Paper Economy
This chart shows total continued unemployment claims since 2010. Jobless claims dropped by 8,000 since the prior week. (SoldAtTheTop)
Jobless claims drop by 8,000
Today’s jobless claims report indicated a decline to both initial and continued jobless claims while initial claims continued to trend below the closely watched 400K level.
Seasonally adjusted “initial” unemployment claims declined by 8,000 to 355,000 claims from a revised 363,000 claims for the prior week while seasonally adjusted “continued” claims dropped to 3.127 million resulting in an “insured” unemployment rate of 2.4%.
Since the middle of 2008 though, two federal government sponsored “extended” unemployment benefit programs (the “extended benefits” and “EUC 2008” from recent legislation) have been picking up claimants that have fallen off of the traditional unemployment benefits rolls. ( Continue… )
This graph shows the Institute for Supply Management's Business Activity Index since 2006. (SoldAtTheTop)
Service sector slows in October
Today, the Institute for Supply Management released their latest Non-Manufacturing Report on Business indicating that service related business activity was slowed in October with the business activity component weakening and the overall non-manufacturing index declining to 54.2 from 55.1 in September.
At 55.4 the business activity index declined a notable 7.51% since September but remained 3.94% above the level seen a year earlier.
This month, service industry respondents are sounding mixed reporting "sluggish" conditions but steady activity:
"Business with markets and customers we serve remains strong." (Management of Companies & Support Services)
"Business is steady, with good fourth quarter expected." (Information)
"The sluggish pace of economic recovery coupled with rapid increases in gas prices on the West Coast continue to drag down customer traffic and discretionary spending. Levels remain well below last year." (Arts, Entertainment & Recreation)
"Ongoing concerns about healthcare reform; reluctance to expand or hire." (Health Care & Social Assistance)
"Outlook is positive yet still guarded. Clients have some pent-up demand that they are acting on with short-term contracts." (Professional, Scientific & Technical Services)
"More companies seeking relief from fuel increases." (Public Administration)
This graph shows total private non-farm payrolls since 2002. Private employers added 158,000 jobs in October 2012. (SoldAtTheTop)
Private employers add 158,000 jobs in October
Private staffing and business services firm ADP released the latest installment of their National Employment Report Thursday indicating that the situation for private employment in the U.S. improved in October as private employers added 158,000 jobs in the month bringing the total employment level 1.67% above the level seen in October 2012.
It's important to note that with this months release, ADP has teamed up with Moody's Analytics and completely revised all their jobs data in an effort to provide a more precise depiction of private job market dynamics as well as offer additional breakouts not found in prior releases.
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.
This graph shows total continued unemployment claims since 2010. Seasonally adjusted continued jobless claims dropped to 3.263 million since the prior week. (SoldAtTheTop)
Jobless claims fall by 9,000
Today’s jobless claims report indicated a decline in initial jobless claims while continued unemployment claims remained flat as seasonally adjusted initial claims trended just below the closely watched 400K level.
Seasonally adjusted “initial” unemployment claims declined by 9,000 to 363,000 claims from a revised 372,000 claims for the prior week while seasonally adjusted “continued” claims dropped to 3.263 million resulting in an “insured” unemployment rate of 2.5%.
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 2.13 million people receiving federal “extended” unemployment benefits.
Taken together with the latest 2.81 million people that are currently counted as receiving traditional continued unemployment benefits, there are 4.95 million people on state and federal unemployment rolls.
This graph shows Hong Kong residential property prices since 1997. (SoldAtTheTop)
Residential prices on the rise in Hong Kong
Recently, the University of Hong Kong released their Hong Kong Residential Real Estate Series (HKU-REIS) indicating that, in July, the price of residential properties increased 0.19% since June and climbed 7.54% above the level seen in July 2011.
The HKU-REIS is a set of property price indices constructed monthly using a “modified” repeat-sale methodology similar to that of the S&P/Case-Shiller indices yet suited to the Hong Kong property market.
This graph shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006. (SoldAtTheTop)
Mortgage rates up from last week
The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as the volume of both purchase and refinance applications.
The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.
The latest data is showing that the average rate for a 30 year fixed rate mortgage (from FHA and conforming GSE data) increased 1 basis point to 3.53% since last week while the purchase application volume increased 1% and the refinance application volume declined 6% over the same period.
