The good news index (GNI), a measure of the diffusion of good headline numbers among a subset of the principal Federal economic indicators, rebounded strongly in May to reach 78.9 percent. This was the best month so far in the increasingly evident recovery.
As the evidence for recovery strengthens, I’ve become something of a NBER Business Cycle Dating Committee (NBCD) watcher. (NBCD watchers are something like Fed watchers, except more intellectual and better looking. To be fair, it must be noted that Fedwatchers are far more wealthy.)
Of the four NBCD members who have made easy-to-find statements about the possibility the economy is in a recovery, three made strong statements that it was their personal view that the economy has been in a recovery for some time. The fourth indicated that we should look at a longer sequence of positive reports before deciding.
In any case, we will stick by our December 4, 2009, call that the technical indicators we make or follow point to an April 2009 turning point. We’ll also stick to our call that the NBCD will not confirm the trough until nearly Christmas.
March exports rose to $147.9 billion but imports rose to $188.3 billion, resulting in a trade deficit of $40.4 billion, up from $39.4 billion in February. Two wrongs may not make a right, but two encouraging signs for demand can lead to a negative report; score a zero.
The price index for imports increased 0.9 percent in April. About 55 percent of the April increase was attributable to higher fuel prices. Nonfuel import prices rose 0.5 percent. Export prices increased 1.2 percent in April. The April advance was led by higher nonagricultural prices. Overall, this is just too much price inflation; score a zero.
U.S. retail and food service sales increased 0.4 percent from the previous month. Not a statistically significant change—score 0.5.
U.S. total business sales for March 2010 were up 2.3 percent from February. Good.
Industrial production increased 0.8 percent in April after having risen 0.2 percent in March. Good.
The Producer Price Index for Finished Goods declined 0.1 percent in April. At the earlier stages of processing, prices received by producers of intermediate goods moved up 0.8 percent and the crude goods index fell 1.2 percent. Good, on balance.
The CPI declined 0.1 percent in April after rising 0.1 percent in March. The index for all items less food and energy was unchanged in both March and April. Good.
Real average hourly earnings for all employees rose 0.1 percent from March to April. Real average weekly earnings rose 0.4 percent over the month. Good.
Sales of new one-family houses in April 2010 were at a seasonally adjusted annual rate 14.8 percent March. Good.
New orders for manufactured durable goods increased 2.9 percent in April. Good.
Real gross domestic product increased at a revised annual rate of 3.0 percent in the first quarter of 2010. The good news is muted a bit.
Personal income increased 0.4 percent in April. Personal consumption expenditures (PCE) increased $4.0 billion, or less than 0.1 percent. Mixed, albeit a good mix.
Monday, May 31, 2010
Tuesday, May 11, 2010
Will the recovery flower in May?
Despite an employment report with mixed news at the top side, May’s good news index is running ahead of April’s through the first half dozen releases.
As we dig beneath the headline numbers on jobs, the news actually gets a little better—four of the five indicators that make up our labor market index improved in April. The employment-to-population ratio had the greatest positive impact, followed in order by aggregate hours, goods-producing employment, and long-term unemployment. The overall unemployment rate was a negative influence.
Overall, the labor market index rose one-half of 1 percent and was half an index point above its trailing 6-month average. The moving average itself advanced for the first time since early 2007.
Total construction activity for March 2010 was 0.2 percent above the February total. Not a significant change, but that’s an upgrade. Score it 0.5.
New orders for manufactured goods increased 1.3 percent in March. Good.
Sales of merchant wholesalers were up 2.4 percent in March 2010. Good.
Consumer credit increased at an annual rate of 1 percent in March 2010. Good.
Nonfarm business sector labor productivity increased at a 3.6 percent annual rate during the first quarter of 2010, with output rising 4.4 percent and hours worked rising 0.8 percent. Good all around.
Nonfarm payroll employment rose by 290,000 in April, the unemployment rate edged up to 9.9 percent, and the labor force increased sharply. Mixed.
As we dig beneath the headline numbers on jobs, the news actually gets a little better—four of the five indicators that make up our labor market index improved in April. The employment-to-population ratio had the greatest positive impact, followed in order by aggregate hours, goods-producing employment, and long-term unemployment. The overall unemployment rate was a negative influence.
