Sunday, October 12, 2014

August’s job openings and turnover, consumer credit, wholesale sales and the August Mortgage Monitor

in contrast to last week, there were not many economic reports of note this week...Tuesday brought us the Fed's G19 report on August consumer credit and the August JOLTS jobs report from the BLS; then on Thursday the Census released the details on Wholesale Trade: Sales and Inventories for August...but Black Knight Financial Services, formerly LPS data & analytics, did release their mortgage monitor for August, the mostly graphics report we've been following for years to keep tabs on the ongoing mortgage crisis...so after we take a look at the regular monthly government releases, we'll pull a few new graphs from the Mortgage Monitor and explain what they mean...

August Job Openings at 13 Year High While Hiring Fell by Most in 4 Years

the Job Openings and Labor Turnover Survey for August (JOLTS) from the Bureau of Labor Statistics estimated that seasonally adjusted job openings rose by 230,000 to a 13 year high of 4,835,000 at the end of August, while the estimate for jobs open at the end of July was revised down by 68,000 from the originally reported 4,673,000 openings to 4,605,000; job openings in restaurants and hotels rose by 73,000 to 632,000; there were also 63,000 more openings in health care and social assistance and 40,000 additional openings in retail.....job openings as a percentage of the employed labor force rose to 3.4% from 3.2% in July, up from 2.8% in August a year earlier and up from a low of 2.7% in January...based on 9,591,000 officially unemployed in August, there would be two unemployed who were actually looking for work during August for every job opening; that, of course, does not count those who might have wanted a job but didn't look for work during the month...

the JOLTS release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and 'other separations', which include retirements and death.... in August, seasonally adjusted new hires totaled 4,640,000, down 296,000 from the 4,934,000 hired or rehired in July, as the hiring rate as a percentage of all employed fell from 3.6% to 3.3%, and was even lower than the 3.4% hiring rate in August a year earlier...hiring fell in every private jobs category, with hiring in construction falling by 73,000 to 298,000, while only hiring by state and local governments increased by 12,000 to 264,000....total separations also fell, from 4,629,000 in July to 4,440,000 in August, as the separations rate as a percentage of the employed fell from 3.3% to 3.2%, the same rate as a year ago...subtracting the 4,440,000 total separations from the total hires of 4,640,000 would imply an increase of 200,000 jobs in August, 20,000 more than the revised payroll job increase of 180,000 for August reported by the BLS establishment survey last week, a difference not unexpected between these two surveys that both have wide confidence intervals...

further breaking down the seasonally adjusted job separations, we find 2,473,000 quit their jobs in August, 74,000 less than the revised 2,547,000 who quit their jobs in July, while the quits rate, an indicator of worker confidence which is being watched by the Fed, remained unchanged at 1.8% of total employment.....in addition to those who quit, another 1,580,000 were either laid off, fired or otherwise discharged in August, down 146,000 from 1,726,000 discharges in July, which reduced the discharges rate from 1.2% to 1.1% of all those who were employed during the month, the lowest discharge rate since the recession began....meanwhile, other separations, which includes retirement and death, were at 387,000 in August, up from 356,000 in July, for an 'other separations' rate of 0.3%, which was unchanged....our FRED graph for this report below shows job openings in blue in thousands monthly since January 2005, and monthly hires in orange and monthly separations in violet over the same span...you can clearly see the August jump in openings in blue while hiring in orange fell...also note that months when separations in purple were above hires in orange, we were losing jobs...the two major components of separations are also included below, the count of layoffs and firings is tracked in red, while the number of those quitting their jobs monthly is shown in green....  

August 2014 JOLTS

August Consumer Credit Shows Slowest Growth This Year

the Fed's G.19 Release on Consumer Credit for August indicated that total seasonally adjusted consumer credit increased at a 5.0% annual rate, or at a pace that would increase credit outstanding by $13.5 annually to $3,247.0 billion, the slowest growth rate in overall credit since last November... the revolving credit portion of the aggregate, which would mostly be credit card debt, decreased by $0.2 billion, or at a 0.3% annual rate, to $880.3 billion, while non-revolving credit, which includes loans for cars and college tuition but not borrowing for real estate, rose at a $13.7 billion annual pace to $2,366.7 billion, an annual growth rate of 7.0%....July's 13 year high credit increase was revised down to a seasonally adjusted $21.6 billion rate of increase, instead of the previously reported $26.01 billion, with July data now showing a $5.4 billion annualized increase in revolving credit and a $16.2 billion increase in non-revolving credit...the Zero Hedge bar graph below shows the seasonally adjusted monthly change in non-revolving credit outstanding in red and revolving credit monthly in blue since the beginning of 2011, with decreases in credit outstanding for any either type pointing down from the zero line...notice the black line sums the two to track the headline change in credit that this release reports on...

