Economic Jolt: Job Openings and Labor Turnover December 2011

Today, the Bureau of Labor Statistics released their latest monthly read of job availability and labor turnover (JOLT) showing that private non-farm job “openings” increased 8.79% since November climbing 20.36% above the level seen in December 2010 while private non-farm job “hires” declined 2.28% from November but rose 3.69% above the level seen in December 2010

Job “layoffs and discharges” declined 4.74% from November falling 1.36% below the level seen last year while quitting activity declined 2.45% from November remaining 3.41% above the level seen in December 2010.

It’s important to understand that job “quits” are included as a component of the “separations” data series as “quitting” is a valid means of workers “separating” from employers but their inclusion tends to create an overall procyclical trend in what would otherwise be logically thought of as a countercyclical process (i.e. downturn leads to increase in separations not decrease).

On The Stamp: Food Stamp Participation November 2011

As a logical consequence of the prolonged economic downturn it appears that participation in the federal food stamp program is continuing to rise.

In fact, household participation has been climbing so steadily that it has far surpassed the last peak (which looks like a minor blip by comparison) set as a result of the immediate fallout following hurricane Katrina.

The latest data released by the Department of Agriculture shows that in November, 94,086 recipients were removed from the food stamps program with the current total still increasing 5.82% on a year-over-year basis while household participation increased 7.46%.

Individual participation as a ratio of the overall civilian non-institutional population has increased 5.06% over the same period.

Participation continues to increase with nominal benefit costs climbing a lofty 6.86% on a year-over-year basis to $6.20 billion for the month.

Envisioning Employment: Employment Situation January 2012

Today’s Employment Situation Report indicated that in January, net nonfarm payrolls increased with private nonfarm payrolls adding 257,000 jobs and the unemployment rate declining to 8.3% over the same period.

Net private sector jobs increased 0.23% since last month climbing 2.06% above the level seen a year ago but but remained a whopping 4.47% below the peak level of employment seen in December 2007.

Full Time Workers Fully Under Pressure: January 2012

Today’s employment situation report showed that in January the full time unemployment rate declined to 8.8% of the civilian workforce but remains near the highest rate seen in 41 years.

The Bureau of Labor Statistics considers full time workers to be those “who have expressed a desire to work full time (35 hours or more per week) or are on layoff from full-time jobs”.

Full time jobless workers currently account for roughly 88.5% of all unemployed workers.

Recovery-less Recovery: Unemployment Duration January 2012

Be sure to bookmark the "Scary Unemployment Dashboard"... it's live.

Today's employment situation report showed that conditions for the long term unemployed were mixed in January and remained epically distressed by historic standards.

Workers unemployed 27 weeks or more declined to 5.518 million or 42.9% of all unemployed workers while the median number of weeks unemployed increased to 21.1 weeks and the average stay on unemployment declined to 40.1 weeks, the highest level ever recorded.

Looking at the charts below (click for super interactive versions) you can see that today’s sorry situation far exceeds even the conditions seen during the double-dip recessionary period of the early 1980s, long considered by economists to be the worst period of unemployment since the Great Depression.

On The Margin: Total Unemployment January 2012

Today’s Employment Situation report showed that in January “total unemployment” including all marginally attached workers declined to 15.1% from the prior month's level of 15.2% while the traditionally reported unemployment rate also declined to 8.3%.

The traditional unemployment rate is calculated from the monthly household survey results using a fairly explicit definition of “unemployed” (essentially unemployed and currently looking for full time employment) leaving many workers to be considered effectively “on the margin” either employed in part time work when full time is preferred or simply unemployed and no longer looking for work.

The Bureau of Labor Statistics considers “marginally attached” workers (including discouraged workers) and persons who have settled for part time employment to be “underutilized” labor.

The broadest view of unemployment would include both traditionally unemployed workers and all other underutilized workers.