Overall, the labor market index rose one-half of 1 percent and was half an index point above its trailing 6-month average. The moving average itself advanced for the first time since early 2007.
Total construction activity for March 2010 was 0.2 percent above the February total. Not a significant change, but that’s an upgrade. Score it 0.5.
New orders for manufactured goods increased 1.3 percent in March. Good.
Sales of merchant wholesalers were up 2.4 percent in March 2010. Good.
Consumer credit increased at an annual rate of 1 percent in March 2010. Good.
Nonfarm business sector labor productivity increased at a 3.6 percent annual rate during the first quarter of 2010, with output rising 4.4 percent and hours worked rising 0.8 percent. Good all around.
Nonfarm payroll employment rose by 290,000 in April, the unemployment rate edged up to 9.9 percent, and the labor force increased sharply. Mixed.
Wednesday, April 21, 2010
Keeping pace; must finish month strong
On indicator-to-indicator basis, the good-news index (GNI) for April is keeping pace with March, on net (2-1/2 points up and 2-1/2 points down). We’ll still need to have a strong finish to the month to keep the growing recovery up to speed. The two wild cards are new home sales, the only indicator with (plenty) of room to make better news in April, and the employment cost index, which makes its quarterly appearance in the GNI.
Consumer credit decreased at an annual rate of 5-1/2 percent in February 2010. Bad.
February 2010 sales of merchant wholesalers were up 0.8 percent from January. Good.
Total February exports of $143.2 billion and imports of $182.9 billion resulted in a goods and services deficit of $39.7 billion, up from $37.0 billion in January. Bad, albeit for all the best reasons.
The Import Price Index rose 0.7 percent in March. The increase was attributable to higher prices for both fuel and nonfuel imports and followed a 0.2 percent decline in February. Export prices also rose 0.7 percent in March. Neutral, at best.
On a seasonally adjusted basis, the CPI-U rose 0.1 percent in March; the index for all items less food and energy was unchanged. Good.
Real average weekly earnings rose 0.1 percent over the month, as a result of a 0.3 percent increase in the average work week offsetting a decrease in real average hourly earnings. Over the past 9 months, real average weekly earnings have changed little. Neutral.
Total business sales for February 2010 were up 0.3% from March. Good.
Retail and food service sales for March increased 1.6 percent from the previous month. Good.
Industrial production edged up 0.1 percent in March and increased at an annual rate of 7.8 percent in the first quarter. Good.
Privately-owned housing starts in March 2010 were at a seasonally adjusted annual rate 1.6 percent above the revised February 2010 estimate.
Consumer credit decreased at an annual rate of 5-1/2 percent in February 2010. Bad.
February 2010 sales of merchant wholesalers were up 0.8 percent from January. Good.
Total February exports of $143.2 billion and imports of $182.9 billion resulted in a goods and services deficit of $39.7 billion, up from $37.0 billion in January. Bad, albeit for all the best reasons.
The Import Price Index rose 0.7 percent in March. The increase was attributable to higher prices for both fuel and nonfuel imports and followed a 0.2 percent decline in February. Export prices also rose 0.7 percent in March. Neutral, at best.
On a seasonally adjusted basis, the CPI-U rose 0.1 percent in March; the index for all items less food and energy was unchanged. Good.
Real average weekly earnings rose 0.1 percent over the month, as a result of a 0.3 percent increase in the average work week offsetting a decrease in real average hourly earnings. Over the past 9 months, real average weekly earnings have changed little. Neutral.
Total business sales for February 2010 were up 0.3% from March. Good.
Retail and food service sales for March increased 1.6 percent from the previous month. Good.
Industrial production edged up 0.1 percent in March and increased at an annual rate of 7.8 percent in the first quarter. Good.
Privately-owned housing starts in March 2010 were at a seasonally adjusted annual rate 1.6 percent above the revised February 2010 estimate.
Friday, April 2, 2010
Gathering strength
March ended well, or at least profitably, and the employment situation report gave April a swift kick off. The Good news Index (GNI), the proportion of selected principal Federal economic indicator reports that headline good news, was 73.8 in March, and is now fully recovered from a mild dip in January.
The employment situation was pretty darn good on the topside and our own index of labor market conditions drawn from deeper in the report was up for the third time in the past six months. In addition, the March increase in the labor market index brought it up above its 6-month moving average. If we were securities market technical analysts, we would be talking about the index testing its downtrend by crossing over the average. And we would be calling that good news as well.
