by Calculated Risk on 3/01/2011 12:45:00 PM

Catching up ... the Census Bureau reported this morning that overall construction spending decreased in January compared to December (seasonally adjusted).

[C]onstruction spending during January 2011 was estimated at a seasonally adjusted annual rate of $791.8 billion, 0.7 percent (±1.4%)* below the revised December estimate of $797.6 billion.

Private construction spending also decreased in January:

Spending on private construction was at a seasonally adjusted annual rate of $490.0 billion, 1.2 percent (±1.1%) below the revised December estimate of $495.9 billion. Residential construction was at a seasonally adjusted annual rate of $245.6 billion in January, 5.3 percent (±1.3%) above the revised December estimate of $233.2 billion. Nonresidential construction was at a seasonally adjusted annual rate of $244.4 billion in January, 6.9 percent (±1.1%) below the revised December estimate of $262.7 billion.

Click on graph for larger image in graph gallery.

This graph shows private residential and nonresidential construction spending since 1993. Note: nominal dollars, not inflation adjusted.

Residential spending is 64% below the peak in early 2006, and non-residential spending is 41% below the peak in January 2008.

This is the first time since December 2007 that private residential construction spending has been higher than non-residential spending. Not by much, but that is something I've been expecting.

We will probably see a sluggish recovery in residential spending in 2011 (mostly multi-family), and for residential investment to make a positive contribution to GDP and employment growth this year for the first time since 2005. And that is one of the reasons I think growth (both GDP and employment) will be better in 2011 than in 2010.

by Calculated Risk on 3/01/2011 11:33:00 AM

Note: The real key is the seasonally adjusted annual sales rate (SAAR) compared to the last few months, not the year-over-year comparison provided by the automakers. But this is a strong increase for GM ...

From MarketWatch: GM U.S. February auto sales surge 45.8% to 207,028

[GM] said January U.S. sales in February surged 45.8% to 207,028 vehicles from 141,951 in February 2010.

Once all the reports are released, I'll post a graph of the estimated total February light vehicle sales (SAAR) - usually around 4 PM ET. Most estimates are for an increase to 12.7 million SAAR in February from the 12.6 million SAAR in January. Sales in January 2010 were at a 10.74 million SAAR.

I'll add reports from the other major auto companies as updates to this post.

From MarketWatch: Ford U.S. February auto sales up 13.8% to 156,626

From MarketWatch: Chrysler sales rise 13% in Feb

From MarketWatch: Toyota U.S. February sales soar 41.8% to 141,846

by Calculated Risk on 3/01/2011 10:16:00 AM

PMI at 61.% in February, up from 60.8% in January, matching the level in May 2004 - the highest since 1983.

From the Institute for Supply Management: January 2011 Manufacturing ISM Report On Business®

The report was issued today by Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "February's report from the manufacturing sector indicates continuing strong performance as the PMI registered 61.4 percent, a level last achieved in May 2004. New orders and production, driven by strength in exports in particular, continue to drive the composite index (PMI). New orders are growing significantly faster than inventories, and the Customers' Inventories Index indicates supply chain inventories will require continuing replenishment. The Employment Index is above 60 percent for only the third time in the last decade. While there are many positive indicators, there is also concern as industries related to housing continue to struggle and the Prices Index indicates significant inflation of raw material costs across many commodities."
...
ISM's New Orders Index registered 68 percent in February, which is an increase of 0.2 percentage point when compared to the 67.8 percent reported in January. This is the 20th consecutive month of growth in the New Orders Index.
...
ISM's Employment Index registered 64.5 percent in February, which is 2.8 percentage points higher than the 61.7 percent reported in January. This is the 17th consecutive month of growth in manufacturing employment.

The price index was at 82 with "66 percent of respondents reported paying higher prices and 2 percent reported paying lower prices, 32 percent of supply executives reported paying the same prices as in January".

Click on graph for larger image in new window.

Here is a long term graph of the ISM manufacturing index.

This was a strong report and above expectations. The new orders and employment indexes were especially strong.

by Calculated Risk on 3/01/2011 10:00:00 AM

Here is the CSpan feed

Prepared testimony from Fed Chairman Ben Bernanke: Semiannual Monetary Policy Report to the Congress

by Calculated Risk on 3/01/2011 09:03:00 AM

Note: At 10 AM, the ISM Manufacturing Index for February and Construction Spending for January will be released. Also Fed Chairman Bernanke provides the Semiannual Monetary Policy Report to the Congress (Senate testimony).

From Ted Nesi at wpri.com: Governor Chafee has a house he’d like to sell you

[Gov. Lincoln Chafee] and his wife, Stephanie, listed their seven-bedroom, three-and-a-half-bathroom house on Providence’s East Side last week for $889,000.

The Chafees purchased the house for $939,000 in 2006 ...

So he is asking $50,000 less than he paid. Case-Shiller doesn't track Providence, but house prices have fallen about 15% in Boston and 22% in New York - and prices have probably fallen at least 10% in Providence. So I wouldn't be surprised to see a price reduction.

by Calculated Risk on 2/28/2011 10:17:00 PM

From Lauren Beale at the LA Times: Cash-only home sales rise in California

All-cash buyers grabbed a record 30.9% share of the Golden State's houses and condos in January ... Cash activity has been brisk for months in foreclosure-ridden areas such as Riverside and San Bernardino. But now, the cash buyer has become a major player in Southern California's most expensive communities, where cash deals account for as much as two-thirds of home sales.
...
In the Southland's $1-million-and-up market, 29.2% of buyers paid cash last year — the highest percentage since 1994, DataQuick statistics show. For homes selling for $5 million and up, 62.2% paid cash.

At the low end it is probably mostly investors. The high end has always had a fairly high percentage of cash buyers, but this is very high. The good news is these buyers will never have negative equity (unless they take out a mortgage).

The large percentage of cash buyers is part of the reason that the MBA purchase index has not been tracking home sales very closely (it also appears that the NAR has been overstating sales).