To calculate the “total” rate of unemployment we would simply use this larger group rather than the smaller and more restrictive “unemployed” group used in the traditional unemployment rate calculation.

Extended Unemployment: Initial, Continued and Extended Unemployment Claims February 02 2012

Today’s jobless claims report showed declines to both initial and continued unemployment claims as seasonally adjusted continued to trend below the closely watched 400K level.

Seasonally adjusted “initial” unemployment declined 12,000 to 367,000 claims from last week’s revised 379,000 claims while seasonally adjusted “continued” claims declined by 130,000 resulting in an “insured” unemployment rate of 2.7%.

Since the middle of 2008 though, two federal government sponsored “extended” unemployment benefit programs (the “extended benefits” and “EUC 2008” from recent legislation) have been picking up claimants that have fallen off of the traditional unemployment benefits rolls.

Currently there are some 3.49 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 4.06 million people that are currently counted as receiving traditional continued unemployment benefits, there are 7.56 million people on state and federal unemployment rolls.

Constuction Spending: December 2011

Today, the U.S. Census Bureau released their latest read of construction spending showing near-cycle low levels of spending in December for residential construction while indicating continued improvement for total non-residential spending.

On a month-to-month basis, total residential spending increased .077% from November and rose 5.29% above the level seen in November 2010 while remaining a whopping 63.34% below the peak level seen in 2006.

Single family construction spending increased 1.53% since November and rose 3.62% since December 2010 but remained a whopping 76.41% below it's peak in 2006.

Non-residential construction spending increased a whopping 3.26% since November climbing 11.89% above the level seen in December 2010 but remained a whopping 32.32% below the peak level reached in October 2008.

The following charts (click for larger dynamic versions) show private residential construction spending, private residential single family construction spending and private non-residential construction spending broken out and plotted since 1993 along with the year-over-year, month-to-month and peak percent change to each since 1994 and 2000 – 2005.

ISM Manufacturing Report on Business: January 2012

Today, the Institute for Supply Management released their latest Report on Business for the manufacturing sector indicating that manufacturing activity improved in January with assessments of most measures increasing.

At 54.1 the purchasing manager’s composite index (PMI) increased 1.88% since December but remained 11.02% below the level seen a year earlier.

Respondents indicated that prices are generally stable and show an overall positive outlook for 2012:

"Still seeing raw materials pricing moving down in general, but expect inflation later in the quarter." (Chemical Products)

"Year starting a little slow, but customers are positive about increased business in 2012." (Machinery)
"Once again, business continues to be strong." (Paper Products)

"Pricing remains in check with the demand we are seeing. Supplier deliveries are on time or early." (Food, Beverage & Tobacco Products)

"The economy seems to be slowly improving." (Fabricated Metal Products)

"Business lost to offshore is coming back." (Computer & Electronic Products)

"Business remains strong. Order intake is great — more than 20 percent above budget." (Primary Metals)

"Indications are that 2012 business environment will improve over 2011." (Transportation Equipment)

"Market conditions appear to be improving, with the outlook for 2012 better yet." (Wood Products

ADP National Employment Report: January 2012

Today, private staffing and business services firm ADP released the latest installment of their National Employment Report indicating that the situation for private employment in the U.S. improved in January as private employers added 170,000 jobs in the month bringing the total employment level 1.77% above the level seen in January 2011.

Looking at the chart (click for full-screen dynamic version) showing ADP’s total private nonfarm payrolls since 2001 as well as the year-over-year and month-to-month percent change, you can see that while the job recovery had been anemic throughout most of 2010, more recently the trend had been picking up momentum.

Although the level of jobs is still far below the peak seen in late 2007 and still near the lows seen during the worst period of the "dot-com" recession, the bottom looks to be clearly defined and the trend is looking comparable to past recoveries.

Perusing the rest of the data in the ADP dataset you can see the the economy is currently showing the most growth for small to mid-sized service providing jobs with goods-producing jobs remaining near trough levels.

