Sunday, May 10, 2015

April employment, March international trade, factory orders, wholesale trade, consumer credit and Mortgage Monitor reports

in addition to the Employment Situation Summary for April from the Bureau of Labor Statistics, this week also saw the release of the March Report on International Trade and the full report on March factory orders, shipments and inventories, and the March wholesale trade report, all from the Census Bureau, and the G-19 on March consumer credit from the Fed...in addition, BLS released the 1st quarter report on labor productivity, which indicated that business sector labor productivity decreased at a 1.9% annual rate over the quarter, as output declined at a 0.2% rate and hours worked rose at a 1.7% rate, and the Institute for Supply Management (ISM) released its April Non-Manufacturing Report On Business, wherein their NMI (non-manufacturing index) rose 1.3%, from 56.5 percent in March to 57.8% in April, indicating an ongoing expansion in the services industries...we also had the release of the Mortgage Monitor for March (pdf) from Black Knight Financial Services, which we'll also look at briefly today.. 

April Jobs Report nets 184,000 Additional Jobs; Unemployment Rate Falls to 5.4%

the report on the Employment Situation Summary for April from the BLS was better than the March report, but otherwise we're hard pressed to see anything encouraging here...the April establishment survey indicated that nonfarm payroll employment increased by a seasonally adjusted 223,000 jobs, while the increase in nonfarm payroll employment for March was revised from 126,000 to 85,000 jobs and the February count was revised from 264,000 to 266,000, hence resulting in a reported net addition of 184,000 seasonally adjusted jobs with this release, and a 191,000 average over the past three months, about 70,000 jobs a month lower than the payroll increases we were seeing over the prior 12 months...the unadjusted establishment data indicates that there were actually 1,178,000 non-farm payroll jobs added in April, as seasonal hiring in construction, maintenance and leisure and hospitality picked up, so the headline jobs number includes a large seasonal adjustment downward.…seasonally adjusted payroll jobs increased in most major sectors, with the exception of the exploitative industries, where there were 15,000 fewer jobs, mostly in oilfield support, and durable goods manufacturing, where payroll jobs fell by 1,000 on a reduction of 5,200 by machinery manufacturers...

the personal employment data extrapolated from the April household survey was consistent with the establishment survey totals, in that the count of the employed rose by 192,000 and those counted as unemployed fell by 26,000, lowering the unemployment rate a notch to 5.4%....the count of those who reported they were working part time but wanted full time work also fell by 125,000, and hence the alternative measure of unemployment, U-6, which includes those "employed part time for economic reasons", also fell by 0.1% to 10.8%...the labor force grew by 166,000 and with an increase of 186,000 in the working age population, the labor force participation rate ticked up from 62.7% in March to 62.8% in April....however, that increase was statistically insufficient to change the employment to population ratio, which remained at 59.3%, the same as in March...of some note, this survey also showed that for the first time in 7 years the unemployment rate for black Americans fell below 10%, as it dropped from 10.1% in March to 9.6% in April...

the BLS employment situation press release itself is very readable, so you can get further details from there...note that almost every paragraph in that release points to one or more of the tables that are linked to on the bottom of the release, and those are also on a separate html page here that you can open it along side the press release to avoid the need to scroll up and down the page....thus, when you encounter a line such as " The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.7 hours. (See tables B-2 and B-7.)"  you can quickly open Table B-2 and Table B-7 where you will find average weekly hours and hours of overtime for both all employees and for non-supervisory by industry sector, where you'd see that average includes workweeks of 46.2 hours for those in "mining and logging" down to an average of 25.0 hours for those working in leisure and hospitality sectors..

