by Calculated Risk on 1/06/2012 02:59:00 PM

From LPS Applied Analytics: LPS' Mortgage Monitor Shows Halt in Delinquency Drop; Foreclosure Starts Down in November

The November Mortgage Monitor report released by Lender Processing Services, Inc. shows that while mortgage delinquencies at the end of November 2011 were nearly 25 percent less than the January 2010 peak, the trend toward fewer loans becoming delinquent, which dominated 2010 and the first quarter of 2011, appears to have halted. At the same time, new problem loans – those loans seriously delinquent as of the end of November that were current six months prior – have not improved significantly in the last year. This degree of stagnation indicates that while the situation is not getting markedly worse, it is not improving either, and inventories of troubled loans remain significantly higher than pre-crisis levels across the board.

According to LPS, 8.15% of mortgages were delinquent in November, up from 7.93% in October, and down from 9.02% in November 2010.

LPS reports that 4.16% of mortgages were in the foreclosure process, down from the record 4.29% in October, and up from 4.08% in November 2010. This gives a total of 12.31% delinquent or in foreclosure. It breaks down as:

• 2.33 million loans less than 90 days delinquent.
• 1.81 million loans 90+ days delinquent.
• 2.21 million loans in foreclosure process.

For a total of 6.26 million loans delinquent or in foreclosure in November.

Click on graph for larger image.

This graph shows the total delinquent and in-foreclosure rates since 1995.

The total delinquent rate has fallen to 8.15% from the peak in January 2010 of 10.97%, but the decline has "halted". A normal rate is probably in the 4% to 5% range, so there is a long ways to go.

The in-foreclosure rate was at 4.16%, down from the record high last month of 4.29%. There are still a large number of loans in this category (about 2.21 million). LPS reported that foreclosure starts were down nearly 30% in November, probably due to process issues.

This graph provided by LPS Applied Analytics shows foreclosure inventories by process.

As LPS noted last month "Judicial vs. non-judicial foreclosure processes remain a significant factor in the reduction of foreclosure pipelines from state to state, with non-judicial foreclosure inventory percentages less than half that of judicial states. This is largely a result of the fact that foreclosure sale rates in non-judicial states have been proceeding at four to five times that of judicial. Non-judicial foreclosure states made up the entirety of the top 10 states with the largest year-over-year decline in non-current loans percentages."

The third graph shows the pipeline ratio (90+ delinquencies and foreclosures, divided by foreclosure sales).

"Pipeline ratios in several judicial states remain extreme." This is especially true for New York and New Jersey - and means that the level of foreclosure sales will probably increase sharply in those states soon. Most of the non-judicial states are in much better shape.

As LPS noted "while the situation is not getting markedly worse, it is not improving either".
All current mortgage delinquency graphs

by Calculated Risk on 1/06/2012 12:29:00 PM

Here are the earlier employment posts:
• December Employment Report: 200,000 Jobs, 8.5% Unemployment Rate
• Employment Summary, Part Time Workers, and Unemployed over 26 Weeks
• Employment graph gallery (fast, no scripting)

And a few more graphs ...

Seasonal Retail Hiring
According to the BLS, retailers hired seasonal workers at the pre-recession pace in 2011.

Click on graph for larger image.

This graph shows the historical net retail jobs added for October, November and December by year. Typically retail companies start hiring for the holiday season in October, and really increase hiring in November.

Retailers hired 718.5 thousand workers (NSA) net this year. This is about the same level as in 2006 and 2007. Note: this is NSA (Not Seasonally Adjusted).

This suggests a fairly strong holiday season.

Duration of Unemployment
This graph shows the duration of unemployment as a percent of the civilian labor force. The graph shows the number of unemployed in four categories: less than 5 week, 6 to 14 weeks, 15 to 26 weeks, and 27 weeks or more.

All categories are moving down (the less than 5 week category is back to normal levels). The other categories are still high.

The the long term unemployed declined to 3.6% of the labor force - this is still very high, but the lowest since September 2009.

Unemployment by Education
This graph shows the unemployment rate by four levels of education (all groups are 25 years and older).

Unfortunately this data only goes back to 1992 and only includes one previous recession (the stock / tech bust in 2001). Clearly education matters with regards to the unemployment rate - and it appears all four groups are generally trending down.

Note: This says nothing about the quality of jobs - as an example, a college graduate working at minimum wage would be considered "employed".

Diffusion Indexes
This is a little more technical. The BLS diffusion index for total private employment was at 61.2 in December, up from 50.7 in November. For manufacturing, the diffusion index increased to 56.8, up from 40.7 in November.

