 |
| iStockphoto/Thinkstock |
Read the entire interview: How an Architectural Firm Expands from Local to Global in One Year
Tuesday, July 2, 2013
Think and Design Without Borders: An Interview with Michael Ellis, 5+design
Read the entire interview: How an Architectural Firm Expands from Local to Global in One Year
Monday, July 1, 2013
Tuesday: June Auto Sales
More grim news from Europe: Joblessness Edges Higher To Hit a Euro Zone Record
Tuesday:
• All day: Light vehicle sales for June. The consensus is for light vehicle sales to increase to 15.5 million SAAR in June (Seasonally Adjusted Annual Rate) from 15.3 million SAAR in May.
• At 10:00 AM, the Manufacturers' Shipments, Inventories and Orders (Factory Orders) for May. The consensus is for a 2.0% increase in orders.
Unemployment in the euro zone continued its steady rise in May ... The jobless rate in the 17 countries that belong to the euro zone was 12.1 percent in May, adjusting for seasonal effects, according to a report from Eurostat, the European Union statistics agency. That figure compared with 12 percent in April ...That is the "good news"? Oh my ... epic failure. Here is the Eurostat unemployment data.
Joblessness in the euro zone has been rising almost without interruption since early 2008, when the financial crisis began, declining only briefly at the beginning of 2011. And analysts see little prospect for a sustained decline anytime soon ... Unemployment rates in Spain and Greece were about 27 percent in May, with youth unemployment remaining well above 50 percent. ... If there was any good news, economists said, it was that unemployment may not go up much more.
Tuesday:
• All day: Light vehicle sales for June. The consensus is for light vehicle sales to increase to 15.5 million SAAR in June (Seasonally Adjusted Annual Rate) from 15.3 million SAAR in May.
• At 10:00 AM, the Manufacturers' Shipments, Inventories and Orders (Factory Orders) for May. The consensus is for a 2.0% increase in orders.
Deutsche Bank: Pace of Construction Hiring to increase in 2nd Half of 2013
From the Financial Times: US construction hiring poised to explode (says Deutsche)
• From Michelle Meyer at Merrill Lynch: Construction Coming Back
• From Kris Dawsey and Hui Shan at Goldman Sachs: Housing Sector Jobs Poised for a Comeback
• From Jed Kolko at Trulia: Here are the “Missing” Construction Jobs
• From Professor Tim Duy at EconomistsView: Employment Report Nothing If Not Consistent
This graph shows total construction employment as reported by the BLS (not just residential).
Since construction employment bottomed in January 2011, construction payrolls have increased by 369 thousand. Historically there is a lag between an increase in activity and more hiring - and it appears hiring should pickup significant in the 2nd half of 2013 (Merrill estimates 20 thousand construction jobs per month will be added this year, Goldman estimates 25 to 30 thousand jobs per month, Deutsche Bank around 50 thousand jobs per month in the 2nd half).
[A]ccording to economists at Deutsche Bank ... if the volume of housing starts accelerate as they expect, construction industry will need about 300,000 new workers in the second half of the year.Earlier articles on construction employment:
excerpt with permission
• From Michelle Meyer at Merrill Lynch: Construction Coming Back
• From Kris Dawsey and Hui Shan at Goldman Sachs: Housing Sector Jobs Poised for a Comeback
• From Jed Kolko at Trulia: Here are the “Missing” Construction Jobs
• From Professor Tim Duy at EconomistsView: Employment Report Nothing If Not Consistent
This graph shows total construction employment as reported by the BLS (not just residential).Since construction employment bottomed in January 2011, construction payrolls have increased by 369 thousand. Historically there is a lag between an increase in activity and more hiring - and it appears hiring should pickup significant in the 2nd half of 2013 (Merrill estimates 20 thousand construction jobs per month will be added this year, Goldman estimates 25 to 30 thousand jobs per month, Deutsche Bank around 50 thousand jobs per month in the 2nd half).
Update: Recovery Measures
By request, here is an update to four key indicators used by the NBER for business cycle dating: GDP, Employment, Industrial production and real personal income less transfer payments.
Note: The following graphs are all constructed as a percent of the peak in each indicator. This shows when the indicator has bottomed - and when the indicator has returned to the level of the previous peak. If the indicator is at a new peak, the value is 100%.
These graphs show that most major indicators are still below the pre-recession peaks.
Click on graph for larger image.
This graph is for real GDP through Q1 2013.
