by Calculated Risk on 5/08/2017 03:40:00 PM

Note: This index is a leading indicator for new non-residential Commercial Real Estate (CRE) investment, except manufacturing.

From Dodge Data Analytics: Dodge Momentum Index Loses Steam in April

The Dodge Momentum Index fell 5.1% in April to 133.8 (2000=100) from its revised March reading of 140.9. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. April’s decline was due to a 12.0% drop for the institutional component of the Momentum Index, while the commercial component rose a meager 0.1%. Since early 2016, the Momentum Index has gained substantial ground, albeit in a saw-tooth pattern, increasing by over 20% through March this year. Despite April’s decline, the broad upward trend for the Momentum Index remains present, suggesting that construction activity still has further room to grow in 2017. The planning data’s strengthening over the past year stands in stark contrast to the 2014-2015 period, when the Momentum Index saw little improvement, gaining just 4.0% in that 24-month span.
emphasis added

Click on graph for larger image.

This graph shows the Dodge Momentum Index since 2002. The index was at 133.8 in April, down from 140.9 in March.

The index is still up solidly year-over-year.

According to Dodge, this index leads "construction spending for nonresidential buildings by a full year". This suggests further increases in CRE spending over the next year.

by Calculated Risk on 5/08/2017 01:21:00 PM

This is a key housing market to follow since Phoenix saw a large bubble and bust, followed by strong investor buying.

note: Updated

The Arizona Regional Multiple Listing Service (ARMLS) reports (table below):

1) Overall sales in April were up 4.5% year-over-year.

2) Cash Sales (frequently investors) were down to 22.5% of total sales.

3) Active inventory is now down 11.0% year-over-year.  

More inventory (a theme in most of 2014) - and less investor buying - suggested price increases would slow sharply in 2014.  And prices increases did slow in 2014, only increasing 2.4% according to Case-Shiller.

In 2015, with falling inventory, prices increased a little faster.  Prices were up 6.3% in 2015 according to Case-Shiller.

With flat inventory in 2016, prices were up 4.8%.

This is the sixth consecutive month with a YoY decrease in inventory following eight months with YoY increases.

April Residential Sales and Inventory, Greater Phoenix Area, ARMLS
	Sales	YoY Change Sales	Cash	Percent Cash	Inventory	YoY Change
Apr-08	4,8751	---	986	20.2%	55,7261	---
Apr-09	8,564	75.7%	3,464	40.4%	44,165	-20.7%
Apr-10	9,261	8.1%	3,641	39.3%	41,756	-5.5%
Apr-11	9,328	0.7%	4,489	48.1%	34,515	-17.3%
Apr-12	8,438	-9.5%	4,013	47.6%	21,125	-38.8%
Apr-13	8,744	3.6%	3,670	42.0%	20,083	-4.9%
Apr-14	7,656	-12.4%	2,469	32.2%	29,889	48.8%
Apr-15	8,368	9.3%	2,120	25.3%	25,950	-13.2%
Apr-16	8,437	0.8%	2,008	23.8%	27,232	4.9%
Apr-17	8,819	4.5%	1,980	22.5%	24,230	-11.0%
1 April 2008 does not include manufactured homes, ~100 more

by Calculated Risk on 5/08/2017 11:08:00 AM

This is a key distressed market to follow since Las Vegas saw the largest price decline, following the housing bubble, of any of the Case-Shiller composite 20 cities.

The Greater Las Vegas Association of Realtors reported Local home prices keep rising as Southern Nevada faces a housing shortage, GLVAR Housing Statistics for April 2017

Local home prices continued to climb in April amid what leaders of the Greater Las Vegas Association of REALTORS®(GLVAR) are now calling a housing shortage.
...
... The total number of existing local homes, condos and townhomes sold in April was 3,529, up from 3,518 in April 2016. Compared to one year ago, sales were up 1.7 percent for homes, but down 5.3 percent for condos and townhomes.

According to GLVAR, local home sales in 2017 continue to outpace 2016, when 41,720 total properties were sold in Southern Nevada. That was more than the 38,577 properties sold during 2015. It was also more total sales than in 2014, but fewer than each year from 2009 through 2013.
...
By the end of April, GLVAR reported 5,083 single-family homes listed for sale without any sort of offer. That’s down 30.9 percent from one year ago. For condos and townhomes, the 639 properties listed without offers in April represented a 71.4 percent drop from one year ago.

For several years, GLVAR has been reporting fewer distressed sales and more traditional home sales, where lenders are not controlling the transaction. That trend continued in April, when 4.4 percent of all local sales were short sales – which occur when lenders allow borrowers to sell a home for less than what they owe on the mortgage. That compares to 4.5 percent of all sales in April 2016. Another 4.0 percent of all April sales were bank-owned, down from 7.1 percent one year ago.
emphasis added

1) Overall sales were up slightly year-over-year.

2) Active inventory (single-family and condos) is down sharply from a year ago (A very sharp decline in condo inventory).

