The good news diffusion index was unchanged at 60.5 in November. Reports on factory orders, retail sales, new home sales, and personal income were positive in November where they had been negative the month before. Conversely, the reports on foreign trade, business sales, housing starts, and durable goods orders were negative where they had been good news in October. The 3-month moving average of the GNDI slipped a bit to 60.4.
November closed out with the following reports:
New orders for manufactured durable goods decreased 0.6 percent in October. Bad news, especially considered with drops in shipments and unfilled orders.
Sales of new one-family houses in October 2009 were at an annual rate 6.2% above September 2009. Good news for a struggling sector.
Personal income increased 0.2 percent and disposable personal income increased 0.4 percent in October. Personal consumption expenditures increased $68.3 billion, or 0.7 percent. Quite good news all around.
Monday, November 30, 2009
Tuesday, November 24, 2009
Off the pace?
Both the monthly good news diffusion index and its 3-month moving average are going into the last week of November lower than they were at the end of October. It will take a very strong finish—3 points out of a possible 4—to keep momentum up.
The Nation's international trade deficit in goods and services increased in September, as imports increased more than exports. Bad, but, as a switch, for better reasons—faster increases, rather than slower declines.
U.S. total business sales for September 2009 were down 0.3 percent from August. Bad.
U.S. retail sales increased 1.4 percent in October. Good.
Privately-owned housing starts in October 2009 were at a seasonally adjusted annual rate of 529,000, more than 10 percent below September. Bad, shockingly bad.
The U.S. Import Price Index rose 0.7 percent in October, led by a 1.8 percent increase in fuel prices. U.S. export prices advanced 0.3 percent in October. Only the disproportionate impact of fuel prices kept this from being too bad. Rated neutral.
The Producer Price Index for Finished Goods advanced 0.3 percent in October; the index for finished goods less foods and energy moved down 0.6 percent. The decline in core prices pushes the envelope a bit, but on balance, this was a good news report.
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.3 percent in October. The index for all items less food and energy rose 0.2 percent in October, the same increase as in September. Good.
Real average weekly earnings fell 0.1 percent over the month, as a result of a decline in real average hourly earnings and an unchanged average work week. Since reaching a recent high point in December 2008, real average weekly earnings have fallen by 1.9 percent. Bad. Not horrible, but bad.
Industrial production increased 0.1 percent in October after having averaged monthly gains of about 0.9 percent over the previous three months. Capacity utilization for total industry moved up 0.2 percentage point to 70.7 percent. Good. Not spectacular, but good.
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.8 percent in the third quarter of 2009. The second estimate of the third-quarter increase in real GDP is 0.7 percentage point lower than the advance estimate issued last month. Less good than we thought, but still in the right direction.
The Nation's international trade deficit in goods and services increased in September, as imports increased more than exports. Bad, but, as a switch, for better reasons—faster increases, rather than slower declines.
U.S. total business sales for September 2009 were down 0.3 percent from August. Bad.
U.S. retail sales increased 1.4 percent in October. Good.
Privately-owned housing starts in October 2009 were at a seasonally adjusted annual rate of 529,000, more than 10 percent below September. Bad, shockingly bad.
The U.S. Import Price Index rose 0.7 percent in October, led by a 1.8 percent increase in fuel prices. U.S. export prices advanced 0.3 percent in October. Only the disproportionate impact of fuel prices kept this from being too bad. Rated neutral.
The Producer Price Index for Finished Goods advanced 0.3 percent in October; the index for finished goods less foods and energy moved down 0.6 percent. The decline in core prices pushes the envelope a bit, but on balance, this was a good news report.
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.3 percent in October. The index for all items less food and energy rose 0.2 percent in October, the same increase as in September. Good.
Real average weekly earnings fell 0.1 percent over the month, as a result of a decline in real average hourly earnings and an unchanged average work week. Since reaching a recent high point in December 2008, real average weekly earnings have fallen by 1.9 percent. Bad. Not horrible, but bad.
Industrial production increased 0.1 percent in October after having averaged monthly gains of about 0.9 percent over the previous three months. Capacity utilization for total industry moved up 0.2 percentage point to 70.7 percent. Good. Not spectacular, but good.