Real GDP returned to the pre-recession peak in Q4 2011, and has hit new post-recession highs for six consecutive quarters.
At the worst point - in Q2 2009 - real GDP was off 4.7% from the 2007 peak.
This graph shows real personal income less transfer payments as a percent of the previous peak through the May report.
This measure was off 11.2% at the trough in October 2009.
Real personal income less transfer payments returned to the pre-recession peak in December, but that was due to a one time surge in income as some high income earners accelerated earnings to avoid higher taxes in 2013. Real personal income less transfer payments declined sharply in January (as expected), and were still 3.3% below the previous peak in May.
Real personal income less transfer payments will probably be the last major indicator to return to pre-recession levels (excluding the spike last December).
The third graph is for industrial production through May 2013 - although production growth has slowed recently.
Industrial production was off over 17% at the trough in June 2009, and has been one of the stronger performing sectors during the recovery.
However industrial production is still 2.1% below the pre-recession peak. This indicator might return to the pre-recession peak in late 2013 or in 2014.
The final graph is for employment and is through May 2013. This is similar to the graph I post every month comparing percent payroll jobs lost in several recessions.
Payroll employment is still 1.8% below the pre-recession peak and will probably be back to pre-recession levels in 2014.
All of these indicators collapsed in 2008 and early 2009, and only real GDP is back to the pre-recession peak (personal income returned to the previous peak in December due to a one time increase in income).
Note: The following graphs are all constructed as a percent of the peak in each indicator. This shows when the indicator has bottomed - and when the indicator has returned to the level of the previous peak. If the indicator is at a new peak, the value is 100%.
These graphs show that most major indicators are still below the pre-recession peaks.
Click on graph for larger image.This graph is for real GDP through Q1 2013.
Real GDP returned to the pre-recession peak in Q4 2011, and has hit new post-recession highs for six consecutive quarters.
At the worst point - in Q2 2009 - real GDP was off 4.7% from the 2007 peak.
This graph shows real personal income less transfer payments as a percent of the previous peak through the May report.This measure was off 11.2% at the trough in October 2009.
Real personal income less transfer payments returned to the pre-recession peak in December, but that was due to a one time surge in income as some high income earners accelerated earnings to avoid higher taxes in 2013. Real personal income less transfer payments declined sharply in January (as expected), and were still 3.3% below the previous peak in May.
Real personal income less transfer payments will probably be the last major indicator to return to pre-recession levels (excluding the spike last December).
The third graph is for industrial production through May 2013 - although production growth has slowed recently.Industrial production was off over 17% at the trough in June 2009, and has been one of the stronger performing sectors during the recovery.
However industrial production is still 2.1% below the pre-recession peak. This indicator might return to the pre-recession peak in late 2013 or in 2014.
The final graph is for employment and is through May 2013. This is similar to the graph I post every month comparing percent payroll jobs lost in several recessions.Payroll employment is still 1.8% below the pre-recession peak and will probably be back to pre-recession levels in 2014.
All of these indicators collapsed in 2008 and early 2009, and only real GDP is back to the pre-recession peak (personal income returned to the previous peak in December due to a one time increase in income).
Construction Spending increased in May
The Census Bureau reported that overall construction spending increased in May:
Click on graph for larger image.
This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.
Private residential spending is 52% below the peak in early 2006, and up 41% from the post-bubble low.
Non-residential spending is 32% below the peak in January 2008, and up about 26% from the recent low.
Public construction spending is now 17% below the peak in March 2009 and was up slightly in May.
The second graph shows the year-over-year change in construction spending.
On a year-over-year basis, private residential construction spending is now up 23%. Non-residential spending is down slightly year-over-year. Public spending is down 4.7% year-over-year.
A few key themes:
1) Private residential construction is usually the largest category for construction spending, and is now the largest category once again. Usually private residential construction leads the economy, so this is a good sign going forward.
2) Private non-residential construction spending usually lags the economy. There was some increase this time for a couple of years - mostly related to energy and power - but the key sectors of office, retail and hotels are still at very low levels. I expect private non-residential to start to increase soon.
3) Public construction spending increased slightly in May - and it is possible public construction spending is near the bottom. Public spending has declined to 2006 levels (not adjusted for inflation) and has been a drag on the economy for 4 years. In real terms, public construction spending has declined to 2001 levels.
