Full Time Workers Fully Under Pressure: April 2012

Today’s employment situation report showed that in April the full time unemployment rate declined slightly to 8.5% 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 April 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 improved in April but remained epically distressed by historic standards.

Workers unemployed 27 weeks or more declined to 5.101 million or 41.3% of all unemployed workers while the median number of weeks unemployed declined to 19.4 weeks and the average stay on unemployment declined to 39.1 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 April 2012

Today’s Employment Situation report showed that in April “total unemployment” including all marginally attached workers went flat at 14.5% while the traditionally reported unemployment rate declined slightly to 8.1%.

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.

ISM Non-Manufacturing Report on Business: April 2012

Today, the Institute for Supply Management released their latest Non-Manufacturing Report on Business indicating that service related business activity declined notably in April with the business activity component dropping while the overall non-manufacturing index declined to 53.5 from 56.0 in March.

At 54.6 the business activity index declined 7.30% since March dropping 2.50% below the level seen a year earlier.

This month, service industry respondents are sounding mixed with lower expectations than earlier in the year though still reasonably optimistic for economic activity in 2012:

"Sales have improved slightly, yet still lag behind pre-recession highs. The hiring freeze has been lifted, but open positions are still being vetted for need, timing of the fill, and so forth." (Public Administration)

"Business conditions have improved in March and April 2012. We have received more job inquiries and job awards in this period. The increase is about 15 percent." (Professional, Scientific & Technical Services)

"Current conditions compared to prior year are good. Fuel and food continue to be a challenge." (Arts, Entertainment & Recreation)

"Business is slowing — and projections for the rest of the year are being lowered." (Professional, Scientific & Technical Services)

"Business is still ahead of last year, but has leveled off a little." (Wholesale Trade)

"High price of petroleum/oil driving up costs for all market areas." (Transportation & Warehousing)

"Sales have improved slightly, yet still lag behind pre-recession highs. The hiring freeze has been lifted, but open positions are still being vetted for need, timing of the fill, and so forth." (Public Administration)

"Business conditions have improved in March and April 2012. We have received more job inquiries and job awards in this period. The increase is about 15 percent." (Professional, Scientific & Technical Services)

"Current conditions compared to prior year are good. Fuel and food continue to be a challenge." (Arts, Entertainment & Recreation)

"Business is slowing — and projections for the rest of the year are being lowered." (Professional, Scientific & Technical Services)

"Business is still ahead of last year, but has leveled off a little." (Wholesale Trade)

"High price of petroleum/oil driving up costs for all market areas." (Transportation & Warehousing)

On The Pulse: Ceridian-UCLA Pulse of Commerce Index April 2012

Today's release of the Ceridian-UCLA Pulse of Commerce Index™ (PCI) suggests that economic activity improved slightly in April with the seasonally adjusted index climbing 0.05% from March but falling 1.89% below the level seen in April 2011.

The three month moving average of the PCI increased slightly from March indicating that the April Industrial Production data will likely show a similar trend.

Extended Unemployment: Initial, Continued and Extended Unemployment Claims May 03 2012

Today’s jobless claims report showed a notable declined to both initial and continued unemployment claims while seasonally adjusted initial claims continued to trend well below the closely watched 400K level.

Seasonally adjusted “initial” declined to 365,000 claims from last week’s revised 392,000 claims while seasonally adjusted “continued” claims declined by 53,000 resulting in an “insured” unemployment rate of 2.6%.

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 3.07 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.42 million people that are currently counted as receiving traditional continued unemployment benefits, there are 6.50 million people on state and federal unemployment rolls.

ADP National Employment Report: April 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 April as private employers added 119,000 jobs in the month bringing the total employment level 1.70% above the level seen in April 2011.

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 – May 02 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) went unchanged at 3.92% since last week while the purchase application volume increased 2.9% and the refinance application declined 0.7% over the same period.

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).

Constuction Spending: March 2012

Today, the U.S. Census Bureau released their latest read of construction spending showing a slight improvement from last month at near-cycle low levels of spending in March for residential construction while also indicating an improvement for total non-residential spending.

On a month-to-month basis, total residential spending increased a slight 0.68% from February and rose 7.42% above the level seen in March 2011 while remaining a whopping 63.91% below the peak level seen in 2006.

Single family construction spending jumped 3.81% since February rising 10.35% since March 2011 but remained a whopping 75.15% below it's peak in 2006.

Non-residential construction spending rose 0.74% since February and climbed 15.16% above the level seen in March 2011 but remained a whopping 32.49% 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: April 2012

Today, the Institute for Supply Management released their latest Report on Business for the manufacturing sector indicating that manufacturing activity improved in April.