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.8 percent in the third quarter of 2009. The second estimate of the third-quarter increase in real GDP is 0.7 percentage point lower than the advance estimate issued last month. Less good than we thought, but still in the right direction.
Tuesday, November 10, 2009
Striding into November
November leads from strength. In the early going, good news came out twice as often as bad news. One must be concerned, however, that all the bad news seemed to fall on the shoulders of the economy’s workers and consumers—the continued decline in revolving credit and the still grim state of the labor market.
Our proprietary index of labor market conditions dropped 1.7 percent to 67.4 (2007=100). This marks the second straight month the index has failed to gain ground relative to its 6-month moving average. Such pauses have been the mark of recoveries that have been termed “jobless” in the past.
Total construction activity for September 2009 was 0.8 percent above August. Good news in a battered sector.
New orders for manufactured goods increased 0.9 percent in September. Good.
Sales of merchant wholesalers were up 0.7 in September. End-of-month inventories were down 0.9 percent. Good.
Productivity increased 9.5 percent in the nonfarm business sector during the third quarter of 2009, and unit labor costs fell 5.2 percent. Good, especially as a significant portion of it was an increase in output.
In October, the unemployment rate rose to 10.2 percent, the highest since April 1983, and nonfarm payroll employment continued to decline. Bad, just plain bad.
Consumer credit decreased at an annual rate of 6 percent in the third quarter of 2009 and at an annual rate of 7.2 percent in September. Bad, increasingly bad at the end.
Our proprietary index of labor market conditions dropped 1.7 percent to 67.4 (2007=100). This marks the second straight month the index has failed to gain ground relative to its 6-month moving average. Such pauses have been the mark of recoveries that have been termed “jobless” in the past.
Total construction activity for September 2009 was 0.8 percent above August. Good news in a battered sector.
New orders for manufactured goods increased 0.9 percent in September. Good.
Sales of merchant wholesalers were up 0.7 in September. End-of-month inventories were down 0.9 percent. Good.
Productivity increased 9.5 percent in the nonfarm business sector during the third quarter of 2009, and unit labor costs fell 5.2 percent. Good, especially as a significant portion of it was an increase in output.
In October, the unemployment rate rose to 10.2 percent, the highest since April 1983, and nonfarm payroll employment continued to decline. Bad, just plain bad.
Consumer credit decreased at an annual rate of 6 percent in the third quarter of 2009 and at an annual rate of 7.2 percent in September. Bad, increasingly bad at the end.
Friday, October 30, 2009
Easing out of October
It’s not like the economy is Usain Bolt—slowing up at the end of a month isn’t going to work very often. Despite a lackluster finish, however, October manages to close out with the news just over 60 percent good.
Total compensation costs for civilian workers increased 0.4 percent from June to September. For the year ending in September, compensation costs and wages and salaries each rose 1.5 percent and benefits increased 1.6 percent. Good, not great, but plus is good.
Personal income decreased less than 0.1 percent, disposable personal income decreased less than 0.1 percent, and personal consumption expenditures decreased 0.5 percent in September. Not good, the income side was essentially unchanged, but growing consumption is important now.
Total compensation costs for civilian workers increased 0.4 percent from June to September. For the year ending in September, compensation costs and wages and salaries each rose 1.5 percent and benefits increased 1.6 percent. Good, not great, but plus is good.
Personal income decreased less than 0.1 percent, disposable personal income decreased less than 0.1 percent, and personal consumption expenditures decreased 0.5 percent in September. Not good, the income side was essentially unchanged, but growing consumption is important now.
Thursday, October 29, 2009
Did the base just get firmer?
Has it been almost a month since this was last updated? The downside of a good month for me. In any case, it has been a pretty good month in terms of the news coming out of the Federal statistical system. The GNDI—our proprietary measure of the relative balance between good and bad news in the topside paragraphs of the Principal Federal Economic Indicators—has crept back over 60 percent, with just personal income and the employment cost reports yet to go. The 3-month average of the good news index is now over 60 as well.
Total construction activity for August 2009 was 0.8 percent above the revised estimate for July. Good news.
New orders for manufactured goods decreased 0.8 percent in August. Shipments decreased 0.3 percent. Bad news, even if the orders decline was mostly a swing in transportation equipment.
August 2009 sales of merchant wholesalers were up 1.0 percent from July. End-of-month inventories were down 1.3 percent. Good news all around.
