Sunday, January 25, 2015

December’s new housing starts and existing home sales, et al

the only widely watched releases of the past week were both housing related; New Residential Construction for December (pdf) from the Census Bureau, and Existing Home Sales for December from the National Association of Realtors (NAR); the week also saw the release of the Kansas City Fed manufacturing survey for January, which covers a region that includes western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, and which indicated a weaker expansion as energy related manufacturing contracted; in addition, the Philadelphia Fed released it's relatively new Nonmanufacturing Business Outlook Survey for January, which like the manufacturing survey from the same New Jersey, Delaware, and Pennsylvania region, saw its broadest diffusion index fall from a highly expansionary reading of 47.5 in December to 8.8 in January, also probably indicating a slowdown in businesses serving the energy industry....then on Friday, we saw the release of the December Chicago Fed National Activity Index, a weighted composite index of 85 different economic metrics, which fell to -0.05 in December from +0.92 in November, indicating growth slightly below the historical trend...

New Housing Permits and Starts Continue at a Million a year Pace

as you should all know by now, the Census reports on new housing are based on a survey of a small percentage of permit offices visited by Census field agents and have such a wide margin of error that they're useless for any analysis other than looking at the long term trend, but we still feel the need to point that out, as blog & media coverage still quotes the data as gospel, omitting any mention of a margin of error...the Census report on New Residential Construction for December (pdf) estimated that new housing starts were at a seasonally adjusted annual rate of 1,089,000 in December, which was 4.4 percent (±11.7%)* above the revised November estimate of 1,043,000 and 5.3 percent (±12.7%)* above the December 2013 rate of 1,034,000...the asterisks indicate that the Census does not have sufficient data to determine whether housing starts rose or fell for the month or even for the year...and of course, the annual rates are just extrapolations from the field agent survey, which which estimated 73,300 housing units were started in December, down from 78,400 in November, which was revised up from 77,500, with 48,000 of those December starts being single family dwellings, while construction was started on 23,800 apartment units in buildings with 5 or more units... adding those unadjusted monthly estimates for the 12 months of the past year, Census reports an estimated 1,005,800 housing units were started in 2014, 8.8 percent (±2.9%) above the 2013 total of 924,900...

similarly, the monthly estimates of new building permits are extrapolated into an annual rate, albeit with a narrower margin of error than new housing starts; for December, Census estimated new permits were issued at a seasonally adjusted annual rate of 1,032,000, which was 1.9 percent (±1.3%) below the revised November rate of 1,052,000, but was 1.0 percent (±1.1%)* above the December 2013 estimate of 1,022,000....those estimates were extrapolated from the unadjusted estimate of 80,600 new permits issued in December, which was up from the estimated 71,300 new permits issued in November...of those units permitted in December, 45,900 (±1.0%) were for single family homes, and 32,500 (±1.0%) represented permits for housing units in building with 5 or more units...for the year, an estimated 1,032,900 housing units were authorized by building permits, 4.2 percent (±0.9%) above the 2013 total...

Existing Home Sales Up 2.4% on Mild December

like the Census data, the National Association of Realtors (NAR) reports existing home sales at a seasonally adjusted annual rate, which means they're projecting how many homes would sell over a year if the seasonally adjusted sales of the given month were extrapolated over an entire year; in December, that results in a report which gives not only the seasonally adjusted annual rate for the current and recent month, but also the actual number of homes that sold over the past year....thus the NAR reported that existing home sales rose 2.4% to a seasonally adjusted annual rate of 5.04 million in December, from a downwardly-revised 4.92 million in November, while they also report that a total of 4.93 million homes actually sold in 2014, down 3.1% from the 5.09 million homes that sold during 2013...the actual unadjusted sales for December rose by 17.4%, from 351,000 in November to 412,000 in December, with all regions of the country seeing an actual increase of over 10% in home sales vs November, an increase probably facilitated at least in part by milder than normal December over most of the country...

