by Calculated Risk on 5/31/2014 08:47:00 AM

This will be a busy week for economic data with several key reports including the May employment report on Friday.

Other key reports include the ISM manufacturing index on Monday, May vehicle sales on Tuesday, and the April Trade Deficit and May ISM non-manufacturing index on Wednesday.

The Fed's Q1 Flow of Funds report will be released Thursday.

Note: The ECB will probably ease monetary policy on Thursday.

----- Monday, June 2nd -----
10:00 AM ET: ISM Manufacturing Index for May. The consensus is for an increase to 55.5 from 54.9 in April.

Here is a long term graph of the ISM manufacturing index.

The ISM manufacturing index indicated expansion in April at 54.9%. The employment index was at 54.7%, and the new orders index was at 55.1%.

10:00 AM: Construction Spending for April. The consensus is for a 0.7% increase in construction spending.

----- Tuesday, June 3rd -----
All day: Light vehicle sales for May. The consensus is for light vehicle sales to be increase to 16.1 million SAAR in May from 16.0 million in April (Seasonally Adjusted Annual Rate).

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the April sales rate.

10:00 AM: Manufacturers' Shipments, Inventories and Orders (Factory Orders) for April. The consensus is for a 0.5% increase in April orders.

----- Wednesday, June 4th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:15 AM: The ADP Employment Report for May. This report is for private payrolls only (no government). The consensus is for 210,000 payroll jobs added in May, down from 220,000 in April.

8:30 AM: Trade Balance report for April from the Census Bureau.

Imports increased and exports decreased in February.

The consensus is for the U.S. trade deficit to be at $41.0 billion in April from $40.4 billion in March.

10:00 AM: ISM non-Manufacturing Index for May. The consensus is for a reading of 55.3, up from 55.2 in April. Note: Above 50 indicates expansion.

2:00 PM: Federal Reserve Beige Book, an informal review by the Federal Reserve Banks of current economic conditions in their Districts.

----- Thursday, June 5th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to increase to 310 thousand from 300 thousand.

Early: The ECB meets in Frankfurt. From Nomura:

We expect the ECB to deliver a package of measures on 5 June to ease monetary policy. We expect a 10bp cut to all key interest rates, taking the refi rate down to 0.15%, the deposit rate negative for the first time to -0.10% and the marginal lending facility rate down to 0.65%. We also expect an extension of the forward guidance on liquidity provisions, with the fixed-rate full-allotment procedure extended by a further 12 months to at least the end of June 2016. We also expect the ECB to launch a targeted LTRO programme in June (60% probability), to address credit weakness and risks to the recovery from this channel.

Early: Trulia Price Rent Monitors for May. This is the index from Trulia that uses asking house prices adjusted both for the mix of homes listed for sale and for seasonal factors.

12:00 PM: Q1 Flow of Funds Accounts of the United States from the Federal Reserve.

----- Friday, June 6th -----
8:30 AM: Employment Report for May. The consensus is for an increase of 213,000 non-farm payroll jobs in May, down from the 288,000 non-farm payroll jobs added in April.

The consensus is for the unemployment rate to increase to 6.4% in May. 

This graph shows the percentage of payroll jobs lost during post WWII recessions through April.

The economy has added 9.2 million private sector jobs since employment bottomed in February 2010 (8.6 million total jobs added including all the public sector layoffs).

There are 406 thousand more private sector jobs now than when the recession started in 2007, but total employment is still 113 thousand below the pre-recession peak.

3:00 PM: Consumer Credit for April from the Federal Reserve.  The consensus is for credit to increase $15.5 billion.

by Calculated Risk on 5/30/2014 06:13:00 PM

From the FDIC: Bay Bank, FSB, Lutherville, Maryland, Assumes All of the Deposits of Slavie Federal Savings Bank, Bel Air, Maryland

As of March 31, 2014, Slavie Federal Savings Bank had approximately $140.1 million in total assets and $111.1 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $6.6 million. ... Slavie Federal Savings Bank is the ninth FDIC-insured institution to fail in the nation this year, and the first in Maryland.

