Economic Jolt: Job Openings and Labor Turnover November 2010

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 3.07% since October but rose 37.53% above the level seen in November 2009 while private non-farm job “hires” declined 1.19% since October remaining just 0.98% above the level seen in November 2009 and job “layoffs and discharges” increased 0.61% since October and dropping 10.58% below the level seen last year.



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).

Radar Watching: November 2010

As I have noted in the past, since the home price index data provided by Radar Logic is more timely, unadjusted and un-smoothed it is particularly useful for gaining deeper visibility over our housing markets especially in light of the distortions created by the massive government tax gimmick and other malfeasance.

By contrast, recognize that because the S&P/Case-Shiller (CSI) data is a two month lagged and a three month moving average, the index data will reflect price movement resulting from the government's housing tax scam (as BostonBubble pointed out) until at least the February 2011 release.

The Radar logic data, on the other hand, while lagged by 60 days is reported daily and, more importantly, is NOT SMOOTHED or adjusted so you can expect to see the underlying trends more precisely and substantially sooner than with the CSI.

As for the latest trends, it’s important to note that the 25-MSA Composite is continuing to show significant year-over-year declines and a slumping direction that appears bound to wipe-out the low value reached in March of 2009 prior to the government's massive housing boondoggle.

The latest data shows that as of the middle of early November, prices are 2.27% below the level seen in November 2009.

Further, while prices have flattened out in recent months, Quinn Eddins, Director of Research at Radar Logic, suggests that this trend should not be viewed as a sign of stability.

"The absence of volatility in home prices during October should not be interpreted as a sign of stability to come, ... Housing markets continue to face serious headwinds in the form of widespread negative equity, high rates of foreclosure and swelling inventories of bank-owned properties. Even if job creation bolsters housing demand in the 2011, I anticipate that demand will fall short of the burgeoning supply homes for sale, and prices will fall further by the end of the year."

ADP vs. BLS Who Do You Trust?: December 2010

Comparing the private nonfarm payroll estimate from ADP, a national staffing and business services firm, to the BLS results, you can see that while an unusual divergence had shaped up over 2010, ADP appears to be closing the gap as of late.

Initially, ADP had appeared to be indicating a significantly more weak "recovery" than the BLS private non-farm payroll results but with the latest results from ADP coming in so strong, it appears that the two series could eventually trend at a similar pace in the near future.

Looking at the chart (click for full-screen dynamic version) you can see that these two series are still quite a bit out of whack with ADP still indicating an increasing annual pace of private non-farm jobs of about half of the BLS rate.

Envisioning Employment: Employment Situation December 2010

Today’s Employment Situation Report showed that in December, net nonfarm payrolls increased by 103,000 while private nonfarm payrolls added 113,000 as the unemployment rate declined to 9.4%.

It's important to note that private sector job creation increased 0.10% since last month remaining a whopping 6.16% below the peak level of employment seen in December 2007 though, on a year-over-year basis, private jobs showed a notable increase of 1.26%.

Full Time Workers Fully Under Pressure: December 2010

Today’s employment situation report showed that the full time unemployment rate declined to 10.2% of the civilian workforce remaining very 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 December 2010

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

Today's employment situation report showed that conditions for the long term unemployed weakened in December while remaining epically distressed by historic standards.

Workers unemployed 27 weeks or more increased to 6.441 million or 44.3% of all unemployed workers while the median number of weeks unemployed increased to 22.4 weeks and the average stay on unemployment increased to 34.2 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 December 2010

Today’s Employment Situation report showed that in December “total unemployment” including all marginally attached workers declined to 16.7% while the traditionally reported unemployment rate declined to 9.4%.

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 January 06 2011

Today’s jobless claims report showed an increase to initial unemployment claims and a decrease to continued unemployment claims as a declining trend continued to shape up for both initial and traditional continued claims.

Seasonally adjusted “initial” unemployment increased by 18,000 to 409,000 claims from last week’s revised 391,000 claims while seasonally adjusted “continued” claims declined by 47,000 resulting in an “insured” unemployment rate of 3.3%.

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 4.50 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 4.11 million people that are currently counted as receiving traditional continued unemployment benefits, there are 8.62 million people on state and federal unemployment rolls.

The following chart shows the recent trend in initial non-seasonally adjusted initial jobless claims with the year-over-year percent change acting as a rough equivalent of a seasonally adjustment.

Historically, unemployment claims both “initial” and “continued” (ongoing claims) are a good leading indicator of the unemployment rate and inevitably the overall state of the economy.

The following chart shows “population adjusted” continued claims (ratio of unemployment claims to the non-institutional population) and the unemployment rate since 1967.

Adjusting for the general increase in population tames the continued claims spike down a bit.

The following chart (click for larger version) shows “initial” and “continued” claims, averaged monthly, overlaid with U.S. recessions since 1967.