3) Fewer distressed sales.

by Calculated Risk on 5/07/2017 08:15:00 PM

Weekend:
• Schedule for Week of May 7, 2017

Monday:
• At 10:00 AM ET, the Fed will release the monthly Labor Market Conditions Index (LMCI).

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

Oil prices were down over the last week with WTI futures at $46.90 per barrel and Brent at $49.87 per barrel.  A year ago, WTI was at $44, and Brent was at $45 - so oil prices are up about 5% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.34 per gallon - a year ago prices were at $2.23 per gallon - so gasoline prices are up about 10 cents a gallon year-over-year.

by Calculated Risk on 5/07/2017 11:11:00 AM

From HotelNewsNow.com: STR: US hotel results for week ending 29 April

The U.S. hotel industry reported positive results in the three key performance metrics during the week of 23-29 April 2017, according to data from STR.

In comparison with the week of 24-30 April 2016, the industry reported the following:

• Occupancy: +3.7% to 70.3%
• Average daily rate (ADR): +5.1% to US$127.50
• Revenue per available room (RevPAR): +8.9% to US$89.65

STR analysts attribute the level of performance growth to a comparison with Passover week last year.
emphasis added

The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

The red line is for 2017, dashed is 2015, blue is the median, and black is for 2009 - the worst year since the Great Depression for hotels.

2015 was the best year on record for hotels.

For hotels, occupancy will now move mostly sideways until the summer travel season.

Data Source: STR, Courtesy of HotelNewsNow.com

by Calculated Risk on 5/06/2017 08:11:00 AM

The key economic reports this week are Retail Sales and the Consumer Price Index (CPI).

----- Monday, May 8th -----
10:00 AM ET: The Fed will release the monthly Labor Market Conditions Index (LMCI).

----- Tuesday, May 9th -----
6:00 AM ET: NFIB Small Business Optimism Index for April.

10:00 AM: Job Openings and Labor Turnover Survey for March from the BLS.

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

Jobs openings increased in February to 5.743 million from 5.625 million in January.

The number of job openings (yellow) were up 3% year-over-year, and Quits were up 3% year-over-year.

----- Wednesday, May 10th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

----- Thursday, May 11th -----
8:30 AM ET: The initial weekly unemployment claims report will be released. The consensus is for 244 thousand initial claims, up from 238 thousand the previous week.

8:30 AM: The Producer Price Index for April from the BLS. The consensus is for 0.2% increase in PPI, and a 0.2% increase in core PPI.

----- Friday, May 12th -----
8:30 AM ET: Retail sales for April will be released.  The consensus is for a 0.6% increase in retail sales.

This graph shows retail sales since 1992 through March 2017.

8:30 AM: The Consumer Price Index for April from the BLS. The consensus is for a 0.2% increase in CPI, and a 0.2% increase in core CPI.

10:00 AM: University of Michigan's Consumer sentiment index (preliminary for May). The consensus is for a reading of 97.3, up from 97.0 in April.

10:00 AM: Manufacturing and Trade: Inventories and Sales (business inventories) report for March.  The consensus is for a 0.1% increase in inventories.

by Calculated Risk on 5/05/2017 07:10:00 PM

A few comments from Steven Kopits of Princeton Energy Advisors LLC on May 5, 2017:

• Total US oil rigs added 6 to 703, all of it in the Permian

• US horizontal oil rigs were up 6 to 598, tied for the second smallest gain since late January

• Morgan Stanley, among other bank and sector analysts, reassures us that OPEC production cuts should finally become visible in the next few weeks

• The market isn’t buying it, though – Art Berman issued a note entitled ‘Oil Prices Plunge to Where They Should Be’.  Given the relatively strong performance of the shale operators reporting quarterly results this week, he might be right.

Click on graph for larger image.

CR note: This graph shows the US horizontal rig count by basin.

Graph and comments Courtesy of Steven Kopits of Princeton Energy Advisors LLC.

by Calculated Risk on 5/05/2017 04:10:00 PM

From the Association of American Railroads (AAR) Rail Time Indicators. Graphs and excerpts reprinted with permission.

U.S. rail carloads were 1,023,300 for the month, up 8.4% (78,949 carloads) over April 2016, thanks once again mainly to coal — coal carloads were up 26.7% (65,158 carloads) over last year’s. ... U.S. rail intermodal traffic in April 2017 was 1,052,001 containers and trailers, up 2.3% (23,448 units) over April 2016 — but only the third highest April on record (slightly below 2014 and 2015).

Click on graph for larger image.

This graph from the Rail Time Indicators report shows U.S. average weekly rail carloads (NSA).  Dark blue is 2017.

Rail carloads have been weak over the last decade due to the decline in coal shipments.

U.S. railroads originated 1,023,300 total carloads in April 2017, up 8.4%, or 78,949 carloads, over April 2016. It’s the sixth straight year-over-year carload increase. Total originated carloads averaged 255,825 per week in April 2017. The good news is that this is up from a weekly average of 236,088 in April of last year. The bad news is that last year was the only year since sometime prior to 1988, when our data begin, in which average weekly carloads were lower than they were this April.

