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.
Tuesday, March 9, 2010
Thursday, March 4, 2010
February comes to a good end
The good news index for February finished strong and was only 0.1 point lower than December 2009, the best month so far in the recovery. (We’re sticking, by the way, with our December 9, 2009, suggestion that the recession’s trough occurred in April 2009.)
Sales of new one-family houses in January were 11.2 percent below December 2009. Bad, very bad, and especially bad for a sector that we really need to see some sustained growth in.
New orders for manufactured durable goods increased 3.0 percent in January. Good, pretty darn good, in what is also a cyclically strategic sector.
Real gross domestic product (GDP) increased at an annual rate of 5.9 percent in the fourth quarter of 2009. An earlier estimated had pegged the overall economic growth rate at 5.7 percent. Good news.
As we move into March, we have found the following:
Total construction spending in January was 0.6 percent below December 2009. Bad.
Personal income increased 0.1 percent and disposable personal income decreased 0.4 percent, in January. Personal consumption expenditures increased 0.5 percent. Mixed—one good (expenditure), one bad (disposable income), one indifferent (personal income).
New orders for manufactured goods increased 1.7 percent in January. Shipments increased 0.3 percent. The orders backlog edged up to 5.54 months worth and the inventory sales ratio was unchanged at 1.29. All pretty good.
Productivity increased 6.9 percent in the nonfarm business sector during the fourth quarter of 2009 as unit labor costs fell 5.9 percent (seasonally adjusted annual rates, revised). In manufacturing, productivity rose 6.6 percent while unit labor costs fell 6.3 percent. Good.
Sales of new one-family houses in January were 11.2 percent below December 2009. Bad, very bad, and especially bad for a sector that we really need to see some sustained growth in.
New orders for manufactured durable goods increased 3.0 percent in January. Good, pretty darn good, in what is also a cyclically strategic sector.
Real gross domestic product (GDP) increased at an annual rate of 5.9 percent in the fourth quarter of 2009. An earlier estimated had pegged the overall economic growth rate at 5.7 percent. Good news.
As we move into March, we have found the following:
Total construction spending in January was 0.6 percent below December 2009. Bad.
Personal income increased 0.1 percent and disposable personal income decreased 0.4 percent, in January. Personal consumption expenditures increased 0.5 percent. Mixed—one good (expenditure), one bad (disposable income), one indifferent (personal income).
New orders for manufactured goods increased 1.7 percent in January. Shipments increased 0.3 percent. The orders backlog edged up to 5.54 months worth and the inventory sales ratio was unchanged at 1.29. All pretty good.
Productivity increased 6.9 percent in the nonfarm business sector during the fourth quarter of 2009 as unit labor costs fell 5.9 percent (seasonally adjusted annual rates, revised). In manufacturing, productivity rose 6.6 percent while unit labor costs fell 6.3 percent. Good.
Friday, February 19, 2010
Pace picks up
Good industrial production news, generally good news on the price side, and even a decent reading on real weekly earnings lead the good news index back up over 70 to 71.4 thus far in February. Let’s do be aware of the fact that import and producer prices are showing some tendency to rising at less comfortable rates, especially when energy and other volatile prices are included. Something to keep an eye on—perhaps the Fed agrees with this more than they let on in announcing their very modest discount rate “normalization.”
Housing starts in January 2010 were at a seasonally adjusted annual rate 2.8 percent above December’s. Good.
Industrial production increased 0.9 percent in January following a gain of 0.7 percent in December. The capacity utilization rate for total industry rose 0.7 percentage point to 72.6 percent. Good.
The Import Price Index advanced 1.4 percent in January as fuel and nonfuel prices each increased. Prices for nonfuel imports rose 0.4 percent. Export prices rose 0.8 percent. Nonagricultural export prices advanced 0.7 percent in January. Mixed, with overtones of upward pressure.
The Producer Price Index for Finished Goods rose 1.4 percent in January. About three-fourths of the broad-based January advance in the finished goods index can be traced to higher prices for energy goods. The index for finished goods less foods and energy moved up 0.3 percent in January after no change in December. Good enough, but be aware of some price pressure at the earlier stages of processing.
