by Calculated Risk on 12/30/2010 11:00:00 AM

From the Kansas City Fed: Survey of Tenth District Manufacturing

Tenth District manufacturing activity continued at a solid pace in December, and producers were increasingly optimistic about future activity. Price indexes in the survey rose further, with a marked increase in raw materials prices.

The net percentage of firms reporting month-over-month increases in production in December was 21, unchanged from 21 in November and up from 10 in October. ... The employment index increased to its highest level in three years, while the new orders for exports index edged down from 11 to 7.

This is the last of the regional Fed surveys for December. The regional surveys provide a hint about the ISM manufacturing index, as the following graph shows.

Click on graph for larger image in graph gallery.

The New York and Philly Fed surveys are averaged together (dashed green, through December), and averaged five Fed surveys (blue, through December) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through November (right axis).

The regional surveys suggest an increase in manufacturing activity in December.

The ISM manufacturing index will released on Monday, Jan 3, 2011.

by Calculated Risk on 12/30/2010 10:00:00 AM

From the NAR: Pending Home Sales Continue Recovery

The Pending Home Sales Index,* a forward-looking indicator, rose 3.5 percent to 92.2 based on contracts signed in November from a downwardly revised 89.1 in October [revised down from 89.3]. The index is 5.0 percent below a reading of 97.0 in November 2009. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

This suggests existing home sales in December and January will be somewhat higher than in November.

Also ...

• The Chicago PMI for December (released this morning) was stronger than expected. The headline index was 68.6, well above the 62.5 expected.

The Chicago Purchasing Managers reported the CHICAGO BUSINESS BAROMETER achieved its highest level since July 1988, expanding for the fifteenth consecutive month.

Production (at 74.0) "reached its highest levels since October 2004", and new orders (73.6) "improved to 2005 levels". The employment index increased to 60.2 from 56.3 in November. This continues the trend of stronger reports recently.

by Calculated Risk on 12/30/2010 08:30:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending Dec. 25, the advance figure for seasonally adjusted initial claims was 388,000, a decrease of 34,000 from the previous week's revised figure of 422,000. The 4-week moving average was 414,000, a decrease of 12,500 from the previous week's revised average of 426,500.

Click on graph for larger image in new window.

This graph shows the 4-week moving average of weekly claims since January 2000.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased this week by 12,500 to 414,000.

Even though weekly claims are seasonally adjusted, sometimes data for holiday weeks can be a little off.

In general the four-week moving average has been declining and that is good news. If weekly unemployment claims remain below 400,000 that would suggest a better labor market.

by Calculated Risk on 12/29/2010 08:41:00 PM

In the S&P/Case-Shiller report for October, S&P noted:

[S]ix markets – Atlanta, Charlotte, Miami, Portland (OR), Seattle and Tampa – hit their lowest levels since home prices started to fall in 2006 and 2007

S&P reports the data Not Seasonally Adjusted (NSA) because of concerns about foreclosures impacting the seasonal factor.

Using the Seasonally Adjusted (SA) series, eleven cities were at post bubble lows; the six cities listed above plus Phoenix, Chicago, Detroit, New York and Las Vegas.

The following graph shows the percent above the post bubble lows for the 20 Case-Shiller cities and the two composite indexes using both SA and NSA data.

Click on graph for larger image in graph gallery.

Las Vegas was slightly above the post bubble low NSA (it isn't apparent on the graph).

We can probably guess the cities that will set new post bubble lows in November. Using the NSA data, Las Vegas, New York and Detroit will all probably join the list above setting new lows.

Using the SA data, Dallas, Cleveland, Denver, and maybe the Composite 20 index will be at new lows.

Note: Earlier I posted A few for Graphs for 2010. Enjoy!

by Calculated Risk on 12/29/2010 04:25:00 PM

Earlier I posted A few for Graphs for 2010. Enjoy!

A 2011 forecast from economist Tom Lawler:

	2010 (estimate)	2011 (forecast)
Total Starts	588	665
.... Single Family	473	520
.... Multi Family	115	145
New Home Sales	320	365

Note: Tom already forecast completions would be at a record low next year, but he thinks starts will increase "with most of the increase coming in the second half of the year".

A special thanks to Tom Lawler for sharing his insights with me this year - and allowing me to share some of them!

by Calculated Risk on 12/29/2010 02:47:00 PM

To make this clear (since I mentioned this change earlier): This change will have no impact on the number of unemployed or the unemployment rate. This will only impact the average duration of unemployment.

From the BLS: Changes to data collected on unemployment duration

Effective with data for January 2011, the Current Population Survey (CPS) will be modified to allow respondents to report longer durations of unemployment. Presently, the CPS accepts unemployment durations of up to 2 years; any response of unemployment duration greater than this is entered as 2 years. Starting with data for January 2011, respondents will be able to report unemployment durations of up to 5 years. This change will likely affect estimates of average (mean) duration of unemployment. The change will not affect the estimate of the number of unemployed persons and will not affect other data series on the duration of unemployment.

Currently if someone says they have been unemployed longer than 2 years, they are listed at 2 years (the current maximum). This new change will allow for responses up to 5 years and will probably have a small impact on the average (mean) duration of unemployment, but will have no impact on the median duration - or on the number unemployed or the unemployment rate.