Weekly Indicators: the US is the big engine that still could edition

  - by New Deal democrat

Monthly data released this week of course included the positive jobs report and the big decline in the unemployment rate. Most of the other data was also positive including an expanding ISM manufacutring report, and increasing expansion in the ISM services report. Residential spending increased. So did consumer credit. Commercial construction spending decreased, as did factory orders.

Watching high frequency weekly indicators should show turns or continuations in before they show up in monthly or quarterly data. The message this week is that they do not confirm a continuation in the punk trend established by the August monthly data.

Let's start this week with Employment related indicators, which surprisingly were neutral to strongly positive this week.

The Department of Labor reported that Initial jobless claims at 367,000 increased 8,000 from the prior week's unrevised figure.   The four week average rose 1,000 to 375,000, about 3.5% above its post-recession low.

The American Staffing Association Index was level at 95. The index is equal to its high reading for the year. It has generally been flat at 93 +/- 1 since March. The red flag from this indicator which was in place a few weeks ago remains off.

The Daily Treasury Statement showed that 4 days into Ocotber, $37.6 B was collected vs. $35.3 B a year ago, a $2.3 B increase. For the last 20 days ending on Thursday, $134.5 B was collected vs. $128.3 B for the comparable period in 2011, a gain of $6.2 B or 4.8%.

Same Store Sales and Gallup consumer spending were all solidly positive:

The ICSC reported that same store sales for the week ending September 29 were down -0.3% w/w but were up +2.4% YoY.  Johnson Redbook reported a 2.4% YoY gain and were up 1.6% month over month for the full month. The 14 day average of Gallup daily consumer spending as of October 4 was $84, compared with $62 last year for this period. Gallup's YoY comparison has been strongly positive for 9 of the last 11 weeks, and this week was the strongest YoY comparison all year.

Bond yields declined and credit spreads narrowed:

Weekly BAA commercial bond rates fell .16% to 4.72%. Yields on 10 year treasury bonds fell .13% to 1.68%.  The credit spread between the two decreased at 3.04%, which is only .02 above its 14 month low. This continues an excellent trend.

Housing reports were mixed but generally positive:

The Mortgage Bankers' Association reported that the seasonally adjusted Purchase Index rose about 4% from the prior week, and is up 11% YoY. These are now back in the upper part of their 2+ year range. The Refinance Index also rose sharply, about +20% for the week, the highest since April 2009, with lower mortgage rates.

The Federal Reserve Bank's weekly H8 report of real estate loans this week fell 15 to 3529. The YoY comparison also decreased slightly to +1.5%, and was 1.8& the seasonally adjusted bottom.

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

Money supply has declined in the last few weeks but remains quite positive on a monthly and yearly basis:

M1 declined -0.5% for the week! But it was up +0.5% month over month.  Its YoY growth rate fell to 11.7%. As a result, Real M1 also fell to +10% YoY.  M2 was flat for the week, and was up 0.8% month over month.  Its YoY growth rate also rose again to 6.9%, so Real M2 remained at 5.2%. The growth rate for real money supply is still quite positive, despite the summer 2011 incoming tsunami of Euro-cash having disappeared from the comparison.

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

The American Association of Railroads  reported that total rail traffic was down -1.8% YoY.  Non-intermodal rail carloads were again off a huge -5.3% YoY or -16,600, once again entirely due to coal hauling which was off -26,500!  Negative comparisons declined precipitously from 11 to 6 types of carloads.  Intermodal traffic was up 6,400 or +2.5% YoY.

Finallym the price of oil declined again last week, but gasoline prices and usage still show the choke collar engaged:

Gasoline prices finally fell last week, down $.03 from $3.83 to $3.80. Gas prices had risen $0.53 since their early July bottom.Oil prices per barrel fell from $92.17 to $89.88. Gasoline usage remained negative on a YoY basis. For one week, it was 8633 M gallons vs. 8989 M a year ago, down -3.6%. The 4 week average at 8683 M vs. 8907 M one year ago, was down -2.5%.

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 0.251. The one month LIBOR  rose slightly from its 52 week low of 0.2142 to 0.2185. 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 from 766 to 875, well above its recent 52 week low of 662. The declining trend in shipping rates for the last 3 years remains fully intact. The Harpex Shipping Index was steady at 378, remaining only 3 above its February 52 week low.

Finally, the JoC ECRI industrial commodities index rose 0.81 for the week from 124.43 to 125.24. It is now positive YoY. This number has improved sharply over the last month and a half.

Once again there is a divergence between transportation and other measures of the economy. Rail traffic overall is down the most it has been in a long time (although all of it is due to a huge decline in coal hauling). Gasoline usage is also down significantly YoY, which is a further decline from last year's big YoY declines. Shipping rates remain in the cellar.

But housing remains strong. Consumer spending has strengthened. Commondity prices in general are strengthening while the Oil choke collar is loosening. Bond prices made a high for the year on Tuesday, and credit spreads are at year low's. Money supply remains a positive. Withholding taxes continue to surge, while other employment measures are neutral. Overall by the high frequency measures the economy improved in September vs. August. The world as a whole may be in contraction, but the US reamins the least worst component.

Have a nice weekend.