Nonfarm payroll employment increased by 162,000 in March, and the unemployment rate held at 9.7 percent. Good (tallied in April).
After-tax profits for large retailers averaged 3.0 cents per dollar of sales for the fourth quarter 2009, up 0.7 cents from third quarter 2009. Good (tallied in March).
Manufacturers' after-tax profits averaged 7.9 cents per dollar of sales for the fourth quarter of 2009, up 0.9 cents from the third quarter of 2009. Good tallied in March).
Personal income increased less than 0.1 percent, and disposable personal income or less than 0.1 percent, in February. Personal consumption expenditures inceased 0.3 percent. Neutral (tallied in April).
New orders for manufactured goods increased 0.6 percent in February. Good (tallied in April).
Total construction activity for February 2010 was 1.3 percent below January. Bad (tallied in April).
The employment situation was pretty darn good on the topside and our own index of labor market conditions drawn from deeper in the report was up for the third time in the past six months. In addition, the March increase in the labor market index brought it up above its 6-month moving average. If we were securities market technical analysts, we would be talking about the index testing its downtrend by crossing over the average. And we would be calling that good news as well.
Nonfarm payroll employment increased by 162,000 in March, and the unemployment rate held at 9.7 percent. Good (tallied in April).
After-tax profits for large retailers averaged 3.0 cents per dollar of sales for the fourth quarter 2009, up 0.7 cents from third quarter 2009. Good (tallied in March).
Manufacturers' after-tax profits averaged 7.9 cents per dollar of sales for the fourth quarter of 2009, up 0.9 cents from the third quarter of 2009. Good tallied in March).
Personal income increased less than 0.1 percent, and disposable personal income or less than 0.1 percent, in February. Personal consumption expenditures inceased 0.3 percent. Neutral (tallied in April).
New orders for manufactured goods increased 0.6 percent in February. Good (tallied in April).
Total construction activity for February 2010 was 1.3 percent below January. Bad (tallied in April).
Friday, March 26, 2010
Someone's gotta build on Marvin Gardens
Much like the GDP report, the good news index (GNI) is doing well as we close in on closing out March, but isn’t quite as good as we reported last month. However, in the fine print of BEA’s report there is a bit of good news, although profits were not quite as high in the fourth quarter as they were in the third, the cash flow they generated -- the internal funds available to corporations for investment –increased to $69.1 billion. In the GNI, in contrast, we look in vain for good news in a sector that traditionally leads the economy—housing and its associated construction activity. Doesn't somebody, anybody own all the yellows?
We have a couple of financial reports (for manufacturing, mining, and wholesale and for retail trade) left in March. I will be late getting on the durable goods report next Wednesday so I can slip it into April’s GNI.
For this week:
Sales of new one-family houses in February 2010 were at a seasonally adjusted annual rate 2.2 percent below January’s. Bad.
New orders for durable goods increased 0.5 percent in February. Good.
GDP increased at an annual rate of 5.6 percent in the fourth quarter of 2009. The third estimate of the fourth-quarter increase in real GDP is 0.3 percentage point lower than the second estimate. Good, albeit less good than we thought a month ago.
We have a couple of financial reports (for manufacturing, mining, and wholesale and for retail trade) left in March. I will be late getting on the durable goods report next Wednesday so I can slip it into April’s GNI.
For this week:
Sales of new one-family houses in February 2010 were at a seasonally adjusted annual rate 2.2 percent below January’s. Bad.
New orders for durable goods increased 0.5 percent in February. Good.
GDP increased at an annual rate of 5.6 percent in the fourth quarter of 2009. The third estimate of the fourth-quarter increase in real GDP is 0.3 percentage point lower than the second estimate. Good, albeit less good than we thought a month ago.
Thursday, March 18, 2010
Will March break out or break stride?
As we move into the last third of March, the housing sector and the job market are still dragging on the news. There are a lot of data still to be released this month, including a report on home sales next week. Let’s wait before making any grandiose interpretations of what has been, thus far, a fair-to-middling month. The good-news index (GNI) is at 71.9 thus far in March, just a little off February’s final pace.
January 2010 sales of merchant wholesalers were up 1.3 percent from December 2009. The inventory-sales ratio was a very lean 1.10. Good.