The Nation's international deficit in goods and services decreased to $30.7 billion in August from $31.9 billion (revised) in July, as exports increased and imports decreased. Generally good things.
U.S. retail and food service sales for September decreased 1.5 percent from the previous month. Not good at all.
U.S. total business sales for August were $989.6 billion, up 1.0 percent from the previous month. Month-end inventories were down 1.5 percent. Good news.
Privately-owned housing starts in September 2009 were 0.5 percent above the revised August 2009 estimate. Good.
New orders for manufactured durable goods increased 1.0 percent in September. Good.
Sales of new one-family houses in September 2009 were at a seasonally adjusted annual rate 3.6% below the revised August 2009 rate. Bad and especially disappointing after the good starts data.
Consumer credit decreased at an annual rate of 5-3/4 percent in August 2009. Bad; there has to be an end to retrenching at some point.
Nonfarm payroll employment continued to decline in September and the unemployment rate continued to trend up. Bad; there has to be a beginning of re-employment at some point.
Industrial production rose 0.7 percent in September after an upwardly revised gain of 1.2 percent in August. In September, the capacity utilization rate for total industry increased to 70.5 percent. Good news.
The U.S. Import Price Index edged up 0.1 percent in September. The increase was led by higher nonfuel prices, which more than offset lower fuel prices. The price index for U.S. exports declined 0.3. This is one of those judgment calls—the topsides were relatively tame, but the import side saw too-large swings, both down for fuel and up for other goods. Neutral, on balance.
The Producer Price Index for Finished Goods declined 0.6 percent in September. The index for finished energy goods fell 2.4 percent, while prices for finished goods less foods and energy edged down 0.1 percent. Good, on a judgment based on the recently announced policy of placing higher weight on “core” measures.
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent in September. The “core” all items less food and energy index also increased 0.2 percent. Good all around.
Real average hourly earnings fell 0.1 percent from August to September. This decline stemmed from CPI-W, up by 0.2 percent, outpacing 0.1 percent growth in average hourly earnings. Bad, especially as average weekly earnings fell 0.4 percent as weekly hours declined.
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 3.5 percent in the third quarter of 2009. Good news and especially important as the first good news from this report since the estimates for the second quarter of 2008
Total construction activity for August 2009 was 0.8 percent above the revised estimate for July. Good news.
New orders for manufactured goods decreased 0.8 percent in August. Shipments decreased 0.3 percent. Bad news, even if the orders decline was mostly a swing in transportation equipment.
August 2009 sales of merchant wholesalers were up 1.0 percent from July. End-of-month inventories were down 1.3 percent. Good news all around.
The Nation's international deficit in goods and services decreased to $30.7 billion in August from $31.9 billion (revised) in July, as exports increased and imports decreased. Generally good things.
U.S. retail and food service sales for September decreased 1.5 percent from the previous month. Not good at all.
U.S. total business sales for August were $989.6 billion, up 1.0 percent from the previous month. Month-end inventories were down 1.5 percent. Good news.
Privately-owned housing starts in September 2009 were 0.5 percent above the revised August 2009 estimate. Good.
New orders for manufactured durable goods increased 1.0 percent in September. Good.
Sales of new one-family houses in September 2009 were at a seasonally adjusted annual rate 3.6% below the revised August 2009 rate. Bad and especially disappointing after the good starts data.
Consumer credit decreased at an annual rate of 5-3/4 percent in August 2009. Bad; there has to be an end to retrenching at some point.
Nonfarm payroll employment continued to decline in September and the unemployment rate continued to trend up. Bad; there has to be a beginning of re-employment at some point.
Industrial production rose 0.7 percent in September after an upwardly revised gain of 1.2 percent in August. In September, the capacity utilization rate for total industry increased to 70.5 percent. Good news.
The U.S. Import Price Index edged up 0.1 percent in September. The increase was led by higher nonfuel prices, which more than offset lower fuel prices. The price index for U.S. exports declined 0.3. This is one of those judgment calls—the topsides were relatively tame, but the import side saw too-large swings, both down for fuel and up for other goods. Neutral, on balance.
