Bad news from the international trade and U.S. services releases has driven the good news index below 40. The GNI now stands at 37.5.
Foreign trade deteriorated on both the export and import accounts and the net was an increase in the deficit—a bad news trifecta from this release.
The quarterly services report was pretty poor as the Census Bureau emphasized for the information sector. Information sector revenue for the first quarter of 2009 was $275.3 billion, a decrease of 0.9 percent from the fourth quarter of 2008. Although this report is on the list of principal federal economic indicators, not included in our news index because its format is too disaggregated and difficult to summarize.
Wednesday, June 10, 2009
Tuesday, June 9, 2009
Middlemen not out of woods yet
Despite a sluggish month for wholesalers, the news index is at 42.9 percent, indicating that a growing proportion of the news released by the government in the Principal Federal Economic Indicator reports has been good so far in June.
April 2009 sales of merchant wholesalers were $309.4 billion, down 0.4 percent from last month. End-of-month inventories were $405.4 billion, down 1.4 percent from last month. The wholesalers’ inventory-to-sales ratio ticked down to 1.31 from 1.32. (Bad. Not enough good news to nudge this to a mixed from the prima facie bad of a further decline in sales in the wholesalers’ channel.)
April 2009 sales of merchant wholesalers were $309.4 billion, down 0.4 percent from last month. End-of-month inventories were $405.4 billion, down 1.4 percent from last month. The wholesalers’ inventory-to-sales ratio ticked down to 1.31 from 1.32. (Bad. Not enough good news to nudge this to a mixed from the prima facie bad of a further decline in sales in the wholesalers’ channel.)
Friday, June 5, 2009
Promising start to June
More than a quarter of the news that will be released this month is out and it has been evenly split between good and bad news. The month’s good news index is at 50.0 as we close out the first week of June.
New orders for manufactured goods have gone up two of the last three months after increasing $2.5 billion or 0.7 percent in April. Shipments, down nine consecutive months, decreased 0.2 percent. April’s unfilled orders-to-shipments ratio was 6.01, up from 5.98 in March. The inventories-to-shipments ratio was 1.45, down from 1.46 in March. (Mixed, an improving mix, but still a mixed bag.)
During the first quarter of 2009, productivity—as measured by output per hour—rose 1.6 percent in the nonfarm business sector; output fell 7.6 percent and hours of all persons fell 9.0 percent. Productivity growth for the first quarter was originally estimated at 0.8 percent. (A slightly better mix than the original report, but productivity gains driven by slower drops in output than hours aren’t as good as they seem.)
Nonfarm payroll employment fell by 345,000 in May, about half the average monthly decline for the prior 6 months. The unemployment rate continued to rise, increasing from 8.9 to 9.4 percent. (Bad news, and on close examination, not really less bad news than last month.)
In March, consumer credit decreased at an annual rate of 5-1/4 percent. A big, and troubling, portion of the decline came in the non-revolving credit line—stuff like auto loans and other credits such as loans for mobile homes, education, boats, trailers, or vacations. (Bad, getting credit back on a sustainable up-trend is critical.)
Although our proprietary index of labor market conditions fell by 2-1/2 percent, it still closed the gap on its 6-month trailing moving average for the second month in a row. In the past, a local trough in this gap has been closely associated with the end of a recession.
New orders for manufactured goods have gone up two of the last three months after increasing $2.5 billion or 0.7 percent in April. Shipments, down nine consecutive months, decreased 0.2 percent. April’s unfilled orders-to-shipments ratio was 6.01, up from 5.98 in March. The inventories-to-shipments ratio was 1.45, down from 1.46 in March. (Mixed, an improving mix, but still a mixed bag.)
During the first quarter of 2009, productivity—as measured by output per hour—rose 1.6 percent in the nonfarm business sector; output fell 7.6 percent and hours of all persons fell 9.0 percent. Productivity growth for the first quarter was originally estimated at 0.8 percent. (A slightly better mix than the original report, but productivity gains driven by slower drops in output than hours aren’t as good as they seem.)
Nonfarm payroll employment fell by 345,000 in May, about half the average monthly decline for the prior 6 months. The unemployment rate continued to rise, increasing from 8.9 to 9.4 percent. (Bad news, and on close examination, not really less bad news than last month.)
In March, consumer credit decreased at an annual rate of 5-1/4 percent. A big, and troubling, portion of the decline came in the non-revolving credit line—stuff like auto loans and other credits such as loans for mobile homes, education, boats, trailers, or vacations. (Bad, getting credit back on a sustainable up-trend is critical.)
Although our proprietary index of labor market conditions fell by 2-1/2 percent, it still closed the gap on its 6-month trailing moving average for the second month in a row. In the past, a local trough in this gap has been closely associated with the end of a recession.
Tuesday, June 2, 2009
A June jump?
June starts with two upbeat reports. Construction spending edged up again and personal income rose a bit. The disposable bit of income, that part left after taxes, rose even more than the total as a result of reduced current taxes and increased social benefit payments.
Total construction activity for April 2009 ($968.7 billion) was 0.8 percent above the revised March 2009. Personal income increased 0.5 percent and disposable personal income increased 1.1 percent in April. Both are good news.
Rather than recite the good news diffusion index here, I’ll ask a question: “Is it good news that spending on construction of manufacturing facilities took a big upward swing starting last April and had the strongest over-the-year and year-to-date percent increases of the sectors the Census Bureau reports on?”