for a more complete summary, the NAR press release, which is titled Existing-Home Sales Rebound in December, 2014 Total Sales Finish 3 Percent Below 2013, is written in plain English that's accessible to the typical reporter, so it should be easy reading for anyone who's attempted to read my summaries here...getting to the actual data on which this report is based is much more difficult...to start with, it's a four step navigation to the page where the links to the data are located (research and statistics > housing statistics > existing home sales > data summary page); then the links on the data page itself are mislabeled, and don't lead to what one would think they'd lead to based on their text; the only way to show that is to explain what each one actually is:

so, by viewing either of the last two above, we can see that the median home selling price for all housing types was $209,500 in December, up 1.1% from $207,200 in November, and 6.0% higher than the $197,700 median home sales price in December of last year, while the average home sales price was $255,800, up 0.8% from the $253,700 average in November, and up 3.7% from the $246,700 average sales price of December a year ago...for complete coverage of this report, Bill McBride has two posts, both with multiple graphs: Existing Home Sales in December: 5.04 million SAAR, Inventory down slightly Year-over-year and A Few Comments on December Existing Home Sales...similarly, he has two posts on the housing starts for December release from the Census, again with several of his very readable graphs: Housing Starts increased to 1.089 Million Annual Rate in December and Comments on December Housing Starts...also, remember that several paragraphs from all the reports of the past week, including the pdfs, can be viewed on one regular html webpage at the Research Economics page at OneWall.com

(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…)

Sunday, January 18, 2015

December’s retail sales, price indexes, industrial production; November’s business inventories and Mortgage Monitor

there was a full schedule of economic releases this week, including the Job Openings and Labor Turnover Survey for November from the Bureau of Labor Statistics (BLS), the Advance Retail sales report for December (pdf), and the Manufacturing and Trade Inventories and Sales report for November (pdf, aka "business inventories"),  both from the Census Bureau, the Import Export Price Indexes for December, the Producer Price Index for December and the Consumer Price Index for All Urban Consumers (CPI-U) for December, all from the BLS, and the December G17 release on Industrial Production and Capacity Utilization from the Fed...we also saw the releases of the first two Fed regional manufacturing surveys, the Empire State Manufacturing Survey (pdf) of New York and northern New Jersey from the New York Fed, and the Philadelphia Fed's December Manufacturing Business Outlook Survey of Pennsylvania, southern New Jersey, and Delaware, which was particularly noteworthy because their broadest composite index has now fallen over 2 months from a 21 year record high reading of 40.8 in November to 6.3 in January, its lowest in a year...undoubtedly, this is indicative of the quick change in business sentiment in the Pennsylvania area in the face of lower prices for natural gas, which have fallen by 35% over the past few months...similarly, with oil prices down by over 50% over the past six months, we should not be surprised to see regional recessions develop in the oil dependent states, like North Dakota, Alaska, Oklahoma and Texas, while other parts of the country see an ongoing recovery stimulated by lower energy costs...

December Retail Sales Fell 0.9%

the December retail sales report was one of the more surprising reports of this past year, as it indicated a seasonally adjusted sales drop of 0.9%, while November's sales were revised from down from up 0.7% to up just 0.4%...a drop of 6.5% in gasoline sales, due to lower prices, was a mitigating factor, but even taking sales at gas stations out of the picture, December's seasonally adjusted  retail sales were still down 0.4%...remember also that December's seasonal adjustment is the year's largest: estimated unadjusted sales in December, extrapolated from surveys of a small sampling of retailers, indicated sales rose to $505,251 million in December from $442,348 million in November, and up from the $483,162 million of sales in December a year ago.. since those sales were adjusted down by more than 12% to $442,931 million, it's evident that the seasonal adjustment could have been a factor in this report...in addition, the CPI report showed prices for goods less energy were 0.3% lower in December, so real retail sales of those goods were higher by that amount...nonetheless, the downward revision of November's sales, combined with seasonally adjusted December sales that were even lower than that, still means that our estimate of the real PCE contribution to 4th quarter GDP was way off the mark, and will probably closer to half the 4.2% growth we had guessed at..

since you're all familiar with the table from this report showing retail sales by business type that we've been including in this space for at least two years, we'll again post a copy of it here...to once again explain what it shows,  the first double column shows us the percentage change in sales for each kind of business from the November revised figure to this month's December "advance" report in the first sub-column, and then the year over year percentage sales change since last December in the 2nd column; the second double column pair below gives us the revision of the November advance estimates (now called "preliminary") as of this report, with the new October to November percentage change under "Oct 2014 r" (revised) and the November 2013 to November 2014 percentage change as revised in the 2nd column of the pair....then, the third pair of columns shows the percentage change of the last 3 months of this year's sales (October, November and December) from the preceding three months (July thru September) and from the same three months of a year ago....with an estimate for the change in sales of the 3 months of the 4th quarter vs the 3rd quarter now in place, combined with the consumer price data, we're able to estimate the contribution of retail sales to 4th quarter GDP...  

