Category Archives: Housing

CPI, Empire survey, Redbook retail sales, Housing index

Posted on by

One of the Fed’s mandates. The ‘headline’ number is below target due to the energy impulse, but the ‘core’ rate, led by services, is on target. The question is whether energy prices, if they remain at current levels, will ‘pull down’ other prices. And the comparisons with last year are now vs the lower numbers that were released after the oil price collapse.

And not to forget that the Fed uses futures prices as indications of future spot prices, even for non perishables, which technically only represent ‘storage prices’.

So with oil futures prices substantially higher than spot (due to elevated storage costs which have been supported by Iran storing oil in anticipation of being able to sell it next year) the Fed’s forecasts will use those elevated prices to forecast that much more inflation.

United States : Consumer Price Index
er-12-15-1
Highlights
Consumer price inflation is very low though the deflationary thrust may be clearing. The CPI came in as expected with no change in November with the core rate, which excludes food and energy, also coming in at expectations with a moderate 0.2 percent gain.

Many components show declines in the month including transportation, apparel (where low import prices are still at play), and recreation. Food prices also fell in the month, which is the first drop since March, while energy prices really fell, down 1.3 percent in November reflecting a 2.4 percent decline for gasoline in a dip that continues to extend through December as well. But there are areas showing pressure including medical care for a second month in a row. Housing is also up but only at a moderate 0.2 percent with owner’s equivalent rent also up 0.2 percent.

Year-on-year prices are showing lift but reflect easy comparisons with price weakness this time last year. The overall rate is up 0.5 percent, 3 tenths higher in the month, with the core rate up 1 tenth to 2.0 percent which hits the Fed’s target.

This report is in line with the Fed’s outlook, showing an easing, at least to a degree, in deflationary pressures. But still falling fuel prices are definitely a live risk to the Fed’s inflation hopes.

Core vs. headline CPI:
er-12-15-2
The Fed uses the prices in green when forecasting inflation:
er-12-15-3
More bad stuff here. Employment is the Fed’s other mandate:

Empire State Mfg Survey
er-12-15-4
Highlights
Factory activity continues to contract in the New York manufacturing region and especially, unfortunately, employment and the workweek. The Empire State index posted its fifth negative reading in a row, minus 4.59 for December which however is the least weak reading of the run. New orders, at minus 5.07, are down for a seventh month in a row but here to the degree of contraction is easing. Not easing, however, is employment which is deeply negative at minus 16.16 for the fourth contraction in a row and the deepest since July 2009. The workweek is another disappointment, at minus 27.27 for the worst reading since even further back, to April 2009.

But there are pluses in this report led by a big gain for the six-month outlook, to 38.51 from 20.33. The gain reflects greater optimism for new orders and shipments but no greater optimism for employment where hiring is expected to be no more than moderate.

Turning back to negatives, prices received are down for a fourth month in a row, at minus 4.04. Contraction in prices for finished goods points to price concessions and lack of demand.

The recovery worst readings for employment and the workweek are definitely worrisome signs. Yes, this report has been running lower than other regional manufacturing reports but today’s results do not point to any year-end lift for the factory sector which is being hit by low exports and low prices.

er-12-15-5
Down again, not good:
er-12-15-6
And housing indicators continue to slow, contrary to all forecasts:

Housing Market Index
er-12-15-7

Share

Mtg apps, US wholesale trade

Posted on by

Maybe up from a year ago, but for the last several months flat to down and still at depressed levels:

United States : MBA Mortgage Applications
er-12-9-1
Highlights
The purchase index was little changed in the December 4 week, up 0.04 percent to an unusual second decimal place as published by the Mortgage Bankers Association. Year-on-year, however, the gain is robust with no decimals offered, at plus 29 percent. The refinance index, measured as usual with one decimal place, rose 4.0 percent in the week. No matter how many decimal places MBA may or may not use, the approaching readings for the purchase index will be interesting to watch as they will cover the reaction, if any, to next week’s pending rate hike by the Fed. The average rate for 30-year fixed mortgages with conforming balances ($417,000 or less) rose 2 basis points in the week to 4.14 percent.
er-12-9-2