Also, acceleration and deceleration of unemployment claims has generally preceded comparable movements to the unemployment rate by 3 – 8 months (click for larger version).

ISM Non-Manufacturing Report on Business: December 2010

Today, the Institute for Supply Management released their latest Non-Manufacturing Report on Business indicating that service related economic activity continued to expand notably throughout December.

At 63.5 the business activity index strengthened from November climbing 19.36% above the level seen a year earlier.

It’s important to note though that only 2 of the 11 indicators cited in the report showed slowing growth since November while the "supplier deliveries" and “backlog of order” components actually contracted.

ADP National Employment Report: December 2010

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 notably in December as private employers added 297,000 jobs in the month bringing the total employment level 0.64% above the level seen in December 2009.

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 the so-called “recovery” has been anemic.

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 – January 05 2010

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, 1 year ARMs as well as application volume for 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 increased 8 basis point to 4.93% since last week marking the seventh consecutive weekly increase while the purchase application volume increased 3.1% and the refinance application volume declined 7.20% over the same period.

It's important to note that rates have been, more or less, trending up for about ten weeks now and coincidentally somewhat in-line with the Fed making QE2 official.

While early scuttlebutt about QE2 measures worked to depress mortgage rates earlier this year, it appears that the actual implementation of the measures is not currently working to force them down any lower resulting in continued poor trends for purchase and refinance activity.

The purchase application volume remains near the lowest level seen in well over a decade while refinance activity continues to slow.

Could the Fed have reached a limit on the long end of the rate curve? We will have to wait to find out.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages as well as one year ARMs since 2006 (click for larger dynamic full-screen version).

The following dynamic charts show the Purchase Index, Refinance Index and Market Composite Index since 2006 (click for larger versions).

Beantown Bust: Boston Home Sales and Prices November 2010

Recently the Massachusetts Association of Realtors (MAR) released their Existing Home Sales Report for November showing that single family homes sales slumped 5.5% on a month-to-month basis from October leaving sales a hideous 31.5% below the level seen in November 2009.

Similarly, condos went flat from October but declined a whopping 38.7% below the level seen in November 2009.

The S&P/Case-Shiller (CSI) Boston index indicated that area single family home prices declined a notable 1.23% between September and October 2010 with values registering a year-over-year decline of 0.23%, the first annual decline in eleven months.

As for condos, the Boston condo CSI indicated area unit values declined 1.00% between September and October 2010 with values showing a slight year-over-year gain of 0.33%.

Obviously the government's sham housing tax gimmick worked to drive sales last year and further, in the absence of this scam, scores of hapless Bostonians have crept back to the sidelines all downhearted, empty pockets... no deposit... no government freebie... no phony baloney house purchase.

Where the trends will go from here should be pretty obvious... back to the weak "organic" trend that preceded the government's malfeasance... subdued home sales and lower prices.

As in months past, be on the lookout for the inflation adjusted charts produced by BostonBubble.com for an even more accurate "real" view of the current home price movement.

Outstanding Contraction!: Commercial Paper Outstanding December 2010

The Commercial Paper (CP) market is essentially a private debt market used by corporations as a generally cheaper means of funding typical recurring operations than drawing on a line of bank credit.

Commercial paper, as financial instrument, is by no means a recent innovation and, in fact, you can read about how the CP market was affected by the many historic financial shocks experienced by the U.S. (read Panic on Wall Street: A History of America’s Financial Disasters)

Although the Federal Reserve was able to artificially bring CP rates down significantly since the shocking 615 basis point spread blowout (A2/P2 spread) of late 2008, they have apparently not been successful in preventing an overall contraction in the CP market.

The Federal Reserve calculates and published the total amount of CP outstanding every week and as of the latest published period, commercial paper outstanding has fallen to a new series low (data tracked back as far as 2001) dropping 17.18% on a year-over-year basis to $969.00 billion, a level that is notably lower than even the worst periods of the last two recessions.

ISM Manufacturing Report on Business: December 2010

Today, the Institute for Supply Management released their latest Report on Business for the manufacturing sector indicating that economic activity continued to expand in December with an increase from November and an indication that most measures are in expansion.

At 57.0 the purchasing manager’s composite index (PMI) increased 0.71% since November climbing 3.83% above the level seen a year earlier.

Constuction Spending: November 2010

Today, the U.S. Census Bureau released their November read of construction spending showing near-cycle low levels of spending for residential construction while indicating a continued and notable decline for non-residential spending.

On a month-to-month basis, total residential spending increased 0.66% from October but dropped 11.08% below the level seen in November 2009 and a whopping 65.16% below the peak level seen in 2006 while single family construction spending increased 0.64% since October but declined 5.23% since November 2009 and whopping 77.24% below it's peak in 2006.

Also, non-residential spending declined 0.10% since October, dropping 21.35% since November 2009 and a whopping 39.93% 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.