July’s job openings, wholesale sales, and Mortgage Monitor

it was a fairly light week for economic releases; the only regular monthly reports released this week were the Job Openings and Labor Turnover Survey (JOLTS) for July from the Bureau of Labor Statistics, the July report on Wholesale Trade, Sales and Inventories from the Census Burfeau, and the Consumer Credit Report for July from the Fed, which showed that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $17.7 billion, or at a 5.8% annual rate, as non-revolving credit expanded at a 6.7% rate to $2,691.8 billion and revolving credit outstanding rose at a 3.4% rate to $969.0 billion…in a once a year report, the BLS also released the Current Employment Statistics Preliminary Benchmark Revision, which estimated that 150,000 fewer payroll jobs were created in the year ending March 2016 than had been reported in the monthly Employment Situation reports we review monthly…however, this preliminary estimate does not yet affect jobs totals as they’re being reported; that will not happen until the final benchmark revision is published with the January 2017 employment report in February 2017….

other reports released this week included the August Non-Manufacturing Report On Business; which saw the NMI (non-manufacturing index) fall to 51.4%, from 55.5% in July, indicating a much smaller plurality of service industry purchasing managers reported expansion in various facets of their business in August than in July…in addition, the Mortgage Monitor for July (pdf) was also released by Black Knight Financial Services, which we’ll also review later today…

Job Openings were at a Record High in July,  with Hiring Up and Firings Down

the Job Openings and Labor Turnover Survey (JOLTS) report for July from the Bureau of Labor Statistics estimated that seasonally adjusted job openings rose by 228,000, from 5,643,000 in June to a record high of 5,871,000 in July, after June job openings were revised higher, from 5,624,000 to 5,643,000…July jobs openings were also 1.4% higher than the 5,788,000 job openings reported in July a year ago, as the job opening ratio expressed as a percentage of the employed rose from 3.8% in June to 3.9% in July, which was nonetheless unchanged from 3.9% a year ago…job openings increased in several sectors, with the 166,000 job opening increase to 1,270,000 openings in the broad professional and business services sector the largest increase for the month (see table 1 for more details)…like most BLS releases, the press release for report is easy to understand and also refers us to the associated table for the data cited, which are 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 July, seasonally adjusted new hires totaled 5,227,000, up by 55,000 from the revised 5,172,000 who were hired or rehired in June, as the hiring rate as a percentage of all employed remained at 3.6%, the same as in July a year earlier (details of hiring by sector since March are in table 2)….meanwhile, total separations fell by 27,000, from 4,964,000 in June to 4,937,000 in July, while the separations rate as a percentage of the employed was unchanged at 3.4%, which was also the separations rate of July a year ago (see table 3)…subtracting the 4,937,000 total separations from the total hires of 5,227,000 would imply an increase of 290,000 jobs in July, a bit more than the revised payroll job increase of 275,000 for July reported by the August establishment survey last week, but still not an unusual difference and well within the expected +/-115,000 margin of error in these incomplete samplings

breaking down the seasonally adjusted job separations, the BLS finds that 2,980,000 of us voluntarily quit our jobs in July, statistically unchanged from the revised 2,979,000 who quit their jobs in June, while the quits rate, widely watched as an indicator of worker confidence, was unchanged at 2.1% of total employment, while it was still up from 1.9% a year earlier (see details in table 4)….in addition to those who quit, another 1,579,000 were either laid off, fired or otherwise discharged in July, down by 43,000 from the revised 1,701,000 who were discharged in June, as the discharges rate remained unchanged at 1.1% of all those who were employed during the month, which was down from the discharges rate of 1.2% a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 378,000 in July, up from 363,000 in June, for an ‘other separations rate’ of 0.3%, which was unchanged from both June and from July of last year….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

July Wholesale Sales Down 0.4%, Inventories Flat

the July report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $441.9 billion, down 0.4 percent (+/-0.4%) from the revised June level, and down 1.0% percent (+/-0.9%) from wholesale sales of July 2015… the June preliminary estimate was revised down to $443.9 billion from the $444.6 billion sales reported last month, which meant that the June change was revised from the preliminary estimate of a 1.9 percent (+/0.5) increase to one of 1.7 percent (+/0.6)…. July wholesale sales of durable goods were up 0.2 percent (+/-0.5%) from last month and were up 0.7 percent (+/-1.4%) from a year earlier, with a 0.6% increase in wholesale sales of professional and commercial equipment and supplies and a 0.5% increase in wholesale sales of electrical and electronic equipment leading the increase for the month, offset by 0.3% lower wholesale sales of automotive equipment and machinery….wholesale sales of nondurable goods were down 1.0 percent (+/-0.5%) from June and were down 2.4 percent (+/-1.4%) from last July, with a 3.5% decrease in wholesale sales of petroleum and petroleum products accounting for about half of the July drop…as an intermediate activity, wholesale sales are not included in GDP except insofar as they are a trade service, since the traded goods themselves do not represent an increase in the output of the goods produced or finally sold….

