January 2009 sales of merchant wholesalers, except manufacturers’ sales branches and offices were $326.1 billion, down 2.9 percent over the month. Wholesale inventories were down 0.7 percent. The inventory-sales ratio rose to 1.30. While the sales decline was less precipitous than last month’s, the news here is still bad.
February 2009 retail sales were down 0.1 percent. Declines were seen almost entirely in the automotive sector, with very small declines in a few other sectors. The important “general merchandise” category saw a small increase. Although the retailers almost scored a second consecutive increase, the report is in the bad news column.
In January, the combined value of distributive trade sales and manufacturers’ shipments were down 1 percent. Inventories declined by a roughly similar amount, thus the inventory-sales ratio remained at 1.43 This report summarizes and restates the bad news we heard last month as the individual underlying data were released.
The goods-and services international trade deficit was $36.0 billion in January, down from $39.9 billion in December. January exports were $7.6 billion less than December exports of $132.5 billion. January imports were $11.5 billion less than December imports of $172.4 billion. While you don’t like to have good news come in through the back door, this report is good news for domestic product; at worst, this should be considered a neutral report.
The U.S. Import Price Index edged down 0.2 percent in February. Declining nonpetroleum prices more than offset an upturn in petroleum prices. Export prices also recorded a modest decrease in February, falling 0.1 percent. While the good news of relative price stability at the top side of this report is tempered somewhat by the split between oil and non-oil imports, good news is good news.
Thus far in March, good news has accounted for about 31 percent of the statistical output from the system of Principal Federal Economic Indicators. I don’t expect this diffusion index to stay above 30 through the end of the month, but it has crept up a bit from January and February.
Friday, March 13, 2009
Friday, March 6, 2009
March less lousy than February, so far
Not so lousy is a pretty low bar. So far in March, about a third of the official statistical reports have headlined good news at the topside. Next week we’ll learn a bit about trade—foreign and domestic—and get or first look at prices.
New orders for manufactured goods decreased $6.9 billion or 1.9 percent to $351.9 billion in January. This was the sixth consecutive decline—a modern record. The drop in orders accompanied declines in shipments, inventories, and unfilled orders that also extended those losing streaks into record territory. The unfilled orders-to-shipments and inventory-to-shipment ratios both rose, although the orders backlog rose slightly faster. All the bad news was somewhat less bad than last month, but was bad nonetheless—and extending the run of bad news certainly isn’t good.
If one had read the recent GDP revision, one was expecting the worse-than-originally reported news on productivity. In the business and nonfarm business sectors, productivity declined 0.4 percent in the fourth quarter of 2008, rather than increasing as reported Feb. 5. In both sectors, this resulted from a 3.2 percentage points downward revision to output, with hours little changed.
Consumer credit increased at an annual rate of 3/4 percent in January 2009. Revolving credit increased at an annual rate of 1-1/4 percent, and nonrevolving credit increased at an annual rate of 1/2 percent. This is good news; shrinking credit, along with deflation, poses huge risks. Glad to see an uptick here.
Nonfarm payroll employment fell by 651,00 in February and the unemployment rate rose from 7.6 to 8.1 percent. Over the past 12 months, the number of unemployed persons has increased by about 5.0 million, and the unemployment rate has risen by 3.3 percentage points. If the current downturn were to see the same degree of increase in the unemployment rate as had occurred in long recessions in the past, there would be about half a point more to go.
Our proprietary index of labor market conditions fell sharply as all five indicators went bad. In declining order of their contribution to the fall, they were good-producing employment, unemployed 15 weeks or longer as a percentage of the civilian labor force, the unemployment rate, aggregate hours index, and employment-to-population ratio. The gap between the declining index and its 6-month trailing moving average widened slightly and is at a level exceeded only in the long recession of 1973-75 and the sharp decline of 1980.
New orders for manufactured goods decreased $6.9 billion or 1.9 percent to $351.9 billion in January. This was the sixth consecutive decline—a modern record. The drop in orders accompanied declines in shipments, inventories, and unfilled orders that also extended those losing streaks into record territory. The unfilled orders-to-shipments and inventory-to-shipment ratios both rose, although the orders backlog rose slightly faster. All the bad news was somewhat less bad than last month, but was bad nonetheless—and extending the run of bad news certainly isn’t good.
If one had read the recent GDP revision, one was expecting the worse-than-originally reported news on productivity. In the business and nonfarm business sectors, productivity declined 0.4 percent in the fourth quarter of 2008, rather than increasing as reported Feb. 5. In both sectors, this resulted from a 3.2 percentage points downward revision to output, with hours little changed.