The U.S. Census Bureau of the Department of Commerce announced today that construction spending during May 2013 was estimated at a seasonally adjusted annual rate of $874.9 billion, 0.5 percent above the revised April estimate of $870.3 billion. The May figure is 5.4 percent above the May 2012 estimate of $830.4 billion.
...
Spending on private construction was at a seasonally adjusted annual rate of $605.4 billion, nearly the same as the revised April estimate of $605.7 billion. ...
In May, the estimated seasonally adjusted annual rate of public construction spending was $269.5 billion, 1.8 percent above the revised April estimate of $264.7 billion.
Click on graph for larger image.This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.
Private residential spending is 52% below the peak in early 2006, and up 41% from the post-bubble low.
Non-residential spending is 32% below the peak in January 2008, and up about 26% from the recent low.
Public construction spending is now 17% below the peak in March 2009 and was up slightly in May.
The second graph shows the year-over-year change in construction spending.On a year-over-year basis, private residential construction spending is now up 23%. Non-residential spending is down slightly year-over-year. Public spending is down 4.7% year-over-year.
A few key themes:
1) Private residential construction is usually the largest category for construction spending, and is now the largest category once again. Usually private residential construction leads the economy, so this is a good sign going forward.
2) Private non-residential construction spending usually lags the economy. There was some increase this time for a couple of years - mostly related to energy and power - but the key sectors of office, retail and hotels are still at very low levels. I expect private non-residential to start to increase soon.
3) Public construction spending increased slightly in May - and it is possible public construction spending is near the bottom. Public spending has declined to 2006 levels (not adjusted for inflation) and has been a drag on the economy for 4 years. In real terms, public construction spending has declined to 2001 levels.
ISM Manufacturing index increases in June to 50.9
The ISM manufacturing index indicated expansion in June. The PMI was at 50.9% in June, up from 49.0% in May. The employment index was at 48.7%, down from 50.1%, and the new orders index was at 51.9%, up from 48.8% in May.
From the Institute for Supply Management: June 2013 Manufacturing ISM Report On Business®
Click on graph for larger image.
Here is a long term graph of the ISM manufacturing index.
This was slightly above expectations of 50.5% and suggests manufacturing expanded in June.
From the Institute for Supply Management: June 2013 Manufacturing ISM Report On Business®
Economic activity in the manufacturing sector expanded in June following one month of contraction, and the overall economy grew for the 49th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.
The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The PMI™ registered 50.9 percent, an increase of 1.9 percentage points from May's reading of 49 percent, indicating expansion in the manufacturing sector for the fifth time in the first six months of 2013. The New Orders Index increased in June by 3.1 percentage points to 51.9 percent, and the Production Index increased by 4.8 percentage points to 53.4 percent. The Employment Index registered 48.7 percent, a decrease of 1.4 percentage points compared to May's reading of 50.1 percent. Manufacturing employment contracted for the first time since September 2009, when the index registered 47.8 percent. The Prices Index registered 52.5 percent, increasing 3 percentage points from May, indicating that overall raw materials prices increased from last month. Comments from the panel generally indicate slow growth and improving business conditions."
emphasis added
Click on graph for larger image.Here is a long term graph of the ISM manufacturing index.
This was slightly above expectations of 50.5% and suggests manufacturing expanded in June.
Markit PMI shows "modest manufacturing expansion" in June, New export orders decline sharply
From MarkIt: Markit U.S. Manufacturing PMI™ – final data
At 51.9, the final Markit U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) signalled only a modest manufacturing expansion in June. Having fallen from 52.3 in May, and dropping below the earlier flash estimate of 52.2, the PMI indicated the slowest rate of growth since last October.The ISM PMI for June will be released at 10 AM today.
...
Firms generally linked the increase in output to larger volumes of new work, though new order growth was little-changed from May’s modest pace. Much of the increase in new work originated domestically, with new export orders falling for the second month running and dropping at the sharpest rate since August 2009.
...
Employment in the manufacturing sector was broadly unchanged in June. This ended a 40-month sequence of increases. A number of firms commented that higher new order requirements were balanced with attempts to control costs.
“Manufacturing clearly down-shifted a gear between the first and second quarters, and is at risk of losing further momentum as we head into the second half of the year." [said Chris Williamson, Chief Economist at Markit]
...
Domestic demand is far from lively, but it is a deteriorating export scene that is causing the real problems. Export orders are being lost at the fastest rate since the height of the financial crisis in mid-2009."
Subscribe to:
Posts (Atom)