by Calculated Risk on 7/08/2014 10:11:00 AM

Note: I have limited internet access until later today.

From the BLS: Job Openings and Labor Turnover Summary

There were 4.6 million job openings on the last business day of May, little changed from 4.5 million in April, the U.S. Bureau of Labor Statistics reported today. ...
...
Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. ... The number of quits (not seasonally adjusted) increased over the 12 months ending in May for total nonfarm and total private and was little changed for government.

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.

Note: graph is from last month (power outage - limited internet access and cannot upload graphs)

Note that hires (dark blue) and total separations (red and light blue columns stacked) are pretty close each month. This is a measure of labor market turnover.  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.

Jobs openings increased in May to 4.635 million from 4.464 million in April.   

The number of job openings (yellow) are up 19% year-over-year compared to May 2013.

Quits are up 15%year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

It is a good sign that job openings are over 4 million for the fourth consecutive month, and that quits are increasing.

by Calculated Risk on 7/08/2014 08:46:00 AM

From NFIB: SMALL BUSINESS OPTIMISM CAN’T BE SUSTAINED

" After a promising 3 month run, June’s Optimism Index fell 1.6 points to 95.0. While job components improved ..." 

"NFIB owners increased employment by an average of 0.05 workers per firm in June (seasonally adjusted), the ninth positive month in a row and the best string of gains since 2006."

Job creation plans continued to strengthen and rose 2 percentage points to a seasonally adjusted net 12 percent, approaching  “normal” levels for a growing economy (even with no growth last quarter) and the best reading since 2007. 

by Calculated Risk on 7/07/2014 09:01:00 PM

Special Note: Due to a power outage and internet interruption (thanks SCE), posting may be light or non-existent until Tuesday afternoon.  I'm also unable to respond to most emails.  I'll be back online soon!

Tuesday:
• At 7:30 AM ET, the NFIB Small Business Optimism Index for June.

• At 10:00 AM, Job Openings and Labor Turnover Survey for May from the BLS. In April, Job Openings were up 17% year-over-year and quits were up 11% year-over-year.

• At 3:00 PM, Consumer Credit for May from the Federal Reserve. The consensus is for credit to increase $17.5 billion.

by Calculated Risk on 7/07/2014 06:36:00 PM

Here is another weekly update on housing inventory ...

There is a clear seasonal pattern for inventory, with the low point for inventory in late December or early January, and then usually peaking in mid-to-late summer.

The Realtor (NAR) data is monthly and released with a lag (the most recent data released was for May).  However Ben at Housing Tracker (Department of Numbers) has provided me some weekly inventory data for the last several years.

Click on graph for larger image.

NOTE: THIS GRAPH IS FOR LAST WEEK DUE TO POWER OUTAGE. This graph shows the Housing Tracker reported weekly inventory for the 54 metro areas for 2010, 2011, 2012, 2013 and 2014.

In 2011 and 2012, inventory only increased slightly early in the year and then declined significantly through the end of each year.

In 2013 (Blue), inventory increased for most of the year before declining seasonally during the holidays.  Inventory in 2013 finished up 2.7% YoY compared to 2012.

Inventory in 2014 (Red) is now 13.6% above the same week in 2013. (Note: There are differences in how the data is collected between Housing Tracker and the NAR).

Inventory is slightly below the same week in 2012 (it was above last week). This increase in inventory should slow price increases, and might lead to price declines in some areas.

Note: One of the key questions for 2014 will be: How much will inventory increase?  My guess was inventory would be up 10% to 15% year-over-year at the end of 2014 based on the NAR report.  Right now it looks like inventory might increase more than I expected.

by Calculated Risk on 7/07/2014 03:29:00 PM

From Tim Duy at Economist's View: Fed Watch: Inflation Hysteria Redux. Excerpt:

It is simply difficult for me to become too worried about inflation given the history of the past twenty years - twenty years in which the US economy was at times substantially outperforming the current environment no less. Underlying inflation simply has not be[en] a problem.

It was not a problem because the Federal Reserve tightened policy multiple times to preempt inflation. Expect the same during this cycle as well - the Fed will begin to gradually raise interest rates sometime next year, and they will maintain a gradual pace of tightening as long as they believe core-PCE will consistently average 2.25% or less. Currently, I anticipate the first rate hike will occur in the second quarter of 2015. If the unemployment rate falls to 5.5% by the end of this year, I would expect the first hike to be in the first quarter of 2015.

What about headline inflation? Headline inflation is at the mercy of the Middle East and the weather, leaving it more volatile than core ...

How will headline inflation influence monetary policy? If you combine headline inflation well in excess of 2.25% (I suspect something more like 3%) with tight labor markets and rapid wage/unit labor cost growth, I think the Fed will accelerate the pace of tightening (indeed, the second two conditions alone would probably do the trick). If we experience high headline inflation in the context of weak wage growth, expect the gradual pace of tightening to continue. Under those circumstances, the Fed will believe that headline inflation will depress demand and lessen inflationary pressures endogenously.

Bottom Line: If you are making a short-term bet on higher headline inflation, primarily you are making a bet on energy and food. That bet is about the Middle East and weather, not monetary policy. I don't have an opinion on that bet. If you are betting on inflation over the medium-term, primarily you are making a bet on higher core inflation. More to the point, you are betting against the Fed. You are essentially betting that the Fed will not do what it has done since Federal Reserve Chair Paul Volker - tighten policy in the face of credible inflationary pressures. I would think twice, maybe three times before making that bet.