by Calculated Risk on 9/27/2012 11:36:00 AM

This morning the BLS released the preliminary annual benchmark revision showing an additional 386,000 payroll jobs as of March 2012. The final revision will be published next February when the January 2012 employment report is released on February 1, 2013. Usually the preliminary estimate is pretty close to the final benchmark estimate.

The annual revision is benchmarked to state tax records. From the BLS:

Establishment survey benchmarking is done on an annual basis to a population derived primarily from the administrative file of employees covered by unemployment insurance (UI). The time required to complete the revision process—from the full collection of the UI population data to publication of the revised industry estimates—is about 10 months. The benchmark adjustment procedure replaces the March sample-based employment estimates with UI-based population counts for March. The benchmark therefore determines the final employment levels ...

Using the preliminary benchmark estimate, this means that payroll employment in March 2012 was 386,000 higher than originally estimated. In February 2013, the payroll numbers will be revised up to reflect this estimate. The number is then "wedged back" to the previous revision (March 2011).

This means the BLS under counted payroll jobs by 386,000 as of March 2012. This preliminary estimate showed an additional 453,000 private sector jobs, but 67,000 fewer government jobs (as of March 2012).

For details on the benchmark revision process, see from the BLS: Benchmark Article and annual benchmark revision for the new preliminary estimate.

The following table shows the benchmark revisions since 1979.

Year	Percent benchmark revision	Benchmark revision (in thousands)
1979	0.5	447
1980	-0.1	-63
1981	-0.4	-349
1982	-0.1	-113
1983	*	36
1984	0.4	353
1985	*	-3
1986	-0.5	-467
1987	*	-35
1988	-0.3	-326
1989	*	47
1990	-0.2	-229
1991	-0.6	-640
1992	-0.1	-59
1993	0.2	263
1994	0.7	747
1995	0.5	542
1996	*	57
1997	0.4	431
1998	*	44
1999	0.2	258
2000	0.4	468
2001	-0.1	-123
2002	-0.2	-313
2003	-0.2	-122
2004	0.2	203
2005	-0.1	-158
2006	0.6	752
2007	-0.2	-293
2008	-0.1	-89
2009	-0.7	-902
2010	-0.3	-378
2011	0.1	162
2012	0.3	386
* less than 0.05%

by Calculated Risk on 9/27/2012 11:00:00 AM

From the Kansas City Fed: Growth in Tenth District Manufacturing Activity Slowed Somewhat

The Federal Reserve Bank of Kansas City released the September Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that growth in Tenth District manufacturing activity slowed somewhat, although producers’ expectations for future activity remained relatively positive.

“Factories reported only minimal overall growth in our region in September, and both production and new orders fell slightly” said Wilkerson. “But firms anticipate growth to pick up later this year and on into next year.”
...
The month-over-month composite index was 2 in September, down from 8 in August and 5 in July, and the lowest in nine months. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. ... The production index dropped from 7 to -4, and the shipments, new orders, and order backlog indexes also moved into negative territory. The employment index eased from 2 to 1, while the new orders for export index inched higher but remained below zero. Both inventory indexes eased but were still in positive territory.

Despite the overall slowdown, most future factory indexes were little changed and remained at generally favorable levels. The future composite index was unchanged at 16, while the future shipments, new orders, and order backlog indexes increased slightly. The future employment index was stable at 16, while the future production index eased somewhat from 31 to 29. The future capital expenditures index fell for the second straight month, while the new orders for export index posted no change.

This was below expectations of a 5 reading for the composite index. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Click on graph for larger image.

The New York and Philly Fed surveys are averaged together (dashed green, through September), and five Fed surveys are averaged (blue, through September) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through August (right axis).

The ISM index for September will be released Monday, Oct 1st, and these surveys suggest another weak reading close to 50.

by Calculated Risk on 9/27/2012 10:03:00 AM

From the NAR: Pending Home Sales Decline in August

The Pending Home Sales Index, a forward-looking indicator based on contract signings, declined 2.6 percent to 99.2 in August from an upwardly revised 101.9 in July but is 10.7 percent above August 2011 when it was 89.6. The data reflect contracts but not closings.

