by Calculated Risk on 6/04/2010 08:30:00 AM

From the BLS:

Total nonfarm payroll employment grew by 431,000 in May, reflecting the hiring of 411,000 temporary employees to work on Census 2010, the U.S. Bureau of Labor Statistics reported today. ... The unemployment rate edged down to 9.7 percent.

Census 2010 hiring was 411,000 in May. Non-farm payroll employment increased 20,000 in May ex-Census.

Click on graph for larger image.

This graph shows the unemployment rate and the year over year change in employment vs. recessions.

Nonfarm payrolls increased by 431,000 in May. The economy has lost 0.6 million jobs over the last year, and 7.4 million jobs since the recession started in December 2007. Ex-Census hiring, the economy only added 20,000 jobs in May.

The unemployment rate decreased to 9.7 percent.

The second graph shows the job losses from the start of the employment recession, in percentage terms (as opposed to the number of jobs lost).

The dotted line is ex-Census hiring. The two lines will rejoin later this year when the Census hiring is unwound.

For the current recession, employment peaked in December 2007, and this recession is by far the worst recession since WWII in percentage terms, and 2nd worst in terms of the unemployment rate (only early '80s recession with a peak of 10.8 percent was worse).

This is a very weak report. The decrease in the unemployment rate was because of a decline in the participation rate - and that is not good news. I'll have much more soon ...

by Calculated Risk on 6/03/2010 11:59:00 PM

The WSJ has an article tonight about the Chinese real estate market and the recent government actions: China's Property Market Freezes Up

Beijing in mid-April announced a package of policies intended to blow the froth out of the market by restricting speculative purchases. ... The housing market in many—though not all—Chinese cities seems to have nearly ground to a halt after the government moves. On average, the number of residential property transactions in the four weeks after the restrictions were announced is down 40% compared with the four weeks before the measures

This slowdown is showing up in commodity prices. A key question is how the Chinese government will react.

Professor Michael Pettis, of the Peking University’s Guanghua School of Management, expects the Chinese government to take action to cushion the slow down, see Beijing’s stop-and-go measures: As

I have said many times before, I suspect we will see a lot of discontinuity in policymaking this year – amid lots of panicking – and recent events show just how. In the past few months Beijing seems to have become so worried about signs of overheating that, after trying unsuccessfully many times to pare growth carefully, it has given up the scalpel and has brought out the sledgehammer.
...
Given the bad global environment, China’s huge domestic imbalances, and its out-of-control monetary condition, there are precious few tools Beijing has for fine-tuning growth. Instead policymakers are going to switch back and forth throughout the year between stomping on the accelerator and stomping on the brakes.

It could be a wild ride.

by Calculated Risk on 6/03/2010 08:34:00 PM

Earlier I posted: Oil Gusher impacting Gulf Coast Hotels

William Spain at MarketWatch has more: Spill could mean dark times for Sunshine State

At stake [in Florida] alone are hundreds of thousands of jobs and perhaps billions of dollars in revenue, depending on when and where the oil from BP PLC's runaway well makes landfall.

Although the beaches were still in the clear as of Thursday afternoon, widespread reports of vacation cancellations are already coming in ...

"It is already ugly," said John Fareed, a partner at Fareed Zapala Koepke, an Orlando-based hospitality-industry consultancy. "When it hits, it will be real and will position itself in the psyche of consumers who are getting ready to make vacation plans. It is going to have a huge impact in terms of future bookings and cancellations.

"Every indication from the people we work with is that bookings have slowed to a trickle".

Of course the loss of tourism pales in comparison to the ecological damage from the oil gusher.

by Calculated Risk on 6/03/2010 03:36:00 PM

Here are two graphs from the Atlanta Fed weekly Financial Highlights released today (graph as of June 2nd):

Click on graph for larger image in new window.

From the Atlanta Fed:

Despite the latest announcement of planned austerity measures by Spain, Portugal, and Italy, uncertainty around the adjustment
challenges in peripheral Europe continues to weigh on the region’s bond prices.

Downgrading of Spanish sovereign debt by Fitch and ongoing concerns about the Spanish banking sector further added to investor worries.

Compared with two weeks ago, peripheral Europe's bond spreads to bunds have widened by 30 basis points (bps) on average.

After declining early last week, sovereign debt spreads have begun widening for peripheral euro area countries. As of June 1, the 10-year bond spread stands at 503 basis points (bps) for Greece, 219 bps for Ireland, 195 bps for Portugal, and 162 bps for Spain.

Similarly, CDS spreads have risen after the initial response to the stabilization package.

It should be noted that the German government, through its financial services regulator BaFin, unilaterally and temporarily banned naked short selling of sovereign debt securities, naked credit default swaps on European sovereign
debt in which the buyer has no hedging demand, and naked short sales in 10 prominent German financials.

After declining following the policy response, the bond and CDS spreads have resumed their steady climb - especially for Greece and Portugal.

And from Reuters today: Hungary Warns of Deficit Overshoot; EU Urges Action

Hungary ... government officials reiterated the 2010 fiscal gap may reach almost twice the target agreed with lenders including the EU. ... Public finances were in much worse shape than previously expected and there was only a slim chance of avoiding a Greek-style scenario, news portal napi.hu cited [the vice chairman of the ruling Fidesz party, Lajos Kosa] as saying.

The euro is down to 1.2166 dollars, the lowest level in four years.

by Calculated Risk on 6/03/2010 02:43:00 PM

From Christine Blank at HotelNewsNow.com: Oil-spill update: Hotels report mixed results

Tourism officials and hotel operators in Gulf of Mexico coastal regions say they are struggling with occupancy and reservations, but some areas are suffering more than others.
...
“We have had some cancellations. It is hitting the beachfront properties hard and the casinos have seen some impact ... and the charter boat companies,” said Richard Forester, executive director of the Mississippi Gulf Coast Convention and Visitors Bureau in Biloxi.
...
“Our members are experiencing unprecedented cancellations heading into their peak season, and this advertising campaign is critical to our economic survival,” said Carol Dover, president and CEO of the Florida Restaurant and Lodging Association in Tallahassee ... Many hoteliers in Northwest Florida that are typically at 90 percent occupancy rates heading into the Memorial Day weekend, were reporting a drop in bookings by 30 percent, according to the FRLA.
...
Texas’s coastal hotels also are feeling an impact, but that could be due to the overall U.S. economy more than to the oil spill.

“We have yet to have any cancellations [because of the oil spill],” said Theresa Elliott, GM of Casa del Mar Beachfront Suites, Galveston, Texas. ... Galveston-area hotels are significantly discounting rooms to boost stays, such as 20-percent off Sunday through Thursday stays, according to Elliott.

The economic impact of the oil gusher is unclear, although tourism, fishing and shipping are all being impacted.