by Calculated Risk on 3/30/2015 10:08:00 AM

From the NAR: Pending Home Sales Rise in February Behind Solid Gains in Midwest, West

The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 3.1 percent to 106.9 in February from a slight downward revision of 103.7 in January and is now 12.0 percent above February 2014 (95.4). The index is at its highest level since June 2013 (109.4), has increased year-over-year for six consecutive months and is above 100 – considered an average level of activity – for the 10th consecutive month.
...
The PHSI in the Northeast fell 2.3 percent to 81.7 in February, but is 4.1 percent above a year ago. In the Midwest the index leaped 11.6 percent to 110.4 in February, and is now 13.8 percent above February 2014.

Pending home sales in the South decreased 1.4 percent to an index of 120.2 in February, but is still 10.8 percent above last February. The index in the West climbed 6.6 percent in February to 102.1 (highest since June 2013 at 111.4) and is now 18.3 percent above a year ago.

This was well above the consensus forecast, but as expected by housing economist Tom Lawler.

Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in March and April.

by Calculated Risk on 3/30/2015 08:30:00 AM

The BEA released the Personal Income and Outlays report for February:

Personal income increased $58.6 billion, or 0.4 percent ... in February, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE)increased $11.8 billion, or 0.1 percent.
...
Real PCE -- PCE adjusted to remove price changes -- decreased 0.1 percent in February, in contrast to an increase of 0.2 percent in January. ... The price index for PCE increased 0.2 percent in February, in contrast to a decrease of 0.4 percent in January. The PCE price index, excluding food and energy, increased 0.1 percent in February, the same increase as in January.

The February price index for PCE increased 0.3 percent from February a year ago. The February PCE price index, excluding food and energy, increased 1.4 percent from February a year ago.

The following graph shows real Personal Consumption Expenditures (PCE) through February 2015 (2009 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

The increase in personal income was higher than expected,   The increase in PCE was below the 0.2% increase consensus.

On inflation: The PCE price index increased 0.3 percent year-over-year due to the sharp decline in oil prices. The core PCE price index (excluding food and energy) increased 1.4 percent year-over-year in February.

Using the two-month method to estimate Q1 PCE growth, PCE was increasing at a 2.0% annual rate in Q1 2015 (using the mid-month method, PCE was increasing 0.8%). This is a slowdown in PCE.

by Calculated Risk on 3/29/2015 08:08:00 PM

From the NY Times: A Deadline for Greece, and U.S. Jobs Data

Greece hopes to gain approval on Monday for a detailed list of economic changes that its international creditors have demanded ...

... recent economic data has been anemic, and it is likely that hiring has not kept up with the blistering pace of gains reached in late 2014. In fact, some economists say hiring could fall below the 200,000 level because of a combination of bad weather and weakness in certain sectors like drilling and energy production.

Monday:
• 8:30 AM ET, Personal Income and Outlays for February. The consensus is for a 0.3% increase in personal income, and for a 0.2% increase in personal spending. And for the Core PCE price index to increase 0.1%.

• At 10:00 AM, the Pending Home Sales Index for February. The consensus is for a 0.3% increase in the index.

• At 10:30 AM, Dallas Fed Manufacturing Survey for March.

Weekend:
• Schedule for Week of March 29, 2015

• Lawler: Possible Upside Surprise for Pending Home Sales Index

• Merrill and Nomura Forecasts for March Employment Report

From CNBC: Pre-Market Data and Bloomberg futures: currently S&P futures are down slightly and DOW futures are flat (fair value).

Oil prices were up slightly over the last week with WTI futures at $48.34 per barrel and Brent at $55.97 per barrel.  A year ago, WTI was at $101, and Brent was at $106 - so prices are down 50% or so year-over-year.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are up to $2.42 per gallon (down more than $1.10 per gallon from a year ago).   Prices in California are now declining following a refinery fire in February and a strike that is now over.

If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com

by Calculated Risk on 3/29/2015 05:16:00 PM

CR Note: The NAR is scheduled to release Pending Home Sales for February tomorrow at 10:00 AM ET. The consensus is for a 0.3% increase in the index. Housing economist Tom Lawler mentioned in his existing home sales forecast a week ago:

While not enough local realtors/MLS either report data on new pending sales or report accurate/consistent data on new pending sales for me to produce a “national” estimate, most or the realtors/MLS that do report such data showed significantly faster YOY growth in pending sales in February compared to January.

Note: The NAR reported Pending Home sales increased 1.7% in January.

Lawler sent me a note today:

Based on the admittedly limited number of other publicly-available regional/MLS reports on pending home sales, I'd look for an "upside surprise" to the NAR's Pending Home Sales Index for February.

Lawler added this example of local data from the California Association of Realtors:

• California pending home sales jumped in February, with the Pending Home Sales Index (PHSI)* increasing 24.8 percent from a revised 89.9 in January to 112.2, based on signed contracts. The month-to-month increase easily topped the long-run average increase of 17.9 percent observed in the last seven years.

• Statewide pending home sales were up 15.6 percent on an annual basis from the 97.1 index recorded in February 2014. The yearly increase was the largest since April 2009 and was the first double-digit gain since April 2012.

Note: The YOY increase in the CAR PHSI in January was 6.0%.

Look for a possible upside surprise tomorrow.

by Calculated Risk on 3/29/2015 11:38:00 AM

Here are some excepts from two research reports ... first from Merrill Lynch:

The recent employment reports have been exceptionally strong with job growth averaging 293,000 a month for the past six months. Although we expect a slight moderation in March with job growth of 270,000, this would still be a healthy number. Within the components, we should continue to see a shedding of jobs in the mining sector, which lost a cumulative 14,000 over the past two months. The plunge in oil prices has resulted in layoffs in oil and gas production. Elsewhere, we expect decent growth in construction jobs but a slowdown in manufacturing hiring given the recent weakness in the PMI surveys. We will also be closely looking at the trend in retail hiring as an indicator of the beginning of the spring shopping season. Overall, this will leave private payroll growth of 260,000 and public of 10,000.

Despite strong job growth, we think the unemployment rate will tick up to 5.6%. The unrounded unemployment rate in February was 5.54%, making it a “high” 5.5%. The risk is that the labor force participation rate increases, reversing the decline in February. As always, the focus will be on wages. We look for a 0.2% gain, an improvement from the 0.12% increase in February. This would leave the yoy rate at 2.0%. We think the risk, however, is that average hourly earnings surprises on the upside relative to our forecast.

From Nomura:

Job growth has been very strong recently. Incoming data have tilted negative in March, but on balance still suggest that payrolls increased at a solid pace. Regional manufacturing surveys released thus far in March have come in less optimistic, suggesting that manufacturing jobs probably grew at a slower rate. Initial and continuing jobless claims have remained low throughout the month but were higher in the BLS survey period in March compared with the same period in February.

Based on readings of these labor market indicators, we forecast a 220k increase in private payrolls, with a 5k increase in government jobs, implying that total nonfarm payrolls will gain 225k. Given the weaker regional manufacturing surveys, we expect manufacturing employment to grow by 5k, compared with 8k in February. We forecast that average hourly earnings for private employees rose by 0.3% m-o-m in March, indicative of our expectation for a gradual pickup in wage growth as a result of the tightening labor market and also representing some bounce back after the unusually weak number in February. Last, we expect the household survey to show that the unemployment rate ticked down by 0.1pp to 5.4%.

The consensus is for an increase of 247,000 non-farm payroll jobs in March, down from the 295,000 non-farm payroll jobs added in February.

The consensus is for the unemployment rate to be unchanged at 5.5% in March.

 I'll write an employment report preview later this week after more data for March is released.