November monthly data reported this past week included improving retail sales, advancing industrial production and capacity utilization (although October was revised downward), and decreases in both producer and consumer prices. In the rear view mirror, October manufacturing and trade sales came in poor.
A 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, especially first time claims for unemployment benefits, were quite positive as the effects of Sandy continue to abate:
The Department of labour reported that Initial jobless claims fell from 370,000 to 343,000. This is only 1000 higher than the lowest weekly report since the onset of the recession at the end of 2007. The four week average fell by 26,250 to 381,500. 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 for the next several weeks.
The American Staffing Association Index increased from 91 to 94. This is normal post-Thanksgiving week rebound. The general trend in this index remains similar to last year.
The Daily Treasury Statement showed that for the first 9 days of December, $68.1 B was collected vs. $61.2 B for the first 9 days of December last year. For the last 20 days ending on Thursday, $145.4 B was collected vs. $128.3 B for the comparable period in 2011, an increase of $17.1 B or +13%. Tax collections have continued to increase sharply for over a month.
Same Store Sales and Gallup consumer spending continued very positive, with Gallup also making a new 4 year high:
The ICSC reported that same store sales for the week ending December 7 declined -0.7% w/w but were up +3.2% YoY. Johnson Redbook showed a 2.2% YoY gain. Johnson Redbook has consistently been lower than the other series for consumer spending, usually running under 2% YoY so this is relatively positive. The 14 day average of Gallup daily consumer spending as of December 13 was $82, compared with $74 for this week last year. Earlier this week we had the highest 14 day average since November 2008, at $89.
Bond yields rose and credit spreads continued to retreat from their recent lows:
Weekly BAA commercial bond yields rose +.01% this week at 4.57%. Yields on 10 year treasury bonds however fell -.01% to 1.62%. The credit spread between the two likewise increased by .02% to 2.95%. Spreads have increased in the last few weeks, 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 rose 1% from the prior week, and also increased 9% YoY, close to if not at a 2 year high. The Refinance Index increased 8% for the week, and continues to be close to its recent multi-year highs.
The Federal Reserve Bank’s weekly H8 report of real estate loans this week declined -21 w/w to 3523. The YoY comparison also decreased to +1.1% and is 1.4% above its bottom.
YoY weekly median asking house prices from 54 metropolitan areas at Housing Tracker increased +2.4% from a year ago. YoY asking prices have been positive for over an entire year.
Money supply returned to being fully positive:
M1 rose +0.1% for the week, and also increased +2.0% month over month. Its YoY growth rate rose to +13.8%. Real M1 also rose to +12.0% YoY. M2 increased +0.3% for the week, and was up +0.1% month over month. Its YoY growth rate rose to 7.4%, so Real M2 rebounded to 5.6%. The growth rate for real money supply has declined significantly in recent months, but is still quite positive.
Rail traffic remained negative YoY, but still due to coal, although the diffusion index increased, and intermodal traffic has also turned negative:
The American Association of Railroads reported that total rail traffic was down -5700 carloads YoY, or -1.0%. Non-intermodal rail carloads were again off considerably less than in recent weeks, only -4900 or -1.6%, and as usual entirely due to coal hauling, which was off -13,000. Ex-coal carloads were up 7300. Negative comparisons rose from 6 back to 8. For the second week in a row, however, intermodal traffic was actually down -800 or -0.3% YoY.
Finally, the price of oil rose slightly while the price of gasoline continued to fall, and gasoline usage also fell:
Gasoline prices fell $.04 last week to $3.35. This is still higher than last year at this time. Oil prices per barrel increased from $85.93 to $86.73. Gasoline usage was down for one week at 8488 M gallons vs. 8666 M a year ago, or -2.1%. The 4 week average at 8542 M vs. 8650 M one year ago, was off -1.2% YoY.
Turning now to the high frequency indicators for the global economy:
The TED spread rose from 0.23 to 0.29, a 3 month high, and in the middle of its 3 year range. The one month LIBOR fell from 0.2120 to 0.2090, near its 3 year low.
The Baltic Dry Index fell sharply from 966 to 784, a 2 month low, but still within the middle of its 1 year range. The Harpex Shipping Index also fell 7 more to yet another new 52 week low of 353. The longer term declining trend in shipping rates for the last 3 years is intact.
Finally, the JoC ECRI industrial commodities index rose from 122.24 to 123.20. It continues to be positive YoY, up 4.85.
Once again the old-fashioned type of economy is producing weak or contractionary data. This includes shipping, rail traffic, and gasoline usage. On the other hand, domestic rail ex-coal is positive and improving. Housing continues its resurgeance from a very low level. Consumer spending is getting even stronger. Weekly employment data is very positive. Gas prices are accomodative for now. One new small negative is that bank lending rates and bond rates and spreads have turned up slightly. Money supply, however, remains quite positive.
In general the leading data remains positive, while the coincident data is mixed. The economy is shambling along, with what still appears to be a lukewarm positive bias.
Have a nice weekend.
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