Nothing good here, sales flat and inventories down a very small amount as sales/inventory stays way too high:

United States : Wholesale Trade
er-12-9-3
Highlights
Wholesale inventories fell 0.1 percent in October against no change for sales, keeping the stock-to-sales ratio for this sector unchanged at 1.31. Wholesale inventories are on the heavy side as this ratio is well up from 1.22 this time last year. Year-on-year, inventories are up 3.6 percent which is well ahead of a 3.7 percent decline for sales.

Inventory builds reflecting falling sales include metals and autos, though strong sales of the latter at the retail level point to a bounce back for related wholesale sales. Inventory draws reflecting rising sales include furniture, apparel, and farm products.

Businesses including wholesalers watch their inventory levels carefully, limiting unwanted overhang as much as they can especially when sales are slow. The decline in October inventories, together with a sizable 3-tenth downward revision to September to plus 0.2 percent, may be negatives for third-quarter GDP but are positives for the production and employment outlooks. Watch Friday for the business inventories report which will include data from the retail sector.
er-12-9-4

Share

Business Roundtable, Mtg apps, ADP, Productivity, 1 year charts

Posted on by

More evidence the capital spending contraction is not over:

CEO Confidence Goes From Bad to Worse

Dec 1 (Fox Business) — CEO confidence in the U.S. economy is dwindling. The Business Roundtable CEO Economic Outlook Index for the 4Q, which looks out six months, fell to the lowest level in three years

For third consecutive quarter, U.S. CEOs cautious on economy

Dec 1 (Reuters) — The Business Roundtable CEO Economic Outlook Index fell 6.6 points to 67.5 in the fourth quarter. The long-term average for the index is 80.1 points. Of the 140 CEOs surveyed, 60 percent said they expected sales to increase over the next six months, down from 63 percent during the previous quarter. The proportion of CEOs who said they expected their capital spending to decrease over the next six months rose to 27 percent from 20 percent in the third quarter. CEOs said that regulation was the top cost pressure facing their business, followed by labor and health care costs.

For the first six months of 2016, CEO expectations for sales decreased by 3.2 points and their plans for capital expenditures decreased by 16.7 points. Hiring plans were essentially unchanged from last quarter when they declined by nearly 8 points.

Nice to see purchase apps up but the 4 week moving average remains depressed:

MBA Mortgage Applications
er-12-2-27
Highlights
Purchase applications are moving sharply higher, up 8.0 percent in the November 27 week that, after a pause in the November 20 week, follows a 12.0 percent surge in the November 13 week. Year-on-year, purchase applications are up an eye-popping 30 percent in strength that points to much needed acceleration for underlying home sales. The rise in mortgage rates has triggered the move, encouraging buyers to step up and lock in rates before they move even higher. In contrast, demand for refinancing is easing, down 6.0 percent in the latest week. Rates edged lower in the week with the average for 30-year fixed mortgages ($417,000 or less) down 2 basis points to 4.12 percent.

er-12-2-26
The ADP number is a forecast for Friday’s Non Farm Payroll numbers, based partially on their own payroll data. We’ll see Friday how accurate it is this time:

ADP Employment Report
er-12-2-25
Highlights
ADP is calling for strength in Friday’s employment report, at a higher-than-expected gain of 217,000 for government payrolls in November. Month-to-month, this report is not always an accurate indicator for the government’s data, forecasting a much lower reading than what turned out for October and a much higher reading than what turned out for September. But ADP’s trend has been accurate, that is steady payroll growth near 200,000 — and today’s report points to strength that would be slightly above trend.

er-12-2-24
And seems to me what’s keeping unit labor costs up is low capacity utilization, as previously reported, and not wage increases. At some point business adjust with either fewer employees or higher output:
er-12-2-23
Note that this also peaked when oil related capital expenditures collapsed a year ago:

er-12-2-22
In fact it was about a year ago when oil prices fell below costs of production, triggering cuts in capital expenditures. At the time the oil price drop was universally deemed an ‘unambiguous positive’ for the US economy. I wrote that it looked to me like an unambiguous negative, listing my reasons why it would not support consumption or investment, but would instead induce a general economic deceleration with a high probability of negative growth, particularly after subsequent revisions of data.

