Weekly Indicators: negatives recede, positives remain edition

  - by New Deal democrat

There were quite a few monthly reports of note released this past week. Fueled by gas prices, September prices increased 0.6%. But consumers outsepnt even that, as retail sales increased 1.1%. Industrial production rebounded slightly, but August's cliff-dive was revised even further downward. The Empire State and Philly Fed reports averaged zero growth. Existing home sales edged down from August's post-recession high. But housing starts and permits both rocketed to new post-recession highs, helping the Index of Leading Indicators rise 0.6, although August was revised down to -0.4.

A reminder: I watch high frequency weekly indicators not because they lead the economy, but because they are a snapshot of the virtual present, as opposed to looking in the rear view mirror. While there is plenty of noise, they should show turns or continuations in a trend before they show up in monthly or quarterly data.

Let's start with Employment related indicators, which resolved last week's big surprise.

The Department of Labor reported that Initial jobless claims rose 49,000 from last week's unrevised 339,000 to 388,000. The four week average fell 1,500 to 365,500, less than 1% above its post-recession low. Averaging the last two weeks' numbers is clearly the correct thing to do.

The American Staffing Association Index was again level at 95. The index is equal to its high reading for the year. The trend in this index is simialr to last year.

The Daily Treasury Statement showed that 13 days into Ocotber, $97.2 B was collected vs. $ 93.2 B a year ago, a $4.0 B increase. For the last 20 days ending on Thursday, $132.8 B was collected vs. $127.3 B for the comparable period in 2011, a gain of $5.5 B or 4.2%. The YoY comparison in tax collections has improved markedly since midyear.

Same Store Sales and Gallup consumer spending varied from barely to solidly positive:

The ICSC reported that same store sales for the week ending October12 were unchanged w/w but were up +2.7% YoY.  Johnson Redbook reported a weak 1.8% YoY gain. Johnson Redbook has consistently been lower than the other series for consumer spending. The 14 day average of Gallup daily consumer spending as of October 18 was $70, compared with $69 last year for this period. This is only the third time in the last 13 weeks that Gallup's YoY comparison has not been strongly positive.

Bond yields declined and credit spreads narrowed:

Weekly BAA commercial bond rates fell .09% to 4.60%. Yields on 10 year treasury bonds, however, rose .04% to 1.71%.  The credit spread between the two decreased to 2.89 %, a new 15 month low. This continues an excellent trend, as it demonstrates a lack of fear of corporate default.

Housing reports were all positive:

The Mortgage Bankers' Association reported that the seasonally adjusted Purchase Index rose 1% from the prior week, and is up 12% YoY. These are now back near the top end of their 2+ year range. The Refinance Index fell -5% for the week, retreating from recent multi-year highs.

The Federal Reserve Bank's weekly H8 report of real estate loans this week increased .01% to 3538. The YoY comparison decreased to +1.3%, and is 1.7% above its bottom.

YoY weekly median asking house prices from 54 metropolitan areas at Housing Tracker  were again up +2.2% from a year ago.  YoY asking prices have been positive for 10 1/2 months.

Money supply has been mixed in the last few weeks but remains quite positive on a yearly basis:

M1 gained +1.8% for the week, but was off -1.6% month over month.  Its YoY growth rate rose slightly to 10.6%. As a result, Real M1 also rose to +8.9% YoY. M2 fell -0.1% for the week, but was up 1.0% month over month.  Its YoY growth rate also rose slightly to 7.1%, so Real M2 also rose slightly to 5.4%. The growth rate for real money supply is still quite positive.

Rail traffic remained negative YoY, but still due to coal, while the diffusion index improved considerably:

The American Association of Railroads  reported that total rail traffic was down -2.2% YoY.  Non-intermodal rail carloads were again off a huge -6.1% YoY or -18,600, once again entirely due to coal hauling which was off -22,900. Excluding coal, carloads were actually up +12,100. Negative comparisons declined to 10 to 8 types of carloads.  Intermodal traffic was up 6,400 or +2.6% YoY.

Finally, the price of oil fell slightly last week, and gasoline prices and usage were mixed:

Gasoline prices fell $.03 last week to $3.82. This is still very high and bodes ill for the impact of energy prices on the economy next spring. Oil prices per barrel declined slightly from $91.66 to $90.05. Gasoline usage turned positive this week on a YoY basis. For one week, it was 8729 M gallons vs. 8598 M a year ago, up +1.5%. The 4 week average at 8680 M vs. 8883 M one year ago, was down -2.3%. The 4 week YoY decline is on top of the YoY decline last autumn.

Turning now to the high frequency indicators for the global economy:

The TED spread continued to fall to year another new 52 week low of 0.22. The one month LIBOR  also fell to a new 52 week low of 0.2107. Both are well below their 2010 peaks and in the middle (TED) or low end (LIBOR) of their respective 3 year ranges.

The Baltic Dry Index rose sharply again from 926 to 1010, well above its recent 52 week low of 662. The longer term declining trend in shipping rates for the last 3 years remains. The Harpex Shipping Index fell 2 to 372, however, establishing a new 52 week low.

Finally, the JoC ECRI industrial commodities index fell again from 121.63 to 120.96, but it nevertheless was positive YoY.

The divergeance between transportation and other indicators lessened this week. While rail traffic as a whole is down, rail ex coal is surging more than ever. The Baltic Dry Index is also rising, although Harpex fell to a new low. Gas usage went positive YoY this week, and the Oil choke collar loosened slightly. Meanwhile housing, bond prices, credit spreads, and money supply all remained strongly positive.

Have a nice weekend.