December 2014 retail sales

in the first column above, you can see which business types other than gas stations that contributed to lower December sales, most notably building and garden supply dealers and electronic and appliance stores, and see the few that had an increase, in particular furniture stores, and bars and restaurants, both of which saw sales rise 0.8%...for the best coverage of this report, Robert Oak at the Economic Populist includes 7 FRED graphs and three proprietary graphs that show the monthly percentage change as above as a bar graph, the dollar value of each as a bar graph, and a pie graph that shows the relative contribution of each business type to total sales...no one, however, covers the revisions to November, so we'll note a few of the more significant changes here...

so you all can follow along, here is a copy of the table from the advance report for November, as reported last month; the newly revised November sales are shown in middle two columns above...the first thing we note is that automotive sales weren't revised much; originally reported as increasing by 1.7%, they're still indicated 1.6% higher...hence, retail sales ex auto took a larger hit, revised from up 0.5% to up just 0.1%...by far the largest factor in that was a revision of November's gas station sales, which were originally reported down 0.8%, and now are seen to have decreased by 3.0%...other business types seeing notable downward revisions include clothing stores, sales of which were reported up 2.2% and are now revised to a 1.2% increase, sales at electronic and appliance stores, which were reported up 0.9% and are now shown as up just 0.1%, November sales at drug stores, originally reported up 0.8%, now revised to a 0.4% increase, and sales at bars and restaurants, which were reported as increasing 0.7% and have now been revised to show a 0.3% increase...in addition, both furniture stores and non-store retailers sales were revised 0.3% lower, while November sales at miscellaneous stores were revised up, from an originally reported decrease of 1.7% to a decrease of just 0.8%...

December Prices and their Impact on GDP

the three releases on December prices are also noteworthy, because the headline numbers on all of them indicate prices are falling...import prices fell 2.5% in December, export prices fell 1.2%, producer prices fell 0.3%, and consumer prices fell 0.4%, the largest drop in six years...lower energy prices accounted for much of the declines in those indexes, but even stripping out energy, only producer prices eked out an increase...what's important to realize about a falling price environment is that it changes the way we have to think about most of the other reports that we review, because any downturn they indicate may be just due to lower prices....for instance, last week we reported that November wholesale sales fell by 0.3%, while wholesale inventories rose by 0.8%; that was in part because wholesale petroleum sales fell by 2.1%, and despite the fact that wholesale petroleum inventories fell by 3.7%....but since wholesale crude oil prices were down 3.2% in November, that means actual sales of barrels of petroleum rose about 1.1%, while inventories, in barrels of oil, just fell 0.5%...with crude oil prices down 18.9% in December, it's almost a certainty that wholesale sales and inventories of non-durable goods, denominated in dollars, will fall when that report is released three weeks from now...but even so, such a report would indicate a positive contribution to GDP if the actual quantity of goods produced and sold or inventoried increases, irregardless of the headline change...in fact, even if GDP falls in dollars in a given quarter, it's still possible that quarter's GDP will be recorded as an increase if the deflator is negative...

the Consumer Price Index Summary from the BLS is written as a press release so it's a very readable overview.  note that a 9.4% drop in gasoline prices dragged down the energy index, which in turn pulled down overall prices, but even without food and energy, core prices were still unchanged...also note that "commodities less food and energy commodities" are now down 0.8% year over year, most of which came over the last two months...this means the average of all items bought at retail are dropping in price, and hence retail sales must be evaluated accordingly...at the end of the release are links to 7 tables, and an html version of the entire release...in reporting on this, we've focused on these three tables from that list:

Table 1 is just a brief summary, useful if you want to see the big picture; it includes the actual index value for each item listed, indexes which are based on prices of 1982 to 1984 equal to 100...thus, when we see that the gasoline index is now at 282.773, that means gasoline prices have gone up 282.8% over the past 30 years...table 1 also reports the unadjusted price change for each index, monthly and annually, and the seasonally adjusted percentage price change for each of the last three months...the "relative importance" column shows the percentage that each index contributes to the overall CPI...then Table 2 breaks those indexes down to show the monthly adjusted and unadjusted prices changes for roughly 200 line items; the first column shows the year over year price change, while the column on the far right is this month's change; clearly, many cuts of meat are still up around 20% on the year, while many energy commodities are down by a similar percentage...other than food and energy, only televisions, which have fallen in price by 16.5%, personal computers and peripheral equipment, which are 10.5% lower, and film and photographic supplies, which have risen by 23.4%, have seen price changes greater than 10% over the past year...finally, Table 3 gives us composite price indexes for broad areas of consumer spending, such as the housing index, which includes rent, utilities, furniture and appliances, sewer and water bills and the like, or the transportation index, which includes everything from airfare to tires as well as gasoline car prices, and also special indexes such as "services less rent of shelter"...if you need your data a bit more predigested, Doug Short and Steve Hansen at the Global Economic Intersection have a good recap of the December report, complete with historical charts and graphics, and Robert Oak covers it with 11 FRED graphs...

