Economic Jolt: Job Openings and Labor Turnover July 2012

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” declined 2.06% since June climbing 7.65% above the level seen in July 2011 while private non-farm job “hires” declined 1.68% from June but rose 1.73% above the level seen in July 2011.

Job “layoffs and discharges” declined 12.15% from June falling 7.15% below the level seen last year while quitting activity rose 1.50% from June climbing 7.87% above the level seen in July 2011.

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).

Fannie Mae Delinquencies: July 2012

The latest release of the Fannie Mae Monthly Summary indicated that all measures of single family delinquency continued to decline in July while remaining at distressed levels.

In July, 2.84% of non-credit enhanced loans went seriously delinquent while the level was 7.76% of credit enhanced loans resulting in an overall total single family delinquency of 3.50%.

The following charts (click for larger ultra-dynamic and surf-able chart) show what Fannie Mae terms the count of “Seriously Delinquent” loans as a percentage of all loans on their books.

It’s important to understand that Fannie Mae does NOT segregate foreclosures from delinquent loans when reporting these numbers.

Hong Kong Bubble?: Hong Kong Residential Property Prices June 2012

Recently, the University of Hong Kong released their Hong Kong Residential Real Estate Series (HKU-REIS) indicating that, in June, the price of residential properties increased 1.18% since May and climbed 6.64% above the level seen in June 2011.

It appears that after a notable pullback in late-2011 prices are totally soaring with all measures continuing to rise notably each month.

The HKU-REIS is a set of property price indices constructed monthly using a “modified” repeat-sale methodology similar to that of the S&P/Case-Shiller indices yet suited to the Hong Kong property market.

Envisioning Employment: Employment Situation August 2012

Today’s Employment Situation Report indicated that in August, net non-farm payrolls increased only slightly adding 96,000 jobs overall with the private non-farm payrolls sub-component adding just 103,000 jobs while the civilian unemployment rate declined slightly to 8.2% over the same period.

Net private sector jobs increased just 0.09% since last month climbing 1.80% above the level seen a year ago but remained a whopping 3.64% below the peak level of employment seen in December 2007.

Recovery-less Recovery: Unemployment Duration August 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 August and remained epically distressed by historic standards.

Workers unemployed 27 weeks or more declined to 5.033 million or 40.0% of all unemployed workers while the median number of weeks unemployed jumped to 18.0 weeks and the average stay on unemployment climbed to 39.2 weeks.

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 August 2012

Today’s Employment Situation report showed that in August “total unemployment” including all marginally attached workers declined to 14.7% while the traditionally reported unemployment rate declined 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: August 2012

Today, the Institute for Supply Management released their latest Non-Manufacturing Report on Business indicating that service related business activity was mixed in August with the business activity component declining while the overall non-manufacturing index improved to 53.7 from 52.6 in July.

At 55.6 the business activity index declined 2.80% since July falling 1.42% below the level seen a year earlier.

This month, service industry respondents are sounding mixed to negative with some reporting "unpredictable" conditions, tighter budgets or even palpable slowdown:

"Markets and customers we serve remain strong and have not caused any adverse impact to our business." (Management of Companies & Support Services)

"Economy still stagnant. Small jobs keeping us going. Expect some improvement in capital spending in fourth quarter." (Professional, Scientific & Technical Services)

"Small slowdown in tourism. Commodity prices on the rise." (Arts, Entertainment & Recreation)

"Budgets are tighter; there are fewer new purchases being pursued that were not planned or budgeted." (Finance & Insurance)

"Overall conditions continue to be unpredictable. Sales are inconsistent as customers reel to the news of the day, which creates havoc on the supply chain to respond." (Retail Trade)

"Customers appear to be refocusing their resources on internal costs and efficiencies." (Wholesale Trade)

ADP National Employment Report: August 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 August as private employers added 201,000 jobs in the month bringing the total employment level 1.96% above the level seen in August 2012.

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.