On a seasonally adjusted basis, the January Consumer Price Index rose 0.2 percent. Over the last 12 months, the index increased 2.6 percent. The index for all items less food and energy declined 0.1 percent in January. Good.
Real average hourly earnings were unchanged in January. A 0.2 percent increase in the Consumer Price Index was offset by a 0.2 percent increase in average hourly earnings for all employees. Real average weekly earnings grew 0.3 percent over the month. Good; it’s the weekly earnings that count in most households.
Housing starts in January 2010 were at a seasonally adjusted annual rate 2.8 percent above December’s. Good.
Industrial production increased 0.9 percent in January following a gain of 0.7 percent in December. The capacity utilization rate for total industry rose 0.7 percentage point to 72.6 percent. Good.
The Import Price Index advanced 1.4 percent in January as fuel and nonfuel prices each increased. Prices for nonfuel imports rose 0.4 percent. Export prices rose 0.8 percent. Nonagricultural export prices advanced 0.7 percent in January. Mixed, with overtones of upward pressure.
The Producer Price Index for Finished Goods rose 1.4 percent in January. About three-fourths of the broad-based January advance in the finished goods index can be traced to higher prices for energy goods. The index for finished goods less foods and energy moved up 0.3 percent in January after no change in December. Good enough, but be aware of some price pressure at the earlier stages of processing.
On a seasonally adjusted basis, the January Consumer Price Index rose 0.2 percent. Over the last 12 months, the index increased 2.6 percent. The index for all items less food and energy declined 0.1 percent in January. Good.
Real average hourly earnings were unchanged in January. A 0.2 percent increase in the Consumer Price Index was offset by a 0.2 percent increase in average hourly earnings for all employees. Real average weekly earnings grew 0.3 percent over the month. Good; it’s the weekly earnings that count in most households.
Thursday, February 18, 2010
Upgrade to trudge
The three reports issued last week nudged the good-news index (GNI) up over 60. Not yet at the quick march, but at least the shoulders are square and the eyes are front.
The rest of this week will be see mostly price reports—international, producer, and consumer—but housing starts and industrial production numbers also will feature.
U.S. retail and food service sales for January increased percent from the previous month. Good.
For December, imports rose faster than exports and the trade deficit increased to $40.2 billion from $36.4 billion in November. Bad, even if the reasons were good; increases in the deficit retard GDP growth.
Total business sales for December 2009 were 0.9% from November. Month end inventories were $ virtually unchanged over the month. Good.
The rest of this week will be see mostly price reports—international, producer, and consumer—but housing starts and industrial production numbers also will feature.
U.S. retail and food service sales for January increased percent from the previous month. Good.
For December, imports rose faster than exports and the trade deficit increased to $40.2 billion from $36.4 billion in November. Bad, even if the reasons were good; increases in the deficit retard GDP growth.
Total business sales for December 2009 were 0.9% from November. Month end inventories were $ virtually unchanged over the month. Good.
Tuesday, February 9, 2010
More plod or a dogtrot?
Based on the fact that the best news in the opening third of February was from the labor market, and that news was pretty much just further deceleration of the downtrend, it’s answer A—so far in February, we’re still plodding on in more or less the right direction.
Our labor market index did eke out a tiny over-the-month gain, but is still below its trend line. From a technical perspective, this indicates that the trend is still down, however much it may have decelerated.
The unemployment rate fell from 10.0 to 9.7 percent in January, and nonfarm payroll employment was essentially unchanged. Good, best in a long time.
Nonfarm business sector labor productivity increased at a 6.2 percent annual rate during the fourth quarter of 2009. This gain reflects increases of 7.2 percent in output and 1.0 percent in hours worked. Good.
In December, consumer credit decreased at an annual rate of 3/4 percent. Bad, a relatively small decline, but a decline nonetheless.
Total construction activity for December 2009 was 1.2 percent below November. Bad.