March trade deficit increases 43%; should have minimal impact on 1st quarter GDP

our March trade deficit surged to the highest level in nearly 7 years as the ending of the west coast dock strike allowed ships that had been sitting offshore to unload...the March report on our international trade in goods and services showed that our seasonally adjusted goods and services deficit rose by $15.5 billion, or 43%, to $51.4 billion in March from a revised February deficit of $35.9 billion, which had itself fallen by $6.8 billion from January while the strike was underway...our March exports rose $1.6 billion to $187.8 billion on a $1.5 billion increase to $127.1 billion in our exports of goods and an increase of $0.2 billion to $60.8 billion in our exports of services, while our imports rose $17.1 billion to $239.2 billion on a $16.4 billion increase to $197.6 billion in our imports of goods, while our imports of services rose $0.8 billion to $41.6 billion... adjusting for inflation based on chained 2009 prices, our 1st quarter our trade deficit increased by $20.9 billion to $173.1 billion as adjusted exports fell from $371,029 million to $356,499 million and adjusted imports rose from $523,254 million to $529,625 million (see exhibit 10, pdf)...that is both a larger decrease in real exports and a larger increase in real imports than was estimated by the BEA in reporting on 1st quarter GDP last week...

the BEA press release provides a good overview of what transpired during the month, but to get the details on trade we have to view the full release and tables (55pp pdf) which is linked to on the sidebar and where over 200 line items of exports and imports are listed...there, in exhibit 7, we see that the major reasons for the March increase in our exports were a $1,471 million increase in our exports of capital goods, led by a $490 million increase in our exports of civilian aircraft, while we also exported $12,282 million in autos and automotive products, a $792 million increase, $332 million more of foods and feeds (due to a $337 increase in our nut exports), and $317 million more industrial supplies (due to a $511 million increase in our exports of non monetary gold)...offsetting that was a $1,699 million dollar decrease to $16,141 million in our exports of consumer goods, led by a $577 million decrease in our exports of pharmaceuticals...

on the import side of the ledger (exhibit 8), we find our imports of consumer goods rose by $9,013 million to $54,164 million on a $1,677 increase in imports of cell phones and similar household electronics, a $1,293 increase in imports of synthetic textiles, and a $981 million increase in our imports of furniture and similar household goods..in addition, our imports of cotton apparel and household goods, footwear, pharmaceutical preparations, toys, games, and sporting goods, televisions and video equipment. other consumer nondurables, non textile apparel and household goods, household appliances cookware, cutlery, tools, and camping apparel and gear all also rose by more that $250 million each, which almost certainly does not indicate an increase in consumption of consumer goods by that much, but rather just an offloading of ships...in addition, our imports of capital goods rose by $3,980 million to $52,047, our imports of auto rose by $2,666 million to $28,851 million, and our imports of foods and feeds rose by $726 million to $11,027 million, probably all as a result of the ending of the strike...on the other hand, our imports of industrial supplies fell by $167 million to $42,617 million on decreases of $822 million in crude oil imports and $422 million of natural gas imports, while imports of industrial supplies likely impacted by the strike rose...

since this $51.4 billion trade deficit was largely unexpected (economists surveyed by Bloomberg were expecting a trade deficit of $42.0 billion), there were widespread revisions of estimates of first quarter GDP, with economists at J.P. Morgan Chase and Deutsche Bank both cutting their first-quarter GDP growth estimates to show a 0.5% contraction, as did economists at Goldman Sachs, while Macroeconomic Advisers estimated a 0.4% contraction for the 1st quarter, and economists polled by the Wall Street Journal estimated decreases of 0.4 to 0.7% percentage points in first quarter GDP...however, since imports subtract from GDP because they represent production for consumption or investment in the quarter that was not produced domestically, we would suggest that the hit to GDP from this report should be trivial, as we expect most of the increase in imports should be included in wholesale inventories, or in retail inventories which will be released next week…that being the case, there should be an offsetting increase in inventories which will add to GDP by nearly as much as the increase in imports subtracts...however, reducing that record stockpile will likely have a major negative impact on 2nd quarter growth...

