by Calculated Risk on 6/06/2024 08:46:00 AM

The Census Bureau and the Bureau of Economic Analysis reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $74.6 billion in April, up $6.0 billion from $68.6 billion in March, revised.

April exports were $263.7 billion, $2.1 billion more than March exports. April imports were $338.2 billion, $8.0 billion more than March imports.
emphasis added

Click on graph for larger image.

Both exports imports increased in April.

Exports are up 5.1% year-over-year; imports are up 4.5% year-over-year.

Both imports and exports decreased sharply due to COVID-19 and then bounced back - imports and exports have generally increased recently.

The second graph shows the U.S. trade deficit, with and without petroleum.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Note that net, exports of petroleum products are positive and have been increasing.

The trade deficit with China increased to $20.1 billion from $20.0 billion a year ago.

by Calculated Risk on 6/06/2024 08:30:00 AM

The DOL reported:

In the week ending June 1, the advance figure for seasonally adjusted initial claims was 229,000, an increase of 8,000 from the previous week's revised level. The previous week's level was revised up by 2,000 from 219,000 to 221,000. The 4-week moving average was 222,250, a decrease of 750 from the previous week's revised average. The previous week's average was revised up by 500 from 222,500 to 223,000.
emphasis added

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 222,250.

The previous week was revised up.

Weekly claims were higher than the consensus forecast.

by Calculated Risk on 6/05/2024 07:01:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Thursday:
• At 8:30 AM ET, Trade Balance report for April from the Census Bureau. The consensus is the trade deficit to be $69.7 billion.  The U.S. trade deficit was at $69.4 Billion in March.

• Also at 8:30 AM, The initial weekly unemployment claims report will be released.  The consensus is for 215 thousand initial claims, down from 219 thousand last week.

by Calculated Risk on 6/05/2024 01:01:00 PM

Here is another monthly update on lumber prices.

SPECIAL NOTE: The CME group discontinued the Random Length Lumber Futures contract on May 16, 2023.  I've now switched to a new physically-delivered Lumber Futures contract that was started in August 2022. 

Unfortunately, this impacts long term price comparisons since the new contract was priced about 24% higher than the old random length contract for the period when both contracts were available.

This graph shows CME random length framing futures through last August (blue), and the new physically-delivered Lumber Futures (LBR) contract starting in August 2022 (Red).

LBR is currently at $489.50 per 1000 board feet, down 4% from a year ago.

Click on graph for larger image.

There is somewhat of a seasonal demand for lumber, and lumber prices frequently peak in the first half of the year.

We didn't see a significant runup in the Spring of 2023 due to the housing slowdown, and we didn't see much of a pickup in the Spring of 2024 either.

by Calculated Risk on 6/05/2024 10:00:00 AM

(Posted with permission). The ISM® Services index was at 53.8%, up from 49.4% last month. The employment index increased to 47.1%, from 45.9%. Note: Above 50 indicates expansion, below 50 in contraction.

From the Institute for Supply Management: Services PMI® at 53.8% May 2024 Services ISM® Report On Business®

Economic activity in the services sector grew in May after contracting in April for the first time since December 2022, say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®. The Services PMI® registered 53.8 percent, indicating sector expansion for the 46th time in 48 months.

The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In May, the Services PMI® registered 53.8 percent, 4.4 percentage points higher than April’s reading of 49.4 percent. The contraction in April ended a string of 15 months of services sector growth following a composite index reading of 49 percent in December 2022; the last contraction before that was in May 2020 (45.4 percent). The Business Activity Index registered 61.2 percent in May, which is 10.3 percentage points higher than the 50.9 percent recorded in April. The New Orders Index expanded in May for the 17th consecutive month after contracting in December 2022 for the first time since May 2020; the figure of 54.1 percent is 1.9 percentage points higher than the April reading of 52.2 percent. The Employment Index contracted for the fifth time in six months, though at a slower rate in May with a reading of 47.1 percent, a 1.2-percentage point increase compared to the 45.9 percent recorded in April.
emphasis added

The PMI was above expectations.

by Calculated Risk on 6/05/2024 08:15:00 AM

From ADP: ADP National Employment Report: Private Sector Employment Increased by 152,000 Jobs in May; Annual Pay was Up 5.0%

Private sector employment increased by 152,000 jobs in May and annual pay was up 5.0 percent year-over-year, according to the May, according to the April ADP® National Employment ReportTM produced by the ADP Research Institute® in collaboration with the Stanford Digital Economy Lab (“Stanford Lab”). ...

