Sunday, December 23, 2012
Weekly Indicators: new seasonal strength shows itself again edition
- by New Deal democrat
November monthly data reported this past week included the highest number of housing permits in 4 years, and a very good report on new home sales as well. Durble goods also showed a solid increase. Personal income, spending, and savings also all rose. The Empire State manufacturing index contracted, while Philly's improved. On the other hand, consumer sentiment soured sharply, most likely in response to the "fiscal cliff" shenanigans in Washington. The Leading Indicators in November also declined -0.2, showing a complete stall over the last 6 month period. Had Sandy not impacted initial jobless claims, most likely the LEI would have risen +0.1 instead.
Once again, let me make this reminder that I watch the high frequency weekly indicators because even though they are more noisy, they will signal a turn or continuation in the direction of the economy well before monthly data is reported. In particular, right now November monthly data is still affected by Hurricane Sandy, while its affect the weekly data has almost completely abated.
To begin with, Employment related indicators were mixed but with a positive bias:
The Department of Labor reported that Initial jobless claims rose from 343,000 to 361,000. The four week average fell by 13,750 to 367,750. As of one week ago, the effects of Hurricane Sandy were still slightly affecting the weekly number. As the elevated post-Sandy numbers wash out, the 4 week average should continue to decline slightly for at least one more week. It is quite possible that we will see a new post-recession low in the 4 week average next week.
The American Staffing Association Index remained at 94. The general trend in this index is now declining slightly in comparison to last year.
The Daily Treasury Statement showed that for the first 14 days of December, $115.6 B was collected vs. $103.1 B for the first 14 days of December last year. For the last 20 days ending on Thursday, $151.0 B was collected vs. $142.3 B for the comparable period in 2011, an increase of $8.7 B or +6.1%. Tax collections have continued to increase sharply for over a month.
Same Store Sales and Gallup consumer spending continued very positive:
The ICSC reported that same store sales for the week ending December 14 declined -4.3% w/w but were up +3.5% YoY. Johnson Redbook showed a 2.4% YoY gain, which is a strong gain for them. The 14 day average of Gallup daily consumer spending as of December 20 was $83, compared with $78 for this week last year. Gallup's report has been running strongly positive this month.
Bond yields rose but credit spreads narrowed slightly:
Weekly BAA commercial bond yields rose +.06% this week at 4.63%. Yields on 10 year treasury bonds also rose +.07% to 1.69%. The credit spread between the two likewise decreased by .01% to 2.94%. Spreads have generally increased in the last month, but remain well off their 52 week highs.
Housing reports continue to be generally positive:
The Mortgage Bankers' Association reported that the seasonally adjusted Purchase Index fell -5% from the prior week, but increased 9% YoY, close to if not at a 2 year high. The Refinance Index declined 14% for the week, as mortgage rates rose.
The Federal Reserve Bank's weekly H8 report of real estate loans this week declined -2 w/w to 3521. The YoY comparison, however, increased to +1.3% and is 1.4% above its bottom.
YoY weekly median asking house prices from 54 metropolitan areas at Housing Tracker increased +2.3% from a year ago. YoY asking prices have been positive for over an entire year.
Money supply has returned to being fully positive:
M1 rose +0.3% for the week, and also increased +3.2% month over month. Its YoY growth rate declined slightly to +13.6%. Real M1 also fell to +11.8% YoY. M2 increased +0.5% for the week, and was up +0.4% month over month. Its YoY growth rate rose to 7.7%, so Real M2 rebounded to 5.9%. The growth rate for real money supply has started to increase again in the last few weeeks.
Rail traffic rebounded and had a strongly positive week:
The American Association of Railroads reported that total rail traffic increased for the first time in many weeks, up +6600 carloads YoY, or +2.2%. Non-intermodal rail carloads were again off significantly, -12,000 or -3.9%, and as usual entirely due to coal hauling, which was off -17,500. Ex-coal carloads were up +5500. Negative comparisons remained at 8. Intermodal traffic, which had suffered due to Pacific port strikes, rebounded to +18,600 or +8.0% YoY. It is very unlikely that this rebound will be sustained at this level.
Finally, the price of oil rose off its seasonal bottom while the price of gasoline fell sharply, and gasoline usage also fell:
Gasoline prices fell $.10 last week to $3.25. This is equal to last year's seasonal lows and probably marks the seasonal low this year as well. Oil prices per barrel increased from $86.73 to $88.38. Gasoline usage was down for one week at 8610 M gallons vs. 8879 M a year ago, or -3.0%. The 4 week average at 8472 M vs. 8722 M one year ago, was off -2.9% YoY.
Turning now to the high frequency indicators for the global economy:
The TED spread fell from 0.29 to 0.26, in the middle of its 3 month range, and also in the middle of its 3 year range. The one month LIBOR rose from 0.2090 to 0.2097, near its 3 year low.
The Baltic Dry Index fell sharply again from 784 to 700, a 3 month low, but still within the middle of its 1 year range. The Harpex Shipping Index also fell 1 more to yet another new 52 week low of 352. The longer term declining trend in shipping rates for the last 3 years is intact.
Finally, the JoC ECRI industrial commodities index rose from 123.20 to 124.57. It continues to be positive YoY, up 5.76.
Most of the recent themes in the weekly data remain intact. Manufacturing is weak, as are shipping and gasoline usage. Consumer sentiment is souring. On the other hand, domestic rail ex-coal is positive and improving. Housing continues its resurgeance from a very low level. Consumer spending remains strong. Money supply is strong. Weekly employment data is generally positive, although temporary help may be flagging. Gas prices are very accomodative at the moment. Commodity prices are positive. Bank lending rates, bond rates, and credit spreads have eased slightly. This week railroad data also turned quite positive.
The "fiscal cliff" is a wild card, and the effects of Sandy remain in the monthly data. In general the most up-to-date weekly data shows a solid positive bias, perhaps reflecting the new seasonality of autumn and winter growth, balanced by spring and summer stalls. At the same time, the flat LEI should not be discounted, as it signifies a complete stall at some point next year, although a post-Sandy rebound in December data, especially jobless claims, may make for a short-lived signal.
Have a nice weekend.