by Calculated Risk on 11/16/2018 11:09:00 AM

From the NY Fed: Total Household Debt Rises for 17th Straight Quarter

The Federal Reserve Bank of New York’s Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit, which shows that total household debt increased by $219 billion (1.6%) to $13.51 trillion in the third quarter of 2018. It was the 17th consecutive quarter with an increase and the total is now $837 billion higher than the previous peak of $12.68 trillion in the third quarter of 2008. Furthermore, overall household debt is now 21.2% above the post-financial-crisis trough reached during the second quarter of 2013. The Report is based on data from the New York Fed’s Consumer Credit Panel, a nationally representative sample of individual- and household-level debt and credit records drawn from anonymized Equifax credit data.
...
Mortgage originations increased to $445 billion from $437 billion in the second quarter.

Mortgage delinquencies were roughly flat, with 1.1% of mortgage balances 90 or more days delinquent in the third quarter.
emphasis added

Click on graph for larger image.

Here are two graphs from the report:

The first graph shows aggregate consumer debt increased in Q3.  Household debt previously peaked in 2008, and bottomed in Q2 2013.

From the NY Fed:

Aggregate household debt balances increased in the third quarter of 2018 for the 17th consecutive quarter, and are now $837 billion higher than the previous (2008Q3) peak of $12.68 trillion. As of September 30, 2018, total household indebtedness was $13.51 trillion, a $219 billion (1.6%) increase from the second quarter of 2018. Overall household debt is now 21.2% above the 2013Q2 trough. Included in report is a new section disaggregating data by borrower age.

Mortgage balances shown on consumer credit reports on September 30 stood at $9.1 trillion, an increase of $141 billion from the second quarter of 2018. Balances on home equity lines of credit (HELOC), on a declining trend since 2009, decreased by $10 billion in the third quarter and are now at $422 billion, the lowest level seen in 14 years. Non-housing balances jumped by $88 billion in the third quarter, with auto loans increasing by $27 billion, credit card balances going up by $15 billion, and student loan balances seeing a seasonally typical $37 billion increase.

The second graph shows the percent of debt in delinquency. There is still a larger than normal percent of debt 90+ days delinquent (Yellow, orange and red).

The overall delinquency rate increased in Q3.  From the NY Fed:

Aggregate delinquency rates worsened in the third quarter of 2018. As of September 30, 4.7% of outstanding debt was in some stage of delinquency, an uptick from 4.5% in the second quarter and the largest in 7 years. Of the $638 billion of debt that is delinquent, $415 billion is seriously delinquent (at least 90 days late or “severely derogatory”). This increase was primarily due to a large increase in the flow into delinquency for student loan balances during the third quarter of 2018. The flow into 90+ day delinquency for credit card balances has been rising for the last year and remained elevated since then compared to its recent history, while the flow into 90+ day delinquency for auto loan balances has been slowly trending upward since 2012.

About 215,000 consumers had a bankruptcy notation added to their credit reports in 2018Q3, slightly higher than in the same quarter of last year. New bankruptcy notations have been at historically low levels since 2016.

There is much more in the report.

by Calculated Risk on 11/16/2018 11:00:00 AM

From the Kansas City Fed: Growth in Tenth District Manufacturing Activity Edged Higher

he Federal Reserve Bank of Kansas City released the November Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that growth in Tenth District manufacturing activity edged higher, while expectations for future activity moderated slightly.

“Firms reported a pickup in orders, production, and shipments in November, following some slowing in recent months” said Wilkerson.
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The month-over-month composite index was 15 in November, up from 8 in October and 13 in September. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The increase in factory growth was driven by both durable and nondurable goods producers, particularly metals, aircraft, food, and plastics. Most month-over-month indexes rose modestly. The production, shipments, new orders, and order backlog indexes all increased to their highest levels since the middle of the year. The new orders for exports index inched up from 3 to 6, while the employment index eased somewhat.
emphasis added

by Calculated Risk on 11/16/2018 10:05:00 AM

From the BLS: Regional and State Employment and Unemployment Summary

Unemployment rates were lower in October in 6 states, higher in 2 states, and stable in 42 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today. Eighteen states had jobless rate decreases from a year earlier and 32 states and the District had little or no change.
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Hawaii had the lowest unemployment rate in October, 2.3 percent. The rates in Texas (3.7 percent) and Washington (4.3 percent) set new series lows. (All state series begin in 1976.) Alaska had the highest jobless rate, 6.4 percent.
emphasis added

Click on graph for larger image.

This graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 1976.

At the worst of the great recession, there were 11 states with an unemployment rate at or above 11% (red).

Currently only one state, Alaska, has an unemployment rate at or above 6% (dark blue).

by Calculated Risk on 11/16/2018 09:22:00 AM

From the Fed: Industrial Production and Capacity Utilization

Industrial production edged up 0.1 percent in October, as a gain for manufacturing outweighed decreases elsewhere. As a result of upward revisions primarily in mining, the overall index is now reported to have advanced at an annual rate of 4.7 percent in the third quarter, appreciably above the gain of 3.3 percent reported initially. Hurricanes lowered the level of industrial production in both September and October, but their effects appear to be less than 0.1 percent per month. In October, manufacturing output rose 0.3 percent for its fifth consecutive monthly increase, while the indexes for mining and for utilities declined 0.3 percent and 0.5 percent, respectively. At 109.1 percent of its 2012 average, total industrial production was 4.1 percent higher in October than it was a year earlier. Capacity utilization for the industrial sector was 78.4 percent, a rate that is 1.4 percentage points below its long-run (1972–2017) average.
emphasis added

Click on graph for larger image.

