by Calculated Risk on 6/01/2010 10:30:00 AM

Overall construction spending increased in April, and private construction spending, both residential and non-residential, also increased in April. From the Census Bureau: April 2010 Construction at $847.3 Billion Annual Rate

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during April 2010 was estimated at a seasonally adjusted annual rate of $869.1 billion, 2.7 percent (±1.4%) above the revised March estimate of $845.9 billion. The April figure is 10.5 percent (±1.6%) below the April 2009 estimate of $971.4 billion. ... Spending on private construction was at a seasonally adjusted annual rate of $565.8 billion, 2.9 percent (±1.1%) above the revised March estimate of $549.7 billion.

Click on graph for larger image in new window.

The first graph shows private residential and nonresidential construction spending since 1993. Note: nominal dollars, not inflation adjusted.

Private residential construction spending appears to have bottomed in early 2009, but has been mostly moving sideways since then. Residential spending is now 61% below the peak of early 2006.

Private non-residential construction spending is now 29% below the peak of late 2008.

The second graph shows the year-over-year change for private residential and nonresidential construction spending.

Nonresidential spending is off 24.6% on a year-over-year (YoY) basis.

Residential construction spending is now up 4.1% from a year ago (easy comparison), and will probably decline slightly later this year.

Private residential spending will probably exceed non-residential spending later this year - mostly because of continued declines in non-residential spending. Private construction will be a weak sector for some time.

by Calculated Risk on 6/01/2010 10:00:00 AM

PMI at 59.7% in May, down from 60.4% in April.

From the Institute for Supply Management: May 2010 Manufacturing ISM Report On Business®

Economic activity in the manufacturing sector expanded in May for the 10th consecutive month, and the overall economy grew for the 13th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

The report was issued today by Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The manufacturing sector grew for the 10th consecutive month during May. The rate of growth as indicated by the PMI is driven by continued strength in new orders and production. Employment continues to grow as manufacturers have added to payrolls for six consecutive months. The recovery continues to broaden as 16 of 18 industries report growth. There are a number of reports, particularly in the tech sector, of shortages of components; this is the result of excessive inventory de-stocking during the downturn."
...
ISM's Employment Index registered 59.8 percent in May, which is 1.3 percentage points higher than the 58.5 percent reported in April. This is the sixth consecutive month of growth in manufacturing employment. An Employment Index above 49.8 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.
emphasis added

This was close to expectations of 59.5% and suggests continued growth in the manufacturing sector.

by Calculated Risk on 6/01/2010 08:51:00 AM

The euro is at a four year low this morning at 1.2174 dollars

From Eurostat: Euro area unemployment rate at 10.1%

The euro area1 (EA16) seasonally-adjusted unemployment rate was 10.1% in April 2010, compared with 10.0% in March. It was 9.2% in April 2009. The EU271 unemployment rate was 9.7% in April 2010, unchanged compared with March. It was 8.7% in April 2009.

Eurostat estimates that 23.311 million men and women in the EU27, of whom 15.860 million were in the euro area, were unemployed in April 2010.

Among the Member States, the lowest unemployment rates were recorded in the Netherlands (4.1%) and Austria (4.9%), and the highest rates in Latvia (22.5%), Spain (19.7%) and Estonia (19.0% in the first quarter of 2010).

Compared with a year ago, one Member State recorded a fall in the unemployment rate and twenty-six an increase. The fall was observed in Germany (7.6% to 7.1%), and the smallest increases in Luxembourg (5.3% to 5.4%) and Malta (6.9% to 7.0%). The highest increases were registered in Estonia (11.0% to 19.0% between the first quarters of 2009 and 2010), Latvia (15.4% to 22.5%) and Lithuania (11.2% to 17.4% between the first quarters of 2009 and 2010).

by Calculated Risk on 6/01/2010 12:55:00 AM

Click on cartoon for larger image in new window. Cartoon from Eric G. Lewis www.EricGLewis.com (site coming soon)

From Bloomberg: Commodities’ Biggest Drop Since Lehman Bear Signal

The Journal of Commerce commodity index that includes steel, cattle hides, tallow and burlap plunged 57 percent in May, two years after a decline that foreshadowed the worst recession in half a century. The index of 18 industrial materials declined the most since October 2008 as Europe’s debt crisis widened and China took steps to curb growth.

From the WSJ: Steel Prices Under Pressure

From the WSJ: China Bites Into Commodities Reserves

The Dow Jones-UBS Commodity Index last week dropped to its lowest level since July, before recouping some of its losses. The index is down 9.9% this year.

In April, China posted a significant drop in imports for some commodities, leaving many analysts wondering whether China's appetite for commodities has abated.

The euro is down to 1.226 dollars.

The Asian markets are off tonight about 0.5% to 1%.

The futures are off somewhat (Dow off 47).

by Calculated Risk on 5/31/2010 10:09:00 PM

From David Streitfeld at the NY Times: Owners Stop Paying Mortgages, and Stop Fretting. A few excerpts:

Foreclosure procedures have been initiated against 1.7 million of the nation’s households.
...
The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics.
...
More than 650,000 households had not paid in 18 months, LPS calculated earlier this year. With 19 percent of those homes, the lender had not even begun to take action to repossess the property ...

Streitfeld provides a few examples. One lady said "The longer I’m in foreclosure, the better."

This isn't for everyone. Streitfeld quotes Kyle Lundstedt, managing director of Lender Processing Service’s analytics group:

“These people are playing a dangerous game. There are processes in many states to go after folks who have substantial assets postforeclosure.”