So let’s look at a few 1 year charts to isolate what’s happened:

The Fed was looking for 3%+ as ‘monetary policy kicked in’ and oil prices helped consumption.

And Q4 is now looking even worse:
er-12-2-21

er-12-2-20

Consumption has decelerated:
er-12-2-19

er-12-2-18

Industrial production not so good:
er-12-2-17

Nor investment:
er-12-2-16

Or manufacturing:
er-12-2-15

er-12-2-14

er-12-2-13

er-12-2-12

How about employment?
er-12-2-11

er-12-2-10

er-12-2-9

Housing starts are back to where they started from, with a mini surge related to the NY tax bread the expired in June:
er-12-2-8

Non manufacturing slower to react, but sagging as well:
er-12-2-7

er-12-2-6

er-12-2-5
And credit aggregate growth has slowed as well:
er-12-2-4

er-12-2-3

Autos have been the ‘bright spot’ but turns out the growth has been from imports:
er-12-2-2

er-12-2-1

Share

Chicago PMI, Pending home sales, Dallas Fed

Posted on by

Another bad one, reversing last month’s suspect move up:

Chicago PMI
er-11-30-9
Highlights
Volatility is what to expect from the Chicago PMI which, at 48.7, is back in contraction in November after surging into strong expansion at 56.2 in October. Up and down and up and down is the pattern with prior readings at 48.7 in September (the same as November) and 54.4 in August.

New orders are down sharply and are back in contraction while backlog orders are in a 10th month of contraction. Production soared nearly 20 points in October but reversed most of the gain in November. Despite November’s weakness, employment are up slightly. Prices paid is in contraction for a fourth straight month.

Though this report points to November weakness for the whole of the Chicago economy, the volatility of the report should limit its impact on the month’s outlook.

Along with the ISM, it’s decelerated with the collapse in oil related capital expenditures, and nothing yet has come along to fill that spending gap (apart from building unsold inventory):
er-11-30-10

More bad, and it’s not like mortgage rates aren’t low:

Pending Home Sales Index
er-11-30-11
Highlights
Sales of existing homes have been soft and are not likely to pick up in the next few months based on October’s pending sales index which is up only 0.2 percent. Year-on-year, the index is up 3.9 percent which matches the rate of gain for final sales during October. Flatness, unfortunately, is the theme.

The Northeast did the best in October, up 4.5 percent for a year-on-year plus 6.8 percent. The West is next with pending sales up 1.7 percent for a year-on-year gain of 10.4 percent. Bringing up the rear are the Midwest, down 1.0 percent on the month for a year-on-year plus 3.3 percent, and the largest region which is the South, down 1.7 percent in October for the only negative year-on-year reading of minus 0.3 percent.

The National Association of Realtors cites low supply of available homes as a negative for sales and warns that prices in some markets are rising too fast, especially for first-time buyers. The association cites strength in the Northeast as an example, a region where price appreciation is lower and supply greater.

The new home market isn’t doing that much better than existing homes, with sales up 4.9 percent year-on-year in the latest available data. Watch for construction spending on tomorrow’s calendar, one aspect of the housing market that has been showing solid strength.
er-11-30-12

And in sync with last week’s existing home sales report also showing flatness at low levels:
er-11-30-13
Not as bad as expected but still in contraction mode:

Dallas Fed Mfg Survey
er-11-30-14
Highlights
The Dallas Fed’s general activity index is in contraction for an 11th consecutive month, at minus 4.9 for November which is, however, improved from October’s minus 12.7. The Econoday consensus was calling for an 11.0 point decline.

