by Calculated Risk on 11/30/2011 08:19:00 AM

On Central Bank action, from the WSJ: Central Banks Take Coordinated Action and from the Federal Reserve: "The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing coordinated actions to enhance their capacity to provide liquidity support to the global financial system. The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity."

Original post:

ADP reports:

ADP today reported that employment in the U.S. nonfarm private business sector increased by 206,000 from October to November on a seasonally adjusted basis. The estimated advance in employment from September to October was revised up to 130,000 from the initially reported 110,000. The increase in November was the largest monthly gain since last December and nearly twice the average monthly gain since May when employment decelerated sharply.

Employment in the private, service-providing sector rose 178,000 in November, which is up from an increase of 130,000 in October. Employment in the private, goods-producing sector increased 28,000 in November, while manufacturing employment increased 7,000.

This was well above the consensus forecast of an increase of 130,000 private sector jobs in November. The BLS reports on Friday, and the consensus is for an increase of 112,000 payroll jobs in November, on a seasonally adjusted (SA) basis.

Government payrolls have been shrinking by about 27,000 per month this year. So this suggests around 206,000 private nonfarm payroll jobs added, minus 27,000 government workers - or around 179,000 total jobs added in November. Of course ADP hasn't been very useful in predicting the BLS report.

by Calculated Risk on 11/30/2011 12:45:00 AM

From the WSJ: GOP Set to Back Payroll-Tax Cut

Republican leaders said Tuesday they would join Democrats in supporting an extension of the 2011 payroll-tax cut ... virtually assuring that American wage-earners will continue to receive the benefit next year.
...
Workers this year have seen their payroll taxes cut to 4.2% of their salary from 6.2%. Democrats want to cut it further, to 3.1%, but Republicans are unlikely to support that.

Probably the two most significant downside risks to the U.S. economy are contagion from the European financial crisis and more rapid fiscal tightening. The extension of the payroll tax cut will lessen the amount of fiscal tightening in 2012 - although government spending will still be a drag on GDP growth next year.

Earlier:
• CoreLogic: 10.7 Million U.S. Properties with Negative Equity in Q3
• Case Shiller: Home Prices decline in September
• Real House Prices and House Price-to-Rent

by Calculated Risk on 11/29/2011 08:10:00 PM

The top story in the Financial Times says it all: Businesses plan for possible end of euro

Here is a quote from someone at Volkswagen: “The conclusion is that overall the impact would not be so negative to our company, as we are mainly an exporter ..."

Export to whom?

Earlier:
• CoreLogic: 10.7 Million U.S. Properties with Negative Equity in Q3
• Case Shiller: Home Prices decline in September
• Real House Prices and House Price-to-Rent

by Calculated Risk on 11/29/2011 04:46:00 PM

• From the Athens News: Eurogroup signs off on 8bn euro aid payment

Eurozone finance ministers agreed on Tuesday to release an 8bn euro aid payment to Greece, part of an 110bn euro package of support agreed with the government last year ...

It looks like Greece will not default in December, but there is a huge hurdle in January when the private creditors are supposed to "voluntarily" agree to large haircuts.

• Surprise! The EFSF is insufficient.

From the WSJ: Euro Zone Sees Shortfall in Rescue Fund

Euro-zone finance ministers acknowledged on Tuesday that the bloc's bailout fund would have less capacity to help troubled nations than once hoped, and stepped up calls on the European Central Bank and the International Monetary Fund to come to their aid.

An analysis presented at a meeting of finance ministers here suggested the fund would be able to raise a maximum of €500 billion to €700 billion ($666 billion to $932 billion), far short of the €1 trillion or even €2 trillion that many had expected. ... ministers are exploring further measures to stem the crisis, which they hope to announce at a European summit on Dec. 8-9.

From the Financial Times: Fears of shortfall lead to moves to boost EFSF

Eurozone finance ministers are weighing more radical options to strengthen their firewall against the sovereign debt crisis, after acknowledging that plans to expand the €440bn eurozone rescue fund could deliver as little as half the extra punch that was anticipated.
Excerpt with permission

• European bond yields were mostly lower today after (from Bloomberg) Italy Pays More Than 7% at Auction of EU7.5 Billion of Bonds

Italy was again forced to pay above the 7 percent threshold that led Greece, Portugal and Ireland to seek bailouts when it sold 7.5 billion euros ($10.1 billion) in bonds today, short of the maximum target for the auction.

The Italian 2 year yield was down to 7.1%, and the 10 year yield was at 7.24%.

The Spanish 2 year yield was down to 5.6%, and the 10 year yield was down to 6.39%.

The Belgian 10 year yield was down to 5.33%, and the French 10 year yield was down to 3.52%.

Note: There is a link below the first post for the table of European bond yields.

• Tim Duy has more: Another European "Solution" Coming?

Earlier:
• CoreLogic: 10.7 Million U.S. Properties with Negative Equity in Q3
• Case Shiller: Home Prices decline in September
• Real House Prices and House Price-to-Rent

by Calculated Risk on 11/29/2011 03:14:00 PM

From the Philly Fed:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for October 2011. In the past month, the indexes increased in 43 states, decreased in five, and remained unchanged in two (Georgia and New Mexico) for a one-month diffusion index of 76. Over the past three months, the indexes increased in 42 states, decreased in seven, and remained unchanged in one (Delaware) for a three-month diffusion index of 70.

Note: These are coincident indexes constructed from state employment data. From the Philly Fed:

The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

Click on graph for larger image.

This is a graph is of the number of states with one month increasing activity according to the Philly Fed. This graph includes states with minor increases (the Philly Fed lists as unchanged).

In October, 45 states had increasing activity, up from 39 in September. This is the highest level since April.

Here is a map of the three month change in the Philly Fed state coincident indicators. This map was all red during the worst of the recession, and all green earlier this year - but this is an improvement from September.

Earlier:
• CoreLogic: 10.7 Million U.S. Properties with Negative Equity in Q3
• Case Shiller: Home Prices decline in September
• Real House Prices and House Price-to-Rent