On The Margin: Total Unemployment July 2013

Today's Employment Situation report showed that in July “total unemployment” including all marginally attached workers declined to 14.0% while the traditionally reported unemployment rate dropped to 7.4%.

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.

Construction Spending: June 2013

Today, the U.S. Census Bureau released their latest read of construction spending showing notable weakening in June with total private construction spending declining 0.41% from May while single family private residential construction spending and non-residential construction spending also declined on the month.

On a month-to-month basis, total residential spending declined 0.02% from May climbing 22.40% above the level seen in June 2012 while still remaining a whopping 50.91% below the peak level seen in 2006.

Single family construction spending declined 0.81% since May rising 31.28% since June 2012 but remained a whopping 64.96% below it's peak in 2006.

Non-residential construction spending declined 0.86% since May falling 1.47% below the level seen in June 2012 and remained a whopping 31.80% 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.

Extended Unemployment: Initial, Continued and Extended Unemployment Claims August 01 2013

Today’s jobless claims report showed declines to both initial and continued unemployment claims as initial claims trended well below the closely watched 400K level.

Seasonally adjusted “initial” unemployment claims declined by 19,000 to 326,000 claims from 345,000 claims for the prior week while seasonally adjusted “continued” claims declined by 52,000 claims to 2.951 million resulting in an “insured” unemployment rate of 2.3%.

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 1.56 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.05 million people that are currently counted as receiving traditional continued unemployment benefits, there are 4.61 million people on state and federal unemployment rolls.

ADP National Employment Report: July 2013

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 in July as private employers added 200,000 jobs in the month bringing the total employment level 1.79% above the level seen in July 2012.

Look for Friday’s BLS Employment Situation Report to likely show somewhat similar trends.

Reading Rates: MBA Application Survey – July 31 2013

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 4.44% since last week while the purchase application volume declined 3% and the refinance application volume decreased 4% over the same period.

Rates now appear to possibly be trending down after weeks of explosive increases that saw a rise of over 100 basis points seemingly directly correlated with the Feds recent suggestion that they may start to wind down GSE purchases later this year.

It appears now though that Chairman Bernanke's latest comments might have worked to provide a bit more clarity surrounding the Feds plans for QE thereby working to halt the recent run-up in rates.

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).

S&P/Case-Shiller: May 2013

Today's release of the S&P/Case-Shiller (CSI) home price indices for May reported that the non-seasonally adjusted Composite-10 price index rose a notable 2.48% since April while the Composite-20 index also increased 2.44% over the same period.

The latest CSI data is continuing to demonstrate significant resiliency compared to past years, as prices remained stable through the typically slow winter and early spring period and now appear to be rising notably through the more active late spring period.

The 10-city composite index increased 11.82% as compared to May 2012 while the 20-city composite increased 12.17% over the same period.

Both of the broad composite indices still show significant peak declines slumping -25.01% for the 10-city national index and -24.39% 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.

Pending Home Sales: June 2013

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for June showing that pending home sales declined with the seasonally adjusted national index falling 0.4% from May but increasing 10.9% above the level seen in June 2012.

Meanwhile, the NARs chief economist Lawrence Yun is suggests that the recent run-up in interest rates worked to depress the latest read of contract activity:

"Mortgage interest rates began to rise in May, taking some of the momentum out of contract activity in June, ... The persistent lack of inventory also is contributing to lower contract signings."

The following chart shows the seasonally adjusted national pending home sales index along with the percent change on a year-over-year basis as well as the percent change from the peak set in 2005 (click for larger version).