Order readings are also negative, at minus 1.6 for new orders, which is a 6 point improvement, but at minus 7.3 for the growth rate of new orders which is little changed from October and in the negative column for the 13th month in a row.

On the plus side is a second straight increase for production, up 4 tenths to 5.2. And readings on the business outlook are steady to higher.

But price data in the report are pushing further into negative ground with finished goods prices at minus 12.1 for an 11th straight negative reading, underscoring the deflationary effects of low energy prices on the Texas economy.

This report rounds out what is a flat to negative run of regional indications for the nation’s manufacturing sector during November, a sector that continues to be hurt by weak export demand and low prices.
er-11-30-15

Share

Mtg prch apps, Durable goods, Personal income and outlays, New home sales, Consumer Sentiment, PMI services

Posted on by

Purchase apps have been flat to down for quite a while now,
and the year over year comp will be reflecting that in a few months as well:

United States : MBA Mortgage Applications
er-11-26-1
Highlights
After spiking sharply in the prior when rates jumped and triggered concern they would move even higher, mortgage application volumes eased in the November 20 week as rates settled back with purchase applications down 1.0 percent and refinancing applications down 5.0 percent. However, purchase applications, up a stunning 24 percent year-on-year, are pointing very strongly to underlying gains for home sales. The average for conforming 30-year mortgages ($417,000 or less) fell 4 basis points to 4.18 percent after rising 6 basis points in the prior week.
er-11-26-2

Up more than expected, and the details highlighted below and year over year chart still looking recession:

United States : Durable Goods Orders
er-11-26-3

Highlights
The factory sector is showing life with new orders in October up a very solid 3.0 percent which just exceeds Econoday’s high-end forecast. Excluding transportation, and orders tied to the biennial Dubai airshow, new orders rose 0.5 percent which is also solid and higher than expected. And underscoring the gains in a significant way is sudden strength in orders for core capital goods, up an outsized 1.3 percent with the prior month revised from a decline to a 0.4 percent gain.

Looking at details, commercial aircraft orders surged more than 200 percent, which again is an anomaly, though in a sign of weakness out transportation, orders for motor vehicles fell 2.9 percent in the month. But this decline is probably not the beginning of a trend given still very strong vehicle sales.

Turning to capital goods industries, new orders for machinery jumped 1.6 percent with computer orders up 5.5 percent and communications equipment up 1.8 percent. Total year-on-year core orders are suddenly in the plus column, at 0.4 percent for the first positive reading since January. These gains speak to a rebound in expectations among businesses which perhaps are now looking for strength in the new year.

Among other readings, total shipments fell 1.0 percent in October which is not a good start to the fourth quarter with core capital goods shipments also lower, down 0.4 percent. Inventories do offer good news, down 0.2 percent amid concern that levels are too high right. And relative to shipments, if not orders, inventories are too high with the inventory-to-shipments ratio jumping to 1.66 from 1.64. Unfilled orders, however, are positive, ending two months of decline with a 0.3 percent gain.

The order data in this report are very encouraging and follow strength in the manufacturing component of the industrial production report. Together they point to a year-end rebound underway for what had been, at least, an export-depressed factory sector. As far as a December rate hike, this report will offset, at least to a degree and perhaps to a large degree, the softness in this morning’s PCE price data.

er-11-26-4

This is for consumer goods:
er-11-26-5

er-11-26-6

er-11-26-7
PCE for durable goods growth has been working its way lower ever since oil related capex collapsed about a year ago:

er-11-26-8

Spending is low and below expectations, and it’s spending that ultimately provides the income. Also, inflation related data remains depressed, perhaps giving the Fed pause regarding rate hikes. But perhaps not…:

United States : Personal Income and Outlays
er-11-26-9

Highlights
The core PCE is the Fed’s most important inflation reading and it is not showing rising pressure, coming in unchanged in October, vs an expected gain of 0.2 percent, with the year-on-year rate at 1.3 percent which is also unchanged. Consumer spending also proved soft, up only 0.1 percent vs expectations for a 0.3 percent gain. Spending shows flat readings across categories including only a small gain for services which usually are strong.

