On The Margin: Total Unemployment April 2013

Today’s Employment Situation report showed that in April “total unemployment” including all marginally attached workers increase slightly to 13.9% while the traditionally reported unemployment rate declined to 7.5%.

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 Manufacturing Report on Business: April 2013

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

At 50.7 the purchasing manager’s composite index (PMI) declined 1.17% since March and dropped 6.28% below the level seen a year earlier giving an indication of slowing manufacturing activity for the second consecutive month.

Respondents appear generally positive overall with many citing strong trends and steady pace:


"Business can be described as flat at best." (Food, Beverage & Tobacco Products)

"Production is still strong; several new projects to support alternative energy." (Primary Metals)

"Slight uptick in business, but overall continuing slowdown in defense due to budget/sequester." (Computer & Electronic Products)

"We have concerns about safety of doing business in South Korea. Our largest customer and part owner is in South Korea." (Electrical Equipment, Appliances & Components)

"Automotive demand remains firm." (Fabricated Metal Products)

"Business continues at a steady pace." (Machinery)

"General business conditions and industrial markets remain strong." (Transportation Equipment)

"Seasonal pick-up underway in the office furniture industry." (Furniture & Related Products)

"Market has slowed this month — weather in some parts of the country, also customers built inventory in anticipation of building increase, but the economy is still slow to pick up this spring." (Wood Products)

"Overall, volume is steady or slightly declining. Q1 sales volume is lower than projected." (Chemical Products)

Construction Spending: March 2013

Today, the U.S. Census Bureau released their latest read of construction spending showing mixed results in March with total private construction spending and private residential construction spending improving while non-residential construction spending declined on the month.

On a month-to-month basis, total residential spending increased 0.40% from February climbing 18.24% above the level seen in March 2012 while still remaining a whopping 56.40% below the peak level seen in 2006.

Single family construction spending rose 1.59% since February rising 37.60% since March 2012 but remained a whopping 65.57% below it's peak in 2006.

Non-residential construction spending declined 1.55% since February and rising 2.75% above the level seen in March 2012 and remained a whopping 28.82% 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.

ADP National Employment Report: April 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 April as private employers added 119,000 jobs in the month bringing the total employment level 1.57% above the level seen in April 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.

S&P/Case-Shiller: February 2013

Today's release of the S&P/Case-Shiller (CSI) home price indices for February reported that the non-seasonally adjusted Composite-10 price index increased for a straight month rising 0.37% since January while the Composite-20 index increased 0.29% over the same period.

The latest CSI data is continuing to demonstrate more resiliency than seen in recent years as prices continue to move up even in the face of typically lower seasonal transactions.

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

The 10-city composite index increased 8.60% as compared to February 2012 while the 20-city composite increased 9.32% over the same period.

Both of the broad composite indices show significant peak declines slumping -29.63% for the 10-city national index and -29.03% 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.

Pending Home Sales: March 2013

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for March showing that pending home sales improved with the seasonally adjusted national index climbing 1.5% from February and increasing 7.0% above the level seen in March 2012.

Meanwhile, the NARs chief economist Lawrence Yun is beginning to adopt the "narrow range" sentiment of years past as limited supply works to mute sales activity:

"Contract activity has been in a narrow range in recent months, not from a pause in demand but because of limited supply. Little movement is expected in near-term sales closings, but they should edge up modestly as the year progresses, ... Job additions and rising household wealth will continue to support housing demand."

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).

Bull Trip!: GDP Report Q1 2013 (First Estimate)

Today, the Bureau of Economic Analysis (BEA) released their first "estimate" of the Q1 2013 GDP report showing that the economy grew in the quarter with real GDP improving at an annualized rate of 2.5% from Q4 2012.

On a year-over-year basis, real GDP increased 1.80% while the quarter-to-quarter non-annualized percent change was an increase of 0.62%.

The latest quarterly results indicate that the most notable source of weakness in the economy came from declines in government spending particularly on national defense with a 11.5% decline in federal national defense spending from Q4.

Residential investment, on the other hand, worked to buoy the overall fixed investment component growing at an annualized rate of 12.6% 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 April 25 2013

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

Seasonally adjusted “initial” unemployment claims declined by 16,000 to 339,000 claims from 355,000 claims for the prior week while seasonally adjusted “continued” claims declined by 93,000 claims to 3.0 million resulting in an “insured” unemployment rate of 2.3%.

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 1.79 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.20 million people that are currently counted as receiving traditional continued unemployment benefits, there are 4.99 million people on state and federal unemployment rolls.

New Home Sales: March 2013

Yesterday, the U.S. Census Department released its monthly New Residential Home Sales Report for March showing a improvement with sales climbing 1.5% from February and rising 18.5% above the level seen in March 2012 but still remaining at an historically low level of 417K SAAR units.

It's important to recognize that the inventory of new homes appears to be mounting as unsold units totaled 153K, still though near the lowest level seen in in at least 47 years while the median number of months for sale went flat at 5.0.

The monthly supply went flat at 4.4 months while the median selling price increased 3.0% and the average selling price declined 1.3% from the year ago level.

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

FHFA Monthly Home Prices: February 2013

Today, the Federal Housing Finance Agency (FHFA) released the latest results of their monthly house price index (HPI) showing that in February, nationally, home prices increased 0.75% from January and rose 7.07% above the level seen in February 2012.

The FHFA monthly HPI are formulated from home purchase information collected from mortgages that have been sold to or guaranteed by Fannie Mae and Freddie Mac.

Existing Home Sales Report: March 2013

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for March showing a decrease in sales with total home sales declining 0.6% since February but still climbing 10.3% above the level seen in March 2012.

Single family home sales also declined falling 0.2% from February but still rose 9.1% above the level seen in March 2012 while the median selling price increased a notable 12.1% above the level seen a year earlier.

Inventory of single family homes increased from February to 1.69 million units dropping 16.3% below the level seen in March 2012 which, along with the sales pace, resulted in a monthly supply of 4.7 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.

The Chicago Fed National Activity Index: March 2013

The latest release of the Chicago Federal Reserve National Activity Index (CFNAI) indicated worsening for the national economy with the index falling to a weak level of -0.23 from a level of 0.76 in February while the three month moving average declined to a level of -0.01.

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: April 2013

The March release of the Federal Reserve Bank of Philadelphia Business Outlook Survey (BOS) indicated a slight worsening of the regions manufacturing activity with the current activity index falling to a weak expansionary level of 1.3 while assessments the future activity plunged to a level of 19.5.

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.

Extended Unemployment: Initial, Continued and Extended Unemployment Claims April 18 2013

Today’s jobless claims report showed an increase 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 4,000 to 352,000 claims from 348,000 claims for the prior week while seasonally adjusted “continued” claims declined by 35,000 claims to 3.068 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 1.78 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.29 million people that are currently counted as receiving traditional continued unemployment benefits, there are 5.07 million people on state and federal unemployment rolls.

Reading Rates: MBA Application Survey – April 17 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 4 basis points to 3.52% since last week while the purchase application volume increased 4% and the refinance application volume increased 5% 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).