by Calculated Risk on 8/05/2015 08:39:00 AM

The Department of Commerce reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $43.8 billion in June, up $2.9 billion from $40.9 billion in May, revised. June exports were $188.6 billion, $0.1 billion less than May exports. June imports were $232.4 billion, $2.8 billion more than May imports.

The trade deficit was close to the consensus forecast of $43.0 billion.

The first graph shows the monthly U.S. exports and imports in dollars through June 2015.

Click on graph for larger image.

Imports increased and exports were mostly unchanged in June.

Exports are 14% above the pre-recession peak and down 4% compared to June 2014; imports are at the pre-recession peak, and down 2% compared to June 2014. 

The second graph shows the U.S. trade deficit, with and without petroleum.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products (wild swings earlier this year were due to West Coast port slowdown).

Oil imports averaged $53.76 in June, up from $50.76 in May, and down from $96.41 in June 2014.  The petroleum deficit has generally been declining and is the major reason the overall deficit has declined since early 2012.

The trade deficit with China increased to $31.5 billion in June, from $30.1 billion in June 2014. The deficit with China is a large portion of the overall deficit.

by Calculated Risk on 8/05/2015 08:19:00 AM

From ADP:

Private sector employment increased by 185,000 jobs from June to July according to the June [July] ADP National Employment Report®. ... The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis.
...
Goods-producing employment rose by 8,000 jobs in July, after adding 13,000 in June. The construction industry added 15,000 jobs in July, down from 17,000 last month. Meanwhile, manufacturing added 2,000 jobs in July, after gaining 9,000 in June.

Service-providing employment rose by 178,000 jobs in July, down from 216,000 in June. month. The 19,000 new jobs added in financial activities was an increase from last month’s 12,000. ...

Mark Zandi, chief economist of Moody’s Analytics, said, “Job growth is strong, but it has moderated since the beginning of the year. Layoffs in the energy industry and weaker job gains in manufacturing are behind the slowdown. Nonetheless, even at this slower pace of growth, the labor market is fast approaching full employment.”

This was below the consensus forecast for 210,000 private sector jobs added in the ADP report. 

The BLS report for July will be released Friday, and the consensus is for 212,000 non-farm payroll jobs added in July.

by Calculated Risk on 8/05/2015 07:00:00 AM

From the MBA: Refinance, Purchase Mortgage Applications Increase in Latest MBA Weekly Survey

Mortgage applications increased 4.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 31, 2015. ...

The Refinance Index increased 6 percent from the previous week. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index increased 3 percent compared with the previous week and was 23 percent higher than the same week one year ago.

“Despite recent concerns about the economy, both purchase and refinance applications increased strongly in response to lower interest rates last week,” said Lynn Fisher, MBA’s Vice President of Research and Economics. “Refinance activity was the highest since May when rates were last at this level. The increase in purchase activity was also notable for this time of year, up 23 percent relative to a year ago.”

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.13 percent, its lowest level since May 2015, from 4.17 percent, with points decreasing to 0.34 from 0.36 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.


The first graph shows the refinance index.

Even with the increase in activity, refinance activity is very low.

2014 was the lowest year for refinance activity since year 2000, and refinance activity will probably stay low for the rest of 2015.


The second graph shows the MBA mortgage purchase index.  

According to the MBA, the unadjusted purchase index is 23% higher than a year ago.

by Calculated Risk on 8/04/2015 06:59:00 PM

From Jon Hilsenrath at the WSJ: Atlanta Fed’s Lockhart: Fed Is ‘Close’ to Being Ready to Raise Short-Term Rates

“I think there is a high bar right now to not acting, speaking for myself,” Mr. Lockhart said ...

Wednesday:
• At 7:00 AM, the Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 8:15 AM, the ADP Employment Report for July. This report is for private payrolls only (no government). The consensus is for 210,000 payroll jobs added in July, down from 238,000 in June.

• At 8:30 AM, Trade Balance report for June from the Census Bureau. The consensus is for the U.S. trade deficit to be at $43.0 billion in June from $41.9 billion in May.

• At 10:00 AM, the ISM non-Manufacturing Index for July. The consensus is for index to increase to 56.2 from 56.0 in June.

• Also at 10:00 AM, Speech by Fed Governor Jerome Powell, The Structure and Liquidity of Treasury Bond Markets, At the Brookings Institute Conference: Are There Structural Issues in the U.S. Bond Markets?, Washington, D.C.

by Calculated Risk on 8/04/2015 03:18:00 PM

From housing economist Tom Lawler:

Below is a table showing some selected operating statistics for nine large, publicly-traded home builders for the quarter ended June 30, 2015.

As the table indicates, reported net home orders for these nine home builders in the quarter ended June 30, 2015 were up 13.7% from the comparable quarter of 2014. There are a few things worth noting. First, while Standard Pacific’s reported net home orders for the latest quarter exclude orders associated with the acquisition of a small Austin builder last June, both Horton’s orders and Meritage’s orders include orders associated with acquisitions of builders subsequent to the beginning of the second quarter of 2014. My “best guess” is that net home orders for these nine builders last quarter excluding the impact of such acquisitions were up about 12.5% from the comparable quarter of 2014.

On July 24th Census, in its “New Residential Sales” report for June, estimated that new home sales ran at a seasonally adjusted annual rate of 482,000, well below the “consensus” forecast. In addition, Census revised downward its estimate for home sales for each of the previous three months. For the second quarter as a whole Census estimated that new home sales were up 19% (not seasonally adjusted) from the comparable quarter of 2014 – well above the YOY gain the nine large builders shown above.

Of course, there are several reasons why net home orders for these nine builders do not always track Census’ estimate of new home sales. First, Census treats sales cancellations different than do builders. Second, the geographic “footprint” of these nine builders does not match that of the US as a whole. Third, the market share of these builders can change significantly. And finally, there may be timing differences between when a builder “books” a sale and when a sale is recorded in Census’ Survey of Construction.

Nevertheless, reported home orders from publicly-treaded builders not only “confirm” that new home sales last quarter were below “consensus” forecasts, but also suggest that Census may revise downward its estimate for second-quarter new home sales in the July “New Residential Sales” report.

	Net Orders			Settlements			Average Closing  Price ($000s)
Qtr. Ended:	6/15	6/14	% Chg	6/15	6/14	% Chg	6/15	6/14	% Chg
D.R. Horton	10,398	8,591	21.0%	9,856	7,676	28.4%	290	272	6.5%
Pulte Group	5,118	4,778	7.1%	3,744	3,798	-1.4%	332	328	1.2%
NVR	3,796	3,415	11.2%	3,175	2,943	7.9%	384	368	4.4%
The Ryland Group	2,387	2,228	7.1%	1,814	1,700	6.7%	351	333	5.4%
Beazer Homes	1,524	1,290	18.1%	1,293	1,241	4.2%	410	372	10.2%
Standard Pacific	1,567	1,425	10.0%	1,305	1,236	5.6%	532	479	11.1%
Meritage Homes	1,986	1,647	20.6%	1,556	1,368	13.7%	380	368	3.3%
MDC Holdings	1,481	1,419	4.4%	1,126	1,158	-2.8%	410	372	10.2%
M/I Homes	1,100	1,016	8.3%	919	894	2.8%	340	306	11.1%
Total	29,357	25,809	13.7%	24,788	22,014	12.6%	$345	$329	4.7%