release the employment report for May. The consensus is for 130,000 jobs added, and for the unemployment rate to be unchanged at 4.2%. There were 177,000 jobs added in April, and the unemployment rate was at 4.2%.

From Goldman Sachs:

While the employment component of the ISM services index improved, it remained at a weak level and the ADP measure of job growth was much weaker than expected. We have lowered our forecast for nonfarm payroll growth by 15k to +110k, below consensus of +126k.
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From BofA:
Payrolls are likely to rise by a stable 150k after coming in at 177k in April. This is slightly higher than consensus expectations of 130k. Claims in the survey week remained at muted levels. Firms likely paused the hiring of trade & transportation workers after the front-loading driven increase in the previous months. But given elevated uncertainty about the steady state on tariff policy, we don’t think they would have already started shedding workers. Risks are to the downside, in our view. We expect the u-rate to remain at 4.2%.
ADP Report: The ADP employment report showed 37,000 private sector jobs were added in May.  This was well below consensus forecasts and suggests job gains below consensus expectations, however, in general, ADP hasn't been very useful in forecasting the BLS report.

ISM Surveys: Note that the ISM indexes are diffusion indexes based on the number of firms hiring (not the number of hires).  The ISM® manufacturing employment index was at 46.8%, up from 46.5% the previous month.   This would suggest some jobs lost in manufacturing. The ADP report indicated 3,000 manufacturing jobs lost in May.

The ISM® services employment index was at 50.7%, up from 49.0% the previous month.   This is still weak, but would suggest some jobs added in services. The ADP report indicated 36,000 service jobs added in May.

Unemployment Claims: The weekly claims report showed about the same initial unemployment claims during the reference week at 226,000 in May compared to 216,000 in April.  This suggests layoffs in May were about the same or a little more than in April.

Conclusion: Over the last year, employment gains averaged 157 thousand per month - and that was probably the trend prior to policy changes.  It still seems early for policy to significantly impact the employment report.   However, my guess is we will start to see the impact of policy uncertainty - a little hiring hesitancy - and I'll take the under for May.

Trade Deficit decreased to $61.6 Billion in April

by Calculated Risk on 6/05/2025 08:50:00 AM

The Census Bureau and the Bureau of Economic Analysis reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $61.6 billion in April, down $76.7 billion from $138.3 billion in March, revised.

April exports were $289.4 billion, $8.3 billion more than March exports. April imports were $351.0 billion, $68.4 billion less than March imports.
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U.S. Trade Exports Imports Click on graph for larger image.

Exports increased and imports increased in April.

Exports were up 8.6% year-over-year; imports were up 3.4% year-over-year.

Imports increased sharply earlier this year as importers rushed to beat tariffs.  Exports likely increased in April as foreign importers rushed to beat retaliatory tariffs.

The second graph shows the U.S. trade deficit, with and without petroleum.

U.S. Trade Deficit 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.

Note that net, exports of petroleum products are positive and have been increasing.

The trade deficit with China decreased to $17.2 billion from $20.1 billion a year ago.

Weekly Initial Unemployment Claims Increase to 247,000

by Calculated Risk on 6/05/2025 08:30:00 AM

The DOL reported:

In the week ending May 31, the advance figure for seasonally adjusted initial claims was 247,000, an increase of 8,000 from the previous week's revised level. The previous week's level was revised down by 1,000 from 240,000 to 239,000. The 4-week moving average was 235,000, an increase of 4,500 from the previous week's revised average. The previous week's average was revised down by 250 from 230,750 to 230,500.
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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 235,000.

The previous week was revised down.

Weekly claims were higher than the consensus forecast.

Wednesday, June 04, 2025

Thursday: Trade Deficit, Unemployment Claims

by Calculated Risk on 6/04/2025 07:30:00 PM

Mortgage Rates Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Thursday:
• At 8:30 AM ET, Trade Balance report for April from the Census Bureau. The consensus is the trade deficit to be $117.3 billion.  The U.S. trade deficit was at $140.5 Billion in March.

• Also at 8:30 AM, The initial weekly unemployment claims report will be released. The consensus is for initial claims of 230 thousand, down from 240 thousand last week.

