Constuction Spending: April 2011

Today, the U.S. Census Bureau released their March read of construction spending showing near-cycle low levels of spending for residential construction while indicating a slight improvement for non-residential spending.

On a month-to-month basis, total residential spending increased 3.14% from March falling 12.15% below the level seen in April 2010 and a whopping 65.68% below the peak level seen in 2006 while single family construction spending declined 0.95% since March falling 12.83% since April 2010 and whopping 77.75% below it's peak in 2006.

Non-residential construction spending increased 0.50% since March but declined 8.50% since April 2010 and a whopping 41.16% 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.

ADP National Employment Report: May 2011

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. stalled somewhat in May as private employers added a mere 38,000 jobs in the month bringing the total employment level 1.34% above the level seen in May 2010.

Looking at the chart (click for full-screen dynamic version) showing ADP’s total private nonfarm payrolls since 2001 as well as the year-over-year and month-to-month percent change, you can see that while the job recovery had been anemic throughout most of 2010, more recently the trend had been picking up momentum.

Although the level of jobs is still far below the peak seen in late 2007 and still near the lows seen during the worst period of the "dot-com" recession, the bottom looks to be clearly defined and the trend is looking comparable to past recoveries.

Perusing the rest of the data in the ADP dataset you can see the the economy is currently showing the most growth for small to mid-sized service providing jobs with goods-producing jobs remaining near trough levels.

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

Reading Rates: MBA Application Survey – June 01 2011

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 declined 11 basis points to 4.58% since last week while the purchase application volume went flat and the refinance application volume declined 5.7% over the same period.

Rates now appear to be trending down having, more of less, declined continually for the last four months.

Given that we are nearing the end of the Feds QE2 intervention, it will be interesting to see how long rates trend in the next few months.

In any event, the purchase application volume remains near the lowest level seen in well over a decade while refinance activity continues to slow.

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).