while the CPI release is very accessible, the new Producer Price Index News Release is nearly inscrutable, and hence no one covers this entire release in detail anymore...once thought of as just covering raw, intermediate and finished wholesale goods, a year ago the BLS added producer price indexes for services and several different classes of construction, and started describing their indexes in terms which might be technically correct but which almost no one understands...thus, within producer prices for services, we get price indices such as "producer prices for final demand services less trade, transportation, and warehousing"...it seems that the BLS wanted to create a core producer price index for services, so they isolated indices for trade, and for transportation and warehousing, into separate indices, leaving that monstrosity as their "core"...but unlike volatile food and energy indexes for goods, the separate indices for services are no more volatile than the overall index, and monthly price changes in producer prices for services might be driven by volatility in any sub-index..

in the producer price index release we have text describing the price changes, and tables showing them...i find it easier to read the tables, and the first one, "Table A. Monthly and 12-month percent changes in selected final demand price indexes, seasonally adjusted" shows the headline producer price index for each of the last 13 months under "total final demand", and the rest of the table shows the goods and services components of that, except for the last column, which shows the year over year change...hence we can see the 0.3% drop in producer prices in December was driven by a 1.2% drop in prices for goods, which in turn included a 0.4% drop in wholesale food prices and a 6.6% drop in wholesale energy prices...we can also note that wholesale food prices have been down 5 out of the last 13 months, and note the ongoing monthly drop in energy prices, whereas producer prices for services, which is a measure in the change in the middleman's margin, have been generally increasing slowly in all categories over the same period...

like all of the BLS press releases, the real details behind these producer price changes can be accessed through the tables at the bottom of the release...the first two, Table 1. Producer price indexes for final demand and Table 2. Producer price indexes for intermediate demand by commodity type are summary indices; but for those interesting in actual wholesale price changes, Table 4. Producer price indexes for selected commodity groupings by final demand category and Table 5. Producer price indexes for selected commodity groupings of intermediate demand by commodity, which also includes what were once called "raw goods", are most useful...in Table 4, for instance, we can immediately spot a 40.3% increase in wholesale eggs in the far right "November to December" seasonally adjusted price change column, and note a 49.0% one month unadjusted increase in wholesale egg prices a few columns to the left...also note that for services listed here, the increases or decreases are not changes in the price of, for example, internet access service or consumer loans, but that they represent the change in the margin that the provider of such services had received during the period....

while we've rarely mentioned import and export prices, they are becoming increasingly important as they drop, because these drops create the appearance that imports and exports are falling when the trade report is released, when in fact they are not...once again, the press release on the Import Export Price Indexes for December is very readable, so there's no point in my writing about it in my incomprehensible prose...just note that import prices were down by 2.5% in December, the 6th monthly drop in a row, largely because imported energy prices were down 15.1%; even so, non-fuel imports still fell in price by a small fraction for the 4th consecutive month...similarly, note that export prices fell 1.2% in December and are down 3.2% for the year, with agricultural export prices down 0.7% in December and 4.9% for the year...again, there are 8 tables at the bottom of the release with detailed price changes….these are important because each one of them is used in computing the deflator (or inflator) for imports and exports when computing GDP...thus, even though our imports and exports appear to be lower, once they're adjusted for these price changes, we find out that both have risen..