Bank failures three weeks in a row ...

by Calculated Risk on 5/30/2014 04:13:00 PM

Fannie Mae reported today that the Single-Family Serious Delinquency rate declined in April to 2.13% from 2.19% in March. The serious delinquency rate is down from 2.93% in April 2013, and this is the lowest level since November 2008.

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

Earlier Freddie Mac reported that the Single-Family serious delinquency rate declined in April to 2.15% from 2.20% in March. Freddie's rate is down from 2.91% in April 2013, and is at the lowest level since February 2009. Freddie's serious delinquency rate peaked in February 2010 at 4.20%.

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

Click on graph for larger image

Both Fannie Mae and Freddie Mac serious delinquency rates have fallen about 0.8 percentage points over the last year, and at that pace the serious delinquency rates will probably be below 2% in a few months - and will be under 1% in late 2015.

Note: The "normal" serious delinquency rate is under 1%.

Maybe serious delinquencies will be back to normal in late 2015 or 2016.

by Calculated Risk on 5/30/2014 02:37:00 PM

From economist Tom Lawler:

Toll Brothers, the self-described “nation’s leading builder of luxury homes” which was recently honored as BUILDER Magazine’s “builder of the year,” reported that net signed contracts on homes in the quarter ended April 30, 2014 totaled 1,749, down 0.2% from the comparable quarter of 2013. Net signed contracts per community last quarter were down 8.3% from the comparable quarter of 2013. The average price on net signed contracts last quarter was $729,000, up 7.5% from a year ago. Home deliveries totaled 1,218 last quarter, up 36.2% from the comparable quarter of 2013, at an average sales price of $706,000, up 22.4% from the comparable quarter of 2013. The outsized gain in the average sales price for closed homes partly reflected big increases in contract prices last year, but also reflected product “mix” changes, including a sharp increase in the share of homes closed in the expensive West region. The company’s order backlog as of the end of April was 4,324, up 18.3% from last April, at an average order price of $742,000, up 7.1% from a year ago.

The company said that it owned or controlled 50,358 lots at the end of April, up 11.5% from last April, and up 40.1% from April 2011.

In Toll’s press release, the company’s CEO said that “(d)emand over the past year has been solid, although relatively flat, compared to the strong growth we initially experienced beginning in 2011, coming off the bottom of this housing cycle.” He also expressed optimism going forward. Here is another quote from the press release.

“We note that last cycle's recovery, in the early 1990's, began with a period of rapid acceleration, followed by leveling, before further upward momentum. We believe that we are in a similar leveling period in the early stages of the housing recovery with significant pent-up demand building."

Toll does give limited (and not very useful) guidance in its press release, and Toll said that it expects to deliver between 5,100 and 5,850 in the fiscal year ending 10/31/2014. Given deliveries in the first half of the fiscal year, that guidance implies a range of deliveries from May 1 through October 31 of between 2,954 and 3,704. Toll’s guidance on the average sales price on deliveries for the year was between $690,000 and $720,000. Using the midpoint of these ranges as the “best guidance,” that would imply deliveries from May 1, 2014 through October 2014 of 3,329, up 30.8% from the comparable period of 2013, at an average sales price of 705,000, up 3.5% from the comparable period of 2013, and little changed from the average sales price in the first half of FY 2014.

Toll’s earnings beat consensus, but net orders per community were disappointing.

by Calculated Risk on 5/30/2014 12:22:00 PM

Just a quick note, total nonfarm U.S. employment is currently 113 thousand below the pre-recession peak. With the release of the May employment report next Friday, total employment will probably be at an all time high.

Note: The consensus is for an increase of 217 thousand non-farm payroll jobs added in May.

I guess I'm going to have to retire the following graph until the next recession ... (once call the "THE SCARIEST JOBS CHART EVER").


Click on graph for larger image.

The graph shows the percentage of payroll jobs lost during post WWII recessions through April.

Of course this doesn't include growth of the labor force, but this will be a significant milestone as the economy recovers from the housing bust and severe financial crisis.