Total January exports of $142.7 billion and imports of $180.0 billion resulted in a goods and services deficit of $37.3 billion, down from $39.9 billion in December. Good on the topside, even if both exports and imports declined. Good.
Retail and food service sales increased 0.3 percent in February. Good.
Total business sales for January were up 0.6% from December 2009. Good.
Industrial production edged up 0.1 percent in February following a gain of 0.9 percent in January. Manufacturing decreased 0.2 percent in February, with mixed results among its major industries. The output of mines rose 2.0 percent, while the index for utilities rose 0.5 percent. Mixed, neutral.
Housing starts in February 2010 were 5.9 percent below the January rate. Bad, just plain cannot yet sustain a drive.
The Import Price Index fell 0.3 percent in February. The decrease was led by a 1.9 percent downturn in fuel prices, which more than offset a 0.2 percent advance in nonfuel prices. Export prices fell 0.5 percent in February after advancing 0.7 percent in each of the previous two months. Good news all around.
The Producer Price Index for Finished Goods declined 0.6 percent in February. This decrease followed a 1.4-percent advance in January and a 0.4-percent increase in December. The index for finished goods less foods and energy inched up 0.1 percent in February. Good, when viewed over time at the topside or when looking more heavily, as we do, on the core.
The Consumer Price Index was unchanged in February after increasing 0.2 percent in January. The index for all items less food and energy rose 0.1 percent in February after falling 0.1 percent in January. Good.
Real average weekly earnings fell 0.2 percent from January to February. Bad.
January 2010 sales of merchant wholesalers were up 1.3 percent from December 2009. The inventory-sales ratio was a very lean 1.10. Good.
Total January exports of $142.7 billion and imports of $180.0 billion resulted in a goods and services deficit of $37.3 billion, down from $39.9 billion in December. Good on the topside, even if both exports and imports declined. Good.
Retail and food service sales increased 0.3 percent in February. Good.
Total business sales for January were up 0.6% from December 2009. Good.
Industrial production edged up 0.1 percent in February following a gain of 0.9 percent in January. Manufacturing decreased 0.2 percent in February, with mixed results among its major industries. The output of mines rose 2.0 percent, while the index for utilities rose 0.5 percent. Mixed, neutral.
Housing starts in February 2010 were 5.9 percent below the January rate. Bad, just plain cannot yet sustain a drive.
The Import Price Index fell 0.3 percent in February. The decrease was led by a 1.9 percent downturn in fuel prices, which more than offset a 0.2 percent advance in nonfuel prices. Export prices fell 0.5 percent in February after advancing 0.7 percent in each of the previous two months. Good news all around.
The Producer Price Index for Finished Goods declined 0.6 percent in February. This decrease followed a 1.4-percent advance in January and a 0.4-percent increase in December. The index for finished goods less foods and energy inched up 0.1 percent in February. Good, when viewed over time at the topside or when looking more heavily, as we do, on the core.
The Consumer Price Index was unchanged in February after increasing 0.2 percent in January. The index for all items less food and energy rose 0.1 percent in February after falling 0.1 percent in January. Good.
Real average weekly earnings fell 0.2 percent from January to February. Bad.
Tuesday, March 9, 2010
Hope for the labor market?
No news is very nearly good news in the labor market this month; nearly, but not quite the facts are that payroll employment didn’t change very much (and that change was in the wrong direction) and the unemployment rate did not improve further. If I might attempt a medical analogy, the hemorrhaging has slowed to insignificance and the fever remains elevated but down from the peak. The good news from the Fed shows that the patient is starting to gain some confidence in the eventual return to full economic health.
Nonfarm payroll employment was little changed in February, and the unemployment rate held at 9.7 percent. Neutral.
Consumer credit increased at an annual rate of 2-1/2 percent in January 2010. Revolving credit decreased at an annual rate of2-1/4 percent and non-revolving credit increased at an annual rate of 5 percent. Good news.
Nonfarm payroll employment was little changed in February, and the unemployment rate held at 9.7 percent. Neutral.
Consumer credit increased at an annual rate of 2-1/2 percent in January 2010. Revolving credit decreased at an annual rate of2-1/4 percent and non-revolving credit increased at an annual rate of 5 percent. Good news.
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