The second graph is for intermodal traffic (using intermodal or shipping containers):

U.S. rail intermodal volume in April 2017 was 1,052,001 containers and trailers, up 2.3% (23,448 units) over April 2016. In the first four months of 2017, U.S. intermodal volume was 4,439,681 units, up 1.6%, or 71,425 units, from 2016.

by Calculated Risk on 5/05/2017 12:55:00 PM

Here is another update of tracking employment during Presidential terms.  We frequently use Presidential terms as time markers - we could use Speaker of the House, or any other marker.

NOTE: Several readers have asked if I could add a lag to these graphs (obviously a new President has zero impact on employment for the month they are elected). But that would open a debate on the proper length of the lag, so I'll just stick to the beginning of each term.

Important: There are many differences between these periods. Overall employment was smaller in the '80s, however the participation rate was increasing in the '80s (younger population and women joining the labor force), and the participation rate is generally declining now.  But these graphs give an overview of employment changes.

The first graph shows the change in private sector payroll jobs from when each president took office until the end of their term(s). Presidents Carter and George H.W. Bush only served one term, and President Obama is in the final months of his second term.

Mr. G.W. Bush (red) took office following the bursting of the stock market bubble, and left during the bursting of the housing bubble. Mr. Obama (blue) took office during the financial crisis and great recession. There was also a significant recession in the early '80s right after Mr. Reagan (yellow) took office.

There was a recession towards the end of President G.H.W. Bush (purple) term, and Mr Clinton (light blue) served for eight years without a recession.

Click on graph for larger image.

The first graph is for private employment only.

Mr. Trump is in Orange (just two months).

The employment recovery during Mr. G.W. Bush's (red) first term was sluggish, and private employment was down 811,000 jobs at the end of his first term.   At the end of Mr. Bush's second term, private employment was collapsing, and there were net 396,000 private sector jobs lost during Mr. Bush's two terms. 

Private sector employment increased slightly under President G.H.W. Bush (purple), with 1,510,000 private sector jobs added.

Private sector employment increased by 20,966,000 under President Clinton (light blue), by 14,717,000 under President Reagan (yellow), and 9,041,000 under President Carter (dashed green).

There were only 1,937,000 more private sector jobs at the end of Mr. Obama's first term.  At the end of his second term, there were 11,756,000 more private sector jobs than when Mr. Obama initially took office.

During the first three months of Mr. Trump's term, the economy has added 493,000 private sector jobs.

 A big difference between the presidencies has been public sector employment.  Note the bumps in public sector employment due to the decennial Census in 1980, 1990, 2000, and 2010. 

The public sector grew during Mr. Carter's term (up 1,304,000), during Mr. Reagan's terms (up 1,414,000), during Mr. G.H.W. Bush's term (up 1,127,000), during Mr. Clinton's terms (up 1,934,000), and during Mr. G.W. Bush's terms (up 1,744,000 jobs).

However the public sector declined significantly while Mr. Obama was in office (down 268,000 jobs).

During the first three months of Mr. Trump's term, the economy has added 29,000 public sector jobs.

The third graph shows the progress towards the Trump goal of adding 10 million jobs over the next 4 years.

After three months, the economy has added 522,000 jobs, about 100,000 behind the projection.

by Calculated Risk on 5/05/2017 09:59:00 AM

The headline jobs number was above expectations, however there were combined small downward revisions to the previous two months.

There was plenty of good news - especially with the unemployment rate falling to 4.4% (although the participation rate declined slightly), and U-6 falling to 8.6%. Overall this was a solid report.

Earlier: April Employment Report: 211,000 Jobs, 4.4% Unemployment Rate

In April, the year-over-year change was 2.24 million jobs. Decent job growth.

Average Hourly Earnings

Click on graph for larger image.

This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation.

The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees.  Nominal wage growth was at 2.5% YoY in April.

Wage growth has generally been trending up.

Employment-Population Ratio, 25 to 54 years old

Since the overall participation rate has declined recently due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

In the earlier period the participation rate for this group was trending up as women joined the labor force. Since the early '90s, the participation rate moved more sideways, with a downward drift starting around '00 - and with ups and downs related to the business cycle.

The 25 to 54 participation rate was unchanged in April at 81.7%, and the 25 to 54 employment population ratio increased to 78.6%.

The participation rate has been trending down for this group since the late '90s, however, with more younger workers (and fewer older workers), the participation rate might move up some more.

Part Time for Economic Reasons

From the BLS report:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) declined by 281,000 to 5.3 million in April. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find full-time jobs.

The number of persons working part time for economic reasons decreased in April. The number working part time for economic reasons suggests a little slack still in the labor market. This is the lowest level since April 2008.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 8.6% in April. This is the lowest level for U-6 since November 2007.

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.63 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 1.69 million in March.

This was the lowest number since June 2008.

This is generally trending down, but still a little elevated.

Although U-6,the number of persons employed part time for economic reasons, and the number of long term unemployed are still a little elevated, it appears the economy is nearing full employment. Overall this was a solid report.