The Producer Price Index for Finished Goods declined 0.6 percent in September. The index for finished energy goods fell 2.4 percent, while prices for finished goods less foods and energy edged down 0.1 percent. Good, on a judgment based on the recently announced policy of placing higher weight on “core” measures.
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent in September. The “core” all items less food and energy index also increased 0.2 percent. Good all around.
Real average hourly earnings fell 0.1 percent from August to September. This decline stemmed from CPI-W, up by 0.2 percent, outpacing 0.1 percent growth in average hourly earnings. Bad, especially as average weekly earnings fell 0.4 percent as weekly hours declined.
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 3.5 percent in the third quarter of 2009. Good news and especially important as the first good news from this report since the estimates for the second quarter of 2008
Wednesday, September 30, 2009
Slowing down and catching up
While the diffusion of good news did not stay above 60 percent in September, the 3-month moving average of our little index continued to advance and is now at 56.4. This all indicates that the tenor of news coming out of the Principal Federal Economic Indicators system has swung decisively from far more bad news than good in the first quarter of the year to more good than bad in the third quarter.
As far as the catching up goes, heres the scoreboard since I last had an opportunity to update:
Nonfarm payroll employment continued to decline in August, and the unemployment rate rose to 9.7 percent. (Bad news)
The U.S. Import Price Index increased 2.0 percent in August. Prices for imports excluding fuel increased 0.4 percent and followed a 0.2 percent decline the previous month. Prices for U.S. exports rose 0.7 percent. (A mixed report; the moderation in non-fuel imports was counterbalanced by a uncomfortable rise in non-food exports.)
The Producer Price Index for Finished Goods advanced 1.7 percent in August; prices for finished goods less foods and energy rose 0.2 percent in August after edging down 0.1 percent a month earlier. (At core, some good news)
The Consumer Price Index for all Urban Consumers (CPI-U) rose 0.4 percent in August; the index for all items less food and energy rose 0.1 percent. (Very good)
Real average hourly earnings fell 0.2 percent from July to August. (Bad news)
Total compensation costs for civilian workers increased 0.4 percent, seasonally adjusted, from March to June 2009. For the year ended June 2009, compensation costs rose 1.8 percent with both components of compensation--wages and salaries and benefits--each rising 1.8 percent. (Good as cost restraint, not good as a real pay increase. Mixed.)
The Nation's international deficit in goods and services increased to $32.0 billion in July, as imports increased more than exports. (Bad, but for encouraging reasons)
July 2009 sales of merchant wholesalers rose 0.5 percent (+/-0.5%) from last month. End-of-month inventories were down 1.4 percent. (Good news.)
Manufacturing corporations' after-tax profits averaged 4.3 cents per dollar of sales for the second quarter of 2009, up 1.6 cents from the first quarter of 2009. (Good news.)
U.S. retail and food service sales for August reached $351.4 billion, an increase of 2.7 percent from the previous month. (Good news.)
U.S. total business sales for July were $978.4 billion, up 0.1 percent from the previous month. Month-end inventories were $1,332.5 billion, down 1.0 percent. (Good news, albeit muted.)
After-tax profits for retailers were 2.7 cents per dollar of sales for the second quarter, up 1.2 cents from the first quarter. (Good news.)
Privately-owned housing starts in August 2009 were at a seasonally adjusted annual rate of 598,000 and 1.5 percent above July 2009. (Good news.)
New orders for manufactured durable goods in August decreased $4.0 billion or 2.4 percent to $164.4 billion. (Bad news.)
Sales of new one-family houses in August 2009 were at a seasonally adjusted annual rate of 429,000. This is 0.7% above the revised July 2009 estimate of 426,000. (Good news.)
Industrial output rose 0.8 percent in August, following an upwardly revised increase of 1.0 percent in July. (Good news.)
Real gross domestic product—the output of goods and services produced by labor and property located in the United States –decreased at an annual rate of 0.7 percent in the second quarter of 2009. (Bad news, even if much less bad than the previous quarter.)
As far as the catching up goes, heres the scoreboard since I last had an opportunity to update:
Nonfarm payroll employment continued to decline in August, and the unemployment rate rose to 9.7 percent. (Bad news)
The U.S. Import Price Index increased 2.0 percent in August. Prices for imports excluding fuel increased 0.4 percent and followed a 0.2 percent decline the previous month. Prices for U.S. exports rose 0.7 percent. (A mixed report; the moderation in non-fuel imports was counterbalanced by a uncomfortable rise in non-food exports.)