Consumer credit increased at an annual rate of 3/4 percent in January 2009. Revolving credit increased at an annual rate of 1-1/4 percent, and nonrevolving credit increased at an annual rate of 1/2 percent. This is good news; shrinking credit, along with deflation, poses huge risks. Glad to see an uptick here.
Nonfarm payroll employment fell by 651,00 in February and the unemployment rate rose from 7.6 to 8.1 percent. Over the past 12 months, the number of unemployed persons has increased by about 5.0 million, and the unemployment rate has risen by 3.3 percentage points. If the current downturn were to see the same degree of increase in the unemployment rate as had occurred in long recessions in the past, there would be about half a point more to go.
Our proprietary index of labor market conditions fell sharply as all five indicators went bad. In declining order of their contribution to the fall, they were good-producing employment, unemployed 15 weeks or longer as a percentage of the civilian labor force, the unemployment rate, aggregate hours index, and employment-to-population ratio. The gap between the declining index and its 6-month trailing moving average widened slightly and is at a level exceeded only in the long recession of 1973-75 and the sharp decline of 1980.
Monday, March 2, 2009
Construction spending weakens again, but consumption spending takes a stand
Construction spending was at an annual rate of $986.2 billion during January 2009, a reduction of 3.3 percent from December. The January figure is 9.1 percent below the January 2008 estimate. (Bad news, no matter how well anticipated.)
Personal consumption expenditures increased $56.4 billion, or 0.6 percent, in January. Personal income increased $44.8 billion, or 0.4 percent, and disposable personal income increased $183.0 billion, or 1.7 percent. (Good news, even after allowing for special factors such as pay raises for federal civilian and military personnel and cost-of-living adjustments to several transfer payment programs.)
With only these two reports in hand, our diffusion index of the news delivered at the top sides of government reports on the economy starts the month of March off well at 50 percent good. The next few days, however, bring several reports (factory shipments and orders and the employment situation in particular) that may very well drive it back to roughly the February GNI (21.1).
Personal consumption expenditures increased $56.4 billion, or 0.6 percent, in January. Personal income increased $44.8 billion, or 0.4 percent, and disposable personal income increased $183.0 billion, or 1.7 percent. (Good news, even after allowing for special factors such as pay raises for federal civilian and military personnel and cost-of-living adjustments to several transfer payment programs.)
With only these two reports in hand, our diffusion index of the news delivered at the top sides of government reports on the economy starts the month of March off well at 50 percent good. The next few days, however, bring several reports (factory shipments and orders and the employment situation in particular) that may very well drive it back to roughly the February GNI (21.1).
Friday, February 27, 2009
GDP worse than we knew
Gross Domestic Product (GDP) decreased at an annual rate of 6.2 percent in the fourth quarter of 2008, according to revised estimates. In the advance estimates, the decrease in real GDP was 3.8 percent. The downward revision to the percent change in real GDP was widespread; the largest contributors were downward revisions to private inventory investment, to exports, and to personal consumption expenditures for nondurable goods. So, the bad news of the advance report released last month has been turned into the worse news of this release.
There was, as the month closes out, good news in 21 percent of February’s Federal statistical output. In February the GNI was 14.7 percent.
There was, as the month closes out, good news in 21 percent of February’s Federal statistical output. In February the GNI was 14.7 percent.
Thursday, February 26, 2009
Bad news in homes and factories
Sales of new one-family houses were at a seasonally adjusted annual rate of 309,000 in January, a rate down 10.2 percent from December 2009 and at only about half that recorded in January 2008. There were 342,000 homes for sale at the end of January; this represents 13.3 months’ supply at the current sales rate. None of this should come as any particular surprise, but it is still bad news, the worst being the more-than-a-year's overhang of unsold houses. Long ago, economist John Maurice Clark identified residential construction as one of the strategic sectors in understanding the business cycle and a sluggish, over-supplied housing market is certainly bad news for that sector.
New orders for manufactured durable goods decreased 5.2 percent to $163.8 billion in January. This was the sixth consecutive monthly decrease and represented an accelerated dive from December's figures. Again, this is the bad news we expected from the hardgoods industries.
With two more "zeros" added in, our diffusion index of good versus bad economic news now stands at 22.2 percent good for February. The only indicator left is a revision of the fourth quarter GDP numbers and that will only tweak the bad news we got at the end of January. Still, the good news index (GNI) will have edged up from last month.
