- by New Deal democrat
This week's most important statistic was surely 3rd quarter GDP, which came in at 2%,lukewarm and as expected: growth, but not enough to knock down unemployment. The Chicago PMI showed that in the Midwest at least manufacturing is still going strong. Consumers meanwhile are as gloomy as ever both about the present and the future. New and existing home sales bounced along the bottom.
Let's turn now to the high frequency weekly data.
Last Friday I said that "Purchase mortgage applications will be important to watch next week." The Mortgage Bankers' Association reported that its seasonally adjusted Purchase Index increased 3.5% last week, ending several weeks of steep decline. Thus it rebounded again from a reading back near July's lows and suggests they will indeed hold. Meanwhile, the Refinance Index increased 3.0% from the previous week. Refinancing is still proceeding at a fast clip in response to near record low 15 and 30 year mortgage rates.
The ICSC reported same store sales for the week ending October 23 increased 0.3% week over week, and were up only 1.9% YoY, again a very weak comparison with recent months. Shoppertrak once again did not report.
Gas prices declined 1 cent to $2.82 a gallon. Gasoline usage soared this week compared with the same week a year ago -- up 500,000 barrels a day at 9.358 vs. 8858 a year ago. This brought gasoline stocks down considerably, to about 5% above their normal range for this time of year. Oil stayed near $81-$82 a barrel, still near the upper end of its 6 month range.
The BLS reported 434,000 new claims. With the sole exception of one week in July that was distorted by unusual auto plant cycles, this is the lowest weekly number in over two years. It's only one week, and the 4 week average is still slightly above 450,000, but this is the most hopeful sign on jobless claims all year.
Railfax continued to show improvement across the board last week, but its rate of growth is not moreso than at this time last year. 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 advanced very slightly so that the index remained at 100.0 for the 4th week in a row. This index tends to stall in November before plunging in the second half of December, but it seems to have started early this year and bears further watching.
M1 declined .5% last week, but was up 0.5% 1month over month, and up about 6% YoY, so “real M1” is up 4.9%. M2 increased .15% last week, +0.8% month over month, and up 3.3% YoY, so “real M2” is up 2.2%. "Real" M2 is inching closer 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 0.02% last week to 5.76%. This compares with yields on 10 year bonds up +.04%.
Eighteen days into October, the Daily Treasury Statement is up $121.2 B vs. $109.4 B a year ago, a gain of 11%. For the last 20 days, receipts are up $131.4 B vs. $118.8 B a year ago, a gain of about 10.5%. The 20 day metric has been stuck very close to $130 B for several months. We really need to see this start going up, but seasonality is going to obscure the results beginning in a few week.
Retail sales are trending umcomfortably closer to zero growth YoY. On the other hand, with refinancing continuing, and possibly some long-overdue relief on the layoff front, they may not fall further. Altogether the news this week verified the prediction by ECRI's Lakshman Achuthan that there will not be a "double-dip", although a "soft landing" at 9%+ unemployment is not exactly something to cheer about.
Have a nice weekend!