Value of March Factory Orders Up 2.1%, Value of Shipments Up 0.5%, Inventories Up 0.2%

the Full Report on Manufacturers’ Shipments, Inventories, & Orders for March (pdf), also from the Census Bureau, reported that the widely watched new orders for manufactured durable goods rose in March by a seasonally adjusted increased $9.6 billion or 2.1% to $476.5 billion, about in line with expectations after the Advance report on durable goods showed a 4.0% increase two weeks earlier...this followed a revised decrease of 0.1% in February and a 0.7% decrease in January, as new orders are now running 4.8% lower than they were in 2014, largely due to lower prices for refinery products, primary metals and commodity foodstuffs...it should go without saying that the transport sector drove the March increase, as volatile orders for commercial aircraft were up 30.6% from February and orders for defense aircraft rose 103.0%; excluding transports, the value of new orders was up just $68 million to $396,116 million, which Census reports as statistically unchanged...

the value of factory shipments rose by $2.3 billion or 0.5% to $482.2 billion, the second increase after February's 0.4% rise, following 5 months of decreases, which were down in part due to lower prices for shipments from refineries and mills...shipments of transportation equipment, which have been up three of the last four months, drove the increase, rising $3.2 billion or 4.3% to $78.0 billion...without transportation equipment, the value of all other shipments fell by 0.3% and are running 5.3% below last year's pace, which again is mostly a price issue, although shipments of most kinds of machinery were also lower....most March factory shipments have already been reflected in one or another component of 1st quarter GDP, and there's no easy way to determine if any of these itemized factory shipments imply a revision to the aggregate GDP totals...

however, when reporting on aggregate inventories for the advance GDP report, the BEA assumed a decrease in inventories of non-durables, while they incorporated report data from the March advance report on durable goods, which was released two weeks ago and unrevised with this report....the aggregate value of March factory inventories, which have been down for 3 out of the last 4 months largely on lower prices, fell by $1.1 billion or 0.2% to $649.1 billion, following the statistically insignificant $0.2 billion increase in February...inventories of March durables were unrevised from the advance report, up $0.3 billion or 0.1% to $413.1 billion, while the value of inventories of non-durable goods, which have been down 10 months in a row, fell another $1.5 billion or 0.6% to $236.1 billion...a 3.6% drop in inventories at refineries was responsible for two-thirds of that drop, and the rest was due to lower priced food products and chemical inventories...

finally, the value of unfilled orders was up for the first time in 4 months, increasing $1.0 billion or 0.1% to $1,157.3 billion, on the heels of a 0.5% decrease in February...as you might guess, orders for transportation equipment drove the increase, with a 0.4% increase to $567,325 million in the order book for commercial aircraft accounting for more than the overall increase...without transports, the factory order books fell by 0.2% in March to $422,908 million, but remained up 3.5% since last year...including the 13.2% year over year increase in unfilled orders for commercial aircraft, unfilled orders remain valued 7.5% higher than a year ago, with only defense aircraft, shipbuilding and oilfield equipment seeing less orders on their books than last year...

March Wholesale Sales fall 0.2%, Wholesale Inventories Rise 0.1%

for the fourth month in a row, the Wholesale Trade, Sales and Inventories Report (pdf) from the Census Bureau indicated that wholesales sales fell in March from the prior month, against a March producer price index that showed most prices, other than for foodstuffs, were increasing... seasonally adjusted sales of wholesale merchants were estimated at $441.6 billion in March, down 0.2 percent (+/-0.7%) from the revised February level of $442.5 billion and down 4.0 percent (+/-1.4%) from the wholesale sales of March last year....moreover, the February preliminary estimate was revised downward $1.4 billion or 0.4%, leaving March wholesale sales 4.2% lower than December...March wholesale sales of durable goods rose by 1.3% percent (+/-1.1%) from February and were up 2.5 percent (+/-1.9%) from a year ago, with wholesale sales of electrical and electronic goods rising 3.2% and wholesale sales of autos and parts up 2.5%...meanwhile, wholesale sales of nondurable goods were down 1.5% (+/-0.7%) from February and were down 9.6 percent (+/-1.4%) from last March, as wholesale sales of raw farm products fell 7.0% and wholesale sales of petroleum and petroleum products fell 5.5%, mostly on lower prices...

