Saturday, August 25, 2012

Weekly Indicators: Summer's almost gone (morning found us calmly unaware) edition

  - by New Deal democrat

The monthly data for July released last week was sparse, and mixed. Both new and existing home sales rose. New home sales equalled their springtime highs, but existing sales are still below that level. Durable goods orders reached a new post-recession high, but "core" capital goods orders, which strip out defense and transportation were down, and are now down YoY, a bad sign.

The high frequency weekly indicators are as close as we can reasonably get to observing economic trends in real time, as turns will show up here before they show up in monthly or quarterly data. Twice in the last two years, as initial jobless claims established new lows, Oil prices turned up and shortly thereafter initial claims followed. But those were in early spring. Will the turn up in gas prices derail declining initial claims again this fall? Let's start with those two items.

As I said, 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 $.02 from $3.72 to $3.74, and are now higher than a year ago.  Oil prices per barrel also rose slightly for the week, closing at $96.02.  Gasoline usage looks like it is holding up. On a one week basis, it was 9081 M gallons vs. 9009 M a year ago, up for the second week in a row, +0.8%. The 4 week average at 9012 M vs. 9166 M one year ago, was off -1.7%. That the last two weeks have been positive 1 YoY is encouraging, but it must continue to not signal further weakness.

Employment related indicators were again mixed this week.

The Department of Labor reported that Initial jobless claims rose 6000 to 372,000 from the prior week's unrevised figure.   The four week average rose 4,250 to 368,000, still less than 2% above its post-recession low. If higher oil prices are again acting as a governor preventing fast economic growth, then this number, unforturnately, should continue to rise in coming weeks.

The Daily Treasury Statement showed that for the first 17 days of August 2012, $113.1 B was collected vs. $112.4 B a year ago, a very slight $0.7 B increase. For the last 20 days ending on Thursday, $132.4 B was collected vs. $125.9 B for the same period in 2011, a solid gain of $6.5 B or +5.2%.

The American Staffing Association Index declined 1 to 93.  This index was generally flat during the second quarter at 93 +/-1, and for it to be positive should have continued to rise from that level after its July 4 seasonal decline. That it has not done so is a real concern.

Same Store Sales and Gallup consumer spending were again positive:

The ICSC reported that same store sales for the week ending August 18 fell -1.4% w/w, but rose +3.1% YoY.  Johnson Redbook reported a 1.9% YoY gain.  Shoppertrak did not report.

The 14 day average of Gallup daily consumer spending as of August 24 was $84, a huge $15 over last year's $69 for this period.  This is the fourth week of real strength after six weeks in a row of weakness. This is very encouraging, and indicates that consumers are regaining their footing.

Bond yields and credit spreads both rose:

Weekly BAA commercial bond rates rose another .13% to 5.02%. Yields on 10 year treasury bonds rose 0.11% to 1.76%.  The credit spread between the two roseto 3.26%, which is about halfway between its 52 week maximum than minimum, and a significant improvement from 6 weeks ago.

Housing reports were mixed:

The Mortgage Bankers' Association reported that the seasonally adjusted Purchase Index rose 0.9% from the prior week, and were also up about +1.7%% YoY, the first positive YoY reading in many weeks. Generally these are in the middle part of their 2+ year range. The Refinance Index fell -9% for the week due to higher mortgage rates, but is still in the vicinity of its 3 year high.

The Federal Reserve Bank's weekly H8 report of real estate loans this week fell 15 for the week to 3507, or about -0.4%. The YoY comparison fell to +0.7% On a seasonally adjusted basis, these bottomed last September and are also up +0.8%.

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 almost 9 months.

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

M1 was off a sharp -2.3% last week, and was down -0.5% month over month.  Its YoY growth rate was steady at +10.7%, as comparisons with last year's tsunami of incoming cash are in full progress. As a result, Real M1 remained at +9.3%. YoY.  M2 rose +0.5% for the week, and was up 0.6% month/month.  Its YoY growth rate rose from +6.5% to +6.7%, so Real M2 grew at +5.3%.  The growth rate for real money supply has slowed, but is still quite positive as the tsunami of cash arriving from Europe last summer disappears from the comparisons.

Rail traffic was slightly positive while its diffusion index worsened:

The American Association of Railroads  reported a meager +0.4% increase in total traffic YoY, or +2,300 cars.  Non-intermodal rail carloads declined -2.1% YoY or -6,200, once again entirely due to coal hauling which was off -11,400.  Negative comparisons rose back from 8 to 10 types of carloads.  Intermodal traffic was up 8,500 or +3.6% YoY.

Turning now to high frequency indicators for the global economy:

The TED spread fell from 0.37 to a new 52 week low of 0.33. The one month LIBOR declined to 0.235, also a 52 week low. It remains well below its 2010 peak. 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 rose slightly from 714 to 717, only 47 points above its February 52 week low of 670.  The Harpex Shipping Index was flat at 398, and remains only 23 above its February low.

Finally, the JoC ECRI industrial commodities index rose from 117.89 to 120.51. YoY comparisons for this number are improving sharply as its August 2011 swoon will leave the comparison period.  Nevertheless, it is generally near its recent 12 month lows and thus remains a strong sign  that the globe taken as a whole has been slipping back into recession.

Global indicators of shipping and industrial metals prices continue to indicate a downturn. US weekly indicators, however, remained generally positive, with the noteworthy exceptions of temporary services and gas prices. Housing sales remain a very important positive, as does money supply. Once again the consumer is showing resilience. All in all, the domestic tone remains positive

Have a nice weekend!