by Calculated Risk on 9/25/2014 11:10:00 AM

From the Kansas City Fed: Growth in Tenth District Manufacturing Activity Edged Higher

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 edged higher, and producers’ expectations for future activity maintained their recent solid levels.

“We saw slightly faster growth this month after a sizable easing in August,” Wilkerson said. “This is despite continued sluggish activity in our important food processing segment, driven in part by higher beef costs this year.”

The month-over-month composite index was 6 in September, slightly higher than 3 in August but lower than 9 in July. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. ... The production index increased from 4 to 12, and the shipment index also grew from a reading of 2 in August to 14. The employment index increased significantly from -4 in the last survey period to 7 in September.
emphasis added

The last regional Fed manufacturing survey for September will be released on Monday, Sept 29th (the Dallas Fed). All of the regional surveys so far have indicated solid growth in September (three out of four higher than in August), and this suggests another strong reading for the ISM manufacturing survey.

by Calculated Risk on 9/25/2014 09:30:00 AM

From CoreLogic: CoreLogic Reports 946,000 Residential Properties Regained $1 Trillion in Total Equity in Q2 2014

CoreLogic ... today released new analysis showing nearly 950,000 homes returned to positive equity in the second quarter of 2014, bringing the total number of mortgaged residential properties with equity in the U.S. to more than 44 million. Nationwide, borrower equity increased year over year by approximately $1 trillion in Q2 2014. The CoreLogic analysis indicates that approximately 5.3 million homes, or 10.7 percent of all residential properties with a mortgage, were still in negative equity as of Q2 2014 compared to 6.3 million homes, or 12.7 percent, for Q1 2014. This compares to a negative equity share of 14.9 percent, or 7.2 million homes, in Q2 2013, representing a year-over-year decrease in the number of homes underwater by almost 2 million (1,962,435), or 4.2 percent.

... Of the 44 million residential properties with positive equity, approximately 9 million, or 19 percent, have less than 20-percent equity (referred to as “under-equitied”) and 1.3 million of those have less than 5 percent (referred to as near-negative equity). Borrowers who are “under-equitied” may have a more difficult time refinancing their existing homes or obtaining new financing to sell and buy another home due to underwriting constraints. Borrowers with near-negative equity are considered at risk of moving into negative equity if home prices fall. In contrast, if home prices rose by as little as 5 percent, an additional 1 million homeowners now in negative equity would regain equity. ...

"The increase in borrower equity of $1 trillion from a year earlier is evidence that things are moving solidly in the right direction,” said Sam Khater, deputy chief economist for CoreLogic. “Borrower equity is important because home equity constitutes borrowers’ largest investment segment and, as a result, is driving forward the rise in wealth for the typical homeowner.”
emphasis added

Click on graph for larger image.

This graph shows the break down of negative equity by state. Note: Data not available for some states. From CoreLogic:

"Nevada had the highest percentage of mortgaged properties in negative equity at 26.3 percent, followed by Florida (24.3 percent), Arizona (19.0 percent), Illinois (15.4 percent) and Rhode Island (14.8). These top five states combined account for 32.8 percent of negative equity in the United States."

Note: The share of negative equity is still very high in Nevada and Florida, but down significantly from a year ago (Q2 2013) when the negative equity share in Nevada was at 36.4 percent, and at 31.5 percent in Florida.

The second graph shows the distribution of home equity in Q2 compared to Q1 2014. Close to 4% of residential properties have 25% or more negative equity, down from Q1.

In Q2 2013, there were 7.2 million properties with negative equity - now there are 5.3 million.  A significant change.

by Calculated Risk on 9/25/2014 08:34:00 AM

The DOL reports:

In the week ending September 20, the advance figure for seasonally adjusted initial claims was 293,000, an increase of 12,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 280,000 to 281,000. The 4-week moving average was 298,500, a decrease of 1,250 from the previous week's revised average. The previous week's average was revised up by 250 from 299,500 to 299,750.

There were no special factors impacting this week's initial claims.

The previous week was revised up to 281,000.

The following graph shows the 4-week moving average of weekly claims since January 1971.

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 decreased to 298,500.

This was below the consensus forecast of 300,000 and in the normal range for an economic expansion.

by Calculated Risk on 9/25/2014 07:01:00 AM

According to Black Knight's First Look report for August, the percent of loans delinquent increased in August compared to July - mostly due to an increase in short term delinquencies - and declined by 5% year-over-year.

Note: Usually delinquencies increase seasonally in September, but this might have moved to August this year. The increase was mostly in the 30 day bucket.

Also the percent of loans in the foreclosure process declined further in August and were down 32% over the last year.  Foreclosure inventory was at the lowest level since March 2008.

Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 5.90% in August, up from 5.64% in July. The normal rate for delinquencies is around 4.5% to 5%.

The percent of loans in the foreclosure process declined to 1.80% in August from 1.85% in July.  

The number of delinquent properties, but not in foreclosure, is down 129,000 properties year-over-year, and the number of properties in the foreclosure process is down 428,000 properties year-over-year.

Black Knight will release the complete mortgage monitor for August in early October.

Black Knight: Percent Loans Delinquent and in Foreclosure Process
	Aug 2014	July 2014	Aug 2013	Aug 2012
Delinquent	5.90%	5.64%	6.20%	6.87%
In Foreclosure	1.80%	1.85%	2.66%	4.12%
Number of properties:
Number of properties that are 30 or more, and less than 90 days past due, but not in foreclosure:	1,852,000	1,713,000	1,836,000	1,910,000
Number of properties that are 90 or more days delinquent, but not in foreclosure:	1,143,000	1,136,000	1,288,000	1,520,000
Number of properties in foreclosure pre-sale inventory:	913,000	935,000	1,341,000	2,020,000
Total Properties	3,908,000	3,786,000	4,465,000	5,450,000

by Calculated Risk on 9/24/2014 08:15:00 PM

On August Durable Goods from MarketWatch: What goes up must come down: Durable-goods orders set to sink

After flying high in July, orders for U.S. durable goods are likely to take a big dive in August.

But don’t pay any heed. The record 22.6% surge in orders in July was propelled mainly by a pile of new contracts for Boeing jets. Those orders tumbled in August and will drag orders into deep negative territory. Economists polled by MarketWatch forecast a 17.3% in new orders.

Strip out airplanes and autos, however, and Wall Street expects orders for durable goods to rise by 1% or more in August.

Thursday:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to increase to 300 thousand from 280 thousand.

• Also at 8:30 AM, Durable Goods Orders for August from the Census Bureau. The consensus is for a 17.1% decrease in durable goods orders (last month durable goods orders were up 22.6% due to aircraft orders).

• At 11:00 AM, the Kansas City Fed manufacturing survey for September.