by CalculatedRisk on 5/24/2011 12:25:00 PM
• From the Richmond Fed: Manufacturing Activity Stalled in May; But Expectations Remain Upbeat
In May, the seasonally adjusted composite index of manufacturing activity — our broadest measure of manufacturing — fell sixteen points to −6 from April’s reading of 10. Among the index’s components, shipments decreased nineteen points to −13, new orders dropped twenty-five points to finish at −15
The pace of hiring held steady at District plants in May. The manufacturing employment index was unchanged at 14 and the average workweek measure flattened, losing seven points to 0. However, wage growth slowed sharply, falling sixteen points to 6.
This was the first regional manufacturing survey to show contraction – the others showed sharply slower growth in May.
Also the Richmond Fed service survey indicated slowing: Service Sector Activity Slowed in May; Hiring and Wages Remained Strong at Non-Retail Firms, and Leveled off at Retail Businesses (This is new and not closely followed).
• FDIC releases Q1 Quarterly Banking Profile
The number of institutions on the “Problem List” flattened. The net increase of four, to 888, is the smallest in three-and-a-half years. The number of “problem” institutions is the highest since March 31, 1993, when there were 928. Total assets of “problem” institutions increased from $390 billion to $397 billion.
I’ll have more from this later.
• Home sales: Distressing Gap. The following graph shows existing home sales (left axis) and new home sales (right axis) through April. This graph starts in 1994, but the relationship has been fairly steady back to the ’60s. Then along came the housing bubble and bust, and the “distressing gap” appeared (due mostly to distressed sales).
Click on graph for larger image in graph gallery.
The gap is due mostly to the flood of distressed sales. This has kept existing home sales elevated, and depressed new home sales since builders can’t compete with the lowprices of all the foreclosed properties.
I expect this gap to close over the next few years once the number of distressed salesstarts to decline.
Note: Existing home sales are counted when transactions are closed, and new home sales are counted when contracts are signed. So the timing of sales is different. Also the National Association of Realtors (NAR) is working on a benchmark revision for existing home sales numbers and I expect significant downward revisions to sales estimates for the last few years – perhaps as much as 10% to 15% for 2009 and 2010. Even with these revisions, most of the “distressing gap” will remain.
• New Home Sales in April at 323 Thousand SAAR, Ties Record low for April