Recovery-less Recovery: Unemployment Duration March 2013

Today's employment situation report showed that conditions for the long term unemployed were mixed in March while still remaining distressed by historic standards.

Workers unemployed 27 weeks or more declined to 4.611 million or 39.6% of all unemployed workers while the median term of unemployment increased to 18.1 weeks and the average stay on unemployment increased to 37.1 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 March 2013

Today’s Employment Situation report showed that in March “total unemployment” including all marginally attached workers declined notably to 13.8% while the traditionally reported unemployment rate also trended down to 7.6%.

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: March 2013

Today, the Institute for Supply Management released their latest Non-Manufacturing Report on Business indicating that service related business activity continued to expand in March while assessments of service-sector related activity pulled back slightly with the business activity component declining while the overall non-manufacturing index slid to 54.4 from last months reading of 56.0.

At 56.5 the business activity index declined a slight 0.70% since February falling 3.25% below the level seen a year earlier.

This month, service industry respondents are sounding very positive with all respondent quotes citing generally improving activity.:


"The economy and our business appear to be improving." (Management of Companies & Support Services)

"Volumes are down slightly, but spending per person is up." (Arts, Entertainment & Recreation)

"Economy and all of our business units appear to be on track for positive gains this year. It may be a struggle, but economic indicators and signs of business growth point to increased spending from our customers." (Professional, Scientific & Technical Services)

"Local business climate seems more upbeat as the market moves higher." (Public Administration)

"Winter weather has affected construction, but the spring building season looks encouraging." (Wholesale Trade)

"Sales increased 17 percent last year; sales continue to rise this quarter." (Retail Trade)

"Anticipate a plentiful season, requiring strategic planning with packaging inventories." (Agriculture, Forestry, Fishing & Hunting)

ADP National Employment Report: March 2013

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 March as private employers added 158,000 jobs in the month bringing the total employment level 1.66% above the level seen in March 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.

Reading Rates: MBA Application Survey – April 03 2013

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 3 basis points to 3.62% since last week while the purchase application volume increased 1% and the refinance application volume declined 6% 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).

Construction Spending: February 2013

Yesterday, the U.S. Census Bureau released their latest read of construction spending showing improvement in February with total construction spending, residential and non-residential construction spending increasing on the month.

On a month-to-month basis, total residential spending increased 2.17% from January climbing 20.08% above the level seen in February 2012 while still remaining a whopping 55.15% below the peak level seen in 2006.

Single family construction spending climbed a notable 4.27% since January rising 34.14% since February 2012 but remained a whopping 66.40% below it's peak in 2006.

Non-residential construction spending increased 0.44% since January and rose 6.08% above the level seen in February 2012 and remained a whopping 27.37% 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.

Bull Trip!: GDP Report Q4 2012 (Third Estimate)

Today, the Bureau of Economic Analysis (BEA) released their third "estimate" of the Q4 2012 GDP report showing that the economy barely registered growth in Q4 2012 with real GDP improving at an annualized rate of just 0.4% from Q3 2012.

On a year-over-year basis, real GDP increased 1.67% while the quarter-to-quarter non-annualized percent change was an increase of a slight 0.09%.

The latest quarterly results indicate that the most notable source of weakness in the economy came from declines in exports with the "net-exports" component declining at an annualized rate of 2.8% from Q3, and notable declines in government spending particularly on national defense with a 22.1% decline in federal national defense spending from Q3.

Residential investment, on the other hand, worked to buoy the overall fixed investment component growing at an annualized rate of 17.6% from Q3.

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.

Extended Unemployment: Initial, Continued and Extended Unemployment Claims March 28 2013

Today’s jobless claims report showed a notable increases to initial unemployment claims and a decline to continued unemployment claims as initial claims trended well below the closely watched 400K level.

Seasonally adjusted “initial” unemployment claims increased by 16,000 to 357,000 claims from 341,000 claims for the prior week while seasonally adjusted “continued” claims declined by 27,000 claims to 3.050 million resulting in an “insured” unemployment rate of 2.4%.

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 1.90 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.46 million people that are currently counted as receiving traditional continued unemployment benefits, there are 5.36 million people on state and federal unemployment rolls.

Pending Home Sales: February 2013

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for February showing that pending home sales declined with the seasonally adjusted national index dropping 0.4% from January but increasing 8.4% above the level seen in February 2012.

Meanwhile, the NARs chief economist Lawrence Yun suggests that new home inventory is needed in order to relieve the current "shortage" :

"Only new home construction can genuinely help relieve the inventory shortage, and housing starts need to rise at least 50 percent from current levels, ... Most local home builders are small businesses and simply don't have access to capital on Wall Street. Clearer regulatory rules, applied to construction loans for smaller community banks and credit unions, could bring many small-sized builders back into the market."

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).

Reading Rates: MBA Application Survey – March 27 2013

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 2 basis points to 3.65% since last week while the purchase application volume increased 7% and the refinance application volume increased 8% 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).

New Home Sales: February 2013

Yesterday, the U.S. Census Department released its monthly New Residential Home Sales Report for February showing a notable monthly decline with sales falling 4.6% from January but rising 12.3% above the level seen in February 2012 but still remaining at an historically low level of 411K SAAR units.

It's important to recognize that the inventory of new homes appears to be mounting as unsold units totaled 152K, still though near the lowest level seen in in at least 47 years while the median number of months for sale rose to 5.0.

The monthly supply increased to 4.4 months while the median selling price increased 2.88% and the average selling price increased 14.49% from the year ago level.

The following chart show the extent of sales decline to date (click for full-larger version).

S&P/Case-Shiller: January 2013

Today's release of the S&P/Case-Shiller (CSI) home price indices for January reported that the non-seasonally adjusted Composite-10 price index increased again rising a slight 0.16% since December while the Composite-20 index increased 0.13% over the same period.

The latest CSI data is beginning to demonstrate more resiliency than seen in recent years as prices continue to move up, even just slightly, in the face of typical lower seasonal transactions.

If this trend continues, rather than declining as has been seen in past years, prices may just remain flat into the February-March release in advance of the typical uplift from the more active spring transactions.

The 10-city composite index increased 7.25% as compared to January 2012 while the 20-city composite increased 8.08% over the same period.

Both of the broad composite indices show significant peak declines slumping -29.86% for the 10-city national index and -29.24% 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 Chicago Fed National Activity Index: February 2013

The latest release of the Chicago Federal Reserve National Activity Index (CFNAI) indicated improvement for the national economy with the index rising to a level of 0.44 from a level of -0.49 in January while the three month moving average declined to a level of 0.09.

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.

The Philly Fed Business Outlook Survey: March 2013

The March release of the Federal Reserve Bank of Philadelphia Business Outlook Survey (BOS) indicated an improvement of the regions manufacturing activity with the current activity index climbing to a weak expansionary level of 2 while assessments the future activity remained flat at level of 32.5.

The following chart shows the current and future activity indexes both with their corresponding 3-month moving averages. The red line marks the threshold between contraction and expansion for these diffusion indexes.

Existing Home Sales Report: February 2013

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for February showing an increase in sales with total home sales rising 0.8% since January climbing 10.2% above the level seen in February 2012.

Single family home sales, on the other hand, declined falling 0.2% from January but still rose 8.7% above the level seen in February 2012 while the median selling price increased a notable 11.3% above the level seen a year earlier.

Inventory of single family homes increased from January to 1.68 million units dropping 19.2% below the level seen in February 2012 which, along with the sales pace, resulted in a monthly supply of 4.6 months.

The following charts (click for full-screen dynamic version) shows national existing single family home sales, median home prices, inventory and months of supply since 2005.