The income side is better, hitting expectations at a 0.4 percent gain with wages & salaries showing an outsized gain of 0.6 percent. And the outlook for future spending is solid with a strong 3 tenths rise in the savings rate to 5.6 percent.

Turning back to inflation readings, the overall PCE price index remains nearly dead flat in a reminder that fuel prices remain very low and should give a boost to durable spending during the holidays. The PCE price index is up only 0.1 percent, vs Econoday expectations for a 0.2 percent gain, with the year-on-year rate at a very telling and extremely low plus 0.2 percent.

Though income data in this report do point to consumer strength ahead, the spending data are not a strong start at all for the fourth quarter. These results, especially the core price readings, will not lift the odds for a December rate hike.

er-11-26-10

The consumer took a hit with the tax hikes and sequesters and that wide gap is still there:
er-11-26-11

Consumption growth is decelerating, including services:
er-11-26-12
er-11-26-13
er-11-26-14
This inflation indicator remains depressed:
er-11-26-15
Last month revised lower and this month below expectations, as a presumed housing ‘burst’ has again failed to materialize:

United States : New Home Sales
er-11-26-16
Highlights
New home sales are not surging, coming in near expectations in October at a 495,000 annualized rate. Though the month’s gain is 10.7 percent, it doesn’t quite reverse the prior month’s 12.9 percent plunge. Year-on-year new home sales are up a respectable looking 4.9 percent which, however, pales to the double-digit rates through most of the year.

Lack of supply is a key issue for the new home sector that is holding down sales, at only 5.5 months relative to sales which is down from 6.0 months in September. But actual new homes on the market are up slightly, at 226,000 which compares to 208,000 a year ago.

Unlike price data in this week’s Case-Shiller and FHFA reports, there is no indication of improved traction in what belies the lack of supply in the market. The median price, at $281,500, is down a very severe looking 8.5 percent in the month with the year-on-year rate at minus 6.0 percent.

The Northeast is showing very solid strength, up more than 100 percent in the month though sales levels in this region make up only a tiny fraction of national sales. The South, by far the largest region for new home sales, showed key strength in the month with a 8.9 percent gain. Year-on-year, the Northeast is out in front with a 60 percent gain followed by the South with a 5.2 percent gain. The West, a key region for home builders, shows a disappointing 2.6 percent year-on-year decline with the Midwest bringing up the rear at minus 4.8 percent.

The housing sector remains uneven with this report confirming lack of strength in Monday’s existing home sales report. Though there are indications, not in this report of course, of price traction in housing, conditions in the sector do not point to an increased chance for a December rate hike.

er-11-26-17
Still below the bottom of all prior recessions, and this is not population adjusted!
er-11-26-18
Sales are near the bottom of prior recessions:
er-11-26-19
A bit worse than expected:

Consumer Sentiment
er-11-26-20
Highlights
Consumer sentiment fell back in the last half of November to a final reading of 91.3 vs a mid-month flash of 93.1. Though November’s final is higher than the 90.0 final in October, the implied reading for the last two weeks is in high 80s/low 90s area and do, unfortunately, point to a possible effect from the Paris attacks. Like yesterday’s very disappointing consumer confidence report, weakness is centered in expectations with this component at 82.9 vs 85.6 for November’s flash. The implied reading here over the last two weeks is in the high 70s area which is noticeably below the mid-80s trend.

But in a positive that points to no immediate effect on consumer spending, the current conditions component shows much less weakness, down only 5 tenths from the flash at 104.3. Inflation readings are up from mid-month but little changed from October, at 2.7 percent for the 1-year outlook, which is unchanged from October, and at 2.6 percent for the 5-year outlook which is up 1 tenth from October.