August 2014 consumer credit via ZH

Wholesale Sales Fall 0.7% in August, Inventories Rise by the Same Amount

>the Census report on Wholesale Trade, Sales and Inventories for August estimated that seasonally adjusted sales of wholesale merchants fell 0.7% (+/-0.4%) to $453.9 billion from the revised July estimate of $457.0 billion, but were still up 5.8 percent(+/-1.8%) from August a year earlier....the July preliminary sales estimate was revised down by $1.6 billion or 0.3%, and hence was only up 0.4% over June, rather than the 0.7% previously reported.....August wholesale sales of durable goods were 0.1 percent(+/-0.5%)* above the revised July estimate and were up 7.0 percent (+/-1.4%) from August a year ago, as wholesale metal sales rose 1.6% while wholesale sales of computers and similar equipment fell 1.7%...seasonally adjusted sales of nondurable goods were down 1.3 percent (+/-0.5%) from July but were up but were up 4.7 percent (+/-3.0%) from last August as wholesale sales of clothing rose 3.4% while wholesale sales of petroleum products fell 4.2%...meanwhile, seasonally adjusted wholesale inventories were valued at $538.0 billion at the end of August, 0.7 percent (+/-0.4%) higher than the revised July level and 7.9% (+/-0.7%) above last August's level, while July's preliminary estimate was revised upward by $0.7 billion or 0.1%...wholesale durable goods inventories were up 0.8% (+/-0.4%) from July and up 8.4 percent (+/-1.2%) from a year earlier, with wholesale inventories of computer equipment up 4.5% while inventories of miscellaneous durable goods fell 0.8%...wholesale inventories of nondurable goods were up 0.5% (+/-0.4%) in August while they were up 6.9% (+/-1.2%) from last August, as wholesale inventories of drugs and druggists' sundries were up by 1.6% while wholesale inventories of chemicals were down 2.8%... finally, the closely watched inventory to sales ratio of merchant wholesalers was at 1.19, up from the 1.17 ratio of July and up from the inventory to sales ratio of 1.16 in August of last year...

Mortgage Delinquencies Rise in August for 3rd Month in a Row; Average Time In Foreclosure Rises to Record 1010 Days

according to the Mortgage Monitor for August (pdf) from Black Knight Financial Services (BKFS, formerly the LPS Data & Analytics division), there were 912,898 home mortgages, or 1.80% of all mortgages outstanding, remaining in the foreclosure process at the end of August, which was down from 935,460, or 1.85% of all active loans that were in foreclosure at the end of July, and down from 2.66% of all mortgages that were in foreclosure in July of last year...these are homeowners who had a foreclosure notice served but whose homes had not yet been seized, and July's so-called "foreclosure inventory" was the lowest percentage of homes in foreclosure since early 2008... new foreclosure starts also fell in August after rising in each of the previous three months, as the 81,612 homes foreclosed on in August was 10.0% lower than the 90,690 foreclosures started in July and 24.2% lower than the 107,552 foreclosures started in August of last year...

in addition to homes in foreclosure, August data showed that 2,994,567 mortgage loans, or 5.90% of all mortgages, were at least one mortgage payment overdue but not in foreclosure, up 4.9% from 5.64% of homeowners with a mortgage who were more than 30 days behind in July, but down from the delinquency rate of 6.20% a year earlier...of those who were delinquent in August, 1,143,222 home owners were considered seriously delinquent, which means they were 90 or more days behind on mortgage payments, but not in foreclosure at the end of the month...thus, a total of 7.70% of homeowners with a mortgage were either late in paying or in foreclosure at the end of August, and 4.06% of them were in serious trouble, ie, either "seriously delinquent" or already in foreclosure at month end... 

the graph below, from page 13 of the Mortgage Monitor pdf, shows the percentage of mortgages that were in the foreclosure process monthly since 1995 in green, the percentage of active home loans that were delinquent but not in foreclosure over the same period in red, and the total of both, representing total percentage of mortgages that were in some kind of mortgage trouble each month, in blue over the same period…we can see that the percentage of homes in foreclosure in green has been falling fairly steadily over the last two years and at 1.80% in August is now well below the October 2011 peak of 4.29% of mortgages in the foreclosure process…but notice that's still more than 4 times the pre-crisis foreclosure inventory of 0.44% from December 2005 that’s highlighted on the graph, so the percentage of homes in foreclosure is still a long way from normal …similarly, with delinquent mortgages shown in red at 5.90% of all mortgage outstanding in August, while up seasonally from the 5.52% delinquency rate in May, is down to nearly half of the 10.57% of all mortgages that were delinquent but not in foreclosure at the peak of the mortgage crisis in January of 2010, but still above the December 2005 mortgage delinquency percentage of 4.27% noted on the graph...note also the seasonality of mortgage delinquencies apparent in the track of the red graph below, wherein they usually begin to increase at the beginning of the school year and peak during the holidays, and then decline at the beginning of the year as homeowners catch up on all their bills after holiday shopping...with the recent release of the iphone6, we can expect another increase in mortgage delinquencies in September, as has been the case each time previously a new Apple product was launched..

