by Calculated Risk on 12/02/2010 11:50:00 PM

From HotelNewsNow.com: STR: Upscale segment reports strong weekly gains

Overall, the industry’s occupancy increased 7.0% to 43.6%, ADR was up 2.9% to US$87.53, and RevPAR ended the week up 10.1% to US$38.16.

The following graph shows the four week moving average for the occupancy rate by week for 2008, 2009 and 2010 (and a median for 2000 through 2007).

Click on graph for larger image in new window.

Notes: the scale doesn't start at zero to better show the change. The graph shows the 4-week average, not the weekly occupancy rate.

On a 4-week basis, occupancy is up 8.2% compared to last year and 4.2% below the median for 2000 through 2007.

Note: For the first time this year, RevPAR (revenue per available room) was up compared to the same week two years ago (in 2008).

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 12/02/2010 06:33:00 PM

Here is a look at European bond spreads from the Atlanta Fed weekly Financial Highlights released today (graph as of Dec 1st):

Click on graph for larger image in new window.

From the Atlanta Fed:

Led by Ireland, peripheral European bond spreads (over German bonds) have risen considerably in the past few weeks.

Since the November FOMC meeting, the 10-year Irish-to-German bond spread has risen by 142 basis points (bps) (from 6.32% to 4.90%), through November 29; spreads on Spanish debt are up 83 bps and 62 bps on Greek debt.

Maybe the Atlanta Fed should add Belgium.

The spreads narrowed sharply today after ECB President Jean-Claude Trichet announced the ECB will extend special liquidity measures until at least April 12th - and continue the Securities Market Program (bond buying of euro-zone debt).

by Calculated Risk on 12/02/2010 03:15:00 PM

An important article from Catherine Rampell at the NY Times: Persistence of Long-Term Unemployment Tests U.S.. A short excerpt:

New data from the Labor Department, provided to The New York Times, shows that people out of work fewer than five weeks are more than three times as likely to find a job in the coming month than people who have been out of work for over a year, with a re-employment rate of 30.7 percent versus 8.7 percent, respectively.

Likewise, previous economic studies, many based on Europe’s job market struggles, have shown that people who become disconnected from the work force have more trouble getting hired, probably because of some combination of stigma, discouragement and deterioration of their skills.

This is why it is critical to help the unemployed. Rampell writes:

Direct employment programs — like the public works projects of the New Deal era and World War II — might be the fastest way to put people back to work, economists say. But those raise concerns of crowding out businesses and displacing other workers. Besides, such proposals, which smack of socialism to some, seem politically unfeasible at the moment.

If structured correctly - in an environment with a 9.6% unemployment rate - the "crowding out" would be minimal. As far as the politics - well, I support a direct hiring program - and I have no expectation of it happening.

by Calculated Risk on 12/02/2010 01:02:00 PM

The BLS will release the November Employment Report at 8:30 AM tomorrow. The consensus is for an increase of 145,000 payroll jobs in November, and for the unemployment rate to stay steady at 9.6%. Note: Bloomberg is listing the consensus as 168,000 payroll jobs, and an increase in the unemployment rate to 9.7%.

Most of the recent employment related reports have been slightly above expectations:

• ADP reported Private Employment increased by 93,000 in November, the largest gain in three years. This was well above expectations of 68,000 private sector jobs.

• The ISM manufacturing employment index decreased slightly to 57.5 from 57.7 in October. This still suggests some hiring in manufacturing (the ADP report showed manufacturing employment increased by 16,000 in November). Most of the regional Fed manufacturing surveys also showed an increase in employment in November.

• Weekly initial unemployment claims were down significantly from October.

Click on graph for larger image in new window.

The average over the last 4 weeks was 431,000 initial claims per week.

For October the average was 456,500. Although still elevated, this suggests some pickup in hiring compared to October.


• The Reuters/University of Michigan consumer sentiment index increased to 71.6 from 67.7 in October.

This graph shows the consumer sentiment index.

There is some correlation between consumer sentiment and employment, and although this increase in sentiment was minor (and sentiment is still low), this does suggest some improvement.

• As I mentioned last month, the decennial Census hiring and layoffs can be ignored. As of October, there were only 1 thousand temporary census workers remaining on the payroll.

• The unemployment rate is dependent on both job creation and the participation rate.

Usually the participation rate - the percent of the civilian population in the labor force - falls when the job market is weak. And a decline in the participation rate puts downward pressure on the unemployment rate (and the opposite is true when the participation rate increases).

Right now the participation rate is very low at 64.5%, and a further decline would be considered very bad employment news (even if the unemployment rate declined slightly). An increase in the participation rate (due to more confidence), could lead to an increase in the unemployment rate even as hiring improves.

This graph shows the recent sharp decline in the participation rate (blue), and also the unemployment rate and the employment-population ratio. The participation rate had mostly been above 66% since the late '80s, and had been over 67% in the late '90s.

The participation rate probably increased in November, and this might have pushed the unemployment rate up to 9.7%.

For much more on the participation rate, see:
• Labor Force Participation Rate: What will happen?
• Labor Force Participation Trends, Over 55 Age Groups

Note: I think the participation rate will move back towards 66% over the next few years, even with an aging population.

• In October the seasonally adjusted unemployment rate was 9.644% unrounded (reported as 9.6%), so it won't take much of an increase to reach 9.7% for November.

• Bottom line: I think hiring improved in November (I'll take the over again on jobs), but the unemployment rate might have increased too (depending on the participation rate).

by Calculated Risk on 12/02/2010 10:00:00 AM

From the NAR:
Strong Rebound in Pending Home Sales

The Pending Home Sales Index,* a forward-looking indicator, rose 10.4 percent to 89.3 based on contracts signed in October from 80.9 in September. The index remains 20.5 percent below a surge to a cyclical peak of 112.4 in October 2009 ... The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

This suggests existing home sales in November and December will be somewhat higher than in October.

This also suggests months-of-supply will fall below double digits in November and December, but will remain elevated putting downward pressure on house prices.

Note: in the calculation of months-of-supply, the NAR uses the seasonally adjusted sales rate, but they do not seasonally adjust inventory. Since inventory declines every November and December, the months-of-supply would decline even if the sales rate stayed steady. Since it appears sales will increase slightly (based on pending home sales), and inventory will seasonally decline, the months-of-supply will fall. For more, see: Housing Supply: What do all the numbers mean?