This is the Markit index which tends to overstate things relative to other indexes:

PMI Services Flash
er-11-26-21

Share

Chicago index, PMI manufacturing index, Existing home sales, Saudi pricing

Posted on by

Still negative. This is just a composite of other indexes that have been released:

Chicago Fed National Activity Index
er-11-23-1
Highlights
October was a soft month for the economy but solidly improved from September, based on the national activity index which is at minus 0.04 vs September’s revised minus 0.29. October’s improvement is centered in the key component of employment, at plus 0.11 vs September’s minus 0.06. The gain reflects the month’s very strong 271,000 rise in nonfarm payrolls and the 1 tenth downtick in the unemployment rate to 5.0 percent.

Turning to the three other components, manufacturing was also a plus for October, from minus 0.17 in September to minus 0.05 and reflecting the related component gain in the industrial production report. The sales/orders/inventories component was little changed, at minus 0.01, as was personal consumption & housing at minus 0.09.

The improvement in October, however, did not lift the 3-month average, at minus 0.20 vs a revised minus 0.03 in September in a reminder that the nation’s economic growth remains, by historical standards, sub-par.

I don’t give much weight to the Markit reports as they have tended to overstate things, which makes this one somewhat interesting:

PMI Manufacturing Index Flash
er-11-23-2
Highlights
Markit’s U.S. manufacturing sample is finally reporting weakness, weakness long registered across the breadth of other manufacturing data. The manufacturing PMI, at 52.6 for the November flash, is still above 50 to indicate monthly growth but the rate of growth is the slowest for this sample in more than two years, since October 2013. Growth in new orders is also the slowest in just over two years with respondents citing special weakness in exports which, hit by the strong dollar and weak global demand, dipped back into the contraction column in the month. Markit’s sample still, however, reports a “robust” rate of production which is a positive indication for November industrial production.

Other readings include the first drop in a year for backlog orders and a fourth straight dip for finished goods inventories. Price data show contraction for inputs, one tied to lower transportation and commodity prices, and little change for finished goods prices. A sign of strength comes from another gain for employment, again in contrast to other data.

More evidence of a slowing housing market for all the reasons previously discussed:

Existing Home Sales
er-11-23-3

Highlights
Sales of existing homes are not a source of strength for the economy, down 3.4 percent in October to a slightly lower-than-expected annualized rate of 5.36 million. Year-on-year, sales are up only 3.9 percent which is the lowest for this reading since January. Weakness is split roughly even between single-family homes, down 3.7 percent in the month to a 4.75 million rate, and condos, down 1.6 percent to a 610,000 rate.

Lack of homes on the market, in a reflection of price weakness, remains a major factor holding down sales. Supply relative to sales is at 4.8 months, up slightly from the prior month but still below the 5.2 months of October last year. A reading of 6.0 months is considered a balanced market. The number of homes on the market, at 2.14 million, is actually below the 2.24 million this time last year, an unwanted surprise that the National Association of Realtors, which compiles the existing home sales report, calls “disturbing”.

Price data for October are once again weak, down 0.9 percent for both the median (at $219,600) and the average (at $262,800). Year-on-year, the median is up 5.8 percent with the average up 3.4 percent.

Regional sales data show a sharp decline in the West, down 8.7 percent in the month for a year-on-year gain of 2.7 percent. The South, which is the largest housing region, also shows weakness, down 3.2 percent for only a 0.5 percent year-on-year gain. The Northeast and Midwest were little changed in October with year-on-year appreciation very solid for both, in the high single digits.

But the weakness in the West and the weakness in the South are not positive indications for the housing sector where moderate strength on the new home side of the market is being offset by weakness on the existing side.