The PHSI in the Northeast rose 0.9 percent to 78.2 in August and is 19.9 percent above August 2011. In the Midwest the index declined 2.6 percent to 95.0 in August but is also 19.9 percent higher than a year ago. Pending home sales in the South slipped 1.1 percent to an index of 110.4 in August but are 13.2 percent above August 2011. With broad inventory shortages in the West, the index fell 7.2 percent in August to 102.5 and is 4.2 percent below a year ago.

This was below the consensus forecast of a slight increase.

Contract signings usually lead sales by about 45 to 60 days, so this is for sales in September and October.

by Calculated Risk on 9/27/2012 08:30:00 AM

Other releases: From the BEA, Q2 GDP was revised down to 1.3% from 1.7%.

From the Census Bureau:

New orders for manufactured durable goods in August decreased $30.1 billion or 13.2 percent to $198.5 billion, the U.S. Census Bureau announced today. This decrease, down following three consecutive monthly increases, was the largest decrease since January 2009 and followed a 3.3 percent July increase.

The decline was due to the volatile transportation sector.

The DOL reports:

In the week ending September 22, the advance figure for seasonally adjusted initial claims was 359,000, a decrease of 26,000 from the previous week's revised figure of 385,000. The 4-week moving average was 374,000, a decrease of 4,500 from the previous week's revised average of 378,500.

The previous week was revised up from 382,000.

The following graph shows the 4-week moving average of weekly claims since January 2000.



Click on graph for larger image.


The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 374,000.

This was below the consensus forecast of 376,000.



And here is a long term graph of weekly claims:

Mostly moving sideways this year, but moving up recently.

All current Employment Graphs

by Calculated Risk on 9/26/2012 08:04:00 PM

On Europe ...

From the Financial Times: Rajoy fights Spanish turmoil

Mariano Rajoy will on Thursday attempt to stave off a backlash from financial markets by announcing budget plans for next year ... His government is also preparing to unveil a new reform programme and the results of a banking stress test.
Excerpt with permission.

From the NY Times: European Markets Jolted Amid Protests in Greece and Spain

On Tuesday in Spain, tens of thousands of demonstrators besieged Parliament to protest austerity measures planned by Mr. Rajoy. ...

In Athens, trade unions called a nationwide strike Wednesday to contest billions of dollars in new salary and pension cuts being discussed by the government and its international creditors. ...

[Prime Minister Antonis] Samaras is negotiating a $15 billion austerity package that is needed to persuade Greece’s so-called troika of lenders — the International Monetary Fund, the European Central Bank and the European Commission — to release nearly $40.7 billion in financial aid that the country needs to stay solvent.

Mr. Rajoy has been trying for months to convince investors that Spain can handle its own problems and that it will not need a bailout that would force Madrid to cede some authority over its fiscal affairs to its lenders, and is set to introduce new cutbacks to meet budgetary goals. Those will include restrictions on early retirement and various measures to streamline regulations and fight unemployment ...

On Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 376 thousand from 382 thousand.

• Also at 8:30 AM, the Durable Goods Orders report for August will be released by the Census Bureau. The consensus is for a 5.0% decrease in durable goods orders.

• Also at 8:30 AM, the BEA will released the third estimate of Q2 Gross Domestic Product. The consensus is that real GDP increased 1.7% annualized in Q2, unchanged form the second estimate.

• At 10:00 AM, the NAR will release the Pending Home Sales Index for September. The consensus is for a 0.3% increase in the index.

• At 10:30 AM, the Kansas City Fed regional Manufacturing Survey for September will be released. This is the last of the regional surveys for September. The consensus is for a reading of 5, down from 8 in August (above zero is expansion).


A question for the September economic prediction contest:

Earlier on new home sales:
• New Home Sales at 373,000 SAAR in August
• New Home Sales and Distressing Gap
• New Home Sales graphs