December Industrial Production Falls 0.1% on Good Weather

the Fed's G17 release on Industrial production and Capacity Utilization for December indicated that industrial production slipped 0.1% from a November reading which was 1.3% higher than October, which has been revised from 0.1% higher than September to now read unchanged...all the weakness was due to a warmer than normal December, which reduced utility production by a seasonally adjusted 7.3%; excluding utilities, all other industrial production was up by more than 0.6%, with manufacturing up 0.3% and mining, which includes oil & gas, up by 2.2%....remember, this report gives us no dollars values or units of production, rather all the data within this report is based on indexes, all of which were set to have their production of 2007 equal to 100...hence, the only way to report on it is to note the percentage change between the monthly, quarterly or annual index values....the landing page of the release, therefore, has a series of summary tables showing the monthly and annual index values and the percentage change between them; following that is a summary of percentage changes for industry groups, market groups, and capacity utilization data for both...at the end there are links to 3 charts and 14 more tables, which break the report down into detail...generally, in covering this report, we have accessed the following two of those: 

Table 1 gives the annual, quarterly, monthly, and year over year change in production for the three industry groups and dozens of market groups...it's difficult to read because as you scroll down the page, the column headings scroll off the top, but most of the time all you'll want to see are the two columns at the extreme right, which show the current month’s change and the year over year change...for December, however, we'd also want to peruse the quarterly figures, which will input into 4th quarter GDP...the easiest way to pick those columns out without a heading is by noting the magnitude of the numbers; the quarterly changes are expressed as growth at an annual rate, so the percentage increases for them are roughly 12 times the size of the monthly percentage change columns adjacent to them...thus, under "annual rate, 2014, Q4", we see that output of final products and supplies grew at a 5.9% annual rate in the 4th quarter, with growth in consumer goods production at a 5.8% rate, as production of consumer durables grew at a 1.2% rate, production of non-energy consumer nondurables grew at a 5.0% rate, and production of consumer energy goods grew at a 13.9% rate in the 4th quarter...all other 4th quarter growth rates are in that same column, and they're typically much larger numbers than the column to the right of them...

Table 7 shows the capacity utilization figures for a dozen types of durable goods manufacturers, 8 classifications of non-durable manufacturers, mining, utilities, and a handful of other special catagories...this is the the percentage of our plant and equipment in each category that was in use during the month...the table shows the historical averages, the highs and the lows, but the amount of industrial capacity we have had at any given point in time has been skewed by investment tax incentives, so comparing today to a previous period is not very meaningful unless one knows all the factors that went into decisions to build plant or increase equipment over time..thus the current and recent capacity utilization figures are those we'd look at for each industry listed...

November Business Sales Down 0.2%, Inventories Up 0.2%

the Manufacturing and Trade Inventories and Sales report for November (pdf), most often referred to as the business inventories report, showed a 0.2 percent (±0.2%)* decrease in sales and a 0.2 percent (±0.1%)* increase in inventories...sales fell 0.6% for manufacturers, leaving them only 0.2% above the year ago sales...as earlier reported, sales for retailers were 0.4% higher, and sales for wholesalers were down 0.3%..factory inventories  were up 0.1%, retailer inventories fell 0.3%, while inventories at wholesalers rose 0.8%...again, all these figures must be adjusted for inflation or deflation as the case might be before they are included in national product accounts..

Mortgage Delinquencies Rise 11.8% in November

we're also going to take a quick look at the the Mortgage Monitor for November (pdf) from Black Knight Financial Services (BKFS, formerly LPS Data & Analytics) this week, because it indicated a spike in mortgage delinquencies for the month, and also because it's seldom covered by the blogs or media...BKFS reported that 3,088,462 mortgage loans, or 6.08% of all mortgages, were at least one mortgage payment overdue, but not in foreclosure at month end, up 11.8% from 2,759,053, or 5.44% of homeowners with a mortgage who were more than 30 days behind for October, but still down 5.7% from the delinquency rate of 6.45% a year earlier...of those who were delinquent in November, 1,162,841 home owners 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, while 1,422,073 were behind by only one payment...this was the largest month-over-month increase in mortgage delinquencies for any month since November 2008, which BKFS oddly attributes to two federal holidays and a month ending on a Sunday, reducing the number of payment processing days for the month...but as we've noted many times in the past, there is normally an increase in mortgage delinquencies in November and December, as homeowners defer mortgage payments while shopping for the holidays, and then get caught up on their bill paying in the first three months of the new year..

