Weekly indicators: summer doldrums edition

  - by New Deal democrat

The monthly data for July released last week was almost all quite positive. Retail sales, industrial production, capactity utilization, and housing permits all rose quite strongly. Consumer sentiment rose slightly. As a result of permits, the Conference Board's Leading Index increased, exactly reversing June's decline. Consumer prices did not rise at all. Producer prices rose +.3. The only significant negative news was that both the Empire State and Philly regional manufacturing indexes both contracted.

I report on high frequency weekly indicators because they are as close as we can reasonably get to observing economic trends in real time.  Turns will show up here before they show up in monthly or quarterly data.  Recently I've been focusing on consumer purchases and the effects of the Oil choke collar as the keys to the economy for the second half of this year.

So let's start once again this week with Same Store Sales and Gallup consumer spending, which were again positive:

The ICSC reported that same store sales for the week ending August 11 fell -0.3% w/w, but rose +3.6% YoY.  Johnson Redbook reported a 2.0% YoY gain.  Shoppertrak did not report.

The 14 day average of Gallup daily consumer spending as of August 16 was at $78, $7 over last year's $70 for this period.  This is the third week of real strength after six weeks in a row of weakness. This is very encouraging but we will still have to see if consumers are regaining their footing.

On the other hand, the energy choke collar has now re-engaged, while there is some enocuraging news agout gasoline usage.

Gasoline prices rose yet again last week, up $.07 from $3.65 to $3.72, and are now higher than a year ago.  Oil prices per barrel also rose for the week, from $92.87 to over $95..  Gasoline usage, at 9308 M gallons vs. 9195 M a year ago, was up for a change, +1.3%  The 4 week average at 8907 M vs. 9163 M one year ago is off -2.8%. August last year is when the precipitous YoY declines in gas usage began to be registered. That we have a positive 1 week YoY comparison is encouraging, but it must continue to not signal further weakness.

Employment related indicators were mixed this week.

The Department of Labor reported that Initial jobless claims rose 5000 to 366,000 from the prior week's unrevised figure.   The four week average fell by 4,500 to 363,750,, only 750 above the lowest 4 week average during the entire recovery.  Needless to say, this number does not appear to be compatible at all with further economic weakness.  -

The Daily Treasury Statement showed that for the first 12 days of August 2012, $85.0 B was collected vs. $85.1 B a year ago.  For the last 20 days ending on Thursday, $131.6 B was collected vs. $126.1 B for the same period in 2011, a gain of +4.3%.

The American Staffing Association Index held steady at 93.  This index was generally flat during the second quarter at 93 +/-1, and has returned to that level after its July 4 seasonal slump. It nevertheless is not rising from that range and so indicates significant weakness.

Bond yields rose while credit spreads shrank:

Weekly BAA commercial bond rates rose another .09% to 4.89%.  These remain close to the lowest yields in over 45 years. Yields on 10 year treasury bonds also rose 0.11% to 1.65%.  The credit spread between the two declined to 3.24%, which is about halfway between its 52 week maximum than minimum, and a significant improvement from one month ago.  Tightening credit spreads are a good sign.

Housing reports remained mixed:

The Mortgage Bankers' Association reported that the seasonally adjusted Purchase Index declined -2.0% from the week prior, and were also down -4.9% YoY, back into the lower to middle part of its two year range. The Refinance Index fell -5.1% but is still near its 3 year high.

The Federal Reserve Bank's weekly H8 report of real estate loans this week rose +0.8% for the week.  The YoY comparison rose to +1.2%.  On a seasonally adjusted basis, these bottomed last September and are also up +1.3%.

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 over 8 months.

Money supply remains generally positive despite now being compared with the inflow tsunami of one year ago:

M1 was off -0.6% last week, and was flat at 0.0% month over month.  Its YoY growth rate fell from +13.9% to +10.7%, as comparisons with last year's tsunami of incoming cash are in full progress. As a result, Real M1 declined to +9.3%. YoY.  M2 fell -0.2% for the week, and was up 0.3% month/month.  Its YoY growth rate fell from 7.4% to +6.5%, so Real M2 grew at +5.1%.  Real money supply indicators are now declining as the tsunami of cash arriving from Europe last summer disappears from the comparisons.

Rail traffic was slightly positive while its diffusion index declined:

The American Association of Railroads  reported a +0.8% increase in total traffic YoY, or +3,800 cars.  Non-intermodal rail carloads declined -1.2% YoY or -3,800, once again entirely due to coal hauling which was off -7,300.  Negative comparisons rose back from 6 to 8 types of carloads.  Intermodal traffic was up 7,400 or +3.2% YoY.

Turning now to high frequency indicators for the global economy:

The TED spread rose from its 52 week low of 0.34 to 0.37. The one month LIBOR declined to 0.237, an 111 month low.. 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 from 774 to 714, only 44 points above its February 52 week low of 670.  The Harpex Shipping Index fell another 2 points to 398.  It is up only 25 from its February low of 375.

Finally, the JoC ECRI industrial commodities index fell from 119.10 to 117.89. This is still near its recent 52 week low.  YoY comparisons for this number will shortly improve (or get less worse) as its August 2011 swoon will leave the comparison period.  Nevertheless, its decline remains a strong sign  that the globe taken as a whole has been slipping back into recession.

Like the positive monthly indicators for July, most of the weekly indicators were at least slightly positive this week, including sales, the 4 week average of jobless claims, the 20 day sum of withholding taxes paid, credit indicators, housing prices and real estate loans, and money supply. The most significant negative is gasoline prices which have risen back into the choke collar zone. Mortgage applications declined. Staffing services were weak.

Global indicators of shipping and industrial metals prices continue to indicate a downturn. By continuing to expand moderately, the US remains the world's least worst economy.

Have a nice weekend!