by Calculated Risk on 3/16/2017 10:10:00 AM

From the BLS: Job Openings and Labor Turnover Summary

The number of job openings was little changed at 5.6 million on the last business day of January, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were also little changed at 5.4 million and 5.3 million, respectively. ...
...
The number of quits edged up to 3.2 million in January. The quits rate was 2.2 percent. Over the month, the number of quits edged up for total private (+129,000) and was little changed for government.
emphasis added

The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

This series started in December 2000.

Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for January, the most recent employment report was for February.

Click on graph for larger image.


Note that hires (dark blue) and total separations (red and light blue columns stacked) are pretty close each month. This is a measure of labor market turnover.  When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

Jobs openings were mostly unchanged in January at 5.626 million compared to 5.539 million in December.  Job openings are mostly moving sideways at a high level.

The number of job openings (yellow) are down slightly year-over-year.

Quits are up 11% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

This is another solid report.

by Calculated Risk on 3/16/2017 08:45:00 AM

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately-owned housing starts in February were at a seasonally adjusted annual rate of 1,288,000. This is 3.0 percent above the revised January estimate of 1,251,000 and is 6.2 percent above the February 2016 rate of 1,213,000. Single-family housing starts in February were at a rate of 872,000; this is 6.5 percent above the revised January figure of 819,000. The February rate for units in buildings with five units or more was 396,000.

Building Permits:
Privately-owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 1,213,000. This is 6.2 percent below the revised January rate of 1,293,000, but is 4.4 percent above the February 2016 rate of 1,162,000. Single-family authorizations in February were at a rate of 832,000; this is 3.1 percent above the revised January figure of 807,000. Authorizations of units in buildings with five units or more were at a rate of 334,000 in February.
emphasis added

Click on graph for larger image.

The first graph shows single and multi-family housing starts for the last several years.

Multi-family starts (red, 2+ units) decreased in February compared to January.  Multi-family starts are up year-over-year.

Multi-family is volatile, and the swings have been huge over the last six months.

Single-family starts (blue) increased in February, and are up 3.2% year-over-year.

This is the highest level for single family starts since 2007.

The second graph shows total and single unit starts since 1968.

 The second graph shows the huge collapse following the housing bubble, and then - after moving sideways for a couple of years - housing is now recovering (but still historically low),

Total housing starts in February were above expectations.  December and January were revised slightly.  Another solid report.  I'll have more later ...

by Calculated Risk on 3/16/2017 08:33:00 AM

The DOL reported:

In the week ending March 11, the advance figure for seasonally adjusted initial claims was 241,000, a decrease of 2,000 from the previous week's unrevised level of 243,000. The 4-week moving average was 237,250, an increase of 750 from the previous week's unrevised average of 236,500.
emphasis added

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 increased to 237,250.

This was at the consensus forecast.

The low level of claims suggests relatively few layoffs.

by Calculated Risk on 3/15/2017 08:44:00 PM

The FOMC's statement and projections were perceived at "dovish" (probably one less hike this year than expected). So mortgage rates declined ...

From Matthew Graham at Mortgage News Daily: Biggest Intraday Drop of the Year For Mortgage Rates

Mortgage rates fell at their fastest pace of the year following today's rate hike announcement from the Fed.  If you're wondering why mortgage rates fell while the Fed's rate moved up, you're not alone.  Fortunately, the explanation is simple.

  Financial markets had already fully accounted for the chance that the Fed would hike rates today.  They'd even gone a step further an begun to account for a faster pace of future rate hikes.  And it was that future outlook that allowed for our pleasant surprise.

As it turns out, the median forecast among Fed members didn't see the Fed Funds rate ending the year any higher than the previous batch of forecasts (both for 2017 AND 2018). ... The average lender offered mid-day improvements that brought rates 0.125% lower, on average.  In terms of conventional 30yr fixed rates, most lenders are back down to 4.25% now on top tier scenarios.
emphasis added

Thursday:
• At 8:30 AM ET, Housing Starts for February. The consensus is for 1.266 million, up from the January rate of 1.246 million.

• Also at 8:30 AM, The initial weekly unemployment claims report will be released.  The consensus is for 242 thousand initial claims, down from 243 thousand the previous week.

• Also at 8:30 AM, the Philly Fed manufacturing survey for March. The consensus is for a reading of 32.5, down from 43.3.

• At 10:00 AM, Job Openings and Labor Turnover Survey for January from the BLS. Jobs openings were mostly unchanged in December at 5.501 million compared to 5.505 million in November.

by Calculated Risk on 3/15/2017 02:10:00 PM

Statement here. 25 bps rate hike.

Yellen press conference video here.

On the projections, projections for GDP in 2017 were narrowed slightly.

GDP projections of Federal Reserve Governors and Reserve Bank presidents
Change in Real GDP1	2017	2018	2019
Mar 2017	2.0 to 2.2	1.8 to 2.3	1.8 to 2.0
Dec 2016	1.9 to 2.3	1.8 to 2.2	1.8 to 2.0

¹ Projections of change in real GDP and inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated.

