Weekly Indicators: widespread weakness, mixed signals edition

  - by New Deal democrat

Monthly data reported last week was sparce. Consumer confidence continued to slide. The PPI unexpectedly rose slightly, while import and export prices both fell. Consumer credit increased.

As to the high frequency weekly indicators, let's start with the jobs-related numbers.

Employment related indicators were mixed:

The Department of Labor reported that Initial jobless claims fell 24,000 from the prior week's unrevised 374,000 to 350,000 last week.   The four week average fell 8750 to 376,500.   This is the best showing in jobless claims in over 4 years. There may be a distortion due to auto plants not closing for retooling, but even that "distortion" sounds like a positive reason.

The Daily Treasury Statement for the first 8 reporting days of July was $62.4 B vs. $63.2 B a year ago. For the last 20 days ending July 12, $137.4B was collected vs. $135.4B for the same period in 2011, an increase of $2.0 B, or +1.5%. This is very weak but should probably be averaged with last week's 30 day average of +10%, due to the impact of the July 4 holiday.

The American Staffing Association Index remained at 93. for the third week in a row. This index has been generally flat for the last two months, mirroring its 2nd quarter flatness last year. Despite that, due to the July 4 artifact it is enow equal to its all time high for this week of the year.

Rail traffic turned mixed once again:

The American Association of Railroads  reported a +1.4% increase in total traffic YoY, or +7,200 cars.  Non-intermodal rail carloads were down -1.0% YoY or -2500, as coal hauling again fell YoY. Without coal, as has become usual, the change would have been positive. Intermodal traffic was up 10,800 or 5.6% YoY.  Negative comparisons, however, have spread to 13 of the 20 carload types, the worst showing since the recovery began. The spreading of weakness in rail hauling is now a real red flag.

Same Store Sales were decidedly mixed.

The ICSC reported that same store sales for the week ending July 7 were up 0.2% w/w, and were up +3.0% YoY.  Johnson Redbook reported a 2.0% YoY gain.  Shoppertrak, which has been very erratic, reported a +10.8% YoY gain! The 14 day average of Gallup daily consumer spending  at $72, however, was only equal with last year's rate. This is the fourth week in a row in which consumer spending has weakened significantly, barely if at all improving YoY, at least in the Gallup report.

Housing reports were mixed:

The Mortgage Bankers' Association reported that the seasonally adjusted Purchase Index rose 3% from the week prior, but was down approximately 3% YoY, back into the middle part of its two year range.  The Refinance Index fell3%, but it still near its 3 year high set three weeks ago. 

The Federal Reserve Bank's weekly H8 report of real estate loans this week fell -0.2%, and the YoY comparison decreased to +0.9%.  On a seasonally adjusted basis, these bottomed in September and remain up +1.0%.  The YoY growth rate has generally weakened in the last month.

YoY weekly median asking house prices from 54 metropolitan areas at Housing Tracker  were up + 2.3% from a year ago.  YoY asking prices have been positive for 7 1/2 months, and remain higher than at any point last year.

Money supply was also weakly positive and is now being compared with the inflow tsunami of one year ago:

M1 rose +1.0% last week, and was up +0.5% month over month.  Its YoY growth rate declined to +14.5%, so Real M1 is up 12.8%. YoY.  M2 rose +0.4% for the week, and was up 0.7% month/month.  Its YoY growth fell again to 8.5%, so Real M2 grew at +6.8%.  Real money supply indicators after slowing earlier this year,  have increased again, but YoY comparisons are starting to wane as expected.

Bond prices were mixed and credit spreads increased:

Weekly BAA commercial bond rates increased by .03% to 5.03%.  With the exception of one week, these are the lowest yields in over 45 years. Yields on 10 year treasury bonds  fell .03% to 1.61%.  The credit spread between the two rose again to 3.42%, back at its 52 week low set three weeks ago.  The recent collapse in government bond yields shows fear of deflation due to economic weakness.  Corporate yields rising in the face of this weakness, if continuing, is a sign of recession.

The energy choke collar remains disengaged:

Gasoline prices rose last week after falling for eleven straight week, up .05 to $3.41.  Oil prices per barrel rose another $3, closing Friday at $87.07. Oil prices remain well below the point where they start to constrict the economy, and gasoline has followed.  The 4 week average of Gasoline usage, at 8917 M gallons vs. 9016 M a year ago, was off only -1.1%. The 4 week average at 8864 M vs. 9226 M one year ago is off -3.9%, still a significant YoY decline; however, June and early July of 2011 were the only months after March 2011 where there was a YoY increase in usage, so the YoY comparison now is especially difficult.  For the last two weeks, however, there is been very little change in YoY demand, which is a definite improvement.

Turning now to high frequency indicators for the global economy:

The TED spread fell .02 to 0.37. During the week it made a new 52 week low. The one month LIBOR rose .02 to 0.248. It has now risen significantly above its recent 4 month range, it remains well below its 2010 peak, and has still within its typical background reading of the last 3 years.  Even with the recent scandal surrounding LIBOR, it is probably still useful in terms of whether it is rising or falling.

The Baltic Dry Index fell 47 to 1110. It is 440 points above its February 52 week low of 670, although well below its October 2011 peak near 2200.  The Harpex Shipping Index fell for the sixth straight week from 435 to 430, but is still up 55 from its February low of 375. 

Finally, the JoC ECRI industrial commodities index fell from 117.78 to 116.13. This is still near its 52 week low.  Its recent 10%+ downturn during the last few months remains a strong sign of all that the globe taken as a whole is slipping back into recession.

To reiterate my conclusion from one week ago, weakness has grown widespread, although most indicators are still positive. In addition to the diffusion of negative YoY rail carloads, credit spreads are now at a 52 week low. Global figures continue to suggest that the US is the least bad global economy, and that the world economy as a whole may be contracting at least slightly.

Have a nice weekend!