New orders for manufactured durable goods decreased 5.2 percent to $163.8 billion in January. This was the sixth consecutive monthly decrease and represented an accelerated dive from December's figures. Again, this is the bad news we expected from the hardgoods industries.
With two more "zeros" added in, our diffusion index of good versus bad economic news now stands at 22.2 percent good for February. The only indicator left is a revision of the fourth quarter GDP numbers and that will only tweak the bad news we got at the end of January. Still, the good news index (GNI) will have edged up from last month.
Saturday, February 21, 2009
Consumer prices stable, real earnings stagnant
On a seasonally adjusted basis, CPI-U increased 0.3 percent in January after declining in each of the three previous months. Prices for all items less food and energy (core-CPI) rose 0.2 percent in January. This non-deflationary report is good news. (Good)
Real average weekly earnings fell by a mere 0.1 percent from December to January. A 0.3 percent increase in average hourly earnings was offset by a 0.3 percent increase in the CPI-W. Average weekly hours were unchanged. In the context of recent reports in which deflationary price movements offset shrinking workweeks, this is, at worst, a neutral report. (Neutral)
After recording these two signals, the GNI stands at 25 percent for February, with only a couple more reports to go.
Real average weekly earnings fell by a mere 0.1 percent from December to January. A 0.3 percent increase in average hourly earnings was offset by a 0.3 percent increase in the CPI-W. Average weekly hours were unchanged. In the context of recent reports in which deflationary price movements offset shrinking workweeks, this is, at worst, a neutral report. (Neutral)
After recording these two signals, the GNI stands at 25 percent for February, with only a couple more reports to go.
Thursday, February 19, 2009
A quick game of catch-up
I have been away on travel for one client and also engaged in a consulting gig with one of the more social statistics-oriented agencies. So, this is a quicker and dirtier than usual run through developments in economic statistics so far in February. Note that, after all that follows, my Good News Index (GNI) for February is at 17.9 percent as of today.
PPI: A 0.8 percent increase followed declines of 1.9 percent in December and 2.5 percent in November. At the earlier stages of processing, the decrease in prices for intermediate materials slowed to 0.7 percent from 4.2 percent, and the index for crude materials declined 2.9 percent after dropping 5.3 percent in December. Although this report contains some good news (declining rates of price deterioration), the topside number is outside the upper bound of my range of comfort, and the volatility itself is not useful at this point. (Bad news)
Housing starts and permits: Starts in January were at a seasonally adjusted annual rate of 466,000. This was 16.8 percent below December. (Bad news, and no surprise)
Industrial production and capacity utilization: Industrial production fell 1.8 percent in January. The capacity utilization rate for total industry fell to 72.0 percent. (Bad news)
International prices: The Import Price Index declined 1.1 percent in January, following decreases in each of the previous five months. In contrast, export prices rose for the first time in six months, advancing 0.5 percent in January. (Mixed, leaning to bad.)
Business sales: down 3.2 percent (±0.2%) from November 2008 and down 11.8 percent from December 2007. Inventories were down, but their ratio to sales edged up. (On balance, bad news)
Retail sales: Retail and food services sales for January, were $344.6 billion, an
increase of 1.0 percent from the previous month. (Good)
Balance of trade: December exports were $8.5 billion less than November exports of $142.3 billion. December imports were $10.2 billion less than November imports of $183.9 billion. (This is a bad news way to narrow the trade deficit—mixed on balance.)
Wholesale trade: December 2008 sales of merchant wholesalers were $336.1 billion, down 3.6 percent from November. Inventories fell, but their ratio to sales crept up. (Bad)
Employment: Nonfarm payroll employment fell 5908,00 in January and the unemployment rate rose from 7.2 to 7.6 percent. Our proprietary index of the labor market also declined sharply as all five indicators went the wrong way. (Bad)
Factory sales: New orders for manufactured goods in December, down five consecutive months, decreased $14.8 billion or 3.9 percent. This was the longest streak of consecutive monthly decreases in a decade and a half. The unfilled orders-to-shipments ratio was 5.82, down from 5.87 in November. The inventories-to-shipments ratio was 1.44, up from 1.42 in November. (Bad throughout)
Consumer credit: Consumer credit decreased at an annual rate of 3 percent in the fourth quarter. (Bad)
Productivity: Output per hour for the nonfarm business sector rose 3.2 percent as output declined 5.5 percent and hours fell 8.4 percent. (This is a bad way to increase productivity—mixed on balance.)