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 but not sold, and this June report estimated that wholesale inventories were valued at a seasonally adjusted $591.3 billion at month end, statistically unchanged (+/-0.4%) from the virtually unrevised June level of $590.9 billion but 0.5 percent (+/-1.8%)* higher than in July a year ago….inventories of durable goods were up 0.3 percent (+/-0.2%) from June but down 1.8 percent (+/-1.6%) from a year earlier, with wholesale inventories of professional and commercial equipment and supplies up 1.4% in the most significant July increase…at the same time, the value of wholesale inventories of nondurable goods were down 0.3 percent (+/-0.5%)* from June but were up 4.3 percent (+/-2.5%) from last July, as the value of inventories of raw farm products fell 2.0% while wholesale inventories of chemicals and related products rose 1.4%…

like factory inventories, July wholesale inventories will be deflated with the appropriate sub-indices of the July producer price index, which showed that aggregate prices for finished goods were down 0.4% in July, with producer prices for food down 1.1% and producer prices for energy down 1.0%, following producer price index increases of 0.5%, 0.7%, and 0.8% in April, May and June respectively…since July prices were down 0.4%, that means the real quantity of July wholesale inventories, unchanged in value from June, was actually about 0.4% greater than June, following a second quarter when aggregate business inventories decreased….hence, the real increase in July inventories appears to provide a significant boost to 3rd quarter GDP from the wholesale component of business inventories…

Mortgage Delinquencies Up Again in July, Mean Time in Foreclosure Slips to 1084 Days

the Mortgage Monitor for July (pdf) from Black Knight Financial Services (BKFS, formerly LPS) reported that there were 550,075 home mortgages, or 1.09% of all mortgages outstanding, remaining in the foreclosure process at the end of July, which was down from 558,345 or 1.10% of all active loans, that were in foreclosure at the end of June, and down from 1.52% of all mortgages that were in foreclosure in July of last year…..these are homeowners who at least had a foreclosure notice served, but whose homes had not yet been seized, and the July “foreclosure inventory” now represents the lowest percentage of homes that remained in the foreclosure process since the middle of 2007… new foreclosure starts, which have been volatile from month to month, fell to 61,253 in July from 69,250 in June and were down from 71,500 in July a year ago; the 58,728 new foreclosures in April was the lowest in over ten years, so new foreclosures are now on a par with the foreclosure start level we saw during 2005 and 2006, before the mortgage crisis began…

in addition to homes in foreclosure, BKFS data also showed that 2,286,421 mortgages, or 4.51% of all mortgage loans, were at least one monthly mortgage payment overdue but not in foreclosure at the end of July, up from the 4.31% of homeowners with a mortgage who were more than 30 days behind in June, and up from the mortgage crisis low of 4.08% of all mortgages in March, but down from the mortgage delinquency rate of 4.67% in July a year earlier…of those who were delinquent in July, 695,148 home owners, or 1.37% of those with a mortgage, were more than 90 days behind on mortgage payments, but still not in foreclosure at the end of the month, which was up from 692,370 such “seriously delinquent” mortgages in June…combining the total number of delinquent mortgages with those in foreclosure, we find that a total of 2,836,496 mortgage loans, or 5.60% of homeowners with a mortgage, were either late in paying or in foreclosure at the end of July, and that 1,245,223, or 2.46% of all homeowners, were in serious trouble, ie, either “seriously delinquent” or already in foreclosure at month end…

once again, we’re including below that part of the monthly table showing the monthly count of active home mortgage loans and their delinquency status, which comes from page 16 of the Mortgage Monitor pdf, largely because with this report they’ve expanded the period covered by this table back to 2000, now giving us the historical details of the period before the mortgage crisis…the columns in the table below 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 over the past 7 months and for each January shown going back to January 2000…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 delinquent and stuck in foreclosure because of the lengthy foreclosure pipelines…thus we can see that the average length of delinquency for those who have been more than 90 days delinquent without foreclosure has now been reduced to 502 days, down from the April 2015 record of 536 days, while the average time of delinquency for those who’ve been in foreclosure without a resolution has slipped back to 1084 days from the record 1092 days set in May of this year…that still means that the average homeowner who is in foreclosure now has been there roughly three years, which, considering that this year’s new foreclosure starts were all less than 7 months old, suggests that many foreclosures started early in the crisis are still not yet completed… 

July 2016 LPS loan counts and days delinquent table

(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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