Weekly Indicators: return to deterioration edition

 - by New Deal democrat

April monthly data reported this past week included Case Shiller house prices up over 10% YoY, consumer confidence up sharply to five year highs, the Chicago manufacturing index up strongly to a six month plus high, personal income flat, the savings rate flat, and personal spending down slightly, but real income minus transfer payments up slightly. In the rear view mirror, Q1 GDP was revised down slightly.

Let's start this week's look at the high frequency weekly indicators by focusing on employment metrics, which are now decidedly mixed:

Employment metrics

American Staffing Association Index

• 94 up 1 w/w, down -0.5% YoY

Initial jobless claims

•   354,000 up 14,000


•   4 week average 347,250 up 7,750

Tax Withholding

• $154.2 B 20 days into May vs. $135.6 B last year, up $18.6 B or +13.7%

In the last month, the ASA has deteriorated to being negative compared with last year, and had its worst comparison yet this week. On the other hand, tax withholding had its best YoY comparison in over 4 months. Initial claims remain within their recent range of between 325,000 to 375,000.

Transport

Railroad transport from the AAR

• -9300 or -3.3% carloads YoY


• -4100 or -2.3% carloads ex-coal


• +3400 or +1.4% intermodal units


• -5900 or -1.1% YoY total loads

Shipping transport

• Harpex unchanged at 398


• Baltic Dry Index down 17 to 809

Rail transport has now had four negative weeks in the last two months. This is a real cause for concern.  The Harpex index has flattened after improving slowly from its January 1 low of 352. The Baltic Dry Index remains above its recent low.

Consumer spending

• ICSC -0.9% w/w +2.8% YoY


• Johnson Redbook +2.7% YoY


• Gallup daily consumer spending 14 day average at $89 up $15 YoY

Gallup's YoY comparisons have generally been extremely positive since last December, and were so again this week.  The ICSC varied between +1.5% and +4.5% YoY in 2012, while Johnson Redbook was generally below +3%. This week both were in the upper part of those ranges, and Gallup once again was strongly positive.

Housing metrics

Housing prices

• YoY this week +6.8%

Housing prices bottomed at the end of November 2011 on Housing Tracker, and averaged an increase of +2.0% to +2.5% YoY during 2012. This weeks's YoY increase is again tied with its 6 year record.

Real estate loans, from the FRB H8 report:

• up 0.1% w/w


• up +0.5% YoY


• +2.2% from its bottom

Loans turned up at the end of 2011 and averaged about 1% gains YoY through most of 2012.  In the last several months the comparisons have softened significantly.

Mortgage applications from the Mortgage Bankers Association:

• +3% w/w purchase applications


• +14% YoY purchase applications


• -12% w/w refinance applications

Refinancing applications had their worst week in almost 6 months, due to higher interest rates, but purchase applications continue their slightly rising trend established earlier this year.

Interest rates and credit spreads

•  4.78% BAA corporate bonds up +0.04%


• 1.99% 10 year treasury bonds up +0.06%


• 2.79% credit spread between corporates and treasuries down -.02%

Interest rates for corporate bonds, although rising strongly in the last month, have generally been falling since being just above 6% two years ago in January 2011, hitting a low of 4.46% in November 2012. On the other hand, Treasuries have returned in the last two weeks to their 2% high established in late 2011, compared with thier low of 1.47% in July 2012. Spreads have varied between a high over 3.4% in June 2011 to a low under 2.75% in October 2012, so spreads are still a positive.

Money supply

M1

• +0.2% w/w


• -0.5% m/m


• +10.0% YoY Real M1

M2

• -0.1% w/w


• +0.2% m/m


• +5.7% YoY Real M2

Real M1 made a YoY high of about 20% in January 2012 and has generally been easing off since.  This week's YoY reading increased sharply.  Real M2 also made a YoY high of about 10.5% in January 2012.  Its subsequent low was 4.5% in August 2012. It has increased slightly in the last few months.

Oil prices and usage

•  Oil $91.97 down -$1.86 w/w


• Gas $3.64 down -$0.03 w/w


• Usage 4 week average YoY -2.5%

The price of a gallon of gas, after declining sharply in March and April, rose again in May. The 4 week average for gas usage remained negative after two positive YoY months several months ago.

Bank lending rates

• 0.25 TED spread up +.02 w/w


• 0.1940 LIBOR down +0.001% w/w

The TED spread recently increased again, but is still near the low end of its 3 year range.  LIBOR remains close to a 3 year low.

JoC ECRI Commodity prices

• down -0.32 to 124.84 w/w


• +6.03 YoY

After several weeks of more positive signs, this week we returned to the pattern of gradual deterioration that began in February. While most indicators remain positive, the data is mixed with some important negatives.

The most important negatives are the actual decline in temporary staffing and in railroad traffic. Also negative this week were mortgage refinancing and treasury bonds, reflecting the bond selloff. Jobless claims were negative for the week, but more neutral compared with the last several months, and real estate loans, just barely positive YoY. Shipping was also neutral, and gas uage is negative but may continue to reflect increased efficiency.

Positives included house prices, YoY purchase mortgage applications, commodities, money supply, and overnight bank rates. Consumer spending was strong again. The spread between corporate and treasury bonds contracted. Gas prices moved lower. Withholding taxes had their best 20 day period since January.

For me to be sold that the data is actually rolling over, I would want to see a sustained increase in jobless claims and a sustained deterioration in consumer spending. That isn't happening now.

Have a nice weekend.