The Producer Price Index for Finished Goods advanced 1.7 percent in August; prices for finished goods less foods and energy rose 0.2 percent in August after edging down 0.1 percent a month earlier. (At core, some good news)
The Consumer Price Index for all Urban Consumers (CPI-U) rose 0.4 percent in August; the index for all items less food and energy rose 0.1 percent. (Very good)
Real average hourly earnings fell 0.2 percent from July to August. (Bad news)
Total compensation costs for civilian workers increased 0.4 percent, seasonally adjusted, from March to June 2009. For the year ended June 2009, compensation costs rose 1.8 percent with both components of compensation--wages and salaries and benefits--each rising 1.8 percent. (Good as cost restraint, not good as a real pay increase. Mixed.)
The Nation's international deficit in goods and services increased to $32.0 billion in July, as imports increased more than exports. (Bad, but for encouraging reasons)
July 2009 sales of merchant wholesalers rose 0.5 percent (+/-0.5%) from last month. End-of-month inventories were down 1.4 percent. (Good news.)
Manufacturing corporations' after-tax profits averaged 4.3 cents per dollar of sales for the second quarter of 2009, up 1.6 cents from the first quarter of 2009. (Good news.)
U.S. retail and food service sales for August reached $351.4 billion, an increase of 2.7 percent from the previous month. (Good news.)
U.S. total business sales for July were $978.4 billion, up 0.1 percent from the previous month. Month-end inventories were $1,332.5 billion, down 1.0 percent. (Good news, albeit muted.)
After-tax profits for retailers were 2.7 cents per dollar of sales for the second quarter, up 1.2 cents from the first quarter. (Good news.)
Privately-owned housing starts in August 2009 were at a seasonally adjusted annual rate of 598,000 and 1.5 percent above July 2009. (Good news.)
New orders for manufactured durable goods in August decreased $4.0 billion or 2.4 percent to $164.4 billion. (Bad news.)
Sales of new one-family houses in August 2009 were at a seasonally adjusted annual rate of 429,000. This is 0.7% above the revised July 2009 estimate of 426,000. (Good news.)
Industrial output rose 0.8 percent in August, following an upwardly revised increase of 1.0 percent in July. (Good news.)
Real gross domestic product—the output of goods and services produced by labor and property located in the United States –decreased at an annual rate of 0.7 percent in the second quarter of 2009. (Bad news, even if much less bad than the previous quarter.)
Thursday, September 3, 2009
Good news prevails in August
The good news diffusion index (GDI)—a proprietary measure of the qualitative nature of the month’s big reports from the Principal Federal Economic Indicators—rose to 62.5 in August. This indicates that good reports outnumbered bad by about three to two.
At the end of August, releases from BEA, BLS, and Census indicated that GDP fell 1.0 percent in the second quarter (bad), personal income was virtually unchanged (neutral), producer prices were down 0.9 percent overall and 0.1 percent for goods other than food and energy (neutral), durable goods orders were up 4.9 percent (good), and new home sales were up 9.6 percent (good).
Thus far in September, construction spending edged down (bad), while the full report on manufacturing was mixed or neutral. Orders were up and inventories down (good), but shipments and unfilled orders were both down (bad).
NOTE: My policy on evaluating price reports has changed to put more weight on “core” indexes, such as the PPI excluding food and energy. This is to allow for the often non-economic volatility of food, energy, and agricultural prices.
At the end of August, releases from BEA, BLS, and Census indicated that GDP fell 1.0 percent in the second quarter (bad), personal income was virtually unchanged (neutral), producer prices were down 0.9 percent overall and 0.1 percent for goods other than food and energy (neutral), durable goods orders were up 4.9 percent (good), and new home sales were up 9.6 percent (good).
Thus far in September, construction spending edged down (bad), while the full report on manufacturing was mixed or neutral. Orders were up and inventories down (good), but shipments and unfilled orders were both down (bad).
NOTE: My policy on evaluating price reports has changed to put more weight on “core” indexes, such as the PPI excluding food and energy. This is to allow for the often non-economic volatility of food, energy, and agricultural prices.
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