by Calculated Risk on 1/13/2015 09:00:00 AM

From the National Federation of Independent Business (NFIB): Small Business Optimism Perks Up in December

The NFIB Small Business Optimism Survey rose 2.3 points to 100.4 in December, its highest level since October of 2006, with positive gains in eight of 10 indices, a strong signal that American small businesses could be finally shaking off the effects of the Great Recession.

“The Index showed strength in November but most of the gains were confined to just two categories. The December Index shows much broader strength led by a significant increase in the number of owners who expect higher sales. This could be a breakout for small business. There’s no question that small business owners are feeling better about the economy. If they continue to feel that way 2015 could be a very good year.” – Bill Dunkelberg, NFIB Chief Economist
emphasis added

Click on graph for larger image.

This graph shows the small business optimism index since 1986.

The index increased to 100.4 in December from 98.1 in November.

by Calculated Risk on 1/12/2015 08:01:00 PM

A decline in oil prices of 5% per day seems routine now.

From the WSJ: Oil Prices Fall to Fresh Lows

After dropping in half in 2014, Brent oil prices are already down 17% for the year, as robust global supply growth continues to outpace demand. ... Brent dropped $2.68, or 5.3%, to $47.43 a barrel on ICE Futures Europe, the lowest settlement since March 2009.

U.S. oil for February delivery settled down $2.29, or 4.7%, at $46.07 a barrel on the New York Mercantile Exchange, the lowest level since April 2009.

For fun ... the financial crisis low for Brent was $33.73 per barrel in 2008.  I doubt prices will fall that far - but at 5% per day, who knows?

Tuesday:
• At 7:30 AM ET, NFIB Small Business Optimism Index for December

• At 10:00 AM, Job Openings and Labor Turnover Survey for November from the BLS. Jobs openings increased in October to 4.834 million from 4.685 million in September. The number of job openings were up 21% year-over-year compared to October 2013, and Quits were up 12% year-over-year.

by Calculated Risk on 1/12/2015 04:26:00 PM

A couple of major changes: Sales were up year-over-year and inventory down slightly year-over-year in Phoenix!

This is a key distressed market to follow since Phoenix saw a large bubble / bust followed by strong investor buying.  These key markets hopefully show us changes in trends for sales and inventory.

The Arizona Regional Multiple Listing Service (ARMLS) reports (table below):

1) Overall sales in December were up 9.2% year-over-year.

2) Cash Sales (frequently investors) were down about 8% to 29.2% of total sales. Non-cash sales were up 18.2% year-over-year.

3) Active inventory is now down 1.8% year-over-year - and at about the same level as in December 2011 (in 2011 house prices bottomed in Phoenix).

More inventory (a theme in 2014) - and less investor buying - suggested price increases would slow sharply in 2014.  And prices increases did slow.

According to Case-Shiller, Phoenix house prices bottomed in August 2011 (mostly flat for all of 2011), and then increased 23% in 2012, and another 15% in 2013.  Those large increases were probably due to investor buying, low inventory and some bounce back from the steep price declines in 2007 through 2010.  Now, with more inventory, price increases have flattened out in 2014.

As an example, the Phoenix Case-Shiller index through October shows prices up about 1% in 2014, and the Zillow index shows Phoenix prices up 2.5% over the last year.

December Residential Sales and Inventory, Greater Phoenix Area, ARMLS
	Sales	YoY Change Sales	Cash Sales	Percent Cash	Active Inventory	YoY Change Inventory
Dec-08	5,524	---	1,665	30.1%	53,7921	---
Dec-09	7,661	38.7%	3,008	39.3%	39,709	-26.2%1
Dec-10	8,401	9.7%	3,939	46.9%	42,463	6.9%
Dec-11	7,843	-6.6%	3,635	46.3%	24,712	-41.8%
Dec-12	7,071	-9.8%	3,211	45.4%	21,095	-14.6%
Dec-13	5,930	-16.1%	2,053	34.6%	25,511	20.9%
Dec-14	6,475	9.2%	1,893	29.2%	25,052	-1.8%
1 December 2008 probably includes pending listings

by Calculated Risk on 1/12/2015 01:52:00 PM

Click on graph for larger image.

This graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the December seasonally adjusted annual sales rate (SAAR).

Heavy truck sales really collapsed during the recession, falling to a low of 181 thousand in April 2009 on a seasonally adjusted annual rate basis (SAAR). Since then sales have more than doubled and hit 446 thousand SAAR in August 2014.   Sales have declined a little since August, and were at 411 thousand SAAR in December.

The level in August was the highest level since February 2007 (over 7 years ago).  Sales are now above the average (and median) of the last 20 years.

by Calculated Risk on 1/12/2015 10:28:00 AM

In addition to Case-Shiller, and CoreLogic, I'm also watching the FNC, Zillow and several other house price indexes.

FNC released their November index data today.  FNC reported that their Residential Price Index™ (RPI) indicates that U.S. residential property values decreased slightly from October to November (Composite 100 index, not seasonally adjusted). The other RPIs (10-MSA, 20-MSA, 30-MSA) also decreased slightly in November. These indexes are not seasonally adjusted (NSA), and are for non-distressed home sales (excluding foreclosure auction sales, REO sales, and short sales).

Notes: In addition to the composite indexes, FNC presents price indexes for 30 MSAs. FNC also provides seasonally adjusted data.

The year-over-year (YoY) change was lower in November than in October, with the 100-MSA composite up 5.2% compared to November 2013.   In general, for FNC, the YoY increase has been slowing since peaking in March at 9.0%.

The index is still down 19.7% from the peak in 2006.

Click on graph for larger image.

This graph shows the year-over-year change based on the FNC index (four composites) through November 2014. The FNC indexes are hedonic price indexes using a blend of sold homes and real-time appraisals.

Most of the price indexes have been showing a slowdown in price increases.

The November Case-Shiller index will be released on Tuesday, January 27th, and I expect Case-Shiller to show a further slowdown in YoY price increases.