by Calculated Risk on 9/17/2009 10:00:00 AM

Here is the Philadelphia Fed Index released today: Business Outlook Survey.

The region’s manufacturing sector is showing signs of growth, according to firms polled for this month’s Business Outlook Survey. ...

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, increased from 4.2 in August to 14.1 this month. This is the highest reading since June 2007 and the second consecutive positive reading. The percentage of firms reporting increases in activity (33 percent)exceeded the percentage reporting decreases (19 percent). Other broad indicators
also suggested some growth this month. The current new orders index also remained positive for the second consecutive month, although it edged one point lower, to 3.3. The current shipments index increased eight points and has now increased 18 points over the last two months. Firms reported declines in inventories this month: The current inventory index declined 18 points, from 0.3 in August to ‐18.1. Indicators for unfilled orders and delivery times remained negative, suggesting continued weakness.

Labor market conditions remain weak, despite signs of improvement in overall activity. The current employment index decreased slightly, from ‐12.9 to ‐14.3. Overall declines, however, are still not as widespread as in the first six months of this year. ...

Click on graph for larger image in new window.

This graph shows the Philly index for the last 40 years.

The index has been positive for two months now, after being negative for 19 of the previous 20 months. Employment is still weak.

by Calculated Risk on 9/17/2009 08:31:00 AM

Click on graph for larger image in new window.

Total housing starts were at 598 thousand (SAAR) in August, up 1.5% from the revised July rate, and up sharply from the all time record low in April of 479 thousand (the lowest level since the Census Bureau began tracking housing starts in 1959).

Single-family starts were at 479 thousand (SAAR) in August, down 3.0% from the revised July rate, but still 34 percent above the record low in January and February (357 thousand).

Permits for single-family units were 462 thousand in August, suggesting single-family starts will be steady in September.

Here is the Census Bureau report on housing Permits, Starts and Completions.

Building Permits:
Privately-owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 579,000. This is 2.7 percent (±1.2%) above the revised July rate of 564,000, but is 32.4 percent (±1.3%) below the August 2008 estimate of 857,000.

Single-family authorizations in August were at a rate of 462,000; this is 0.2 percent (±1.1%) below the revised July figure of 463,000.

Housing Starts:
Privately-owned housing starts in August were at a seasonally adjusted annual rate of 598,000. This is 1.5 percent (±7.9%) above the revised July estimate of 589,000, but is 29.6 percent (±6.0%) below the August 2008 rate of 849,000.

Single-family housing starts in August were at a rate of 479,000; this is 3.0 percent (±5.7%) below the revised July figure of 494,000.

Housing Completions:
Privately-owned housing completions in August were at a seasonally adjusted annual rate of 760,000. This is 5.5 percent (±14.0%) below the revised July estimate of 804,000 and is 25.3 percent (±9.6%) below the August 2008 rate of 1,018,000.

Single-family housing completions in August were at a rate of 489,000; this is 1.6 percent (±12.7%)* below the revised July figure of 497,000.

Note that single-family completions of 489 thousand are at about the same level as single-family starts (479 thousand). This suggests residential construction employment has stabilized.

It now appears that single family starts bottomed in January. However, as expected, it appears starts are moving sideways - and will probably stay near this level until the excess existing home inventory is reduced.

by Calculated Risk on 9/17/2009 08:30:00 AM

The DOL reports weekly unemployment insurance claims decreased to 545,000:

In the week ending Sept. 12, the advance figure for seasonally adjusted initial claims was 545,000, a decrease of 12,000 from the previous week's revised figure of 557,000. The 4-week moving average was 563,000, a decrease of 8,750 from the previous week's revised average of 571,750.
...
The advance number for seasonally adjusted insured unemployment during the week ending Sept. 5 was 6,230,000, an increase of 129,000 from the preceding week's revised level of 6,101,000.

Click on graph for larger image in new window.

This graph shows the 4-week moving average of weekly claims since 1971.

The four-week average of weekly unemployment claims decreased this week by 8,750 to 563,000, and is now 95,750 below the peak in April.

It appears that initial weekly claims have peaked for this cycle. However it seems that weekly claims are stuck at a very high level; weekly claims have been in the high 500 thousands for almost 3 months. This indicates continuing weakness in the job market. The four-week average of initial weekly claims will probably have to fall below 400,000 before the total employment stops falling.

by Calculated Risk on 9/16/2009 09:09:00 PM

From Bloomberg: Homebuyer Tax-Credit Extension Gains Lawmaker Support

An extension of the $8,000 U.S. homebuyer tax credit is gaining support in the Senate as bill sponsor John Isakson said he is rallying lawmakers to continue a program that helped boost home sales by more than 1 million.

“I’m working the floor now to make everyone aware that the $8,000 credit sunsets on Nov. 30,” Isakson, a Georgia Republican, said in an interview today. The former real estate executive says he is “talking to everybody and anybody.”

This is terrible policy, and hopefully the bill will be scuttled.

Meanwhile the usual suspects are lining up to support the bill:

Realtors, bankers and homebuilders have joined in the push, starting a campaign that encourages Congress to extend the program for one year ...

White House spokesman Robert Gibbs told reporters today that President Barack Obama’s economic team is looking at the tax credit and “evaluating the impact” on new home sales.

“Through that evaluation we’ll come to something to give the president a recommendation,” Gibbs said.
...
The bill has at least 15 co-sponsors including Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, and senators Patty Murray, a Washington Democrat, and Joe Lieberman, a Connecticut independent.

What is wrong with Connecticut?

by Calculated Risk on 9/16/2009 05:25:00 PM

From the UCLA News today:

Sluggish overall growth is predicted [in a report titled "The Long Goodbye," by UCLA Anderson Forecast], as the [national] unemployment rate will be above 10 percent well into next year.

And in the UK from The Times: Record one in five young people out of work

The number of young people out of work hit a record 947,000 in July as total unemployment in Britain hit 2.47 million.

Official data today showed that the number of jobless 16 to 24-year-olds jumped by nearly 60,000 in the three months to July to the highest level since 1992, when records began.

That figure translates to a record 19.7 per cent - also the highest since records began - meaning that one in five people in that age bracket is looking for work.
...
Total unemployment hit a 13-year high of 2.47 million as more than 210,000 people lost their jobs, sending the jobless rate back to 1996 levels of 7.9 per cent.

And from the NY Times: High Jobless Rates Could Last Years, O.E.C.D. Warns

Unless government programs for the unemployed are refined, there is a danger that high jobless rates will persist beyond 2010 in advanced economies, the Organization for Economic Cooperation and Development warned on Wednesday.

“A recovery may be in sight,” the group said in its annual employment outlook, referring to economic output. “But the short-term employment outlook is grim.”

The international organization said that unemployment among its 30 member nations would rise to nearly 10 percent by the end of 2010, above its previous post-1970 peak of 7.5 percent during the second quarter of 1993.

In the U.S., Rep. Jim McDermott, D-Wash and Sen. Jack Reed, D-R.I. have offered bills in the House and Senate to extend unemployment benefits again. However this proposed extension would only be for any additional 13 weeks for people in high-unemployment states, and many workers will exhaust those claims early in the new year.

I expect to see a double digit unemployment rate within the next few months, and with below trend GDP growth, I expect double digit unemployment rates through most of 2010.