A brave mid-month scrabble

Good news on prices and a bit of an edge-up in real earnings outweighed a troublesome industrial production report. The good news diffusion index now reads 35.7 percent, compared with less than 15 percent at the beginning of the year.

Businesses are scrabbling hard to find the brake-the-slide traction we mentioned yesterday; holding the line on prices is a good thing. With most of this month’s remaining indicators on the production rather than pricing side, however, I’d expect the news index to slip a bit before we close out the month.

On a seasonally-adjusted basis, the CPI-U was unchanged in April after falling 0.1 percent in March. The index for all items less food and energy increased 0.3 percent in April after increasing 0.2 percent in March. Moderate price increases are very good news at this juncture.

Real average weekly earnings rose by 0.1 percent in April 2009 due to a 0.1 percent increase in average hourly earnings. Average weekly hours and the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) were unchanged. Over the year real earnings increased 2.6 percent. Rising real earnings are good news at any juncture.

Industrial production decreased 0.5 percent in April after having fallen 1.7 percent in March. The capacity utilization rate for total industry fell further in April, to 69.1 percent, a low over the history of this series, which begins in 1967. Bad news.