“Job gains and pay growth are slowing going into the second half of the year,” said Nela Richardson, chief economist, ADP. “The labor market is solid, but we're monitoring notable pockets of weakness tied to both producers and consumers.”
emphasis added

This was below the consensus forecast of 174,000. The BLS report will be released Friday, and the consensus is for 180,000 non-farm payroll jobs added in May.

by Calculated Risk on 6/05/2024 07:00:00 AM

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

Mortgage applications decreased 5.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending May 31, 2024. This week’s results include an adjustment for the Memorial Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 5.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 16 percent compared with the previous week. The Refinance Index decreased 7 percent from the previous week and was 5 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index decreased 16 percent compared with the previous week and was 13 percent lower than the same week one year ago.

“Mortgage rates moved slightly higher last week, with the 30-year conforming rate reaching 7.07 percent – its highest level since early May – despite incoming data indicating somewhat slower economic growth,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “After adjusting for the Memorial Day holiday, both purchase and refinance application volumes were down, with purchase activity specifically 13 percent below last year’s level.”

Added Fratantoni, “Government purchase volume was down less, helped by growth in VA applications. The market is relying on first-time homebuyer demand, and many first-time buyers do use government lending programs.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 7.07 percent from 7.05 percent, with points increasing to 0.65 from 0.63 (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 MBA mortgage purchase index.

According to the MBA, purchase activity is down 13% year-over-year unadjusted.  

Red is a four-week average (blue is weekly).  

Purchase application activity is up slightly from the lows in late October 2023, and below the lowest levels during the housing bust.  

The second graph shows the refinance index since 1990.

With higher mortgage rates, the refinance index declined sharply in 2022, and mostly flat lined since then with a slight increase recently.

by Calculated Risk on 6/04/2024 08:18:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

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

• At 8:15 AM, The ADP Employment Report for May. This report is for private payrolls only (no government). The consensus is for 174,000 payroll jobs added in May, down from 192,000 in April.

• At 10:00 AM, the ISM Services Index for May.   The consensus is for a reading of 50.5, up from 59.4.

by Calculated Risk on 6/04/2024 02:13:00 PM

This graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the May 2024 seasonally adjusted annual sales rate (SAAR).

Heavy truck sales really collapsed during the great recession, falling to a low of 180 thousand SAAR in May 2009.  Then heavy truck sales increased to a new record high of 570 thousand SAAR in April 2019.

Click on graph for larger image.

Note: "Heavy trucks - trucks more than 14,000 pounds gross vehicle weight."

Heavy truck sales declined sharply at the beginning of the pandemic, falling to a low of 308 thousand SAAR in May 2020.  

Heavy truck sales were at 512 thousand SAAR in May, down slightly from 512 thousand in April, and down 9.4% from 565 thousand SAAR in May 2023.  

Usually, heavy truck sales decline sharply prior to a recession.   Heavy truck sales are solid. 

by Calculated Risk on 6/04/2024 10:39:00 AM

Today, in the Real Estate Newsletter: Asking Rents Mostly Unchanged Year-over-year

Brief excerpt:

Tracking rents is important for understanding the dynamics of the housing market. For example, the sharp increase in rents helped me deduce that there was a surge in household formation in 2021 (See from September 2021: Household Formation Drives Housing Demand). Now that household formation has slowed, and multi-family completions have increased, rents are under pressure.

From ApartmentList.com: Apartment List National Rent Report

The national median rent increased by 0.5% in May and now stands at $1,404, but the pace of growth slowed slightly this month. This is typically the time of year when rent growth is accelerating amid the busy moving season, so sluggish growth this month indicates that the market is headed for another slow summer.

Since the second half of 2022, seasonal declines have been steeper than usual and seasonal increases have been more mild. As a result, apartments are on average slightly cheaper today than they were one year ago. Year-over-year rent growth nationally currently stands at -0.8 percent and has now been in negative territory since last summer.

CoreLogic: “Attached Single-Family Rental Prices Post First Annual Decrease in 14 Years”

U.S. single-family rent growth continued to slowly increase year over year in March to 3.4%.

After registering a 2.9% annual gain in February, attached rental appreciation lost ground in March, posting a -0.6% loss.

There is much more in the article.