Paper Economy
This chart shows the annual figures for total employment in private nonfarm payrolls (in thousands) from 2002 to 2011. Since plummeting in 2009, employment has gained steadily. (SoldAtTheTop)
Private employment up in December
Today, private staffing and business services firm ADP released the latest installment of their National Employment Report indicating that the situation for private employment in the U.S. improved notably in December as private employers added 325,000 jobs in the month bringing the total employment level 1.81% above the level seen in December 2010.
Looking at the chart (click for full-screen dynamic version) showing ADP’s total private nonfarm payrolls since 2001 as well as the year-over-year and month-to-month percent change, you can see that while the job recovery had been anemic throughout most of 2010, more recently the trend had been picking up momentum.
Although the level of jobs is still far below the peak seen in late 2007 and still near the lows seen during the worst period of the "dot-com" recession, the bottom looks to be clearly defined and the trend is looking comparable to past recoveries.
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 chart shows the rate of total unemployment, whoch includes both traditionally unemployed and underemployed workers, since 2000. Rates have improved since 2009's peak but remain high. (SoldAtTheTop)
Unemployment rate drops to 8.5 percent
Today’s Employment Situation report showed that in December “total unemployment” including all marginally attached workers declined to 15.2% from the prior month's level of 15.6% while the traditionally reported unemployment rate also declined to 8.5%.
The traditional unemployment rate is calculated from the monthly household survey results using a fairly explicit definition of “unemployed” (essentially unemployed and currently looking for full time employment) leaving many workers to be considered effectively “on the margin” either employed in part time work when full time is preferred or simply unemployed and no longer looking for work.
The Bureau of Labor Statistics considers “marginally attached” workers (including discouraged workers) and persons who have settled for part time employment to be “underutilized” labor.
The broadest view of unemployment would include both traditionally unemployed workers and all other underutilized workers.
To calculate the “total” rate of unemployment we would simply use this larger group rather than the smaller and more restrictive “unemployed” group used in the traditional unemployment rate calculation.
This chart shows the yearly average contract interest rates for 15- and 30-year fixed rate mortgages since 2007. Rates have been falling steadily since enjoying a slight uptick at the beginning of 2011. (SoldAtTheTop)
Mortgage rates increase slightly
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 4.01% since last week while the purchase application volume declined 9.7% and the refinance application declined 1.9% over the same period.
With rates trending ever lower, the economy seemingly near recession and the FOMC members becoming more dovish by the day, it will be interesting to see how far rates on the long end can decline. All things being equal, falling home prices, declining purchase applications and record low long lending rates all appear to indicate a deflationary for the macro-economy.
The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).
This chart shows the yearly value, in millions, of construction spending put in place since 2004. Since the housing market's collapse after the 2006 peak, spending has been slow to recover. (SoldAtTheTop)
November construction spending shows weak expansion
Today, the U.S. Census Bureau released their latest read of construction spending showing near-cycle low levels of spending in November for residential construction while indicating a slight improvement for total non-residential spending.
On a month-to-month basis, total residential spending increased 2.01% from October and rose 2.70% above the level seen in November 2010 while remaining a whopping 63.97% below the peak level seen in 2006.
Single family construction spending increased 1.52% since October and rose 2.42% since November 2010 but remained a whopping 76.82% below it's peak in 2006.
Non-residential construction spending increased 0.4% since October climbing 4.46% above the level seen in November 2010 but remained a whopping 34.66% below the peak level reached in October 2008.
The following charts (click for larger dynamic versions) show private residential construction spending, private residential single family construction spending and private non-residential construction spending broken out and plotted since 1993 along with the year-over-year, month-to-month and peak percent change to each since 1994 and 2000 – 2005.
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