Fed's Beige Book: "Economic activity has declined slightly"

by Calculated Risk on 6/04/2025 04:00:00 PM

Fed's Beige Book

Reports across the twelve Federal Reserve Districts indicate that economic activity has declined slightly since the previous report. Half of the Districts reported slight to moderate declines in activity, three Districts reported no change, and three Districts reported slight growth. All Districts reported elevated levels of economic and policy uncertainty, which have led to hesitancy and a cautious approach to business and household decisions. Manufacturing activity declined slightly. Consumer spending reports were mixed, with most Districts reporting slight declines or no change; however, some Districts reported increases in spending on items expected to be affected by tariffs. Residential real estate sales were little changed, and most District reports on new home construction indicate flat or slowing construction activity. Reports on bank loan demand and capital spending plans were mixed. Activity at ports was robust, while reports on transportation and warehouse activity in other areas were mixed. On balance, the outlook remains slightly pessimistic and uncertain, unchanged relative to the previous report. However, a few District reports indicate the outlook has deteriorated while a few others indicate the outlook has improved.

Labor Markets

Employment has been little changed since the previous report. Most Districts described employment as flat, three Districts reported slight-to-modest increases, and two Districts reported slight declines. Many Districts reported lower employee turnover rates and more applicants for open positions. Comments about uncertainty delaying hiring were widespread. All Districts described lower labor demand, citing declining hours worked and overtime, hiring pauses, and staff reduction plans. Some Districts reported layoffs in certain sectors, but these layoffs were not pervasive. Two Districts noted that, for many of their contacts, hiring plans had not changed since the start of the year. Wages continued to grow at a modest pace, although many Districts reported a general easing in wage pressures. A few Districts indicated that higher costs of living continued to put upward pressure on wages.

Prices

Prices have increased at a moderate pace since the previous report. There were widespread reports of contacts expecting costs and prices to rise at a faster rate going forward. A few Districts described these expected cost increases as strong, significant, or substantial. All District reports indicated that higher tariff rates were putting upward pressure on costs and prices. However, contacts' responses to these higher costs varied, including increasing prices on affected items, increasing prices on all items, reducing profit margins, and adding temporary fees or surcharges. Contacts that plan to pass along tariff-related costs expect to do so within three months.
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Q1 Update: Delinquencies, Foreclosures and REO

by Calculated Risk on 6/04/2025 12:58:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Q1 Update: Delinquencies, Foreclosures and REO

A brief excerpt:

This entire housing cycle I’ve argued that we would NOT see a surge in foreclosures that would significantly impact house prices (as happened following the housing bubble) for two key reasons: 1) mortgage lending has been solid, and 2) most homeowners have substantial equity in their homes.
...
FDIC REOThis graph shows the nominal dollar value of Residential REO for FDIC insured institutions based on the Q1 FDIC Quarterly Banking Profile released last week. Note: The FDIC reports the dollar value and not the total number of REOs.

The dollar value of 1-4 family residential Real Estate Owned (REOs, foreclosure houses) was up 5% YOY from $742 million in Q1 2024 to $784 million in Q1 2025. This is historically extremely low.
There is much more in the article.

Heavy Truck Sales Down 8% YoY in May

by Calculated Risk on 6/04/2025 10:51:00 AM

This graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the May 2025 seasonally adjusted annual sales rate (SAAR) of 446 thousand.

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 record high of 570 thousand SAAR in April 2019.

Heavy Truck Sales Click on graph for larger image.

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


Heavy truck sales declined sharply at the beginning of the pandemic, falling to a low of 288 thousand SAAR in May 2020.  

Heavy truck sales were at 446 thousand SAAR in May, down from 457 thousand in April, and down 7.9% from 484 thousand SAAR in May 2024.  

Year-to-date (NSA) sales are down 4.6%.

Usually, heavy truck sales decline sharply prior to a recession and sales were OK in May.  

As I mentioned yesterday, light vehicle sales declined in May to 15.65 million SAAR.  We are starting to see some payback from the "beat the tariffs" surge in March and April.

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

Light vehicle sales were at 15.65 million SAAR in May, down 9.3% from April, and down 1.1% from May 2024.