At 54.8 the purchasing manager’s composite index (PMI) rose 2.62% since March remaining 8.21% below the level seen a year earlier.

Respondents indicated that while there is still some slowness and caution, outlook was overall positive going forward:

"We expect our production levels to remain at the current level or increase over the next quarter." (Chemical Products)

"In general, demand remains strong for products, and we [are experiencing] more supply disruptions now than four to five months ago." (Machinery)

"The economy was off to a good start through the first quarter, but the European issues keep coming up as well as the recent disappointing jobs report. It appears that some of the early gains may be temporary." (Fabricated Metal Products)

"Warm weather in Midwest appears to have helped soft drink sales." (Food, Beverage & Tobacco Products)

"Positive increase in volume of sales and orders, and slight uptick in inventories, indicate the overall outlook remains robust through summer at least." (Miscellaneous Manufacturing)

"Sales are slowing." (Computer & Electronic Products)

"Business conditions on a national scale have a very positive outlook for the commercial metals we provide. At this point, we have outperformed each quarter's goal and anticipate a strong finish." (Primary Metals)

"Strong demand [compared to] previous year." (Plastics & Rubber Products)

"Business indicators suggest a stronger stability in overall environment. Production and orders are stable." (Transportation Equipment)

"Business conditions continue to improve." (Furniture & Related Products)

The Federal Reserve Bank of Dallas Texas Manufacturing Outlook Survey: April 2012

Today, the Federal Reserve Bank of Dallas released their latest read on manufacturing in their region indicating that manufacturing activity worsened with the current general business activity index declining to a contraction level of -3.4 while assessments of future general business activity index declined to 15.17.

University of Michigan Survey of Consumers April 2012 (Final)

Today's final release of the Reuters/University of Michigan Survey of Consumers for April indicated a slight increase in consumer sentiment from the prior month with a reading of 76.4 with improvement on an annual basis with the level increasing 9.46% above a year ago while one year inflation expectations eased to 3.2%.

The Index of Consumer Expectations (a component of the Conference Board's Index of Leading Economic Indicators) climbed to 72.3, and the Current Economic Conditions Index declined to 82.9.

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.

Bull Trip!: GDP Report Q1 2012 (First Rough Estimate)

Today, the Bureau of Economic Analysis (BEA) released their first "estimate" of the Q1 2012 GDP report showing that the economy continued to expand with real GDP increasing at an annualized rate of 2.2% from Q4 2011.

On a year-over-year basis real GDP increased 2.08% while the quarter-to-quarter non-annualized percent change was 0.55%.

The latest quarterly results indicate that the most notable source of weakness in the economy came from government defense spending which declined at a rate of 8.1% from Q4 2011 while other categories such as non-residential structures also saw notable weakness declining at a rate of 12% from Q4 2011 shaving 0.35% from real GDP. 

Fixed residential investment, on the other hand, expanded notably (supposedly) increasing at a rate of 19.1% while over the same period.

Keep in mind that these results are likely very poorly estimated and are sure to be revised notably in following quarters and even years to come.

Pending Home Sales: March 2012

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for March showing that pending home sales improved notably with the seasonally adjusted national index climbing 4.1% since February while increasing 12.8% above the level seen in March 2011.

Meanwhile, the NARs chief economist Lawrence Yun suggests that, based on the current trends, 2012 could see the best selling in five years.

"The spring home buying season looks bright because of an elevated level of contract offers so far this year, ... If activity is sustained near present levels, existing-home sales will see their best performance in five years. Based on all of the factors in the current market, that’s what we’re expecting with sales rising 7 to 10 percent in 2012."

The problem is though, the MBA Purchase Index is not currently capturing any significant rise in purchase contract activity which begs the question... how are the buyers that the NAR sees in the pending index financing their purchase? ... Cash?

The following chart shows the seasonally adjusted national pending home sales index along with the percent change on a year-over-year basis as well as the percent change from the peak set in 2005 (click for larger version).

The Chicago Fed National Activity Index: March 2012

Today’s release of the Chicago Federal Reserve National Activity Index (CFNAI) showed a weakening of the national economy with the index dropping into negative territory at -0.29 while the three month moving average also declined to 0.05.

The CFNAI is a weighted average of 85 indicators of national economic activity collected into four overall categories of “production and income”, “employment, unemployment and income”, “personal consumption and housing” and “sales, orders and inventories”.

The Chicago Fed regards a value of zero for the total index as indicating that the national economy is expanding at its historical trend rate while a negative value indicates below average growth.

A value at or below -0.70 for the three month moving average of the national activity index (CFNAI-MA3) indicates that the national economy has either just entered or continues in recession.