Think of this as a measure of how widespread job gains are across industries. The further from 50 (above or below), the more widespread the job losses or gains reported by the BLS. From the BLS:

Figures are the percent of industries with employment increasing plus one-half of the industries with unchanged employment, where 50 percent indicates an equal balance between industries with increasing and decreasing employment.

It appears job growth was spread across more industries in December (good news).

We'd like to see the diffusion indexes consistently above 60 - and even in the 70s like in the '1990s.

by Calculated Risk on 1/06/2012 10:01:00 AM

This was a decent report compared to expectations, but it was still weak compared to the number of people unemployed and the high level of unemployment.

There were 200,000 payroll jobs added in December. This included 212,000 private sector jobs added, and 12,000 government jobs lost. The unemployment rate fell to 8.5% from a revised 8.7% in November (revised from 8.6%). U-6, an alternate measure of labor underutilization that includes part time workers and marginally attached workers, declined to 15.2% - this remains very high. U-6 was in the 8% range in 2007.

For the year, the economy added 1.64 million total non-farm jobs or just 137 thousand per month. This is a better pace of payroll job creation than in 2010, but the economy still has 6.0 million fewer payroll jobs than at the beginning of the 2007 recession.

There were 1.92 million private sector jobs added in 2011, or about 160 thousand per month.

Both the participation rate and the employment population ratio were unchanged in December at 64.0% and 58.5% respectively.

The average workweek was increased slightly to 34.4 hours, and average hourly earnings increased 0.2%. "The average workweek for all employees on private nonfarm payrolls increased by 0.1 hour to 34.4 hours in December. ... In December, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents, or 0.2 percent, to $23.24. Over the past 12 months, average hourly earnings have increased by 2.1 percent." This is sluggish earnings growth, and earnings are being impacted by the large number of unemployed and marginally employed workers.

There are a total of 13.1 million Americans unemployed and 5.6 million have been unemployed for more than 6 months. Still very grim.

Overall this was a decent report compared to expectations, but still weak given the slack in the economy.

Percent Job Losses During Recessions

Click on graph for larger image.

This graph shows the job losses from the start of the employment recession, in percentage terms - this time aligned at maximum job losses.

In the previous post, the graph showed the job losses aligned at the start of the employment recession.

Part Time for Economic Reasons

From the BLS report:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) declined by 371,000 to 8.1 million in December.

This is the lowest level since January 2009.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 15.2% in December from 15.6% in November.

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 5.588 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 5.680 million in November. This is still very high, but this is the lowest number since Oct 2009. Long term unemployment remains a serious problem.

More graphs coming ...

by Calculated Risk on 1/06/2012 08:30:00 AM

From the BLS:

Nonfarm payroll employment rose by 200,000 in December, and the unemployment rate,
at 8.5 percent, continued to trend down, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in transportation and warehousing, retail trade, manufacturing, health care, and mining.
...
The change in total nonfarm payroll employment for October was revised from +100,000 to +112,000, and the change for November was revised from +120,000 to +100,000.

The following graph shows the employment population ratio, the participation rate, and the unemployment rate.

Click on graph for larger image.

The unemployment rate declined to 8.5% (red line).

The Labor Force Participation Rate was unchanged 64.0% in December (blue line). This is the percentage of the working age population in the labor force. The participation rate is well below the 66% to 67% rate that was normal over the last 20 years, although some of the decline is due to the aging population.

The Employment-Population ratio was unchanged at 58.5% in December (black line).

The second graph shows the job losses from the start of the employment recession, in percentage terms. The dotted line is ex-Census hiring.

This was a decent report and above consensus, but expectations are pretty low. I'll have much more soon ...

by Calculated Risk on 1/06/2012 12:05:00 AM

From Reuters: Office vacancies fell in Q4 as rents rose: Reis

The vacancy rate dipped to 17.3 percent in the quarter from 17.4 percent in the third quarter and 17.6 percent at the end of 2010, Reis said. ... effective rents ... rose 0.5 percent ... Some 12.3 million square feet of new office space came to market last year, it said, the lowest such level in 15 years.

"After four quarters of squeezing out gains in occupancy, the office sector has assuredly turned the corner and begun the process of recovery," Reis research chief Victor Calanog said ... "Still, given the severity of the last downturn and the lackluster pace of economic growth, it will be years before the office sector climbs out of the hole."

Click on graph for larger image.

This graph shows the office vacancy rate starting in 1991.

Reis is reporting the vacancy rate declined to 17.3% in Q4, down from 17.4% in Q3. The vacancy rate was at a cycle high of 17.6% in Q3 and Q4 2010. It appears the office vacancy rate peaked in 2010 and is declining very slowly.

As Reis noted, there are very few new office buildings being built in the US, and new construction will probably stay low for several years.