Friday, September 3, 2010

Weekly Indicators: Honor Labor Edition

- by New Deal democrat

On Labor Day weekend, let us remember and vow to assist the 8 million workers who have been thrown out of their jobs since the beginning of the Great Recession, and to continue to press for policies thaat will get them all back to work. Bonddad had an extremely good idea earlier this week.

In the meantime, this morning we found out that, excluding the census, there were +60,000 jobs added in August. As I said last week, the critical part of this report I wanted to see was whether weakness would be confined to the two areas of expired stimulus - housing construction / real estate and state and local employment; or whether it was spreading out into other area. The answer is, the report was better on that score than I could have hoped. Government losses, ex-census, were only 7,000. Construction gained jobs (due to the ending of a strike), but was otherwise flat. The gains were relatively small, but they were broad-based. The household survey showed a gain of +290,000, for a gain of 1,438,000 so far this year - double that of the establishment survey. The report validated looking at the American Staffing Association Index, as 392,000 of the 763,000 jobs gained in the establishment survey so far this year have been temp jobs. Hours worked in manufacturing were up +0.1, which will add +0.07 to the LEI. One downside was the increase in U6 from 16.5% to 16.7%.

Other monthly data reported this week was either flat: auto sales, personal income, the ISM manufacturing index (a positive surprise though); or higher: personal spending, factory orders, pending home sales (also a positive surprise). So were August same store sales, up 3.2%. The savings rate declined, but that is good for the near term for growth. Construction spending continued to decline.

Now here's a look at high frequency weekly indicators:
The Mortgage Bankers' Association reported that "the Refinance Index increased 2.8 percent from the previous week and is at its highest level since May 1, 2009.... The seasonally adjusted Purchase Index increased 1.8 percent from one week earlier." The Purchase index continues to move generally sideways after bottoming. Refinancing is becoming a real story, having almost relentlessly risen since rates cratered 4 months ago, and is beginning to approach its highs from ! 1/2 years ago. Household debt is being delevered dramatically. This is a good sign for the future.

The ICSC reported same store sales for the week ending August 29 rose 2.8% vs. a year earlier, and also barely up +0.1% from the prior week. Shoppertrak, on the other hand, reported that "retail sales increased 5.4 percent for the week ending August 28 while sales slipped 4.6 percent versus the previous week ending August 21." A brief side note: there is a commenter who continues to repeat Mish's claim of survivor bias in same store sales. Aside from the fact that we have debunked this claim as to the census bureau data, readers may wish to ponder why the ICSC raw number tanked when Walmart pulled out of the survey.

Gas prices decreased $.02 to $2.68 a gallon, testing new lows since Oil peaked in April. At 9.386 million barrels consumed a day vs. 9.478 the same week last August, this is the first week in a while in YoY decline -- but 2009's number was an outlier, so I am not giving this much weight.

The BLS reported 472,000 new jobless claims, the second week back in its 8 month range. This time of year is the lowest "seasonal" layoff period, meaning unexpected layoffs get greater weight. With the census mainly unwound, and local school years having started, will we see declines in the weeks ahead?

Railfax once again showed substantial growth vs. last year in all 4 sectors: Cyclical, intermodal, baseline, and total traffic all continued to move significantly up, and intermodal traffic remains at new highs. Rail traffic seems to be an excellent real-time indicator of the economy, and has suggested that the downturn foreseen in the LEI beginning in April has already been happening. Rail traffic may now be telling us that the downturn in the private sector at least may be abating.

The American Staffing Association reported that for the week ending August 22, temporary and contract employment remained even at its two year high of 95.0.

M1 increased +1.3% in the last week, about 2.0% month over month, and up 5.0% YoY, so “real M1” is up 3.7%. M2 increased 0.15% in the last week, +0.5% month over month, and up 2.7% YoY, so “real M2” is up 1.4%. Real M1 remains a positive sign, while real M2 continues to counsel caution.

Weekly BAA commercial bond rates continued to drop, .05% more last week to 5.51%. If there are creditworthiness issues arising due to an anticipated "double-dip", they certainly aren't showing up here! BTW, this is confirmed by the fact the DJ Bond Index continues to make new weekly highs.

The Daily Treasury Statement ended August at $135.5 B vs. $126.4 B a year ago, a gain of $9.1 B or 7.4%%. For the last 20 reporting days, we are up ~4% vs. a year ago..

Bottom line: For the second week in a row, almost all of the weekly indicators were positive. Since April there have been a lot of weeks when the bear ate us, so we can be thankful that for a couple of weeks now, we have eaten the bear instead.

P.S.: A brief programming note. Although we are "closed" for the holiday, I may paste a tome on outsourcing and productivity if I don't party or sleep too much!

Whether you are a Doomer or a Happytalking Corporate Shill, enjoy your long weekend.