This graph shows Capacity Utilization. This series is up 11.7 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 78.4% is 1.4% below the average from 1972 to 2017 and below the pre-recession level of 80.8% in December 2007.

Note: y-axis doesn't start at zero to better show the change.

The second graph shows industrial production since 1967.

Industrial production increased in October to 108.5. This is 25% above the recession low, and 4% above the pre-recession peak.

The increase in industrial production was below the consensus forecast, however the previous months were revised up.  Capacity utilization was above consensus.

by Calculated Risk on 11/15/2018 07:07:00 PM

Friday:
• At 9:15 AM ET, The Fed will release Industrial Production and Capacity Utilization for October. The consensus is for a 0.2% increase in Industrial Production, and for Capacity Utilization to increase to 78.2%.

• At 10:00 AM, State Employment and Unemployment (Monthly) for October 2018

• At 11:00 AM, From the NY Fed: Q3 Quarterly Report on Household Debt and Credit

• Also at 11:00 AM, the Kansas City Fed manufacturing survey for November.

by Calculated Risk on 11/15/2018 02:53:00 PM

The CAR reported: Homebuyers continue to wait it out in October as market uncertainties linger

As market uncertainties continue to linger, California home sales declined for the sixth straight month in October and remained below the 400,000-level sales benchmark for the third consecutive month, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 397,060 units in October, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2018 if sales maintained the October pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

October’s sales figure was up 3.8 percent from the revised 382,550 level in September and down 7.9 percent compared with home sales in October 2017 of 431,070. October marked the third month in a row that sales were below 400,000, which hasn’t occurred since February 2015.

“Homebuyers continued to put their homeownership plans on hold in October and wait out the market,” said 2019 C.A.R. President Jared Martin. “With mortgage rates at seven-year highs making homeownership more expensive and home prices beginning to flatten, this phenomenon will likely continue for the near term as buyers wait for further price adjustments and for interest rates to stabilize.”
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Statewide active listings rose for the seventh consecutive month after nearly three straight years of declines, increasing 28 percent from the previous year. October’s listings increase was the largest in four years.
emphasis added

Here is some inventory data from the NAR and CAR (ht Tom Lawler).  Notice inventory is really increasing year-over-year in California.

YOY % Change, Existing SF Homes for Sale
	NAR (National)	CAR (California)
Sep-17	-8.4%	-11.2%
Oct-17	-10.4%	-11.5%
Nov-17	-9.7%	-11.5%
Dec-17	-11.5%	-12.0%
Jan-18	-9.5%	-6.6%
Feb-18	-8.6%	-1.3%
Mar-18	-7.2%	-1.0%
Apr-18	-6.3%	1.9%
May-18	-5.1	8.3%
Jun-18	-0.5%	8.1%
Jul-18	0.0%	11.9%
Aug-18	2.1%	17.2%
Sep-18	1.1%	20.4%
Oct-18	---	28.0%

by Calculated Risk on 11/15/2018 09:37:00 AM

Earlier: From the NY Fed: Empire State Manufacturing Survey

Business activity continued to grow at a solid clip in New York State, according to firms responding to the November 2018 Empire State Manufacturing Survey. The headline general business conditions index edged up two points to 23.3.
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The index for number of employees moved up five points to 14.1, and the average workweek index climbed nine points to 9.2, indicating increases in both employment levels and hours worked.
emphasis added

From the Philly Fed: November 2018 Manufacturing Business Outlook Survey

Growth in manufacturing activity slowed in November, according to results from this month’s Manufacturing Business Outlook Survey. The survey’s broad indicators for general activity, new orders, shipments, employment, and work hours remained positive but fell from their readings last month. The firms remained generally optimistic about future growth.

The diffusion index for current general activity decreased from 22.2 in October to 12.9 in November, its lowest reading since August … The firms continued to report overall higher employment. Almost 25 percent of the responding firms reported increases in employment this month, while 8 percent of the firms reported decreases in employment. The current employment index remained positive but declined 3 points to 16.3. The current workweek index fell nearly 15 points to 6.3, its lowest reading in two years.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Click on graph for larger image.

The New York and Philly Fed surveys are averaged together (yellow, through November), and five Fed surveys are averaged (blue, through October) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through October (right axis).

This suggests the ISM manufacturing index will show solid expansion again in November, but will likely be lower than in October.

by Calculated Risk on 11/15/2018 08:48:00 AM

On a monthly basis, retail sales increased 0.8 percent from September to October (seasonally adjusted), and sales were up 4.6 percent from October 2017.

From the Census Bureau report:

Advance estimates of U.S. retail and food services sales for October 2018, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $511.5 billion, an increase of 0.8 percent from the previous month, and 4.6 percent above October 2017.

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 0.5% in October.

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 3.6% on a YoY basis.

The increase in October was above expectations, however sales in August and September were revised down.

by Calculated Risk on 11/15/2018 08:35:00 AM

The DOL reported:

In the week ending November 10, the advance figure for seasonally adjusted initial claims was 216,000, an increase of 2,000 from the previous week's unrevised level of 214,000. The 4-week moving average was 215,250, an increase of 1,500 from the previous week's unrevised average of 213,750.
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 215,250.

This was slightly higher than the consensus forecast. The low level of claims suggest few layoffs.

by Calculated Risk on 11/14/2018 09:29:00 PM

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for 215 thousand initial claims, up from 214 thousand the previous week.

• Also at 8:30 AM, Retail sales for October will be released.  The consensus is for a 0.5% increase in retail sales.

• Also at 8:30 AM, The New York Fed Empire State manufacturing survey for November. The consensus is for a reading of 20.0, down from 21.1.

• Also at 8:30 AM, the Philly Fed manufacturing survey for November. The consensus is for a reading of 20.0, down from 22.2.