by Calculated Risk on 10/20/2011 11:45:00 AM

The high frequency data and surveys continue to indicate some improvement. Earlier this morning, the 4-week average of initial weekly unemployment claims fell to the lowest level since April - although still elevated - and now the Philly Fed manufacturing survey indicated expansion for the first time in three months - although still weak.

Even if there has been a little rebound from the economic shock in early August, due to the threat of a U.S. default, the rebound is just to sluggish growth. And there are significant downside risks from the European crisis and premature tightening in the U.S.

As a reminder, my most used post title over the last few years has been "Jobs, jobs, jobs", and even if we see sluggish growth, jobs remain priority #1 in the U.S.

• From the Philly Fed: October 2011 Business Outlook Survey

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, increased from ‐17.5 in September to 8.7, the first positive reading in three months. The current new orders index paralleled the rise in the general activity index, increasing 19 points and returning to positive territory. The shipments index also recorded a positive reading, increasing from ‐22.8 in September to 13.6 this month.
...
The current employment index remained slightly positive but decreased 4 points from its reading in September. The average workweek index increased notably from ‐13.7 to 3.1.

This indicates expansion in October, and was well above the consensus forecast of -9.0.

Click on graph for larger image in graph gallery.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index. The dashed green line is an average of the NY Fed (Empire State) and Philly Fed surveys through October. The ISM and total Fed surveys are through September.

The average of the Empire State and Philly Fed surveys rebounded in October, and is now slightly positive.

• The following graph shows existing home sales Not Seasonally Adjusted (NSA).

The red columns are for 2011.

Sales NSA are above last September - of course sales declined sharply last year following the expiration of the tax credit in June 2010.

The level of sales is still elevated due to investor buying. The NAR noted:

All-cash sales accounted for 30 percent of purchase activity in September, up from 29 percent in August and 29 percent also in September 2010; investors make up the bulk of cash purchases.

Earlier:
• Existing Home Sales in September: 4.91 million SAAR, 8.5 months of supply
• Existing Home Sales graphs

by Calculated Risk on 10/20/2011 10:00:00 AM

The NAR reports: Existing-Home Sales Off in September but Higher Than a Year Ago

Total existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, declined 3.0 percent to a seasonally adjusted annual rate of 4.91 million in September from an upwardly revised 5.06 million in August, but are 11.3 percent above the 4.41 million unit pace in September 2010.
...
Total housing inventory at the end of September declined 2.0 percent to 3.48 million existing homes available for sale, which represents an 8.5-month supply at the current sales pace, compared with an 8.4-month supply in August.

Click on graph for larger image in graph gallery.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in September 2011 (4.91 million SAAR) were 3.0% lower than last month, and were 11.3% above the September 2010 rate.

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory decreased to 3.48 million in September from 3.55 million in August.

The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, so it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory decreased 13.0% year-over-year in September from September 2010. This is the eight consecutive month with a YoY decrease in inventory.

Months of supply increased to 8.5 months in September, up from 8.4 months in August. This is much higher than normal. These sales numbers were close to the consensus.

I'll have more soon ...

by Calculated Risk on 10/20/2011 08:30:00 AM

The DOL reports:

In the week ending October 15, the advance figure for seasonally adjusted initial claims was 403,000, a decrease of 6,000 from the previous week's revised figure of 409,000. The 4-week moving average was 403,000, a decrease of 6,250 from the previous week's revised average of 409,250.

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 403,000.

This is the lowest level for the 4-week average of weekly claims since April, and this was slightly above the consensus forecast. This is still elevated, and still above the post-recession lows of earlier this year.

by Calculated Risk on 10/19/2011 09:35:00 PM

A few articles ahead of the meeting this weekend ...

From the Financial Times: Eurozone leaders meet in Frankfurt

France’s president Nicolas Sarkozy flew to Frankfurt on Wednesday night for an emergency meeting with leading players in the eurozone crisis including German chancellor Angela Merkel, as Franco-German differences bedevilled attempts to agree a comprehensive package of measures.
excerpt with permission

From the NY Times: Leaders in Europe Take Time From a Farewell to Negotiate a Bailout Deal

Angela Merkel, the chancellor of Germany, tried to play down expectations, saying that it would not be possible “to erase the mistakes of the past in just one stroke.” A European summit meeting Sunday ... will be just “one point” in “a long journey.”

From the WSJ: Doubts Grow on Euro Fund

European officials are discussing a scenario in which governments issuing bonds would borrow from the bailout fund to guarantee a portion of the bond issues—a move that would increase debts for already troubled economies.

Pressure is rising ahead of a weekend summit of European leaders billed as critical to stemming the region's deepening debt crisis.

And from the Financial Times: EU bank recap could be only €80bn. The IMF was calling for a €200bn plan, and some estimates were for €275bn. Maybe they should do another stress test and announce all the banks passed - that has worked well before - Not!

Earlier:
• Housing Starts increased in September
• Rate of increase slows for Key Measures of Inflation in September
• AIA: Architecture Billings Index declined in September
• 2012 Social Security Cost-Of-Living Adjustment approximately 3.6% increase

by Calculated Risk on 10/19/2011 06:13:00 PM

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

Although containers tell us nothing about value, container traffic does give us an idea of the volume of goods being exported and imported - and possible hints about the trade report for August. LA area ports handle about 40% of the nation's container port traffic.

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.

Click on graph for larger image in graph gallery.

On a rolling 12 month basis, inbound traffic is down 0.3% from August, and outbound traffic is up 0.9%.

Inbound traffic is "rolling over" and this might suggest that retailers are cautious about the coming holiday season. However, the National Retail Federation says that imports will be pick up in October:

[T]he [import] statistics were skewed because of high-than-normal numbers in 2010 when fears of shortages in shipping capacity caused many retailers to bring holiday merchandise into the country earlier than usual.
...
“After a summer of trying to compare apples to oranges, retail cargo is back to normal [in October],” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “October is the historic peak of the shipping cycle each year, and retailers are bringing merchandise into the country on their usual schedule and at normal levels again instead of being forced to move cargo early."

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

For the month of September, loaded inbound traffic was down 4% compared to September 2010, and loaded outbound traffic was up 12% compared to September 2010.

Exports have been increasing, although bouncing around month-to-month. Exports are up from last year, but are still below the peak in 2008.

Imports have been soft - this is the 4th month in a row with a year-over-year decline in imports. However, if the NRF is correct, imports will pick up in October to the highest level this year.