by Calculated Risk on 7/10/2012 10:00:00 AM

From the BLS: Job Openings and Labor Turnover Summary

There were 3.6 million job openings on the last business day of May, little changed from 3.4 million in April, the U.S. Bureau of Labor Statistics reported today.
...
The level of total nonfarm job openings in May was up from 2.4 million at the end of the recession in June 2009.
...
In May, the quits rate displayed little or no change for total nonfarm, total private, and government. The number of quits was 2.1 million in May, up from 1.8 million at the end of the recession in June 2009.

The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

This series started in December 2000.

Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for May, the most recent employment report was for June.

Click on graph for larger image.

Notice that hires (dark blue) and total separations (red and light blue columns stacked) are pretty close each month. When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs. According to JOLTS, the economy gained a few jobs in May (update: initial post had incorrect number for total separations).

Jobs openings increased in May to 3.642 million, up from 3.447 million in April. The number of job openings (yellow) has generally been trending up, and openings are up about 18% year-over-year compared to May 2011.

Quits increased slightly in May, and quits are now up about 6% year-over-year. These are voluntary separations and more quits might indicate some improvement in the labor market. (see light blue columns at bottom of graph for trend for "quits").

All current employment graphs

by Calculated Risk on 7/10/2012 08:22:00 AM

From the National Federation of Independent Business (NFIB): June Small-Business Optimism Lowest Since October 2011

In a disappointing reversal of several months of slow but positive growth, June’s Index of Small Business Optimism dove three points, falling to 91.4. The decline is significant, and relinquished the gains achieved earlier this year. Only one of the ten Index components improved; labor market indicators and spending plans for capital equipment and inventories accounted for about 40 percent of the decline.
...
Nearly one-quarter of owners cite weak sales as their most important business problem (23 percent) [up from 20 percent in May].

Note: Small businesses have a larger percentage of real estate and retail related companies than the overall economy.

Click on graph for larger image.

This graph shows the small business optimism index since 1986. The index decreased to 91.4 in June from 94.4 in May.

This index remains low, and once again, lack of demand is the biggest problem for small businesses. (In the survey, the "single most important problem" was "poor sales".

by Calculated Risk on 7/09/2012 10:21:00 PM

Another light day for economic data.

• At 7:30 AM ET, the NFIB Small Business Optimism Index for June will be released. The consensus is for a decrease to 92.0 in June.

• At 10:00 AM, the Job Openings and Labor Turnover Survey for May will be released by the BLS. The number of job openings has generally been trending up.

On the Fed, from Bloomberg: Goldman Sachs, Bank Of America Say Fed To Hold Rate

Goldman Sachs Group Inc. and Bank of America Corp. say a weaker-than-forecast June jobs gain in the U.S. will lead the Federal Reserve to keep its benchmark interest rate at almost zero until the middle of 2015.
...
“The ‘late 2014’ formulation has now ‘aged’ by six months since it was first adopted, but the economy still looks no better,” Jan Hatzius, the chief economist at Goldman Sachs in New York, wrote in a report yesterday. The central bank may announce the change as soon as its next policy meeting July 31 to Aug. 1, Hatzius wrote.

And from Tim Duy today at EconomistsView: Fedspeak - And Lots of It

Lots of Fed chatter today. Most of it points toward quantitative easing, but with a caveat: In general, we are getting a rehash of already stated views, views that should have pointed in the direction of QE3 at the last meeting.
...
Bottom Line: Lots of Fed chatter, on average pointing in the direction of additional easing, but none of it really that new, and all of which would have pointed to QE3 at the last meeting. Enough chatter, though, that it makes me suspect that the minutes from the last FOMC meeting will have plenty of talk like "several participants saw the need for additional easing." If so, expectations for the Fed to step up in August will become even more entrenched.

QE3 or extend the extended period? That is probably the debate for the next FOMC meeting.

by Calculated Risk on 7/09/2012 05:38:00 PM

Tom Lawler sent me an update on Phoenix today:

The Arizona MLS reported that residential home sales by realtors in the Greater Phoenix, Arizona area totaled 9,129 in June, down 17.9% from last June’s pace. Bank-owned properties were 14.1% of last month’s sales, down from 40.8% last June, while last month’s short-sales share was 32.8%, up from 27.0% last June. Active listings in June totaled 19,857, down 1.5% from May and down 32.0% from a year ago. The median sales price last month was $141,000, up 27.6% from last June. Citing data from the Cromford Report, ARMLS said that foreclosures pending in Maricopa County in June totaled 17,910, down 35.1% from a year ago.

Look at the sharp decline in bank owned properties sold - this was down to 14.1% of all sales, down from 40.8% last June.

Short sales were up - from 27.0% to 32.8% - but total distressed sales were down to 46.9% of sales (still high) from 67.8% last June.

Lawler didn't mention it, but conventional sales were up about 19% compared to June 2011. So the decline in overall sales is actually a positive! I mentioned this last month: Home Sales Reports: What Matters

When we look at sales for existing homes, the focus should be on the composition between conventional and distressed. ... Those looking at the number of existing home sales for a recovery in housing are looking at the wrong number. Look at inventory and the percent of conventional sales.

And another key point; look at the decline in foreclosures pending. This was down from close to 44,000 in June 2010, to 27,616 in June 2011, and 17,910 in June 2012. Note: Arizona is a non-judicial foreclosure state, and as LPS noted this morning, the non-judicial states are recovering much faster than the judicial foreclosure states.

Also inventory (active listings) is down from around 42,000 in June 2010, and from 29,203 in June 2011, to 19,857 in June 2012. And months-of-supply is now close to 2 months in Phoenix.

We should have data on other distressed markets over the next few days, but I wanted to highlight this sharp decline in Phoenix.

by Calculated Risk on 7/09/2012 03:01:00 PM

Note: This is not Mortgage Equity Withdrawal (MEW) data from the Fed. The last MEW data from Fed economist Dr. Kennedy was for Q4 2008.

The following data is calculated from the Fed's Flow of Funds data and the BEA supplement data on single family structure investment. This is an aggregate number, and is a combination of homeowners extracting equity - hence the name "MEW", but there is little MEW right now - and normal principal payments and debt cancellation.

For Q1 2012, the Net Equity Extraction was minus $107 billion, or a negative 3.6% of Disposable Personal Income (DPI). This is not seasonally adjusted.

Click on graph for larger image in new window.

This graph shows the net equity extraction, or mortgage equity withdrawal (MEW), results, using the Flow of Funds (and BEA data) compared to the Kennedy-Greenspan method.

There are smaller seasonal swings right now, perhaps because there is a little actual MEW (this is heavily impacted by debt cancellation right now).

The Fed's Flow of Funds report showed that the amount of mortgage debt outstanding declined sharply in Q1. Mortgage debt has declined by $885 billion over the last four years. This decline is mostly because of debt cancellation per foreclosures and short sales, and some from modifications. There has also been some reduction in mortgage debt as homeowners paid down their mortgages so they could refinance.

For reference:

Dr. James Kennedy also has a new method for calculating equity extraction: "A Simple Method for Estimating Gross Equity Extracted from Housing Wealth". Here is a companion spread sheet (the above uses my simple method).

For those interested in the last Kennedy data included in the graph, the spreadsheet from the Fed is available here.