Clearly, the Federal Reserve's QE3 announcement and implementation has had a notable effect on mortgage rates in recent weeks continuing to lift refinance application activity and possibly helping to establish a base of sorts to purchase applications.
The question is though, if the Fed is stimulating this activity by forcing artificially low rates, what would these trends look like if prevailing rates were based on a more fundamental market function?
This graph tracks the S&P/Case-Shiller Composite-10 Index since 2000. The Composite-10 home prices index increased 1.35 percent in August 2012 compared to August 2011. (SoldAtTheTop)
Home prices increase in August
The latest release of the S&P/Case-Shiller (CSI) home price indices for August reported that the non-seasonally adjusted Composite-10 price index increased 0.87% since August while the Composite-20 index increased 0.88% over the same period.
The latest CSI data clearly indicates that the price trends continued to experience a lift through the typically more active spring-summer season and as I recently pointed out, the more timely and less distorted Radar Logic RPX data while continuing to capture rising prices, is starting to see a leveling off of the trend as the data moves through the summer transactions and heads for the typical declines seen in late-summer and fall.
The 10-city composite index increased 1.35% as compared to August 2011 while the 20-city composite increased 2.03% over the same period.
Both of the broad composite indices show significant peak declines slumping -29.90% for the 10-city national index and -29.37% for the 20-city national index on a peak comparison basis.
To better visualize today’s results use Blytic.com to view the full release.
This graph shows real gross domestic product since 1999. On a year-over-year basis real GDP increased 2.32 percent in Q3 2012. (SoldAtTheTop)
GDP increases 2 percent in Q3
Today, the Bureau of Economic Analysis (BEA) released their first "estimate" of the Q3 2012 GDP reportshowing that the economy continued to expand with real GDP increasing at a tepid annualized rate of 2.0% from Q2 2012.
On a year-over-year basis real GDP increased 2.32% while the quarter-to-quarter non-annualized percent change was 0.50%.
The latest quarterly results indicate that the most notable source of weakness in the economy came from declining exports of goods and services, a notable decline private farm inventories and weakness in non-residential structures.
Government spending worked to buoy GDP with a 13% quarter-on-quarter increase in non-defense spending while a decline in imports of goods also added positively (declining imports contribute positively to the final GDP aggregate).
Other categories such as residential structures also saw notable slowing from the prior quarter registering a still respectable rate of 8.5% while non-residential fixed structures expand by just 0.6%.
Keep in mind that these results are likely very poorly estimated and are sure to be revised notably in following quarters and even years to come.
This graph tracks the Chicago Fed National Activity Index since 2001. (SoldAtTheTop)
Latest Chicago Fed data shows economic improvement in September
The latest release of the Chicago Federal Reserve National Activity Index (CFNAI) showed an improvement of the national economy with the index climbing from the prior month to stand at a very weak 0.00 while the three month moving average remained very near contraction territory at -0.37.
The CFNAI is a weighted average of 85 indicators of national economic activity collected into four overall categories of “production and income”, “employment, unemployment and income”, “personal consumption and housing” and “sales, orders and inventories”.
The Chicago Fed regards a value of zero for the total index as indicating that the national economy is expanding at its historical trend rate while a negative value indicates below average growth.
A value at or below -0.70 for the three month moving average of the national activity index (CFNAI-MA3) indicates that the national economy has either just entered or continues in recession.
This graph shows total continued unemployment claims since 2010. (SoldAtTheTop)
Jobless claims drop by 23,000
Today’s jobless claims report indicated a decline in initial jobless claims while continued unemployment claims remained flat as seasonally adjusted initial claims trended just below the closely watched 400K level.
Seasonally adjusted “initial” unemployment claims declined by a notable 23,000 to 369,000 claims from a revised 392,000 claims for the prior week while seasonally adjusted “continued” claims dropped to 3.254 million resulting in an “insured” unemployment rate of 2.5%.
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 2.08 million people receiving federal “extended” unemployment benefits.
Taken together with the latest 2.74 million people that are currently counted as receiving traditional continued unemployment benefits, there are 4.83 million people on state and federal unemployment rolls.
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