- by New Deal democrat
Four of the five data points that can help determine if we are headed for a 'double dip" recession have now been released. Last week retail sales fell 1%. On Wednesday, Housing Permits fell over 35,000. Meanwhile last week saw May's final M1 and M2 numbers improve. With the exception of Congressional action to help out the states (which is looking distressingly unlikely), today saw the last of the other pieces of data.
The monthly data released this week showed that Leading Indicators for May were up 0.4%, as bond yields, M2, and an increased manufacturing workweek counterbalanced declines in the stock market and housing permits. Industrial Production and Capacity Utilization also were both strongly positive, up +1.2% and +1.0% respectively. Housing permits and starts both dropped, -36k and -66k. Commodity, Producer, and Consumer Prices all were in deflation. -2.8%, -0.3%, and -0.2%.
Turning to the weekly indicators:
The ICSC reported that year over year sales were up 2.9% from last year for the week ending June 12, but off -0.7% from the previous week. Shoppertrak reported that sales increased 5.5% YoY for the week ending June 12, but fell 2.8%compared with the previous week that included the Memorial Day weekend.
The price of Gas declined again to $2.70. Gas is now off $.20 from its high of $2.90 in April. The 4 week average of usage last week remains very slightly down from last year, again suggesting that the price of Oil did begin to "bite" and suggesting a slowdown. The price of a barrel of Oil is less than 10% higher than last year at ~$76/barrel. It is somewhat disconcerting that, despite the EUro remaining near its multiyear lows, Oil has nevertheless made up about 50% of its decline from nearly $90/barrel.
The BLS reported 472,000 new jobless claims this week. This was a bad number. As I have said before, while we have no way of knowing from what sector this continued elevated level of layoffs is coming from, the monthly jobs reports make me suspect that it consists of construction jobs post expiration of the housing credit, and state and municipal workers. I strongly suspect that laid off Census workers are now also contributing to this total.
Since housing is so important, especially now, I am adding the MBA mortgage indexes to my weekly reports. For the week ending June 11, the Composite Index increased a seasonally adjusted 17.7%. The Refinance Index increased 21.1% over the previous week, while the Purchase Index increased 7.3%, the first increase since it went into a five week week tailspin. The four week moving average for the Market Index was up 3.8%, and up 5.5% for Refinancings, but still down 1.7% for Purchases.
The American Staffing Association did not publish a weekly index of temporary employment this week.
Railfax showed an improvement in cyclical loads this week, mainainting the advance compared with last year, but not improving on that.
Weekly M2 was up slightly; weekly M1 declined slightly. M1 is still over up 3% YoY in real terms, and "real" M2 has also turned positive, but not enough to signal that we are out of the woods.
But I have saved the best for last. Twelve days into June, the Daily Treasury Statement shows $89.8B in withholding taxes collected compared with $82.0B last year, a gain of $7.8B, or 9.5% YoY! For the last 20 reporting days, withholding taxes for 2010 are $123.4B vs. $120.6B a year ago, a gain of 2.3%. Remember that the last two weeks of May were positively awful, pulling in less than May of 2009. That situation has completely reversed. If this keeps up even one more week, it will strongly suggest a big upside surprise in June nonfarm payrolls (perhaps as employers who hesitated to hire in May due to the situation in Europe, pulled the trigger in June).
We have enough "juice" to give us a decent Q2 GDP, and the coincident indicators ex-retail sales look strong. The deflationary pulse and the strong decline in housing, together with the surprising resilience of Oil prices are of concern about Q3.