by Calculated Risk on 9/29/2011 05:24:00 PM

Probably deserves a mention ... from Freddie Mac: Fixed-Rate Mortgages Lowest on Record

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), coming on the heels of the Federal Reserve's recent announcements. The conventional 30-year fixed averaged an all-time record low at 4.01 percent; likewise the 15-year fixed averaged an all-time record low at 3.28 percent for the week.
...
"Fixed mortgage rates fell to all-time record lows this week following the Federal Reserve's announcement of its Maturity Extension Program and additional purchases of mortgage-backed securities. Interest rates for ARMs, however, were nearly unchanged as the Federal Reserve plans to sell $400 billion in short-term Treasury securities, which serve as benchmarks for many ARMs." [said Frank Nothaft, vice president and chief economist, Freddie Mac]

Earlier:
• Weekly Initial Unemployment Claims decline sharply to 391,000
• Misc: GDP revised up, Employment to be revised up, Germany approves EFSF changes, Pending Home sales decline
• Kansas City Manufacturing Survey: Manufacturing activity expands "modestly" in September
• Employment: Comment on preliminary annual benchmark revision

by Calculated Risk on 9/29/2011 01:45:00 PM

This morning the BLS released the preliminary annual benchmark revision of +192,000 payroll jobs. The final revision will be published next February when the January 2012 employment report is released February 3, 2012. Usually the preliminary estimate is pretty close to the final benchmark estimate.

The annual revision is benchmarked to state tax records. From the BLS:

Establishment survey benchmarking is done on an annual basis to a population derived primarily from the administrative file of employees covered by unemployment insurance (UI). The time required to complete the revision process—from the full collection of the UI population data to publication of the revised industry estimates—is about 10 months. The benchmark adjustment procedure replaces the March sample-based employment estimates with UI-based population counts for March. The benchmark therefore determines the final employment levels ...

Using the preliminary benchmark estimate, this means that payroll employment in March 2011 was 192,000 higher than originally estimated. In February 2012, the payroll numbers will be revised up to reflect this estimate. The number is then "wedged back" to the previous revision (March 2010).

Click on graph for larger image.

This graph shows the impact of the preliminary benchmark revision on job losses in percentage terms from the start of the employment recession.

The red line on the graph is the current estimate, and the dotted line shows the impact of estimated coming benchmark revision. This puts the current payroll employment about 6.7 million jobs below the pre-recession peak in December 2007. Still very ugly.

For details on the benchmark revision process, see from the BLS: Benchmark Article and annual benchmark revision for the new preliminary estimate.

The following table shows the benchmark revisions since 1979.

Year	Percent benchmark revision	Benchmark revision (in thousands)
1979	0.5	447
1980	-0.1	-63
1981	-0.4	-349
1982	-0.1	-113
1983	*	36
1984	0.4	353
1985	*	-3
1986	-0.5	-467
1987	*	-35
1988	-0.3	-326
1989	*	47
1990	-0.2	-229
1991	-0.6	-640
1992	-0.1	-59
1993	0.2	263
1994	0.7	747
1995	0.5	542
1996	*	57
1997	0.4	431
1998	*	44
1999	0.2	258
2000	0.4	468
2001	-0.1	-123
2002	-0.2	-313
2003	-0.2	-122
2004	0.2	203
2005	-0.1	-158
2006	0.6	752
2007	-0.2	-293
2008	-0.1	-89
2009	-0.7	-902
2010	-0.3	-378
2011	0.1	192 (estimate)
* less than 0.05%

by Calculated Risk on 9/29/2011 11:00:00 AM

This is the last of the regional Fed surveys for September. The regional surveys provide a hint about the ISM manufacturing index - and the regional surveys were weak in September, but not as weak as in August.

From the Kansas City Fed: Growth in Manufacturing Activity Edged Higher

Growth in Tenth District manufacturing activity edged higher in September. Expectations moderated slightly, but producers on net still anticipated increased activity over the next six months. Price indexes moved up modestly, with slightly more producers planning to raise selling prices.

The month-over-month composite index was 6 in September, up from 3 in August and 3 in July ... The employment index increased for the second straight month, but the new orders for exports index fell slightly after rising last month.

“Factory activity in our region continues to grow modestly, and firms generally expect this trend to continue,” said Wilkerson. “Price indexes also edged higher this month after generally decelerating earlier in the summer.”

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Click on graph for larger image in graph gallery.

The New York and Philly Fed surveys are averaged together (dashed green, through September), and five Fed surveys are averaged (blue, through September) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through August (right axis).

The ISM index for September will be released Monday, Oct 3rd and this suggests another weak reading in September.

Earlier:
• Weekly Initial Unemployment Claims decline sharply to 391,000
• Misc: GDP revised up, Employment to be revised up, Germany approves EFSF changes, Pending Home sales decline

by Calculated Risk on 9/29/2011 10:00:00 AM

• From the BLS: Current Employment Statistics Preliminary Benchmark Announcement

In accordance with usual practice, the Bureau of Labor Statistics (BLS) is announcing the preliminary estimate of the upcoming annual benchmark revision to the establishment survey employment series. The final benchmark revision will be issued on February 3, 2012, with the publication of the January 2012 Employment Situation news release.

Each year, the Current Employment Statistics (CES) survey employment estimates are benchmarked to comprehensive counts of employment for the month of March. These counts are derived from state unemployment insurance (UI) tax records that nearly all employers are required to file. ... The preliminary estimate of the benchmark revision indicates an upward adjustment to March 2011 total nonfarm employment of 192,000 (0.1 percent).

Usually the final benchmark revision is pretty close to the preliminary revision.

• The BEA reported that GDP increased at a 1.3% real annual rate in Q2 (third estimate), revised up from the previously reported 1.0% increase. It was still a weak quarter, but the internals were positive: the contributions from consumption and trade were revised up, and the contribution from "change in private inventories" was revised down.

• From the NAR: Pending Home Sales Decline in August

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, declined 1.2 percent to 88.6 in August from 89.7 in July but is 7.7 percent above August 2010 when it stood at 82.3. The data reflects contracts but not closings.

• From Bloomberg: German Parliament Backs Euro Rescue Fund

The lower house of parliament passed the measure with 523 votes in favor and 85 against, granting the fund powers to buy bonds in secondary markets, enable bank recapitalizations and offer precautionary credit lines.

A key point: German Chancellor Merkel's ruling coalition party backed the bill.

by Calculated Risk on 9/29/2011 08:30:00 AM

The DOL reports:

In the week ending September 24, the advance figure for seasonally adjusted initial claims was 391,000, a decrease of 37,000 from the previous week's revised figure of 428,000. The 4-week moving average was 417,000, a decrease of 5,250 from the previous week's revised average of 422,250.

The following graph shows the 4-week moving average of weekly claims since January 2000 (there is a longer term graph in graph gallery).

Click on graph for larger image in graph gallery.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims declined this week to 417,000.

This is the lowest level for weekly claims since early April, although the 4-week average is still elevated.