May reports on international trade, wholesale trade, job openings, consumer credit, and the Mortgage Monitor

  the key report of the past week was the May Report on International Trade, while we also saw the May Wholesale Trade, Sales and Inventories Report (pdf) from the Census Bureau, the May Job Openings and Labor Turnover Survey (JOLTS) from the BLS, which showed a record number of job openings, and the G-19 on May consumer credit from the Fed, which showed credit expansion slowed from last month…private releases included June Non-Manufacturing Report On Business from the Institute for Supply Management (ISM), which saw their non-manufacturing index rise to 56.0% from 55.7%, and the Mortgage Monitor for May (pdf) from Black Knight Financial Services, which showed mortgage delinquencies rose for a 2nd month running, and which we’ll also look at briefly today..

Trade Deficit Increases $1.2 Billion in May: Slight Real Decrease From 1st Quarter

our trade deficit increased by 2.9% in May as the value of both exports and imports decreased but our exports fell by a greater amount…the Census report on our international trade in goods and services for May indicated that our seasonally adjusted goods and services trade deficit rose by $1.2 billion to $41.9 billion in May from an April deficit which was revised from $40.9 billion to $40.7 billion….our May exports fell $1.5 billion to $188.6 billion on a $1.6 billion decrease to $127.7 billion in our exports of goods and an increase of $0.1 billion to $60.9 billion in our exports of services, while our imports fell $0.3 billion to $230.5 billion on a $0.4 billion decrease to $189.2 billion in our imports of goods and a $0.1 billion increase to $41.2 billion in our imports of services….

lower exports of capital goods accounted for the entire decrease in our exports and then some, as they fell $2,438 million to $44,896 million on a $1,240 million drop in our exports of civilian aircraft and decreases of over $300 million each in our exports of industrial engines, other industrial machines, and telecommunications equipment…we also saw $80 million decrease in our exports of consumer goods as decreases in exports of pharmaceuticals and cells phones offset an increase in our exports of artwork and antiques…offsetting decreases in those categories, we saw an $804 million increase to $37,695 million in our exports of industrial supplies, as our exports of fuel oil rose by $515 million and our exports of other petroleum products rose by $456 million…in other categories, our exports of automotive products rose by $106 million to $12,618 million, our exports of foods, feeds, and beverages rose by $181 million to $10,964 million, and our exports of goods not categorized by end use fell $19 million to $4,892 million…

reduced imports of capital goods, which fell by $781 million to $50,791 million on a $793 million drop to $575 million in our imports of oilfield equipment, lower imports of industrial supplies, which fell by $604 million to $40,945 million on a $372 million drop in oil imports, and a drop of $382 million to $10,500 in our imports of foods feeds and beverages accounted for the lower May imports; those were offset by a $847 million increase to $29,462 million in our imports of automobiles, parts and engines, a $16 million increase to $48,928 million in our imports of consumer goods, and a $468 million increase to $6,817 million in our imports of goods not categorized by end use…for more details, two itemized lists of the value of more than 200 export and import line items, both monthly and year to date, can be viewed in table form in exhibit 7 and exhibit 8 of the full pdf for this release

in determining how the April and May changes in trade will effect 2nd quarter GDP, the BEA adjusts each imported or exported item for inflation with the appropriate price change for that item or category from the Import and Export Price Indexes for those months to get the quantity of items traded, quite a tedious process which we’d be unable to duplicate…however, exhibit 10 in the pdf for this report provides us with monthly goods trade figures by end use category and in total in chained 2009 dollars, ie, the same inflation adjustment used by the BEA to compute trade figures for GDP, albeit these are not annualized here….

to compute the change in trade from the first quarter to April and May in GDP terms, we have to annualize the change in the monthly figures, which we do here by treating the average of April and May trade as a proxy for the total 2nd quarter figure, and compare that to the average we have for the first quarter…first, we find that our real goods exports averaged $119,172 million monthly in the first quarter, while April and May real exports averaged $120,651 million in 2009 dollars; then, comparing the change between the two as an annualized figure, we find that our real goods exports are rising at an 5.1% annual rate so far this quarter….computing similarly, our imports averaged $176,770 million monthly in the first quarter while they’ve averaged $178,307 million so far in the second quarter; meaning our imports are rising at a 3.5% annual rate so far this  quarter

as you’ll recall, exports add to GDP because they are domestic production that is not counted in any other GDP component, while imports subtract from GDP because they represent the portion of consumption or investment that occurred during the quarter that was not produced domestically….goods exports increasing at an 5.1% in the 2nd quarter would partially reverse their 11.6% 1st quarter rate of decline and would add ~0.48 percentage points to GDP, while imports increasing at a 3.5% rate would be less than half of the 7.2% rate of increased imports saw in the first quarter and would subtract ~0.45 percentage points from GDP….so if the April and May trade deficit persists in June, the slight improvement in net trade will add about 0.03 percentage points to GDP.. 