Familiar theme of deceleration after oil capital expenditures collapsed about a year ago:
er-11-23-4

Saudis in the news but doesn’t look like they’ve changed the pricing policy that brought prices down, as they work to let prices fall to the point they sell their entire output capacity, like all the rest do:

Oil gyrates after Saudi Arabia reiterates support for market

er-11-23-5
And it looks from this chart like spot prices remained subdued even during the days futures rose last week, and futures due ultimately converge to spot:
er-11-23-6

Share

Housing starts, High end weakness

Posted on by

Falling off, as previously discussed, particularly multi family, which had been the driver:

Housing Starts
er-11-19-1
Highlights
Pulled down by a big drop in multi-family homes, housing starts fell a steep 11.0 percent in October to a 1.060 million annualized rate that is far below Econoday’s low estimate. Starts for multi-family homes, which spiked in September following a springtime jump in permits for this component, fell back 25 percent in the month to a 338,000 annualized rate. Single-family starts fell a much less severe 2.4 percent to 722,000.

And there is important good news in this report. Permits are up, rising 4.1 percent to a 1.150 million rate that hits the Econoday consensus. Single-family permits are up 2.4 percent to a 711,000 rate with multi-family up 6.8 percent to 439,000.

Housing completions fell back in October, down 6 percent to a 965,000 rate that reflects lower work in the Northeast and Midwest. Homes under construction rose 0.9 percent to a recovery best 938,000 rate and are up a very strong 16.4 percent year-on-year, pointing, despite the slip in starts, to ongoing strength for construction spending, at least for October.

But the big drop in starts is definitely a negative for the near-term construction outlook, though the rise in permits points to subsequent strength.

er-11-19-2
er-11-19-3
er-11-19-4
er-11-19-5

Sotheby’s Offers Employees Voluntary Buyouts to Cut Costs

Nov 13 (Bloomberg) — Sotheby’s is offering employees voluntary buyouts to cut costs after a drop in third-quarter revenue grabbed more attention from the company’s investors than its largest ever semiannual auction season.

San Francisco in housing ‘correction’

Nov 5 (CNBC) — San Francisco homes are still some of the priciest in the nation, but sales of those houses are showing significant weakness. September sales were down 19.5 percent in the city from a year ago, according to the California Association of Realtors.

“We’re going through a kind of correction, as we have a lot of new developments being built right now. The supply is definitely on the rise,” said Justin Fichelson, an agent at Climb Real Estate Group in San Francisco. “The market is not going to continue going up like we’ve seen in the past two years, because prices are already high.”

London Mansion Prices Fall 11.5% as Home `Bubble’ May Have Burst

Nov 12 (Bloomberg) — Prices of homes valued at 5 million pounds ($7.6 million) or more fell 11.5 percent on a per square foot basis in the third quarter from a year earlier, according to Richard Barber, a director at broker W.A. Ellis LLP, a unit of Jones Lang LaSalle Inc. Sales volumes across all homes in the best parts of central London dropped 14 percent in the period, the realtor said on Thursday.

“The bubble may already have burst” for the most expensive homes, Barber said. Now, “36 percent of all properties currently on the market across prime central London are being marketed at a lower price than they were originally listed at, with the average reduction in price being 8.5 percent.”

Luxury-Jet Market Value Seen Slipping for First Time Since 2009

Nov 15 (Bloomberg) — Global long-term spending on private jets is starting to slow for the first time since 2009 as slumping commodity prices sap demand in emerging markets, according to an industry forecast.

Deliveries for the 11 years ending in 2025 will be valued at $270 billion, Honeywell International Inc. said Sunday in its annual survey of the luxury-aircraft market. That’s down 3.6 percent from last year’s comparable projection, and snapped a streak of gains since the last U.S. recession ended.

The decline reflects weakness in Brazil, Russia, India and China, the group known as the BRIC countries, and the impact of political conflicts in the Middle East and Africa, according to Brian Sill, chief of Honeywell’s business and general aviation unit. Delays in some new plane models are also pushing back demand, he said.

