by Calculated Risk on 9/05/2011 08:50:00 AM

From the Telegraph: "Eurozone service sector [slowed] and the Purchasing Managers Index figures show services activity slowed to its lowest rate since September 2009. The eurozone PMI figure slipped to 51.5 in August, down from 51.6 in July."

"The [U.K.] guage of services activity, which makes up the biggest part of the British economy and includes shops and restaurants, fell to 51.1 in August from 55.4 in July"

From the WSJ: U.S. Lawsuit Pressures Bank Shares

Shares in U.K. and European banks slumped Monday after several institutions were named in a lawsuit Friday alleging they sold risky home loans to U.S. housing agencies Fannie Mae and Freddie Mac.

The suit by the Federal Housing Finance Agency in New York and Connecticut courts alleged that units of 17 banks including Royal Bank of Scotland Group PLC, Barclays PLC, HSBC Holdings PLC, Deutsche Bank AG, Credit Suisse AG and Société Générale SA, misrepresented the risks of $196 billion in home mortgage-loan securities sold to the agencies in a four-year period, making it the largest legal action by a federal regulator over the mortgage meltdown.

The Greek 2 year yield is at 49.99%!

Here is a graph of the 10 year spread (Italy to Germany) from Bloomberg. And for Spain to Germany. The Italian spread is at 365, most of the way back up to the high of 389 on Aug 4th, and the Spanish spread is at 330, still down from 398 on Aug 4th. Most of the increase in the spread is because the German 10 year yield is at 1.9%. (The U.S. Ten Year is slightly under 2% too).

The Portuguese 2 year yield is up to 13.6%. Also the Irish 2 year yield is at 8.5%.

Here are the links for bond yields for several countries (source: Bloomberg):

Greece	2 Year	5 Year	10 Year
Portugal	2 Year	5 Year	10 Year
Ireland	2 Year	5 Year	10 Year
Spain	2 Year	5 Year	10 Year
Italy	2 Year	5 Year	10 Year
Belgium	2 Year	5 Year	10 Year
France	2 Year	5 Year	10 Year
Germany	2 Year	5 Year	10 Year

by Calculated Risk on 9/05/2011 12:12:00 AM

A couple of points from the WSJ: Euro Falls on Greece Worries

Rival [German] parties gained fresh support in the elections Sunday, piling further pressure on [Chancellor Angela] Merkel ... the loss of regional influence comes as Merkel's party prepares for a much-anticipated vote in the German parliament at the end of the month on changes to the euro-zone's temporary bailout mechanism.
...
The news follows Friday's suspension of talks between the Greek government and representatives of the International Monetary Fund, European Central Bank and European Commission over new bailout funds.

And from Reuters: German court to rule on Sept 7 on euro,Greek bailouts

Germany's constitutional court will announce its verdict on September 7 on whether the government broke the law with last year's euro zone and Greek bailout packages, it said in a statement on Tuesday.

It is unlikely the court will rule against the bailout, but Merkel is losing political support. It appears the changes to the bailout mechanism will pass the German parliament, but the vote might be close.

The European crisis is heating up again ...

by Calculated Risk on 9/04/2011 06:47:00 PM

By request, I've added links for the Weekly Schedule of economic releases and the graph galleries at the bottom of the first post.

The graph galleries are a collection of the most recent versions of frequently updated graphs. (Older versions are removed).

The Graph Galleries are grouped by Employment, New Home Sales, Existing Home sales and much more. There are tabs for each gallery. Clicking on a tab will load a gallery. Then thumbnails will appear below the main graph for all of the graphs in the selected gallery. Clicking on the thumbnails will display each graph.

To access the galleries, just click on a graph on the blog - or click on "Graph Galleries" at the bottom of the first post.

As an example, clicking on this graph (based on the most recent employment report), will open the "employment" chart gallery and display this graph - with thumbnails for other employment related graphs.

The "print" key displays the full size image of the selected graph for printing from your browser.

The title below the graph is a link to the post on Calculated Risk and also includes the date the graph was posted to the gallery.

Note: The graphs are free to use on websites or for presentations. All I ask is that online sites link to my site http://www.calculatedriskblog.com/ and that printed presentations credit www.calculatedriskblog.com.

Best to all.

Yesterday:
• Summary for Week ending September 2nd (with plenty of graphs)

Friday on employment:
• August Employment Report: 0 Jobs (unchanged), 9.1% Unemployment Rate
• Employment Summary, Part Time Workers, and Unemployed over 26 Weeks
• Duration of Unemployment, Unemployment by Education and Diffusion Indexes

by Calculated Risk on 9/04/2011 11:14:00 AM

Note: This statement was released before the jobs report, and I'd like to focus on some of the details. NFIB’s monthly small business survey for August will be released on Tuesday, September 13, 2011.