August 2014 LPS delinquencies and foreclosures

one of the special focal points of this month's mortgage monitor report was an analysis of what had since happened to those homeowners who were in foreclosure at the end of last year...from page 15 of the Mortgage Monitor's presentation, the following pie graph is a graphic representation of the August status of those who were in foreclosure at the end of December....as you can clearly see, nearly half of the pie is purple, representing the 49% who were in foreclosure at the end of 2013 who are still in foreclosure today…meanwhile, the teal wedge of the pie indicates that 23% who were in foreclosure in December had since had their homes seized, and those loans are now listed as 'REO', or real estate owned by the mortgage holder...in orange, we see that 4% of those in foreclosure in December have reached an agreement with their banker to sell their house to a third party, often as a "short sale", for less than the amount owed...the light blue wedge represents the 2% who somehow came up with the funds to pay off their mortgage, & hence now own their homes free & clear...also no longer in foreclosure are the 8% who are current, shown in dark blue, and the 2% those who caught up on their payments and are now again 30 days behind, shown in red, and also the 12% in green, who are those who are more than 60 days delinquent, but no longer in foreclosure at the end of August...as we learned from the July report, 53% of foreclosure starts are in this group who paid up and got out of foreclosure, only to fall behind and be foreclosed on again...

August 2014 LPS resolution of 2013 foreclosures

the next graphic, a bar graph from page 16 of the pdf, shows the count and hence the percentage of each of those 2013 foreclosure situations shown above that have been modified over the ensuing 8 months…the count of those that have been modified, accounting for 25% of the total, is shown blue in each bar for each situation shown in the pie above, while the red section in each bar are those that have not been modified...for instance, of the roughly 100,000 who were in foreclosure in 2013 who are now current, which is shown in the first bar, about 25% received a mortgage modification that helped them get current; similarly, for the 610,000 mortgages that are still in foreclosure 8 months later, 25% of them also had their mortgages modified, but still not enough to lift the foreclosure...we can also see that in the bars on the far right, representing those who've sold their homes or who paid off their mortgage, very few had their mortgages modified...on the other hand, of those who are now 30 days delinquent, almost all had a mortgage modification...similarly, for those who who are 60 days delinquent, almost half had a mortgage modification, but nonetheless have already missed two payments..although not included this month,. the July mortgage monitor (pdf) had several  graphs further breaking down the various types of modifications delinquent mortgages have undergone, including the state level data on plate 11...

August 2014 LPS 2013 foreclosures as modified

the next graphic, from page 20 of the August Mortgage Monitor, first shows us the total count of mortgages that have been 90 days or more delinquent but not in foreclosure for every six months over the duration of the mortgage crisis, and then it gives us a color coded representation of the length of time that those seriously delinquent mortgages had been delinquent in each of those June and December bar shaped snapshots...the first bar is June 2009, & then the highest bar is December 2009, one month before the peak of the crisis...within each bar, the percentage of seriously delinquent mortgages that were 3 to 6 months behind on payments is shown in blue, the portion of seriously delinquent mortgages that were 7 or 8 months late is shown in red, the percentage of seriously delinquent mortgages that were 9 to 11 months behind is shown in green, while those mortgages that are 12 or more months behind on payments are shown in purple...the last bar shows August details; note the blue 3 to 6 month delinquencies at 44% for August are at the highest proportion of the total since December 2010...

August 2014 LPS bucket profile of seriously delinquent

to tie all these graphics together, we'll include a portion of the Mortgage Monitor table showing the monthly count of active home mortgage loans and their delinquency status, which comes from page 24 of the pdf....the columns here show the total active mortgage loan count nationally for each month given, number of mortgages that were delinquent by more than 90 days but not yet in foreclosure, the monthly count of those mortgages that are in the foreclosure process (FC), the total non-current mortgages, including those that just missed one or two payments, and then the number of foreclosure starts for each month shown going back to January 2008….in the last two columns, we see the average length of time that those who have been more than 90 days delinquent have remained in their homes without foreclosure, and then the average number of days those in foreclosure have been stuck in that process because of the lengthy foreclosure pipelines…notice that although the average length of delinquency for those who have been more than 90 days delinquent without foreclosure has fallen to 493 days, the average time for those who’ve been in foreclosure without a resolution has lengthened to a record average 1010 days…

August 2014 LPS FC & delinquent loan count table

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links that accompanies these commentaries, most from the aforementioned GGO posts, contact me…)

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