Wholesale Sales Up 0.3% in May; Inventories Rise 0.8%

the May Wholesale Trade, Sales and Inventories Report (pdf) from the Census Bureau estimated that seasonally adjusted wholesale sales were at $449.8 billion, increasing 0.3 percent (+/-0.5)* from the revised April level, while they still remained 3.8 percent (+/-1.2%) lower than wholesale sales of a year earlier…the April preliminary estimate was revised upward by $0.2 billion or less than a tenth of a percent…wholesale sales of durable goods slipped 0.1 percent (+/-0.9%)* after an increase of 1.2% in April and 0.9% in March and were 1.6 percent (+/-1.4%) higher than a year earlier, with a 2.0% decrease in electrical and electronic goods sales the major drag….wholesale sales of nondurable goods were up 0.7 percent (+/-0.5%) from April, but were down 8.3 percent (+/-1.6%) from last May with wholesale sales of petroleum and petroleum products up 4.3% on the month on higher prices…as an intermediate economic activity, wholesale sales are not included in GDP except as a trade service, as they do not represent an increase in our output of the goods traded…

on the other hand, the monthly change in private inventories is a major factor in GDP, as additional goods on the shelf represent goods that were produced, and this May report estimated that wholesale inventories were valued at $581.9 billion at month end, an increase of 0.8 percent (+/-0.4%) from the revised April level and 5.0 percent (+/-1.4%) higher than May a year ago, again with an April upward revision of $0.1 billion or much less than 0.1%…inventories of durable goods were up 0.6 percent (+/-0.4%) from April and were up 6.2 percent (+/-1.6%) from a year earlier, with inventories of all durable goods categories showing an increase, while the value of wholesale inventories of nondurable goods were up were up 1.2 percent (+/-0.5%) from April and were up 3.1 percent (+/-1.8%) from last May as a 4.4% increase in the value of inventories of petroleum and petroleum products was again a factor..

as you know, to approximate the contribution of wholesale inventories that are valued here in current dollars to the change in GDP, we must first convert these figures into an approximation of the change in the quantity of goods inventoried…we’d do that by deflating the value of each of the categories of inventories with the appropriate sub-index from the producer price index for the same month; in May, producer prices for finished goods rose 1.3%, largely on a 5.9% increase in wholesale energy prices, after April’s producer prices for finished goods fell 0.7%, again on a 2.9% drop in wholesale energy prices…that suggests that the May change in real wholesale inventories was negative by about a half a percent, after an April when real wholesale inventories rose by 0.8%…

Job Openings at a Record High in May; Hiring and Firing Falls

`by virtue of a downward revision of April job openings, the number of job openings reported by private businesses and government agencies in May were the highest since the labor department started tracking the metric in December 2000….the May Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics estimated that seasonally adjusted job openings rose by 29,000 to 5,363,000 in May after April job openings were revised from 5,376,000 to 5,334,000, while May’s jobs were still 16.3% higher than the 4,608,000 job openings reported in May a year ago…the increase in openings was spread across goods producing industries, services, and government, as only job openings in health care and social assistance fell by 23,000 (see table 1)…like most BLS releases, the press release for report is very readable and also refers us to the associated table for the data cited, linked at the end of the release…

the JOLTS release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and ‘other separations’, which includes retirements and deaths….in May, seasonally adjusted new hires totaled 5,000,000, down 34,000 from the 5,034,000 hired or rehired in April, as the hiring rate as a percentage of all employed remained slipped from 3.6% to 3.5%, the same hiring rate as in May a year earlier (details of hiring by industry are in table 2)… separations also fell, from 4,895,000 in April to 4,743,000 in May, as the separations rate as a percentage of the employed fell from 3.5% to 3.3%, the same rate as a year ago (see table 3)…subtracting the 4,743,000 total separations from the total hires of 5,000,000 would imply an increase of 257,000 jobs in May, remarkably close to the revised payroll job increase of 254,000 for May reported by the June establishment survey last week, considering large margins of error in both surveys…

breaking down the seasonally adjusted job separations, the BLS finds that 2,699,000 quit their jobs in May, down 10,000 from the revised 2,709,000 who quit their jobs in April, while the quits rate, widely watched as an indicator of worker confidence, was unchanged at 1.9% of total employment (see table 4)….in addition to those who quit, another 1,653,000 were either laid off, fired or otherwise discharged in May, down from the 1,784,000 discharges in April, as the discharges rate fell from 1.3% to 1.2% of all those who were employed during the month….meanwhile, other separations, which includes retirements and deaths, were at 391,000 in May, down from 402,000 in April, for an ‘other separations’ rate of 0.3%, which was unchanged…both seasonally adjusted and unadjusted details by industry and by region on hires and job separations, and on job quits and discharges can be accessed using the links to tables at the bottom of the press release