Total construction activity for April 2009 ($968.7 billion) was 0.8 percent above the revised March 2009. Personal income increased 0.5 percent and disposable personal income increased 1.1 percent in April. Both are good news.
Rather than recite the good news diffusion index here, I’ll ask a question: “Is it good news that spending on construction of manufacturing facilities took a big upward swing starting last April and had the strongest over-the-year and year-to-date percent increases of the sectors the Census Bureau reports on?”
Friday, May 29, 2009
First quarter GDP still bad news
Revising a number from very, very bad to very bad isn’t really good news, or even mixed. Real gross domestic product is now thought to have decreased at an annual rate of 5.7 percent in the first quarter of 2009. The advance estimate for first quarter GDP change was a decline of 6.1 percent.
I have not been logging the corporate profits indicator that is released along with GDP. That number moved away from its fourth quarter red ink, a decline of a quarter-trillion dollars, to a modest increase of $43 billion. (Please comment on whether or not I should be including this indicator in my calculations and analysis.)
The GNI closes out May at 36.1 percent. While that’s certainly better than the 14.7 percent in January, there is still a lot of bad news out there. Next week will be very interesting as we run up to the May employment situation on Friday through April construction spending, personal income, and factory shipments, and a revised first quarter productivity estimate.
I have not been logging the corporate profits indicator that is released along with GDP. That number moved away from its fourth quarter red ink, a decline of a quarter-trillion dollars, to a modest increase of $43 billion. (Please comment on whether or not I should be including this indicator in my calculations and analysis.)
The GNI closes out May at 36.1 percent. While that’s certainly better than the 14.7 percent in January, there is still a lot of bad news out there. Next week will be very interesting as we run up to the May employment situation on Friday through April construction spending, personal income, and factory shipments, and a revised first quarter productivity estimate.
Thursday, May 28, 2009
A crocus sighting? Or just a croak?
I had thought my computer had lost the power to shock me; then I opened the Census Bureau’s Economic Indicators page. Any uptick, even one as small as April’s, in housing sales, especially coupled with firmness in mid-range pricing and another tick down in the months of inventory on hand, has to be regarded as promising.
While the small increase in durable goods orders also was good to hear, the details of that report, declining shipments and unfilled orders in particular, were not as good. Thus, the durable goods block in my good news diffusion index (GNI) was filled with a more conservative 0.5 rather than the 1.0.
After these two releases were logged, the May GNI read 38.2 percent, up 6.9 percentage points from April. The only release left on my calendar for May, unfortunately, is the preliminary report on first quarter GDP. So, let’s not start unrestrained celebrations yet.
Sales of new one-family houses in April 2009 were at a seasonally adjusted annual rate of 352,000; a modest 0.3% above March. The median sales price of new houses sold in April 2009 was $209,700, up a bit over the month; the average sales price was $254,000, down an even smaller bit. A good report, and something of a surprise.
New orders for manufactured durable goods in April increased $3.0 billion or 1.9 percent to $161.5 billion. This was the second increase in the last three months. Inventories, unfilled orders, and shipments fell. After some vacillation, I have decided to bend over backwards and call this a mixed report. (A painful example of the innate conservatism of the social sciences.)
While the small increase in durable goods orders also was good to hear, the details of that report, declining shipments and unfilled orders in particular, were not as good. Thus, the durable goods block in my good news diffusion index (GNI) was filled with a more conservative 0.5 rather than the 1.0.
After these two releases were logged, the May GNI read 38.2 percent, up 6.9 percentage points from April. The only release left on my calendar for May, unfortunately, is the preliminary report on first quarter GDP. So, let’s not start unrestrained celebrations yet.
Sales of new one-family houses in April 2009 were at a seasonally adjusted annual rate of 352,000; a modest 0.3% above March. The median sales price of new houses sold in April 2009 was $209,700, up a bit over the month; the average sales price was $254,000, down an even smaller bit. A good report, and something of a surprise.
New orders for manufactured durable goods in April increased $3.0 billion or 1.9 percent to $161.5 billion. This was the second increase in the last three months. Inventories, unfilled orders, and shipments fell. After some vacillation, I have decided to bend over backwards and call this a mixed report. (A painful example of the innate conservatism of the social sciences.)
Tuesday, May 19, 2009
It ain't over til it's over
The recession ain’t over yet, apparently. The housing-related sectors of the economy led us down, and will have to stabilize before we can stop the slide. The May good news diffusion index slipped to 33.3 on a very poor housing starts report.
Privately-owned housing starts in April 2009 were at an annual rate of 458,000. This is 12.8 percent below the revised March 2009 estimate of 525,000. This is bad, very bad. It’s only saved from being completely disastrous by the relatively stable-to-positive signs in the single-family components of starts and permits.
The rest of the month’s reports include the preliminary first quarter GDP release and the advance report on durable goods orders, neither which we should expect to much good news in, and the now very critical May 25th report on new home sales.
Privately-owned housing starts in April 2009 were at an annual rate of 458,000. This is 12.8 percent below the revised March 2009 estimate of 525,000. This is bad, very bad. It’s only saved from being completely disastrous by the relatively stable-to-positive signs in the single-family components of starts and permits.
The rest of the month’s reports include the preliminary first quarter GDP release and the advance report on durable goods orders, neither which we should expect to much good news in, and the now very critical May 25th report on new home sales.
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