Friday, November 6, 2009

Weekly Indicators

Well, we all know that the Big Kahuna this week was the Jobs report, showing a loss of 190,000 jobs in October, and a jump in the unemployment rate to 10.2%. Hourly earnings did increase, as did manufacturing hours, ovetime, and temp hiring. Still, regardless of what the GDP says, for average Americans who measure their well-being in jobs and wages, the Recession is definitely not over.

In other monthly figures, the wholesale inventory/sales ratio from two months ago dropped to 1.18. Projecting the steep decline forward to the present, wholesalers' supply is probably stretched taut. It should not be surprising if there is a sudden dramatic jump in manufacturing over the next few months. This is probably already reflected in the surge in the October ISM manufacturing report. But it was matched to the downside by the just-barely-positive non-manufacturing report, which also showed a decline in the employment number.

In other reports, auto sales for October rose strongly to an 10.5M seasonally adjusted annual rate, putting to rest the pessimists' wrong notion that cash-for-clunkers only borrowed sales from the future and so when it expired, auto sales would crash for months to come. To the contrary, October sales were the best all year ex-cash for clunkers.

Turning to high-frequency weekly indicators, while Shoppertrak reported Wednesday that "year-over-year retail sales declined 4.6 percent for the week ending October 31," these weekly Shoppertrak YoY sale reports have been consistently negative as compared to ICSC's same store sales.

Emblematic of that, ICSC same store sales for the final week of October were up 1.9% YoY and 0.1% WoW, the 5th week in a row of gains in both series. On a monthly basis, while as late as a week ago, ICSC Research expected same-store sales for October to be in the 0% to +1% range YoY, October same store retail sales actually rose 2.1%. All categories of stores except department stores saw increases.

With both auto sales and retail sales rising strongly, October's real retail sales number (the "holy grail" for future employment growth) is likely to look pretty good.

The Treasury Dept. reported total State and Federal withholding tax receipts of 137.7M vs. 157.7M in 2008 for the month of October. This metric typically lags the beginning and end of recessions by about 1 quarter, but is a decent measure of state and local fiscal distress. So far, there is no sign of a turnaround.

Weekly Railfax figures showed that rail traffic is beginning its regular seasonal decline, but less so than last year's drastic decrease, for better YoY comparisons.

Oil fell below $77/barrel on the poor unemployment figure.

Finally, Initial Jobless Claims fell to 512,000; and the 4 week average fell to 523,750, continuing the trend of reduced new layoffs since April.

Bottom line: this week's economic data suggests that the economic expansion continues to gain strength, but it is leaving behind far too many average Americans, and the numbers of those left behind continues to increase.
From Silver Oz, re auto sales:

While the auto sales number has shown improvement from its recent lower levels, it is still an extremely sales rate (as low as the depths of the 1982 recession) and is not near a level that the auto industry can stabilize on let alone thrive with. Improvement is nice, but I would be very hesitant to call any number below 12.5 million (SAAR) good. Just an interesting comparison; at the 10.5 million rate in 1982 we were selling .045 cars per capita, now we are selling but .035 cars per capita, so in a population neutral comparison in 1982 terms we are at an 8 million unit sales rate (or the equivalent from 1982 would have sold 13.5 million cars today). The good news is that the sales rate moved up, the bad news is that it has a long way to go before the auto industry will be out of the woods.