Extended Unemployment: Initial, Continued and Extended Unemployment Claims September 06 2012

Today’s jobless claims report indicated that both initial and continued unemployment claims declined while seasonally adjusted initial claims remained below the closely watched 400K level.

Seasonally adjusted “initial” declined by 12,000 claims to 365,000 claims from a revised 377,000 claims for the prior week while seasonally adjusted “continued” claims declined by 6,000 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 2.26 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.11 million people that are currently counted as receiving traditional continued unemployment benefits, there are 5.38 million people on state and federal unemployment rolls.

On The Stamp: Food Stamp Participation June 2012

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 indicated that in June, 173,612 recipients were added to the food stamps program with the current total increasing 3.29% on a year-over-year basis while household participation increased 4.90% over the same period.

Individual participation as a ratio of the overall civilian non-institutional population has increased 1.73% over the same period.

Participation continues to swell with nominal benefit costs climbing 2.75% on a year-over-year basis to $6.20 billion for the month.

Reading Rates: MBA Application Survey – September 05 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 to 3.66% since last week while the purchase application volume declined 0.8% and the refinance application volume declined 3.0% 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).

ISM Manufacturing Report on Business: August 2012

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

At 49.6 the purchasing manager’s composite index (PMI) rose 0.40% since July remaining 5.52% below the level seen a year earlier.

Respondents appear to have completed a significant about-face from the optimistic views expressed earlier in the year as they indicated that "slowing" is now the best description of manufacturing activity:

"Internal indicators and feedback from sales channels are indicating a slowdown in demand for capital equipment." (Machinery)

"Business continues to be very solid, but there is now a slowing of incoming orders." (Fabricated Metal Products)

"Incoming orders have slowed somewhat, but indications are that there will be a stronger fourth quarter." (Plastics & Rubber Products)

"Business is slow right now. Companies seem to be holding onto their money." (Computer & Electronic Products)

"We can sense, feel and see headwinds with customer orders, especially Europe related." (Apparel, Leather & Allied Products)

"New orders and backlog remain flat." (Miscellaneous Manufacturing)

"Auto industry slowing a bit in the second half [of the year]." (Transportation Equipment)

"U.S. drought severely impacting raw materials prices." (Food, Beverage & Tobacco Products)

"Lackluster demand continues in all regions of the world, and is supporting much lower raw materials prices in the second half of 2012." (Chemical Products)

Constuction Spending: July 2012

Today, the U.S. Census Bureau released their latest read of construction spending showing an overall decline from last month with total residential and non-residential construction spending declining as single family spending improved while all measures remained at near-cycle lows. 

On a month-to-month basis, total residential spending declined 1.58% from June but rose 17.47% above the level seen in July 2011 while remaining a whopping 60.88% below the peak level seen in 2006.
Single family construction spending climbed 1.45% since June rising 20.55% since July 2011 but remained a whopping 72.91% below it's peak in 2006.

Non-residential construction spending declined 0.88% since June but climbed 8.65% above the level seen in July 2011 and remained a whopping 31.01% 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.

University of Michigan Survey of Consumers August 2012 (Final)

Today's final release of the Reuters/University of Michigan Survey of Consumers for August indicated an increase in consumer sentiment from the prior month with a reading of 74.3 and improvement on an annual basis with the level increasing a notable 33.15% above a year ago while one year inflation expectations rose to 3.6%.

The Index of Consumer Expectations (a component of the Conference Board's Index of Leading Economic Indicators) declined to 65.1, and the Current Economic Conditions Index rose to 88.7.

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.

Extended Unemployment: Initial, Continued and Extended Unemployment Claims August 30 2012

Today’s jobless claims report indicated that initial unemployment claims went flat and continued unemployment claims declined slightly while seasonally adjusted initial claims remained below the closely watched 400K level.

Seasonally adjusted “initial” wen flat at 374,000 claims while seasonally adjusted “continued” claims declined by 5,000 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 2.27 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.16 million people that are currently counted as receiving traditional continued unemployment benefits, there are 5.44 million people on state and federal unemployment rolls.