by Calculated Risk on 8/01/2012 08:20:00 AM

ADP reports:

Employment in the U.S. nonfarm private business sector increased by 163,000 from June to July, on a seasonally adjusted basis. The estimated gain from May to June was revised down slightly, from the initial estimate of 176,000 to 172,000.

Employment in the private, service-providing sector expanded 148,000 in July after rising a revised 151,000 in June. The private, goods-producing sector added 15,000 jobs in July. Manufacturing employment rose 6,000 this month, following a revised increase of 9,000 in June.

This was above the consensus forecast of an increase of 120,000 private sector jobs in July. The BLS reports on Friday, and the consensus is for an increase of 100,000 payroll jobs in July, on a seasonally adjusted (SA) basis.

ADP hasn't been very useful in predicting the BLS report, but this suggests a stronger than consensus report.

by Calculated Risk on 8/01/2012 07:00:00 AM

From the MBA: Refinance Applications Increase Again to Three-Year High in Latest MBA Weekly Survey

The Refinance Index increased 0.8 percent from the previous week to its highest level since the week ending April 17, 2009. The slight increase in refinance activity was muted by a 6 percent drop in government refinance applications, while conventional refinance activity increased about 2 percent over the week. The seasonally adjusted Purchase Index decreased about 2 percent from one week earlier.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 3.75 percent from 3.74 percent, with points increasing to 0.51 from 0.43 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

Click on graph for larger image.

The first graph shows the MBA mortgage purchase index. The purchase index has been mostly moving sideways over the last two years.

Note: Yesterday Zillow reported record low mortgage rates in their survey: "The 30-year fixed mortgage rate on Zillow(R) Mortgage Marketplace is currently 3.34 percent, down one basis point from 3.35 percent at the same time last week."

The second graph shows the refinance index.

The refinance index is at the highest level in three years.

by Calculated Risk on 7/31/2012 09:38:00 PM

Wednesday will be a busy day with most of the focus on the FOMC announcement, auto sales and the ISM manufacturing index:
• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. Expect more refinancing activity and record low mortgage rates.

• At 8:15 AM, the ADP Employment Report for June will be released. This report is for private payrolls only (no government). The consensus is for 120,000 payroll jobs added in June, down from the 176,000 reported last month.

• At 10:00 AM, the ISM Manufacturing Index for July will be released. The consensus is for an increase to 50.1, up from 49.7 in June. (below 50 is contraction).

• Also at 10:00 AM, construction spending for June will be released. The consensus is for a 0.5% increase in construction spending.

• At 2:15 PM, the FOMC announcement will be released. Expectations range from doing nothing, to extending the period that the FOMC expects "exceptionally low levels for the federal funds rate" through 2015, to launching QE3. The FOMC is under pressure with unemployment forecast to remain very high for years, and inflation below the target rate - and projected to remain below the target rate for several years.

• At around 4:00 PM, the SAAR rate for auto sales will be released. The automakers will report sales during the day, and light vehicle sales are expected to decrease to 14.0 million from 14.1 million in June SAAR.

by Calculated Risk on 7/31/2012 07:49:00 PM

For the economic question contest in July, the leaders were (Congratulations all!):

1st: Alexander Petrov (2nd month in a row!)
2nd: Mayson Lancaster
3rd: Bob Dellar
4th tie: Vad Yazvinski, Richard Plaster, Bill Dawers, James White

Questions this week for August contest:

by Calculated Risk on 7/31/2012 05:58:00 PM

Fannie Mae reported that the Single-Family Serious Delinquency rate declined in June to 3.53% from 3.57% May. The serious delinquency rate is down from 4.08% in June last year, and this is the lowest level since April 2009.

The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.

Freddie Mac reported that the Single-Family serious delinquency rate declined in June to 3.45%, from 3.50% in May. Freddie's rate is only down from 3.50% in June 2011. Freddie's serious delinquency rate peaked in February 2010 at 4.20%.

These are loans that are "three monthly payments or more past due or in foreclosure".

Click on graph for larger image

I don't know why Fannie's delinquency rate is falling faster than for Freddie.

Although this indicates some progress, the "normal" serious delinquency rate is under 1%, so there is a long way to go. At the current rate of decline, Fannie will be back to "normal" in 2015, and Freddie in 2020.