This week the initial strong showing of Industrial Production, up 1.0%, and capacity utilization, up 0.7%, were overshadowed by the outright decline in the Philly Fed index of -7.7, and the Initial Jobless claims report showing that new unemployment claims have shot up to 500,000 from 460,000 three weeks ago. July LEI were up anemically at 0.1. The general trend of the leading indicators for the last 4 months has been to converge on zero, which is about where I expect 3rd quarter GDP to wind up.
Here's what happened with the high frequency weekly indicators I follow:
The Mortgage Bankers' Association reported that "the[ir] Refinance Index increased 17.1 percent from the previous week and was the highest Refinance Index observed in the survey since the week ending May 15, 2009. The seasonally adjusted Purchase Index decreased 3.4 percent from one week earlier." The Purchase index remains above its lows from a month ago, and the overall trend of the last 6 weeks is sideways. It appears we've bottomed, but without any bounce back.
The ICSC reported same store sales for the week ending August 14 rose 3.3% vs. a year earlier, and declined -1.3% from the prior week. This is still a good showing, but less so than the 4% YoY comparisons we were seeing a month ago. On the other hand, Shoppertrakreported that for the week ending August 14, YoY sales were up 6.0%, and up a slight 0.8% vs. the prior week. In general, retail sales are still holding up well.
Gas prices decreased $.03 to $2.75 a gallon, back within its 3 month range, and at 9.459 million barrels consumed a day last week vs. 9.205 the same week last August.
The BLS reported 500,000 new jobless claims, the highest since last November. This is obviously bad, but I continue to caution that this data series is probably still distorted due to filings by some of the 500,000 laid off census workers, and also laid off municipal (*teachers*), state, and construction/real estate employees due to the ending of those two stimulus programs this spring are also excellent candidates.
Railfax continued U-turn upward from week, showing strong growth vs. last year in all 4 sectors: Cyclical, intermodal, baseline, and total traffic turned sharply up. Auto carloads rebounded strongly, but waste and scrap metal, although also turning upward, remained slightly below last year. As I have said in the last few weeks, rail traffic is suggesting that the double-dip is right now.
The American Staffing Association reported that for the week ending August 8, temporary and contract employment declined by -.69%, pushing the index back down to 93 (from its two year high last week of 94).
M1 declined -0.1% in the last week, but was up 1.0% month over month, and up 5% YoY, so “real M1” is up 3.7%. M2 increased 0.1% in the last week, and is up 0.4% month over month, and up 2.5% YoY, so “real M2” is up 1.2%. I would want to see real M2 up over 2.5% to feel confident that there will be no double-dip
Weekly BAA commercial bond rates dropped .08% more last week to 5.78%, still showing no sign of distress as might be found if another deflationary bust had started.
The good news in the Daily Treasury Statement. So far in August $91.0 B has been collected vs. $85.4 B a year ago, a gain of 6.5%. For the last 20 reporting days, we are also up about 6.5%, $12124.3 B vs. $117.0 B. As I discussed last week, this series shows that private sector employment is not declining.
That daily withholding taxes continue to record substantial increases, in the face of the poor initial claims, suggests that the weakness in jobs is generally coming from the public sector. The railfax data suggests that the fall-off in housing starts has already had an effect on that sector as well.
