by Calculated Risk on 9/06/2011 01:35:00 PM

From Jon Lansner at the O.C. Register: Sellers rush to pull homes off O.C. market

The latest Orange County home inventory report from local broker Steve Thomas — data as of September 1 [shows] sellers quit the market in droves.

As more homeowners throw in the towel with the realization that the best time of the year to sell has now passed, the inventory continues to steadily drop. Last year at this time the inventory was still growing, continuing right through September. Not this year. Over the past month, the inventory has shed a total of 349 homes and now totals 10,754, dropping below the 11,000 mark and reaching levels not seen since March. In the last two weeks alone, the inventory dropped by 297 homes, the largest drop so far this year. Last year there were 963 more homes on the market compared to today. In transitioning into the fall market, expect more homeowners to throw the proverbial towel. This will continue through the end of the year.

It is normal for inventory to decline as the summer ends, so this decline is mostly seasonal. However, not mentioned in the article, is that this is an 8.2% decline from the same period in 2010.

I've been using the HousingTracker / DeptofNumbers data that Tom Lawler mentioned back in June to track inventory. Ben at deptofnumbers.com is tracking the aggregate monthly inventory for 54 metro areas.

Click on graph for larger image in graph gallery.

This graph shows the NAR estimate of existing home inventory through July (left axis) and the HousingTracker data for the 54 metro areas through early September. The HousingTracker data shows a steeper decline in inventory over the last few years (the NAR will probably revise down their inventory estimates this fall).

The second graph shows the year-over-year change in inventory for both the NAR and HousingTracker.

HousingTracker reported that the early September listings - for the 54 metro areas - declined 16.5% from last September. Of course there is a large percentage of distressed inventory, and various categories of "shadow inventory" too. But this is a significant year-over-year decline and pretty soon we will be talking about inventory being at the lowest level since 2005 (inventory increased sharply near the end of 2005 signaling the end of the housing bubble).

by Calculated Risk on 9/06/2011 10:00:00 AM

The August ISM Non-manufacturing index was at 53.5%, up from 52.7% in July. The employment index decreased in August to 51.6%, down from 52.5% in July. Note: Above 50 indicates expansion, below 50 contraction.

From the Institute for Supply Management: August 2011 Non-Manufacturing ISM Report On Business®

Economic activity in the non-manufacturing sector grew in August for the 21st consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®.

The report was issued today by Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee. "The NMI registered 53.3 percent in August, 0.6 percentage point higher than the 52.7 percent registered in July, and indicating continued growth at a slightly faster rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index decreased 0.5 percentage point to 55.6 percent, reflecting growth for the 25th consecutive month, but at a slower rate than in July. The New Orders Index increased by 1.1 percentage points to 52.8 percent. The Employment Index decreased 0.9 percentage point to 51.6 percent, indicating growth in employment for the 12th consecutive month, but at a slower rate than in July. The Prices Index increased 7.6 percentage points to 64.2 percent, indicating that prices increased at a faster rate in August when compared to July. According to the NMI, 10 non-manufacturing industries reported growth in August. Respondents' comments remain mixed. There is a degree of uncertainty concerning business conditions for the balance of the year."
emphasis added

Click on graph for larger image in graph gallery.

This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index.

This was above the consensus forecast of 50.5% and indicates slightly faster expansion in August than in July.

by Calculated Risk on 9/06/2011 08:44:00 AM

This is a strongly worded statement from the SNB: Swiss National Bank sets minimum exchange rate at CHF 1.20 per euro

The current massive overvaluation of the Swiss franc poses an acute threat to the Swiss economy and carries the risk of a deflationary development.

The Swiss National Bank (SNB) is therefore aiming for a substantial and sustained weakening of the Swiss franc. With immediate effect, it will no longer tolerate a EUR/CHF exchange rate below the minimum rate of CHF 1.20. The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities.

Even at a rate of CHF 1.20 per euro, the Swiss franc is still high and should continue to weaken over time. If the economic outlook and deflationary risks so require, the SNB will take further measures.

The FT Alphaville has several posts about this move, including The clairvoyant Jim O’Neill and SNB euroquake, the analyst reaction – part one and SNB euroquake, the analyst reaction – part two.

by Calculated Risk on 9/05/2011 10:42:00 PM

The European markets declined sharply on Monday. The DAX was off 5.3%, the FTSE 100 off 3.6%.

From the WSJ: Europe Signals Global Gloom

[This is] a pivotal week that includes the European Central Bank's monthly decision on interest rates and a decision by a German court on the legality of Germany's participation in Europe's €440 billion ($625 billion) rescue fund.

The ECB purchased Italian and Spanish government bonds Monday in a bid to keep 10-year borrowing costs from rising further above 5% ... The ECB has purchased over €50 billion in bonds since reactivating the program four weeks ago.

And from the NY Times: Europeans Talk of Sharp Change in Fiscal Affairs

The idea is to create a central financial authority — with powers in areas like taxation, bond issuance and budget approval — that could eventually turn the euro zone into something resembling a United States of Europe.
...
Nothing happens quickly in Europe, however. For the most part, such efforts are still being made behind the scenes.
...
The idea of a European Treasury that would enforce fiscal discipline on wayward countries ... Those in prosperous nations like Germany do not want to see their taxes used to bail out countries that borrowed their way into trouble. And those in weaker nations are reluctant to allow outsiders to dictate how their governments spend their money and tax their citizens.

The Asian markets are red tonight with the Nikkei down over 1%.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P 500 is down about 28 points, and Dow futures are down about 250 points.

Oil: WTI futures are down to $84 and Brent is up to $110.

by Calculated Risk on 9/05/2011 04:02:00 PM

With the unemployment rate at 9.1% and almost 14 million Americans unemployed, with the alternate measure of unemployment (U-6) at 16.2%, with 6 million workers unemployed for more than 6 months, and with 6.9 million fewer payroll jobs than at the beginning of the 2007 recession, one might think every major publication would lead with a labor story on Labor Day. One would be wrong.

A quick glance shows zero labor stories on the front page on the NY Times - or on the Business page. Zero. Zip. Zilch. Nada.

LA Times? Same story - no stories.

The WSJ? One story, sort of. Infrastructure Likely Part Of Obama Jobs Push

President Barack Obama signaled Monday he'll propose a major infrastructure program and an extension of a payroll tax break in the jobs speech he planned to deliver Thursday before a joint session of Congress.

The WaPo? A few opinion pieces.

CNBC? You guessed it. Zip.

Here is a new survey: Out of Work and Losing Hope: The Misery and Bleak Expectations of American Workers (ht Ann)

The unemployed are pessimistic about the prospects of an economic recovery, and have gotten more so over time. In August 2009, 56% thought that the economy would begin to recover within two years. Now, two years later, only 29% think the economy will begin to recover in the next two years. Another 30% are thinking in a time frame of three to five years, leaving 42% that believe that economic recovery is more than five years down the road. This is a strong statement about the likelihood of recovery: almost three quarters of the unemployed do not see an economic recovery even in the space of the next two years.

Misery. Bleak expectations. And almost no labor stories ... on Labor Day.