When all you read is gloom, turn here for a much different perspective.

Sunday, July 5, 2009

Weekly Good News Wrap June 29-July 4

  • Online Job Numbers Signal Hiring Bounce for Some

    Posted: Sun, 05 Jul 2009 05:33:00 +0000

    The Conference Board reported this week that there were 3,294,800 online job postings in June on more than 1,200 major Internet job boards.

    The postings between January and May signal an improvement from the decline of 1.2 million postings between August 2008 and January 2009.

    "Job demand has definitely stabilized since January," said Gad Levanon, from The Conference Board. "Although there is some bounce in the monthly numbers, the number of online advertised vacancies has held steady in the last three months."

    Renee Fulton, from the staffing firm Talis Group, said employers these days are looking to hire — and to hire quickly.

    She believes that companies needed the help long before now, but they had stopped job orders because of uncertainty in the economy.

    As a result, business was slow from November to March.

    But her outlook for the rest of 2009 is much more positive.

    Recent activity, particularly the placement of engineers in the manufacturing sector, has picked up. Last month the number of job orders for her firm was level with the same time frame last year. She said June 2008 was a very strong month.
  • More Economists Point to Recovery Signs

    Posted: Sat, 04 Jul 2009 03:25:00 +0000

    On June 1 we pointed to three clear markers that signified the beginning of US economic recovery. As we enter July more and more economists are also reflecting on the signs that the US economy as a whole isreturning to growth.

    On Tuesday, Rebecca Wilder in her excellent blog "News N Economics," reflected, "The labor market is almost surely the key to this recovery." She goes on to illustrate the "lagging peak" in initial jobless claims and it's correlation to the end of the recession. Robert Gordon published that back in April and we also pointed to his article in early May. Gordon's striking association between a GDP contraction trough and the final peak in unemployment claims for a recessionary cycle seems increasingly likely at this point in history as well.

    Wilder highlights more encouraging signs: "once claims do peak, they tend to fall rather quickly. Therefore, history suggests that [jobless] claims should start to drop off sharply in the second half of 2009 (coming months)."

    On Wednesday, James D. Hamilton (Professor of Economics at the University of California, San Diego) examines an excellent paper by James C. Morley, Associate Professor, at the University of Washington. Summarizing the Morley paper, Hamilton notes in his Econbrowser blog that "often a sharp economic downturn is followed by an equally sharp economic recovery." Hamilton continues, "So why would anyone predict anything other than a robust rebound? Will we see a robust recovery? I can't rule it out."

    And on Wednesday we heard what was likely the most positive news from Scott Grannis reporting on corporate layoffs. Scott observes that "layoffs have all but vanished." Layoff levels are essentially back to those observed during the growth years of 2004-2007.

    Meanwhile the beginnings of recovery in real estate continued this week. "Lower mortgage rates are helping to support the housing market," said Freddie Mac Chief Economist Frank Nothaft. "The 30-year fixed-rate mortgage rate peaked this year over the week of June 11 and is now around a quarter-of-a-percentage point lower this week." The Mortgage Bankers Association reported an increase in mortgage applications even though refinancing activity is at its lowest level since last fall. That means that significantly more applications are now being originated for home sales.

    That trend was further corroborated by the National Association of Realtors who reported a modest rise in pending sales of existing homes last month. Pending home sales now show a sustained uptrend, rising for four consecutive months through May.

    And as we noted earlier in the week, commercial real estate sales are also showing renewed signs of life.
  • US Economy Grows for Second Consecutive Month

    Posted: Thu, 02 Jul 2009 02:47:00 +0000

    Wednesday the Institute for Supply Managment published its manufacturing report for June 2009. It's overall index (PMI) bumped up for the sixth straight month and stood at 44.8%. The reading suggests, "the overall economy grew for the second consecutive month" in June.

    The reading also shows the overall manufacturing sector still on track for a return to growth in the fourth quarter of this year.

    Norbert J. Ore, chair of ISM's Survey Committee was quoted as saying "Manufacturing continues to contract at a slower rate, but the trends in the indexes are encouraging as seven of 18 industries reported growth in June. Most encouraging is the gain in the Production Index, which is up 12.1 percentage points in the last two months to 52.5 percent. Aggressive inventory reduction continues and indications are that the de-stocking cycle is at or near the end in most industries."

    The overall manufacturing trend continues to collorate well with the several manufacturing graphs we've published and tracked earlier in the year.

    With the June ISM index we have yet another concrete indictor that recovery has begun for this cycle.
  • A $4.3B Investment in Real Estate

    Posted: Tue, 30 Jun 2009 03:22:00 +0000

    On Monday, Blackstone Group (BX) said it had finished raising 3.1 billion euros, or $4.3 billion, for its Blackstone Real Estate Partners Europe III fund. (“BREP Europe III”)

    The placement will aim to exploit the real estate recovery.

    Blackstone had initially only sought to raise 2.5 billion euros for the fund, but found significantly moreappetite for real estate risk in the current environment.

    "BREP Europe III is well positioned to take advantage of the inevitable recapitalization of the propertysector," said Chad Pike, Senior Managing Director of Blackstone.


  1. GNE,

    What do you think of the Seeking Alpha guy who opines that the second half will not bring recovery but will be mired in recession because, among other things, California's dire economic situation? It seems the naysayers are coming back out of the woodwork in mass this week.

  2. The data just does not support those claims. It is likely that we will continue to see the naysayers for several months yet. Once initial claims drop significantly and we get the first GDP reading for Q2, the bears will have no where to go but back to their dens.

    There will alway be naysayers, but objectively more and more investors are seeing good news... The Rasmussen Investor Index, which measures the economic confidence of investors on a daily basis is now up twenty-two points from the beginning of 2009...


  3. GNE,

    Any sense yet how second quarter profits will shape up? I imagine this will be a real test as to whether the green shoots are real or not.

  4. With the economy continuing to contract in Q2, I'd say earnings will not be great, but neither will they be as negative as they were in Q1. The big news will be in the commentary execs give on their earnings conference calls. Look for many companies to "guide higher" for their q3 outlooks during those calls.


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