Friday, October 22, 2010

Weekly Indicators: Indian Summer Edition

- by New Deal democrat

This week's column comes with a seasonally appropriate soundtrack that you can enjoy while you read the stats:

Monthly statistics this week included the LEI for September up .3 as expected, but August was revised down to +.1. This means an economy remaining just barely positive going forward. Meanwhile housing starts and permits moved in opposite directions, starts showing strength and permits weakness. Industrial production and capacity utilization both declined, the former down -.2%, showing the coincident economy in a stall. The Philly Fed index was also barely positive. One piece of good news was the American Institute of Architects index showing expansion for the first time in over two years, adding to the data suggesting that commercial construction will bottom out sometime next year.

Let's turn now to the high frequency weekly data. For the first time in over a month, this past week most were soft.

The Mortgage Bankers' Association reported that its Refinance Index increased 11.2% from the previous week, losing about 1/2 of the gain from the week before. Refinancing is still proceeding at a fast clip in response to near record low 15 and 30 year mortgage rates. The seasonally adjusted Purchase Index, however, decreased again by 6.7% from one week before, the second steep slide in a row. The purchase index is back near July's lows. This is probably in response to mortgage qualification standards that were tightened earlier this month but is a point of concern.

The ICSC reported same store sales for the week ending October 3 declined -0.7% week over week, and were up only 1.7% YoY, the weakest comparison in many months. Shoppertrak did not make a report again this week.

Gas prices rose 1 cent to $2.83 a gallon, and at usage at 8.891 million gallons was slightly below last year's 8.950. Gasoline stocks increased again, and continue to be 10% above their normal range for this time of year. Oil retreated to $81 a barrel, still near the upper end of its 6 month range.

The BLS reported 450,000 new claims, but last week's 463,000 new jobless claims were revised significantly upward to 475,000. The continually elevated layoffs has been the single most depressing weekly statistic all year. The four week average stands at 458,000.

Railfax continued to baseline and intermodal rail traffic improving last week. Economically sensitive waste and scrap metal improved still is running no better than last year's levels. This means there is trend growth but no higher.

The American Staffing Association reported that for the week ending October 19, temporary and contract employment declined very slightly -.21% but the ASA says the overall index remained at 100.0, equalling its two year high.

M1 declined 1% last week, but was up 0.6% 1month over month, and up about 5.5% YoY, so “real M1” is up 4.4%. M2 increased less than 0.1% last week, +0.7% month over month, and up 3.2% YoY, so “real M2” is up 2.1%. "Real" M2 remains close to breaking out of the "red zone" of +2.5%, which would give us the "all clear" as to any "double dip."

Weekly BAA commercial bond rates increased 0.15% last week to 5.74%. This compares with yields on 10 year bonds up +.05%. A smidgen of risk aversion entered the bond market this week.

Thirteen days into October, the Daily Treasury Statement is up $97.7 B vs. $84.8 B a year ago, a gain of over 15%! For the last 20 days, receipts are up $132.7 B vs. $116.9 B a year ago, a gain of about 13%.

Manufacturing in particular looks to be stalling, and there was some weakness carried over into same store sales, but nothing that qualifies as concern of a double-dip at this point. Purchase mortgage applications will be important to watch next week.

Have a nice weekend!