by Calculated Risk on 11/17/2014 07:10:00 PM

Some excellent research from the NY Fed Liberty Street Economics: Measuring Labor Market Slack: Are the Long-Term Unemployed Different?. The conclusion:

[W]e find that long-term unemployed workers are not less attached to the labor market than short-term unemployed workers. If anything, the long-term unemployed group has the largest share of prime-age workers, the age group likely to have the strongest labor force attachment. We also see that long-term unemployment is an economy-wide phenomenon, spread across industries and occupations. While there may be unobservable characteristics of long-term unemployed workers that make them less attached to the labor force, when looking at their observable characteristics, it’s hard to argue that they should not be considered as part of labor market slack.

The "underutilization of labor resources" may be "gradually diminishing" (from the recent FOMC statement), but based on this research, the unemployment rate, and the number of people working part time for economic reasons, it appears there is still a fair amount of slack in the labor market.

Tuesday:
• At 8:30 AM ET, the Producer Price Index for October from the BLS. The consensus is for a 0.1% decrease in prices, and a 0.1% increase in core PPI.

• At 10:00 AM, the November NAHB homebuilder survey. The consensus is for a reading of 55, up from 54 in October. Any number above 50 indicates that more builders view sales conditions as good than poor.

by Calculated Risk on 11/17/2014 04:14:00 PM

Here is a price index for commercial real estate that I follow. 

From CoStar: Commercial Real Estate Price Surge Continues In Third Quarter

NATIONAL COMPOSITE INDICES CONTINUE TO CLIMB. Both the value-weighted and the equal-weighted U.S. Composite Indices of the CCRSI made strong gains in September 2014 to close the quarter. The value-weighted index, which is heavily influenced by core transactions, advanced by 1.9% in the month of September and 3.3% in the third quarter of 2014. The value-weighted index is now 2.8% above its prerecession high and continues to make solid gains. The equal-weighted U.S. Composite Index, which is heavily influenced by smaller non-core deals, increased by 1.3% in September and 4.2% in the third quarter of 2014.
...
ANNUAL PRICE GAINS REALIZED ACROSS ALL MAJOR PROPERTY SECTORS. The retail, industrial, and office segments all moved up toward 2007 pricing levels in September 2014 and are now within 11.4%, 14.4%, and 21.2% of their previous peaks, respectively. The multifamily sector, which recovered earlier than the other property types, is now 1% above its previous peak.
emphasis added

Click on graph for larger image.

This graph from CoStar shows the the value-weighted U.S. Composite Index and the equal-weighted U.S. Composite Index indexes.

 The value weighted index is above the pre-recession peak, but the equal weighted is still well below the pre-recession peak.

There are indexes by sector and region too.

The second graph shows indexes by sector.

The multifamily sector is now above the previous peak.  The office sector is lagging.

Note: These are repeat sales indexes - like Case-Shiller for residential - but this is based on far fewer pairs.

by Calculated Risk on 11/17/2014 12:59:00 PM

Update: Here is the summary Summary of FY2014 FHA Annual Report to Congress on the Financial Health of the Mutual Mortgage Insurance Fund

Joe Light at the WSJ writes: Federal Housing Authority in the Black for First Time Since 2011

The audit found that the FHA’s insurance fund had an economic value of $4.8 billion at the end of September, up from negative $1.1 billion last fiscal year. Its capital-reserve ratio, which the FHA is supposed to keep above 2%, grew to 0.41%. While an improvement, it was still short of last year’s projection.
...
More important, the report estimated that the FHA won’t return to the congressionally mandated 2% threshold until 2016, a year later than formerly estimated.

Recent FHA loans have performed very well, and the better performance combined with higher fees has led to the improvement.

by Calculated Risk on 11/17/2014 09:23:00 AM

From the Fed: Industrial production and Capacity Utilization

Industrial production edged down 0.1 percent in October after having advanced 0.8 percent in September. In October, manufacturing output increased 0.2 percent for the second consecutive month. The index for mining declined 0.9 percent and the output of utilities moved down 0.7 percent. At 104.9 percent of its 2007 average, total industrial production in October was 4.0 percent above its level of a year earlier. Capacity utilization for the industrial sector decreased 0.3 percentage point in October to 78.9 percent, a rate that is 1.2 percentage points below its long-run (1972–2013) average.
emphasis added

Click on graph for larger image.

This graph shows Capacity Utilization. This series is up 11.9 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 78.9% is 1.2 percentage points below its average from 1972 to 2012 and below the pre-recession level of 80.8% in December 2007.

Note: y-axis doesn't start at zero to better show the change.

The second graph shows industrial production since 1967.

Industrial production decreased 0.1% in October to 105.1. This is 25.3% above the recession low, and 4.1% above the pre-recession peak.

The monthly change for Industrial Production was below expectations.

by Calculated Risk on 11/17/2014 08:34:00 AM

From the NY Fed: Empire State Manufacturing Survey

The November 2014 Empire State Manufacturing Survey indicates that business activity continued to expand for New York manufacturers. The headline general business conditions index climbed four points to 10.2, indicating a pace of growth somewhat faster than last month’s. The new orders index rose eleven points to 9.1, and the shipments index advanced eleven points to 11.8. The index for number of employees edged down to 8.5 but remained positive, indicating that employment levels grew; the average workweek index, by contrast, was negative, pointing to a decline in hours worked. ...
emphasis added

This is the first of the regional surveys for November.  The general business conditions index was at the consensus forecast of a reading of 10.5, and indicates slightly faster expansion in November than in October (above zero suggests expansion).