- by New Deal democrat
The big monthly news released this week was continued growth in nonfarm payrolls, up 244,000 in April. February and March were also revised higher. That makes 15 out the last 16 months that initial estimates have been revised upward. The household survey showed a decline of 191,000 jobs, so the unemployment rate went back up to 9.0%. Signifcantly, temporary hiring declined, while construction employment remained steady. While manufacturing continued strong, via the ISM manufacturing index, the ISM non-manufacturing index slipped sharply. Income and spending for April were reported higher, as were monthly same store sales.
Despite the good April payroll news, I sincerely hope that readers of this blog were not surprised by the several suddenly punk reports this past week. Back in January I said that I expected the economy to stall in the second and third quarters due to Oil and Austerian stupidity. Week after week for at least three months in this column I have been reporting the slowly deteriorating YoY numbers in many indices. This week the MSM's complacency was finally broken. So was the speculative surge in several commodities, most especially silver - which caused Oil to back off 10% in a single week. For the next several months I expect to be chronicling the coincident damage, while we wait to see how long it takes high prices to cure high prices, and how much Austerian stupidity emanates from Versailles.
So, turning to the high-frequency weekly indicators:
As indicated above, Oil started the week over $110 but finished at about $97.50 a barrel by Friday. Nevertheless, it still remains slightly above 4% of GDP. Gas at the pump increased $.08 more to $3.96 a gallon - with the exception of 8 weeks in 2008, an all time high. Gas prices have gone up over $1 a gallon in less than 5 months. Gasoline usage at 8943 M gallons was 2.3% lower than last year's 9148. This YoY comparison has been negative for the last eight weeks in a row, averaging -1.6% for the last six weeks. If this level of decline continues for another month, that will be equivalent to the decline near the end of 2007. If we continue to get more poor economic data, expect the declines in Oil prices to stick around for a little while.
The BLS reported that Initial jobless claims last week were 474,000. The four week average is now 431, 250. Needless to say, this was awful, and no it can't all be put at the feet of bus drivers laid off one week for spring break.
Railfax was up 3.3% YoY. Baseline traffic remains below last year's levels. On a 4-week average basis, Cyclical traffic is now also barely above last year's levels. Auto shipments are also down YoY (this may be related to the earthquake in Japan). Even intermodal traffic's YoY advance is at a low ebb, as is total traffic.
The Mortgage Bankers' Association reported an increase of 0.3% in seasonally adjusted mortgage applications last week. Refinancing increased 6.0%, preumably refelcting a decline in mortgage rates. It remains above its June-July 2010 lows. The purchase series has been generally flat for close to one full year - compared with its previous relentless decline, a good thing.
The American Staffing Association Index remained at 92 for the fifth week in a row, after stalling at he 90-91 level for 7 weeks. If this series does not pick up significantly in the next few weeks, it will mirror its flatness in early 2008 and 2009.
The ICSC reported that same store sales for the week of April 30 rose 2.8% YoY, and increased 0.8% week over week. Shoppertrak reported a 6.0% YoY decrease for the week ending April 30. It also reported a WoW decrease of 16.0% (reversing last week's big gain due to Easter). Calendar affects continued to strongly affect these results, but this is still the biggest YoY decline in a very long time for Shoppertrak.
Weekly BAA commercial bond rates decreased .05% to 5.93%. This equals the .05% decrease in the yields of 10 year treasuries to 3.36%. There remains no sign of corporate distress here, although there is a small tinge of fears of deflation (due to the commodity crash).
Adjusting +1.07% due to the 2011 tax compromise, the Daily Treasury Statement showed that for the first 4 days in May 2011, $37.0 B was collected vs. $36.7 B a year ago, for an increase of $0.3 B YoY. For the last 20 days, $132.9 B was collected vs. $130.1 B a year ago, for an increase of $2.8 B, or 2.2%. Use this series with extra caution because the adjustment for the withholding tax compromise is only a best guess, and may be significantly incorrect.
M1 was up 2.8% w/w, up 0.9% M/M, and up 11.6% YoY, so Real M1 is up 8.9%. M2 was up .3% w/w, up 0.4% M/M and up 4.9% YoY, so Real M2 is up 2.2%. Although Real M1 is still strongly in the "green zone" where it has been since before the end of the "great recession," Real M2 has faded back into the "yellow zone" below 2.5%.
We have a number of indices - Railfax, American Staffing Association, initial claims - that are stalling or worse. Still, both Real M1 and the holding steady of mortgage applications continue to say no outright downturn.
Have a nice weekend!