Look for Friday’s BLS Employment Situation Report to likely show somewhat similar trends.

Reading Rates: MBA Application Survey – February 01 2012

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as the volume of both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage (from FHA and conforming GSE data) declined 1 basis point to 4.03% since last week while the purchase application volume declined 1.7% and the refinance application declined 3.6% over the same period.

With rates trending ever lower, the economy seemingly near recession and the FOMC members becoming more dovish by the day, it will be interesting to see how far rates on the long end can decline.  All things being equal, falling home prices, declining purchase applications and record low long lending rates all appear to indicate a deflationary for the macro-economy.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).

S&P/Case-Shiller: November 2011

Note... be sure to bookmark the overall S&P/Case-Shiller Dashboard or the Scary Housing Dashboard of the weakest markets for a real-time view of all the markets tracked by S&P.

The latest release of the S&P/Case-Shiller (CSI) home price indices for November reported that the non-seasonally adjusted Composite-10 price index declined 1.29% since October while the Composite-20 index declined 1.27% over the same period with both measures continuing to decline notably since last year.

The latest CSI data clearly indicates that the price trends are experiencing a declining trend into the typically less active summer and fall season and as I recently pointed out, the more timely and less distorted Radar Logic RPX data is starting to capture notable falling prices driven primarily by seasonality.

The 10-city composite index declined 3.56% as compared to November 2010 while the 20-city composite declined 3.67% over the same period.

Topping the list of regional peak decliners was Las Vegas at -61.07%, Phoenix at -55.54%, Miami at -51.06%, Tampa at -47.36% and Detroit at -44.38%.

Additionally, both of the broad composite indices show significant peak declines slumping -32.87% for the 10-city national index and -32.94% for the 20-city national index on a peak comparison basis.

To better visualize today’s results use Blytic.com to view the full release.

The following charts (click for larger version) shows the percent change to single family home prices given by the Case-Shiller Indices as compared to each metros respective price peak set between 2005 and 2007 as well as annual and monthly changes.

Additionally, in order to add some historical context to the perspective, I updated my “then and now” CSI charts that compare our current circumstances to the data seen during 90s housing decline.

To create the following annual and normalized charts I simply aligned the CSI data from the last month of positive year-over-year gains for both the current decline and the 90s housing bust and plotted the data side-by-side (click for larger version).

The “peak” chart compares the percentage change, comparing monthly CSI values to the peak value seen just prior to the first declining month all the way through the downturn and the full recovery of home prices.

More Pain, Less Gain: S&P/Case-Shiller Preview for November 2011

As I demonstrated in prior posts, given their strong correlation, the home price indices provided daily by Radar Logic, averaged monthly, can effectively be used as a preview of the monthly S&P/Case-Shiller home price indices.

The current Radar Logic 25 MSA Composite data reported on residential real estate transactions (condos, multi and single family homes) that settled as late as November 25 and averaged for the month indicates that with slowing summer/fall transactions has come a notable decline of prices (the typical trend) with the national index declining 1.8% since October and falling 7.11% below the level seen in November 2010.

The Radar Logic index will likely be capturing an decline in prices from now until early 2012 as transactions continue to trend down.

Look for tomorrow's S&P/Case-Shiller home price report to reflect this declining trend though to a lesser degree due to its three month rolling-average nature with prices moderately higher.

University of Michigan Survey of Consumers January 2012 (Final)

Today's final release of the Reuters/University of Michigan Survey of Consumers for January indicated improvement in consumer sentiment with a reading of 75.0 and climbing just 1.08% above the level seen last year while one year inflation expectations rose slightly to 3.3%.

The Index of Consumer Expectations (a component of the Conference Board's Index of Leading Economic Indicators) rose to 69.1, and the Current Economic Conditions Index climbed to 84.2.

It's important to recognize that consumer sentiment has seriously eroded over the past few months with the current results remaining near levels not seen since 1980, a major indication that consumers are in the process of tightening even further on spending.