BKFS also reported there were 828,682 home mortgages, or 1.63% of all mortgages outstanding, remaining in the foreclosure process at the end of November, which was down from 857,824, or 1.69% of all active loans that were in foreclosure at the end of October, and down from 2.50% of all mortgages that were in foreclosure in November of last year...these are homeowners who had a foreclosure notice served but whose homes had not yet been seized, and November's so-called "foreclosure inventory" was the lowest percentage of homes in foreclosure since early 2008... new foreclosure starts fell to 81,437 in October from 91,038 in October, the lowest number of new foreclosures since 2006 and well below the 104,939 foreclosures that were started in November of last year....adding foreclosures to delinquencies, we find that 7.71% of all homeowners with a mortgage were either late in paying or in foreclosure at the end of November, and also note that 3.86% of them were in serious trouble, ie, either "seriously delinquent" or already in foreclosure at month end...

the graph below shows the number of mortgages that were farther behind in their mortgage payments in each month since 2005 than they were in the prior month, divided into 4 types of mortgage delinquencies; those that were current in the prior month but became delinquent in the reporting month are shown in blue; those that transitioned from one month late to two months late are shown in red; while those that transitioned from two months late to 3 months late are shown in green...finally, of those who were more than 90 days delinquent in the prior month who were foreclosed on in each month is shown in purple... note the callout within the graph from BKFS indicating that November saw the most new 30 day delinquencies since June of 2013...

November 2014 LPS delinquency status

since we have not recently shown the table of non-current mortgages by state, we'll include the current update to that table here as well...shown below for each state and the District of Columbia are the percentage of home loans that were delinquent (Del%) in November, the percentage of mortgages that were in the foreclosure process (FC%), the total percentage of mortgages that weren't current with their payments (NonCurr%) and the year over year change in the number of non-current mortgages...note that states that have a judicial foreclosure process, where the bank must prove their right to foreclose on a homeowner in court, are marked by a red asterisk, claimed by servicers as the reason that foreclosures have been taking so long....there are now only 4 states that still have more than 3% of their mortgaged homes in the foreclosure process, and all are judicial states: New Jersey with 5.4%, New York with 4.3%, Florida with 3.8%, and Hawaii with 3.7% of their homes with mortgages in foreclosure...

November 2014 LPS state non current table

for more on the November Mortgage Monitor, including several more graphs on all aspects of November's mortgage servicing, see the "Closer Look at Delinquency Surge and Much More -Mortgage Monitor" from Mortgage News Daily; this is viewable in a browser window..


(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…)

Sunday, January 11, 2015

December employment and the week’s other economic reports; a Keystone XL update

the December Employment Situation Summary - essentially delayed a week due to the New Years holiday - was released on Friday; the establishment survey indicated an addition of 252,000 jobs in December, and a upward revision of 50,000 more jobs to the count of jobs previously reported for October and November...as a result, 2014 will go into the record books as seeing the greatest job creation since 1999, and the greatest private job creation since 1997...furthermore, there were less layoffs in 2014 than in any year since 1997, and there were fewer first time claims for unemployment rations per capita in the fourth quarter than in any quarter in US history...add to that the fact that the 3rd quarter saw the fastest economic growth since 2003, and that without an inventory buildup, and it looks like we're at the top of the economic cycle; believe it or not, it doesn't get any better than this...the standard of living for the masses may improve slightly if lower energy prices persist, but it's hard to imagine job creation or the economy getting any stronger than it is now, so we've essentially slipped down into an economy that's creating a lot more crappy jobs than it was before the recession...the upside for those still looking for work is that job creation tends to continue well after the economy has peaked..

the BLS press release itself is very readable, so you can get the basic details on the employment report from there...excellent summary charts are provided in the two posts covering the report from Bill McBride, here and here; Robert Oak includes 24 FRED charts in his post on the household survey alone....and as usual, selections from the blog posts offering the most detailed coverage of this report will be included at the beginning of our main section of links below....at the bottom of the press release there are links to roughly 30 tables which give us the statistical data behind what's covered in the two surveys; with these two tables summarizing the lot: 

the 16 " A" tables that follow are household data tables, while the 9 "B" tables are developed from the establishment survey...there's a summary in the press release with a basic outline of the types of jobs created; that's broken down into well over 100 job categories here: Table B-1. Employees on nonfarm payrolls by industry sector and selected industry detail, a table which we've often summarized...we've also often covered the weekly hours and weekly pay by industry, which are enumerated in detail in the tables here: Table B-2, Table B-3., Table B-7 and Table B-8; what appeared to be decent wage gains in November were reversed in December...the household survey showed that the unemployment rate fell from 5.8% to 5.6%; however, most of that was due to an increase of 456,000 to a total of 92,898,000 of us not counted in the labor force, a new record high, while the labor force participation rate dropped to a 38 year low at 62.7%...