Jet shipments will drop 2.6 percent to 9,200 planes, according to Honeywell, whose forecast had predicted fluctuations in deliveries but no drop in the planes’ list value in the post-recession years. Large planes that had spearheaded the recovery are now seeing slower growth.

Share

Mtg Purchase Apps, Saudi Pricing History, China

Posted on by

So much for housing leading the way up- looks to have gone from flat to down:

MBA Mortgage Applications
er-11-12-1

sg2015111243711
For the most part Saudis have been lowering premiums and increasing discounts which causes prices to fall to get their sales up to their pumping capacity:
er-11-12-2

Not without a bit of pain, which they may have come to believe inevitable due to long term supply/demand dynamics:

Saudi Arabia risks destroying Opec and feeding the Isil monster

(Telegraph) &#8212 The rumblings of revolt against Saudi Arabia and the Opec Gulf states are growing louder. The International Energy Agency (IEA) estimates that the oil price crash has cut Opec revenues from $1 trillion a year to $550bn. US output has dropped by 500,000 b/d since April, but the fall in October slowed to 40,000 b/d. Total production of 9.1m b/d is roughly where it was a year ago when the price war began. A confidential order from King Salman has frozen new hiring by the state, stopped property contracts and purchases of cars, and halted a long list of projects.

We’ll see what this means in actual practice:

Li promises full use of fiscal weapons

(Xinhua) — To lead to a major lift in the nation’s productivity, the government will ensure a steady business environment for all major sectors of the market, the president said. The government will make full use of fiscal policies, reduce taxes properly and help companies to overcome their difficulties and upgrade structure, Li told the meeting. The government will invest more to improve infrastructure in central and western China to achieve balanced development, and private companies are welcome to invest in such projects, Li said.

Share

Lumber Prices, Small Business Index, Import Export Prices, Redbook Retail Sales, Wholesale Trade

Posted on by

Along with most indicators, this one turned south as oil capex collapsed:

Update: Framing Lumber Prices down Sharply Year-over-year

Here is another graph on framing lumber prices. Early in 2013 lumber prices came close to the housing bubble highs.

The price increases in early 2013 were due to a surge in demand (more housing starts) and supply constraints (framing lumber suppliers were working to bring more capacity online).

Prices didn’t increase as much early in 2014 (more supply, smaller “surge” in demand).

In 2015, even with the pickup in U.S. housing starts, prices are down year-over-year. Note: Multifamily starts do not use as much lumber as single family starts, and there was a surge in multi-family starts.
er-11-10-1

There were hopes that the last tic up was the beginning of a reversal but now seems the downtrend since the oil capex collapse may still be in progress:
er-11-10-2
er-11-10-3
The deflationary forces continue:

Import and Export Prices
er-11-10-4

er-11-10-5
No sign of consumer strength here:
er-11-10-6
Inventories remain high going into Q4:

Wholesale Trade
er-11-10-x
Highlights
Wholesale inventories rose 0.5 percent in September following an upward revised 0.3 percent gain in August. The September build appears to be intentional based on a 0.5 percent rise in September sales that keeps the stock-to-sales ratio for wholesalers unchanged at 1.31.

Inventories of autos rose 2.3 percent as wholesalers try to keep up with what is very strong retail demand for autos. Excluding autos, the stock-to-sales wholesale ratio is unchanged at 1.27.

Inventory draws reflecting gains in sales include computer equipment, electrical goods, and apparel. Wholesale inventories of furniture rose on a swing lower for sales.

Inventories in general are heavy and businesses, waiting for a pick up in sales, are being careful to keep them in check. Today’s results are in line with Commerce Department assumptions and should have little bearing on third-quarter GDP revisions. Watch Friday for the business inventories report which will include data from the retail sector.

er-11-10-7
Sales looking like recession:
er-11-10-8
er-11-10-9
Autos are just holding their own:
er-11-10-10

Share