Consumer Credit Expansion Slows to a 5.7% Rate in May

the Fed’s G.19 Release on Consumer Credit for May showed that total seasonally adjusted consumer credit outstanding increased by $16.1 billion to $3,401.0 billion, or at a 5.7% annual rate, down from growth at 7.6% rate in both March and April … the revolving credit portion of the aggregate, which would mostly be credit card debt, rose by $1.6 billion, or at a 2.1% annual rate, to $901.0 billion, after rising at a post recession record 11.5% rate in April, while non-revolving credit, which includes loans for cars, yachts, and college tuition but not borrowing for real estate, rose at a by $14.5 billion to $2,500.0 billion, an annual growth rate of 7.0%….April’s total credit expansion was revised from $20.6 billion to $21.4 billion, or growth at a 7.6% rate, up from the 7.3% rate originally reported, with revolving credit rising at a 11.5% rate and non-revolving credit increasing at an 6.2% rate… oddly, the New York Times reported on this release with the headline “Consumer Borrowing Hits a Record $3.4 Trillion” and spoke of a surge in auto and student loans, when in fact the growth in new auto and student loans was well below the average of the past two and a half years and consumer credit has increased every month since 2011 (and hence every month sets a new record)

Delinquent Mortgages Rise Almost 4% in May to Nearly 5% of All Mortgages

the Mortgage Monitor for May (pdf) from Black Knight Financial Services (BKFS, formerly LPS) reported that there were 754,422 home mortgages, or 1.49% of all mortgages outstanding, remaining in the foreclosure process at the end of May, which was down from 763,531, or 1.51% of all active loans that were in foreclosure at the end of April, and down from 1.91% of all mortgages that were in foreclosure in May of last year…these are homeowners who had a foreclosure notice served but whose homes had not yet been seized, and the May “foreclosure inventory” remains the lowest percentage of homes that were in the foreclosure process since late 2007… new foreclosure starts rose, however, from 73,547 in April to 81,944 in May, while they remained lower than the 86,258 new foreclosures started in May of 2014, and while they’ve been volatile from month to month, they have remained in a range from 73,500 to 95,000 monthly since the beginning of 2014, which is still about twice the monthly level of new foreclosures we saw in the precrisis year of 2005…

in addition to homes in foreclosure, May BKFS data showed that 2,513,318 mortgages, or 4.96% of all mortgage loans, or were at least one mortgage payment overdue but not in foreclosure, up from 4.77% of homeowners with a mortgage who were more than 30 days behind in April, but still below from the mortgage delinquency rate of 5.62% a year earlier…BKFS attributes the increase, the second in a row, to the fact that the month ended on a Sunday, such that a portion of homeowner’s regular payment checks were thus delivered late…of those who were delinquent in May, 922,072 home owners, or 1.82% of those with a mortgage, were considered seriously delinquent, which means they were more than 90 days behind on mortgage payments, but still not in foreclosure at the end of the month…combining these totals, we find a total of 6.45% of homeowners with a mortgage were either late in paying or in foreclosure at the end of May, and 3.31% of them were in serious trouble, ie, either “seriously delinquent” or already in foreclosure at month end… 

as you may recall, the Mortgage Monitor (pdf) is a mostly graphics presentation that covers a variety of mortgage related issues each month; in addition to delinquencies and foreclosures, this May monitor also includes graphics showing mortgage prepayment rates, the ARM share of current mortgage originations, charts on home affordability based on their own home price index and Census income figures, and a look at mortgages that could be refinanced, and the purported advantages to homeowners of doing so…

the graph that we’ll include here, from page 7 of the mortgage monitor, shows the count of foreclosure starts as they occurred in each month since the beginning of 2008, wherein each bar represents monthly foreclosure starts, and within each bar foreclosure starts on mortgages that have never been in trouble previously are indicated in blue, and foreclosure starts on mortgages that had been in foreclosure at least once before are in red…the latter therefore represent mortgages that were in foreclosure, resolved that earlier foreclosure prior to a completed foreclosure sale either through a modification, or by making a payment to get caught up on their loan, only to fall behind on payments again and end up in foreclosure yet another time…the green line on the graph then shows such repeat foreclosures as a percentage of total foreclosure starts for the month, which has now risen to nearly 54% of all foreclosures, as a large number of those who’ve had their mortgages modified previously are now in foreclosure again…in May, new foreclosures rose by 9.3%, from 34,700 in April to 37,900 in May, while repeat foreclosures rose by more than 5,000 to over 44,000, or 13.4% over April’s level…

May 2015 LPS new and repeat foreclosures

we’ll also include below that part of the Mortgage Monitor table showing the monthly count of active home mortgage loans and their delinquency status, which comes from page 18 of the pdf….the columns here show the total active mortgage loan count nationally for each month given, number of mortgages that were delinquent by more than 90 days but not yet in foreclosure, the monthly count of those mortgages that are in the foreclosure process (FC), the total non-current mortgages, including those that just missed one or two payments, and then the number of foreclosure starts for each month the past year and a half and for each January shown going back to January 2008….in the last two columns, we see the average length of time that those who have been more than 90 days delinquent have remained in their homes without foreclosure, and then the average number of days those in foreclosure have been stuck in that process because of the lengthy foreclosure pipelines…the average length of delinquency for those who have been more than 90 days delinquent without foreclosure slipped from the April record of 544 days and is now at 535 days, while the average time for those who’ve been in foreclosure without a resolution is also off its record high but is still nearly three years at 1013 days…  

May 2015 LPS loan counts and days delinquent

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most from the aforementioned GGO posts, contact me…)

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