by Calculated Risk on 5/21/2015 08:35:00 AM

The DOL reported:

In the week ending May 16, the advance figure for seasonally adjusted initial claims was 274,000, an increase of 10,000 from the previous week's unrevised level of 264,000. The 4-week moving average was 266,250, a decrease of 5,500 from the previous week's unrevised average of 271,750. This is the lowest level for this average since April 15, 2000 when it was 266,250.

There were no special factors impacting this week's initial claims.

The previous week was unrevised.

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.


The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 266,250.

This was above the consensus forecast of 270,000, and the low level of the 4-week average suggests few layoffs. This is the lowest 4-week average in 15 years (since April 2000).

Note: If the 4-week average falls to 266,000, it will be the lowest in 40 years!

by Calculated Risk on 5/20/2015 07:27:00 PM

From Jon Hilsenrath at the WSJ: Fed Looks Past June for First Rate Hike

Federal Reserve officials at their April policy meeting said in the most explicit terms yet that they are unlikely to start raising short-term interest rates in June, as seemed possible when 2015 began.

Officials have been saying they won’t begin lifting their benchmark federal funds rate from near zero until they see more improvement in the labor market and are confident inflation will rise toward their 2% target. Several of them started the year thinking they might reach that point by midyear.

But by last month, after watching the economy stumble through the winter, many at the April 28-29 meeting were doubtful those criteria for a rate increase would be met, according to minutes of the meeting released Wednesday.

Thursday:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to increase to 270 thousand from 264 thousand.

• Also at 8:30 AM, the Chicago Fed National Activity Index for April. This is a composite index of other data.

• At 10:00 AM, the Philly Fed manufacturing survey for May. The consensus is for a reading of 8.0, up from 7.5 last month (above zero indicates expansion).

• At 10:00 AM, Existing Home Sales for April from the National Association of Realtors (NAR). The consensus is for sales of 5.22 million on seasonally adjusted annual rate (SAAR) basis. Sales in March were at a 5.19 million SAAR. Economist Tom Lawler estimates the NAR will report sales of 5.20 million SAAR.

• At 11:00 AM, the Kansas City Fed manufacturing survey for May.

• At 1:30 PM, Speech by Fed Vice Chairman Stanley Fischer, Past, Present, and Future Challenges for the Euro Area, At the ECB Forum on Central Banking, Linho Sintra, Portugal

by Calculated Risk on 5/20/2015 04:26:00 PM

From CoreLogic (formerly DataQuick): CoreLogic Reports Southern California Home Sales Rose 8.5 Percent Year over Year in April 2015

A total of 21,708 new and existing houses and condominiums sold in April 2015 in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties, up 9.9 percent month over month from 19,760 sales in March 2015. April 2015 sales also rose by 8.5 percent compared to April 2014 when there were 20,008 sales, marking the second straight month with year-over-year increases. Southern California home sales in April 2015 were the second highest for the month of April since 2006, only behind April 2013 when 21,795 homes sold.

Sales activity picked up last month, making it one of the stronger Aprils since the housing bust, though sales remained below average," said Andrew LePage, a data analyst for CoreLogic. "Many buyers still face credit and affordability hurdles, and the inventory of homes for sale remains relatively tight in many markets. New home construction is still well below historically normal levels, too."
...
Real estate-owned (REO) sales represented 4.5 percent of all Southern California home sales in April, down from 5.1 percent of sales in March 2015 and down from 5.2 percent in April 2014.
...
Short sales accounted for 4.4 percent of total sales in April, up from 4 percent in March 2015 and down from 5 percent in April 2014.
emphasis added

The NAR will release existing home sales for April tomorrow at 10:00 AM ET. The consensus is for sales of 5.22 million on seasonally adjusted annual rate (SAAR) basis, up about 10% from April 2014.

by Calculated Risk on 5/20/2015 02:32:00 PM

From the Fed: Minutes of the Federal Open Market Committee, April 28-29, 2015 . Excerpts:

In their discussion of communications regarding the path of the federal funds rate over the medium term, participants expressed a range of views about when economic conditions were likely to warrant an increase in the target range for the federal funds rate. Participants continued to judge that it would be appropriate to raise the target range for the federal funds rate when they had seen further improvement in the labor market and were reasonably confident that inflation would move back to its 2 percent objective over the medium term. Although participants expressed different views about the likely timing and pace of policy firming, they agreed that the Committee's decision to begin firming would appropriately depend on the incoming data and their implications for the economic outlook. A few anticipated that the information that would accrue by the time of the June meeting would likely indicate sufficient improvement in the economic outlook to lead the Committee to judge that its conditions for beginning policy firming had been met. Many participants, however, thought it unlikely that the data available in June would provide sufficient confirmation that the conditions for raising the target range for the federal funds rate had been satisfied, al-though they generally did not rule out this possibility. Participants discussed the merits of providing an explicit indication, in postmeeting statements released prior to the commencement of policy firming, that the target range for the federal funds rate would likely be raised in the near term. However, most participants felt that the timing of the first increase in the target range for the federal funds rate would appropriately be determined on a meeting-by-meeting basis and would depend on the evolution of economic conditions and the outlook. In keeping with this data-dependent approach, some participants further suggested that the postmeeting statement's description of the economic situation and outlook, and of progress toward the Committee's goals, provided the appropriate means by which the Committee could help the public assess the likely timing of the initial increase in the target range for the federal funds rate.
emphasis added

by Calculated Risk on 5/20/2015 10:08:00 AM

Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.

From the AIA: Architecture Billings Remain Stuck in Winter Slowdown

Riding a stretch of increasing levels of demand for thirteen out of the last fifteen months, the Architecture Billings Index (ABI) dropped in April for the second month this year. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the April ABI score was 48.8, down sharply from a mark of 51.7 in March. This score reflects a decrease in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 60.1, up from a reading of 58.2 the previous month.

“The fundamentals in the design and construction industry remain very healthy,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “The fact that both inquires for new projects and new design contracts continued to accelerate at a healthy pace in April points to strong underlying demand for design activity. However, April would typically be a month where these projects would be in full swing, but a severe winter in many parts of the Northeast and Midwest has apparently delayed progress on projects.”
emphasis added

Click on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was at 48.8 in April, down from 51.7 in March. Anything below 50 indicates contraction in demand for architects' services.

Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.  The multi-family residential market was negative for the third consecutive month - and this might be indicating a slowdown for apartments - or at least less growth.

According to the AIA, there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on non-residential construction.  This index was mostly positive over the last year, suggesting an increase in CRE investment in 2015.