other than the employment summary, the other key reports this week included the November report on our International Trade in Goods and Services from the Commerce Department and the Full November Report on Manufacturers’ Shipments, Inventories, & Orders (pdf, aka Factory Orders) from the Census Bureau...the International Trade report was notable in that both exports and imports fell (on a seasonally adjusted basis), with the imports dropping more, partially due to lower oil prices, resulting in a $3.2 billion improvement in the trade deficit to $39.0 billion....the international trade news release itself is very readable, while Robert Oak at the Economic Populist covers it in detail with several graphs here: Trade Deficit Declines 7.7% on Crude Oil Imports...for more details, the Full Release & Tables (PDF) linked on the sidebar, is very useful; Exhibit 7 and Exhibit 8 on pages 12 through 15 of the pdf provide a itemized breakdown of the dollar value of several hundred goods categories traded in October, November and for the year...

the 'Factory Orders' report includes 4 tables, for shipments, new orders, unfilled orders and inventories, with each listing dollar amounts for up to 50 different types of factories, over the last 3 months and annually, both seasonally adjusted and adjusted...i know of no blog or media site other than possibly trade publications that covers this report in detail; instead, the focus is almost always on the nearly meaningless monthly new orders, which can be extremely volatile (for instance, they fell by more than 10% in August after rising the same amount in July on the rollout of a new Boeing jet), but it's the other figures that count; as both shipments and inventories are included in GDP; shipments of course indicating goods that have been manufactured, sold and shipped, and inventories representing completed products still in the warehouse...and as we've pointed out repeatedly, the most important indicator of the health of the manufacturing sector in this report is the unfilled orders data; if that's rising, as it rose 0.4% in November, and as it has risen for 18 out of the last 19 months, that means the current factory operating rate is not keeping up with the new orders coming in, irregardless of whether the new orders fell from the prior month or not...

other reports released this week included the Monthly Wholesale Trade: Sales and Inventories report for November from the Census Bureau and the report on Consumer Credit for November from the Fed...the wholesale trade report surprised in that wholesale sales fell by 0.3%, while wholesale inventories rose by 0.8%; the weakness in sales was mostly in non-durable goods, which fell 0.8%, while inventories of both durable goods and non durable wholesale goods rose equally...the 2nd page of the wholesale trade pdf provides an itemized table of both sales and inventories, both seasonally adjusted and unadjusted...meanwhile, the consumer credit report showed a slowing expansion of credit, with overall credit up at a 5.1% rate in November, with non revolving credit (ie, for cars and student loans) up at a 7.5% annual rate, while revolving credit fell at a 1.3% rate...remember that the main paragraphs from all these reports, including the pdfs, and a number of other reports we dont cover can be viewed on one regular webpage at the Research Economics page at OneWall.com

it now seems certain that Congress will pass a bill mandating approval of the Keystone XL pipeline, and that Obama will veto it...the house passed just such a bill on Friday by a vote of 266-153, and indications are that at least nine Democrats will join the Senate Republican majority in passing the same bill and sending it to Obama next week...communiqués from the White House have indicated that a veto will be forthcoming; all that remains to be seen now is if those favoring construction of the pipeline can get enough support to override the veto; one tally counts at least 64 votes in favor of the pipeline in the new Senate...also clearing the way for construction, the Nebraska Supreme Court reversed a lower court’s decision that blocked the pipeline route through the state, once again giving the pipeline a legal go ahead...however, even if Obama's veto is overridden, it's not certain or even likely that the pipeline would be built anymore...as we pointed out in November, the Canadian Energy Research Institute estimated that oil-sands projects need a price of $85 a barrel to be profitable in the current cheapest (in situ) method, and that new mines will require $105 a barrel oil to be profitable; other estimates of costs for tar sand extraction are similar...terminal prices for West Canada Select (heavy) crude oil prices have been below $35 per barrel all week, and Canadian projects are shutting down even faster than those in the US, and some of that started even before prices fell; Norwegian oil giant Statoil pulled out of their tar sands project in September...in the past year, Shell, the French oil giant Total, and SunCor of Canada all cancelled their tar sands projects...even China's CNPC International pulled out of the oil sands and withdrew its support for Enbridge's Gateway project to deliver tar sands oil to the west coast...and with current tar sands production already flowing into the US through the Alberta Clipper pipeline to Wisconsin and the Flanigan South pipeline through Illinois & points south, there may not be enough additional tar sands output to justify construction of another redundant pipeline...so if approval from the US is forthcoming, and there is no tar sands oil to be shipped, it now seems quite likely that TransCanada would either delay or cancel the Keystone XL project altogether...