this release also reported that seasonally adjusted wholesale inventories were valued at $574.5 billion at the end of March, 0.1% (+/-0.4%)* higher than the revised February level of $573.7 billion and 5.1% (+/-1.2%) above the value of wholesale inventories last March, while February's preliminary inventory estimate was revised down by $0.3 billion or 0.1%...the value of wholesale durable goods inventories were up 0.5 percent (+/-0.4%)  from February and up 7.4 percent (+/-1.6%) from a year earlier, as wholesale inventories of electrical and electronic goods rose 1.5% and are now 11.5% above a year ago....the value of wholesale inventories of nondurable goods was down 0.4% (+/-0.5%)* from February but were still 1.5 percent (+/-1.6%) higher than last March, as the value of wholesale inventories of petroleum and petroleum products fell 4.3% from last month while inventories of raw farm products were down 2.6%, again mostly due to lower prices...the closely watched inventory to sales ratio of merchant wholesalers was unchanged at 1.30, and although it was up from the inventory to sales ratio of 1.19 in March of last year, that was at a time when the higher sales of petroleum products vis a vis inventories counted as a much larger percentage of the overall ratio..  

March Consumer Credit Up a 7.4% Rate, Most in 8 Months

the Fed's G.19 Release on Consumer Credit for March indicated that total seasonally adjusted consumer credit outstanding increased by $20.2 billion to $3,363.3 billion, or at a 7.4% annual rate, the most in 8 months... the revolving credit portion of the aggregate, which would mostly be credit card debt, rose by $4.3 billion, or at a 5.9% annual rate, to $889.4 billion, after falling at a 3.3% rate in February, while non-revolving credit, which includes loans for cars and college tuition but not borrowing for real estate, rose at a by $19.2 billion to $2,458.6 billion, an annual growth rate of 7.9%....February's credit expansion was revised lower to show growth at a 5.3% rate, down from the 5.6% rate originally reported, with revolving credit falling at a 1.4% rate and non-revolving credit increasing at an 8.5% rate...

Foreclosure Starts Jump 18% in March as Seriously Delinquent Mortgages Average a Record 542 Days

the Mortgage Monitor for March (pdf) from Black Knight Financial Services (BKFS, formerly LPS Data & Analytics) reported that there were 782,155 home mortgages, or 1.55% of all mortgages outstanding, remaining in the foreclosure process at the end of March, which was down from 799,956, or 1.58% of all active loans that were in foreclosure at the end of February, and down from.2.13% of all mortgages that were in foreclosure in March of last year...these are homeowners who had a foreclosure notice served but whose homes had not yet been seized, and the March "foreclosure inventory" remains the lowest percentage of homes that were in the foreclosure process since late 2007... new foreclosure starts, however, rose to 94,138 in March, the 2nd highest level since December 2013. up from 79,740 in February and up from the 88,113 foreclosures started in March a year ago... 

in addition to homes in foreclosure, March BKFS data showed that 2,379,512 mortgages, or 4.70% of all mortgage loans, or were at least one mortgage payment overdue but not in foreclosure, down from 5.36% of homeowners with a mortgage who were more than 30 days behind in February, and down from the mortgage delinquency rate of 5.52% a year earlier...of those who were delinquent in March, 970,782 home owners, or 1.92% of those with a mortgage, were considered seriously delinquent, which means they were more than 90 days behind on mortgage payments, but still not in foreclosure at the end of the month...thus, a total of 6.25% of homeowners with a mortgage were either late in paying or in foreclosure at the end of March, and 3.47% of them were in serious trouble, ie, either "seriously delinquent" or already in foreclosure at month end...

as you know, the Mortgage Monitor is a mostly graphics presentation that covers a wide range of mortgage servicing issues….today we’ll just include that part of the Mortgage Monitor table showing the monthly count of active home mortgage loans and their delinquency status, which comes from page 15 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 the past year and for each January 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 the average length of delinquency for those who have been more than 90 days delinquent without foreclosure is rising again and is now at a record 542 days, while the average time for those who’ve been in foreclosure without a resolution is off its record high but still nearly three years at 1003 days…   

March 2015 LPS loan counts and days delinquent table 2

(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, most from the aforementioned GGO posts, contact me…)

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