From the National Federation of Independent Business (NFIB): NFIB Jobs Statement: Job Gains in August? Keep Your Expectations Low

"We wish there was good news to report, but sadly, we will give you more of the same: The prospects for a good jobs report are dim. In August, small-business owners reported job losses averaging .08 workers per firm over the last three months. This follows a loss of .23 workers per firm reported in June and .15 workers per firm in July. The good news is that the trend is moving in the right direction—losses appear to be decreasing—although it doesn’t seem to be moving fast enough to close the employment void we’ve been experiencing for the last several years." [said William C. Dunkelberg, Chief economist for (NFIB)]
...
“While the readings remain historically weak, we can find a grain of encouragement as we look at hiring prospects. Over the next three months, 11 percent plan to increase employment (up 1 point), and 12 percent plan to reduce their workforce (also up 1 point), yielding a seasonally adjusted net 5 percent of owners planning to create new jobs, which is a 3 point improvement over July."

Note: Small businesses have a larger percentage of real estate and retail related companies than the overall economy.

Here is a graph of the net hiring plans for the next three months since 1986.

Hiring plans were still low in August, but positive and improving.

It is no surprise that small businesses are struggling due to the high concentration of real estate related companies in the survey. But as Dunkelberg noted, current small business hiring (fewer job losses) and hiring plans are both slowly moving in the right direction.

Yesterday:
• Summary for Week ending September 2nd (with plenty of graphs)
• Schedule for Week of September 4th

Friday on employment:
• August Employment Report: 0 Jobs (unchanged), 9.1% Unemployment Rate
• Employment Summary, Part Time Workers, and Unemployed over 26 Weeks
• Duration of Unemployment, Unemployment by Education and Diffusion Indexes
• Employment graph gallery

by Calculated Risk on 9/04/2011 09:00:00 AM

From Kash Mansori at The Street Light: Europe's Banking System: The Transatlantic Cash Flow

And now, the flip side of the story presented [Thursday], in which ECB data seems to indicate that monetary financial institutions (MFIs) in Europe have been moving their deposits out of European banks. Where is that money going?
...
European banks are shifting their cash assets out of European banks and putting much of them into US banks. ... This has happened at a significant rate, with a net transatlantic flow from European to US banks that probably totals close to half a trillion dollars in just six months.

If you're wondering exactly who has been the first to lose confidence in the European banking system, look no further. It seems that at the forefront is the European banking system itself.

by Calculated Risk on 9/03/2011 08:01:00 PM

Note: I've updated the percent job losses in recession graphs. With an earlier BLS revision, the peak of employment moved to January 2008 instead of December 2007. This matters if we are counting the number of months below the previous peak. (ht Scott)

By request, here is an update to several participation rate graphs. Here is a look at some the long term trends (updated graphs through August 2011).

The following graph shows the changes in the participation rates for men and women since 1960 (in the 25 to 54 age group - the prime working years).

Click on graph for larger image in graph gallery.

The participation rate for women increased significantly from the mid 30s to the mid 70s and has mostly flattened out this year - the rate increased slightly in August to 74.7%. The participation rate for men has decreased from the high 90s a few decades ago, to 88.7% in August 2011. (up slightly from July).

There will probably be some "bounce back" for both men and women (some of the recent decline is probably cyclical), but the long term trend for men is down.

The next graph shows that participation rates for several key age groups.

There are a few key long term trends:
• The participation rate for the '16 to 19' age group has been falling for some time (red). This was at 34.5% in August.

• The participation rate for the 'over 55' age group has been rising since the mid '90s (purple), although this has stalled out a little recently (perhaps cyclical). This was at 40.2% in August.

• The participation rate for the '20 to 24' age group fell recently too (perhaps more people are focusing on eduction before joining the labor force). This appears to have stabilized - although it was down to 70.5% in August, from 71.5% in August 2010, and I expect the participation rate to increase for this cohort as the job market improves.

The third graph shows the participation rate for several over 55 age groups. The red line is the '55 and over' total seasonally adjusted. All of the other age groups are Not Seasonally Adjusted (NSA).

The participation rate is generally trending up for all older age groups.

Eventually the 'over 55' participation rate will start to decline as the oldest baby boomers move into even older age groups.

I've been expecting some small bounce back in the overall participation rate, but I don't think the bounce back will be huge - and we haven't seen it yet. The overall participation rate increased slightly in August to 64.0% from 63.9% in July (the lowest rate in almost 30 years).

Earlier:
• Summary for Week ending September 2nd (with plenty of graphs)
• Schedule for Week of September 4th

Yesterday:
• August Employment Report: 0 Jobs (unchanged), 9.1% Unemployment Rate
• Employment Summary, Part Time Workers, and Unemployed over 26 Weeks
• Duration of Unemployment, Unemployment by Education and Diffusion Indexes
• Employment graph gallery