(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…)

Monday, January 5, 2015

on posting here, and on the week ended Jan 3rd

it wasn't a bad week to dispense with our full economic coverage, as there were few reports of note...probably the most widely watched of those was the S&P/Case-Shiller Home Price Indices for October, the home page of which links to this pdf with the detailed report and tables...the best coverage of Case-Shiller on the web was from Bill McBride, with the following two posts, which include several graphs: Case-Shiller: National House Price Index increased 4.6% year-over-year in October, followed by his analysis in House Prices: Better Seasonal Adjustment; Real Prices and Price-to-Rent Ratio in October….for a quick summary of the 20 city price index changes, the WSJ has an interactive table included here: A Look at Case-Shiller by Metro Area...the other hard data release was the Census report on Construction Spending for November (pdf) which estimated construction spending fell by 0.3%; that was after a 1.1% increase in October, so 4th quarter construction spending is still growing at a 5.9% annual rate vis-a-vis the 3rd quarter...this pdf report includes tables listing types and amounts of various public and private construction...

there were also three diffusion indexes released this week: the December Texas area manufacturing survey from the Dallas FedChicago Purchasing Managers Index (PMI) for December from the ISM-Chicago (pdf), and the December Manufacturing Report On Business and national PMI from the Institute for Supply Management (ISM)...diffusion indexes are calculated from surveys of business management wherein responses indicating business growth add 1 to the index or subindex, and responses indicating contraction either subtract from the index or aren't counted, such that indexes over zero or fifty mean a plurality of those surveyed indicated growth, while lower or negative numbers indicate a majority of responses were negative...

our elimination of the full coverage of weekly economic reports does not preclude the possibility that a report will be surprising or unusual enough to take at detailed look at here; i just want to dispense with the weekly regurgitating of every number that appears in a government or other widely watched release...for those who still need their weekly economic data fix, we would suggest the Research Economics page at OneWall.com; although there's no accompanying commentary, this page includes several paragraphs from each of the above reports, as well as a few reports we've rarely noted, such as a the weekly ICSC Chan Store Sales report and this week's Pending Home Salas index from the National Association of Realtors, all updated daily....for visualization of most of that, Doug Short has graphs of most of the important reports, but since his RSS feed hasn't been working regularly over the past few weeks, we'll point you to catch his latest updates on each report on his advisor's perspectives index page: http://www.advisorperspectives.com/dshort/updates/index.php ... 

i'm not sure what will fill this space yet but it seems likely that i'll at least in part revert to commenting on any economic policy charges that appear newsworthy; to that end we'll be watching the first actions of the new Republican congress, which apparently will being by replacing Doug Elmendorf, the current Republican director of the Congressional Budget Office, because he believes in arithmetic...you see, one job of the Congressional budget office is to "score" each bill that Congress proposes, or determine how much it will cost and how they'll pay for it...normally, the annual deficit predicted by the CBO is computed by estimating government spending and subtracting the expected revenues from taxes, and hence what normally happens when Congress cuts taxes is that the CBO would expect that the deficit would increase because revenues would fall...the incoming Republicans intend to install a Budget Office chief who'll initiate "dynamic scoring" of proposed tax cuts; what that means is that instead of government revenues falling when taxes are cut, the new CBO will assume that tax cuts will generate so much economic activity (ie, from the rich buying yachts with the largess and hence employing yacht builders who'll pay taxes) that revenues would actually increase, and hence the deficit would shrink...so, we'll try to keep track of this funny arithmetic and let you know how it works out...

as i mentioned in last week’s email, i am also writing about US and world gas & oil production & the oil price war that was started by OPEC in late November as it relates to US horizontal fracturing, ie, fracking, and also including some news on the movement opposing fracking, and posting that on a blog i started early December: Focus on Fracking....like what i've written here, that posting starts out as a Sunday morning newsletter that is emailed to my county's no-fracking google group, as well as to a few environmental journalists, wherein my synopsis precedes one of several unedited link collections that i'm now sending out on Sunday mornings...although i will be posting those newsletters online at Focus on Fracking each Sunday evening, it would be easy enough for me to include a BCC mailing list to my morning mailing of that collection, which is usually emailed within an hour or two after i mail these selected links...so if anyone wants to receive that "fracking" newsletter via email on Sunday mornings, write me at my gmail address, where you can also write me with any questions on any of the economic reports that i've covered here in the past, ask me to remove you from this mailing, or just about anything else...

(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…)