The unemployment rate was at 4.7% in February, and the unemployment rate projections were mostly unchanged.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents
Unemployment Rate2	2017	2018	2019
Mar 2017	4.5 to 4.6	4.3 to 4.6	4.3 to 4.7
Dec 2016	4.5 to 4.6	4.3 to 4.7	4.3 to 4.8

² Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

As of January, PCE inflation was up 1.9% from January 2016. Inflation was revised up slightly for 2017.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents
PCE Inflation1	2017	2018	2019
Mar 2017	1.8 to 2.0	1.9 to 2.0	2.0 to 2.1
Dec 2016	1.7 to 2.0	1.9 to 2.0	2.0 to 2.1

PCE core inflation was up 1.7% in January year-over-year.  Core PCE inflation was unrevised for 2017.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents
Core Inflation1	2017	2018	2019
Mar 2017	1.8 to 1.9	1.9 to 2.0	2.0 to 2.1
Dec 2016	1.8 to 1.9	1.9 to 2.0	2.0

by Calculated Risk on 3/15/2017 02:02:00 PM

FOMC Statement:

Information received since the Federal Open Market Committee met in February indicates that the labor market has continued to strengthen and that economic activity has continued to expand at a moderate pace. Job gains remained solid and the unemployment rate was little changed in recent months. Household spending has continued to rise moderately while business fixed investment appears to have firmed somewhat. Inflation has increased in recent quarters, moving close to the Committee's 2 percent longer-run objective; excluding energy and food prices, inflation was little changed and continued to run somewhat below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labor market conditions will strengthen somewhat further, and inflation will stabilize around 2 percent over the medium term. Near-term risks to the economic outlook appear roughly balanced. The Committee continues to closely monitor inflation indicators and global economic and financial developments.

In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 3/4 to 1 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Patrick Harker; Robert S. Kaplan; Jerome H. Powell; and Daniel K. Tarullo. Voting against the action was Neel Kashkari, who preferred at this meeting to maintain the existing target range for the federal funds rate.
emphasis added

by Calculated Risk on 3/15/2017 11:41:00 AM

The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning:

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.5% annualized rate) in February. The 16% trimmed-mean Consumer Price Index also rose 0.2% (2.2% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics' (BLS) monthly CPI report.

Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers rose 0.1% (1.5% annualized rate) in February. The CPI less food and energy rose 0.2% (2.5% annualized rate) on a seasonally adjusted basis.

Note: The Cleveland Fed released the median CPI details for February here. Motor fuel was down 30% annualized in February.

Click on graph for larger image.

This graph shows the year-over-year change for these four key measures of inflation. On a year-over-year basis, the median CPI rose 2.5%, the trimmed-mean CPI rose 2.2%, and the CPI less food and energy rose 2.2%. Core PCE is for January and increased 1.7% year-over-year.

On a monthly basis, median CPI was at 2.5% annualized, trimmed-mean CPI was at 2.2% annualized, and core CPI was at 2.5% annualized.

Using these measures, inflation has generally been moving up, and most of these measures are above the Fed's 2% target (Core PCE is still below).

by Calculated Risk on 3/15/2017 10:17:00 AM

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 71 in March, up from 65 in February. Any number above 50 indicates that more builders view sales conditions as good than poor.

From NAHB: Builder Confidence Hits 12-Year High

Builder confidence in the market for newly-built single-family homes jumped six points to a level of 71 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This is the highest reading since June 2005.
...
“While builders are clearly confident, we expect some moderation in the index moving forward,” said NAHB Chief Economist Robert Dietz. “Builders continue to face a number of challenges, including rising material prices, higher mortgage rates, and shortages of lots and labor.”

All three HMI components posted robust gains in March. The component gauging current sales conditions increased seven points to 78 while the index charting sales expectations in the next six months rose five points to 78. Meanwhile, the component measuring buyer traffic jumped eight points to 54.

Looking at the three-month moving averages for regional HMI scores, the Midwest increased three points to 68 and the South rose one point to 68. The West dipped three points to 76 and the Northeast edged one point lower to 48.
emphasis added

Click on graph for larger image.

This graph show the NAHB index since Jan 1985.

This was above the consensus forecast and another solid reading.

by Calculated Risk on 3/15/2017 08:45:00 AM

On a monthly basis, retail sales increased 0.1 percent from January to February (seasonally adjusted), and sales were up 5.7 percent from February 2016.

From the Census Bureau report:

Advance estimates of U.S. retail and food services sales for February 2017, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $474.0 billion, an increase of 0.1 percent from the previous month, and 5.7 percent above February 2016. ... The December 2016 to January 2017 percent change was revised from up 0.4 percent to up 0.6 percent.

Click on graph for larger image.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

Retail sales ex-gasoline were up 0.1% in February.

The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail and Food service sales, ex-gasoline, increased by 4.5% on a YoY basis.

The increase in February was close to expectations, and sales for January were revised up. A solid report.

by Calculated Risk on 3/15/2017 07:00:00 AM

From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey

Mortgage applications increased 3.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 10, 2017.

... The Refinance Index increased 4 percent from the previous week. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index increased 3 percent compared with the previous week and was 6 percent higher than the same week one year ago.
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) increased to its highest level since April 2014, 4.46 percent, from 4.36 percent, with points decreasing to 0.37 from 0.44 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.


The first graph shows the refinance index since 1990.

Refinance is up over the last three weeks, but it seems like activity will decline again as interest rates increase.


The second graph shows the MBA mortgage purchase index.

Even with the increase in mortgage rates over the last few months, purchase activity is still holding up.

However refinance activity has declined significantly since rates increased.