Economic Jolt: Job Openings and Labor Turnover July 2011

Yesterday, the Bureau of Labor Statistics released their latest monthly read of job availability and labor turnover (JOLT) showing that private non-farm job “openings” increased 2.29% since June climbing 15.26% above the level seen in July 2010 while private non-farm job “hires” declined 2.03% from June remaining 1.92% above the level seen in July 2010

Job “layoffs and discharges” declined 3.65% from June falling 6.82% below the level seen last year while quitting activity increased 2.02% from June and 8.91% above the level seen in July 2010.

It’s important to understand that job “quits” are included as a component of the “separations” data series as “quitting” is a valid means of workers “separating” from employers but their inclusion tends to create an overall procyclical trend in what would otherwise be logically thought of as a countercyclical process (i.e. downturn leads to increase in separations not decrease).

Reading Rates: MBA Application Survey – September 07 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 9 basis points to 4.23% since last week while the purchase application volume declined 0.2% and the refinance application volume slumped 6.3% over the same period.

With rates at or near generational lows (including the 10-year T-Bill) and the FOMC members becoming more dovish by the day, it will be interesting to see where rates will go once clear details of QE3, purported to be focused more on long term rates, are revealed.

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).

ISM Non-Manufacturing Report on Business: August 2011

Today, the Institute for Supply Management released their latest Non-Manufacturing Report on Business indicating that overall service related economic activity remained weak throughout August while the business activity component declined on the month.

At 55.6 the business activity index declined 0.89% since July while sliding 0.36% below the level seen a year earlier.

Like the ISM Manufacturing index released earlier this month, the non-manufacturing sector respondents are raising some concern over a sluggish economy, pricing pressure and hesitant customers:

"Overall prices paid are increasing, while sales are still slightly behind projections." (Public Administration)

"This month we have seen a downward trend in sales activities due to weather and economic conditions." (Construction)

"Customer traffic is trending lower, but spending per person continues to increase. Labor cost savings realized through attrition, as fewer replacements are hired. The outlook for the remainder of 2011 is cautiously optimistic, with increased investment in marketing. 'Sticky prices' are keeping operating expenses elevated even as commodity supply eases." (Arts, Entertainment & Recreation)

"Business is holding, but looking weaker toward fourth quarter." (Professional, Scientific & Technical Services)

"Business climate uncertainty is increasing." (Management of Companies & Support Services)