Personal Income and spending: Personal income decreased $25.3 billion, or 0.2 percent, and disposable personal income decreased $25.1 billion, or 0.2 percent, in December. Personal consumption expenditures decreased $102.4 billion, or 1.0 percent. (Bad both ways)
Construction spending: Construction spending during December 2008 was at a seasonally adjusted annual rate of $1,053.7 billion, 1.4 percent below the revised November estimate. Just missed being neutral (the margin of error is + or – 1.3 percent), but still bad news. (Bad)
Housing vacancies: The rental vacancy rate was 10.1 percent in the fourth quarter of 2008—higher than the fourth quarter rate for 2007 (9.6 percent), but not statistically different from the rate last quarter (9.9 percent in III:08). For homeowner vacancies, the current rate of 2.9 percent was not statistically different from the fourth quarter 2007 rate or the rate last quarter (2.8 percent each). (Not used in the GNI)
PPI: A 0.8 percent increase followed declines of 1.9 percent in December and 2.5 percent in November. At the earlier stages of processing, the decrease in prices for intermediate materials slowed to 0.7 percent from 4.2 percent, and the index for crude materials declined 2.9 percent after dropping 5.3 percent in December. Although this report contains some good news (declining rates of price deterioration), the topside number is outside the upper bound of my range of comfort, and the volatility itself is not useful at this point. (Bad news)
Housing starts and permits: Starts in January were at a seasonally adjusted annual rate of 466,000. This was 16.8 percent below December. (Bad news, and no surprise)
Industrial production and capacity utilization: Industrial production fell 1.8 percent in January. The capacity utilization rate for total industry fell to 72.0 percent. (Bad news)
International prices: The Import Price Index declined 1.1 percent in January, following decreases in each of the previous five months. In contrast, export prices rose for the first time in six months, advancing 0.5 percent in January. (Mixed, leaning to bad.)
Business sales: down 3.2 percent (±0.2%) from November 2008 and down 11.8 percent from December 2007. Inventories were down, but their ratio to sales edged up. (On balance, bad news)
Retail sales: Retail and food services sales for January, were $344.6 billion, an
increase of 1.0 percent from the previous month. (Good)
Balance of trade: December exports were $8.5 billion less than November exports of $142.3 billion. December imports were $10.2 billion less than November imports of $183.9 billion. (This is a bad news way to narrow the trade deficit—mixed on balance.)
Wholesale trade: December 2008 sales of merchant wholesalers were $336.1 billion, down 3.6 percent from November. Inventories fell, but their ratio to sales crept up. (Bad)
Employment: Nonfarm payroll employment fell 5908,00 in January and the unemployment rate rose from 7.2 to 7.6 percent. Our proprietary index of the labor market also declined sharply as all five indicators went the wrong way. (Bad)
Factory sales: New orders for manufactured goods in December, down five consecutive months, decreased $14.8 billion or 3.9 percent. This was the longest streak of consecutive monthly decreases in a decade and a half. The unfilled orders-to-shipments ratio was 5.82, down from 5.87 in November. The inventories-to-shipments ratio was 1.44, up from 1.42 in November. (Bad throughout)
Consumer credit: Consumer credit decreased at an annual rate of 3 percent in the fourth quarter. (Bad)
Productivity: Output per hour for the nonfarm business sector rose 3.2 percent as output declined 5.5 percent and hours fell 8.4 percent. (This is a bad way to increase productivity—mixed on balance.)
Personal Income and spending: Personal income decreased $25.3 billion, or 0.2 percent, and disposable personal income decreased $25.1 billion, or 0.2 percent, in December. Personal consumption expenditures decreased $102.4 billion, or 1.0 percent. (Bad both ways)
Construction spending: Construction spending during December 2008 was at a seasonally adjusted annual rate of $1,053.7 billion, 1.4 percent below the revised November estimate. Just missed being neutral (the margin of error is + or – 1.3 percent), but still bad news. (Bad)
Housing vacancies: The rental vacancy rate was 10.1 percent in the fourth quarter of 2008—higher than the fourth quarter rate for 2007 (9.6 percent), but not statistically different from the rate last quarter (9.9 percent in III:08). For homeowner vacancies, the current rate of 2.9 percent was not statistically different from the fourth quarter 2007 rate or the rate last quarter (2.8 percent each). (Not used in the GNI)
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