by Calculated Risk on 4/03/2014 01:05:00 PM

Reis reported that the vacancy rate for regional malls were unchanged at 7.9% in Q1 2014. This is down from a cycle peak of 9.4% in Q3 2011.

For Neighborhood and Community malls (strip malls), the vacancy rate was also unchanged at 10.4%. For strip malls, the vacancy rate peaked at 11.1% in Q3 2011.

Comments from Reis Senior Economist Ryan Severino:

[Strip Malls] The national vacancy rate for neighborhood and community shopping centers was unchanged during the first quarter. Though this was slightly worse than the 10 basis points decline from last quarter, it is still on par with the pace of improvement since the market began to recover roughly two years ago. The national vacancy rate remains down 70 basis points from the historical peak vacancy rate of 11.1% which was recorded over two years ago, during the third quarter of 2011. Although we continue to see improvement in both the economy and the labor market, gains are not yet sufficient to translate into more meaningful declines in the national vacancy rate.

Construction during the first quarter was the lowest since the first quarter of 2011 while net absorption was the lowest since the second quarter of 2011. Inclement weather across much of the country undoubtedly had an impact on construction during the first quarter, delaying projects. Because demand remains tied to new construction, net absorption figures were also muted this quarter. Nonetheless, construction activity remains on an upward trend as the economy recovers.
...
[Regional] Malls continue to perform better than neighborhood and community centers, but their recovery also remains challenging. Vacancy as of the first quarter was 7.9%, unchanged from the fourth quarter and down 40 basis points from the first quarter of 2013. Vacancy is also down 150 basis points from the historical high level reached during the third quarter of 2011. Asking rents grew by 0.5% in the first quarter and 1.7% during the last twelve months. This is the twelfth consecutive quarter of rent increases at the national level for regional malls.

Click on graph for larger image.

This graph shows the strip mall vacancy rate starting in 1980 (prior to 2000 the data is annual). The regional mall data starts in 2000. Back in the '80s, there was overbuilding in the mall sector even as the vacancy rate was rising. This was due to the very loose commercial lending that led to the S&L crisis.

In the mid-'00s, mall investment picked up as mall builders followed the "roof tops" of the residential boom (more loose lending). This led to the vacancy rate moving higher even before the recession started. Then there was a sharp increase in the vacancy rate during the recession and financial crisis.

Mall vacancy data courtesy of Reis.

by Calculated Risk on 4/03/2014 10:00:00 AM

The March ISM Non-manufacturing index was at 53.1%, up from 51.6% in February. The employment index increased in March to 53.6%, up from 47.5% in February. Note: Above 50 indicates expansion, below 50 contraction.

From the Institute for Supply Management: March 2014 Non-Manufacturing ISM Report On Business®

Economic activity in the non-manufacturing sector grew in March for the 50th consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The report was issued today by Anthony Nieves, CPSM, C.P.M., CFPM, chair of the Institute for Supply Management® (ISM®) Non-Manufacturing Business Survey Committee. "The NMI® registered 53.1 percent in March, 1.5 percentage points higher than February's reading of 51.6 percent. The Non-Manufacturing Business Activity Index decreased to 53.4 percent, which is 1.2 percentage points lower than the reading of 54.6 percent reported in February, reflecting growth for the 56th consecutive month but at a slower rate. The New Orders Index registered 53.4 percent, 2.1 percentage points higher than the reading of 51.3 percent registered in February. The Employment Index increased 6.1 percentage points to 53.6 percent from the February reading of 47.5 percent and indicates substantial growth after one month of contraction. The Prices Index increased 4.6 percentage points from the February reading of 53.7 percent to 58.3 percent, indicating prices increased at a faster rate in March when compared to February. According to the NMI®, 13 non-manufacturing industries reported growth in March. Despite the affects of weather on many of the respective businesses, the majority of respondents indicate that business conditions are improving. The respondents also project better business activity and economic conditions as weather conditions continue to improve."
emphasis added

Click on graph for larger image.

This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index.

This was slightly below the consensus forecast of 53.5% and indicates faster expansion in March than in February.

by Calculated Risk on 4/03/2014 08:54:00 AM

The Department of Commerce reported this morning:

[T]otal February exports of $190.4 billion and imports of $232.7 billion resulted in a goods and services deficit of $42.3 billion, up from $39.3 billion in January, revised. February exports were $2.0 billion less than January exports of $192.5 billion. February imports were $1.0 billion more than January imports of $231.7 billion.

The trade deficit was above the consensus forecast of $39.1 billion.

The first graph shows the monthly U.S. exports and imports in dollars through January 2014.

Click on graph for larger image.

Imports increased and exports decreased in February.  

Exports are 15% above the pre-recession peak and up 2% compared to February 2013; imports are at the pre-recession peak, and up about 1% compared to February 2013. 

The second graph shows the U.S. trade deficit, with and without petroleum, through January.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Oil averaged $91.53 in February, up from $90.21 in January, and down from $95.96 in February 2013.  The petroleum deficit has generally been declining and is the major reason the overall deficit has declined since early 2012.

The trade deficit with China declined to $20.86 billion in February, from $23.41 billion in February 2013.  About half of the trade deficit is related to China.

Overall it appears trade is picking up slightly.

by Calculated Risk on 4/03/2014 08:30:00 AM

The DOL reports:

In the week ending March 29, the advance figure for seasonally adjusted initial claims was 326,000, an increase of 16,000 from the previous week's revised figure of 310,000. The 4-week moving average was 319,500, an increase of 250 from the previous week's revised average of 319,250.

The previous week was revised down from 311,000.

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 319,500.

This was above the consensus forecast of 320,000.  The 4-week average is close to normal levels during an expansion.

by Calculated Risk on 4/02/2014 08:25:00 PM

Thursday:
• Early: Reis Q1 2014 Mall Survey of rents and vacancy rates.

• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to increase to 320 thousand from 311 thousand.

• Also at 8:30 AM, the Trade Balance report for February from the Census Bureau. The consensus is for the U.S. trade deficit to decrease to $38.5 billion in February from $39.1 billion in January.

• At 10:00 AM, the ISM non-Manufacturing Index for March. The consensus is for a reading of 53.5, up from 51.6 in February. Note: Above 50 indicates expansion, below 50 contraction.