The homeownership rate in the fourth quarter 2009 was not statistically different from the fourth quarter 2008. The homeowner vacancy rate in fourth quarter 2009 was not statistically different from the fourth quarter 2008. Neutral. (Not included in GNI.)
New orders for manufactured goods increased 1.0 percent in December. Shipments increased 1.9 percent. Good.
December 2009 sales of merchant wholesalers were not much changed in December. Neutral (plus).
Our labor market index did eke out a tiny over-the-month gain, but is still below its trend line. From a technical perspective, this indicates that the trend is still down, however much it may have decelerated.
The unemployment rate fell from 10.0 to 9.7 percent in January, and nonfarm payroll employment was essentially unchanged. Good, best in a long time.
Nonfarm business sector labor productivity increased at a 6.2 percent annual rate during the fourth quarter of 2009. This gain reflects increases of 7.2 percent in output and 1.0 percent in hours worked. Good.
In December, consumer credit decreased at an annual rate of 3/4 percent. Bad, a relatively small decline, but a decline nonetheless.
Total construction activity for December 2009 was 1.2 percent below November. Bad.
The homeownership rate in the fourth quarter 2009 was not statistically different from the fourth quarter 2008. The homeowner vacancy rate in fourth quarter 2009 was not statistically different from the fourth quarter 2008. Neutral. (Not included in GNI.)
New orders for manufactured goods increased 1.0 percent in December. Shipments increased 1.9 percent. Good.
December 2009 sales of merchant wholesalers were not much changed in December. Neutral (plus).
Friday, January 29, 2010
They're off and plodding in 2010
Oops, my bad. I read my spreadsheet rather than the OMB schedule of release dates to say on Monday we had five reports left in January. Unfortunately, today’s excellent GDP report was the last bit of news we’ll be getting. Even that welcome news left the good news index (GNI) at 55.9, down a great deal from December. A slow, but not entirely negative, start.
I’ve finally caught up with the calculations on our proprietary index of labor market conditions; no big prize for having guessed that it went down a bit in January as well. Discouraging as that is, the index edged a bit closer to its 6-month average, signaling further deceleration in the labor market’s slide.
On balance, I can stick with my call from December 4, 2009, that the recession sputtered into recovery in April of that year. Based solely on the average relationship between business-cycle troughs and labor-market toughs in recent recessions, it may be the last quarter of this year before the labor market begins a sustained upswing.
Sales of new one-family houses in December 2009 were at a rate 7.6 percent below November‘s. More bad news for this troubled sector.
New orders for manufactured durable goods in December increased 0.3 percent. Good news, especially with shipments up and inventories nudging down.
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 5.7 percent in the fourth quarter of 2009. Good and had more than just inventory accumulation behind it.
I’ve finally caught up with the calculations on our proprietary index of labor market conditions; no big prize for having guessed that it went down a bit in January as well. Discouraging as that is, the index edged a bit closer to its 6-month average, signaling further deceleration in the labor market’s slide.
On balance, I can stick with my call from December 4, 2009, that the recession sputtered into recovery in April of that year. Based solely on the average relationship between business-cycle troughs and labor-market toughs in recent recessions, it may be the last quarter of this year before the labor market begins a sustained upswing.
Sales of new one-family houses in December 2009 were at a rate 7.6 percent below November‘s. More bad news for this troubled sector.
New orders for manufactured durable goods in December increased 0.3 percent. Good news, especially with shipments up and inventories nudging down.
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 5.7 percent in the fourth quarter of 2009. Good and had more than just inventory accumulation behind it.
Monday, January 25, 2010
Resolutions and hangovers.
It has been a while since my last post—travel, kids home from college, kids back to college and other activities surrounding a Merry Christmas and, thus far, Happy New Year.
One 2010 resolution is to make more frequent postings; another is to maintain a good news diffusion series based on reference dates in addition to the current index based on release dates. The release-based index is a sort of index of psychological inputs—the news that economic actors are getting. The somewhat more delayed reference date index will better synch to underlying conditions. I invite readers to keep me honest on both these resolutions.
The economy itself might have done well to adopt a resolution to keep up its end-of-year momentum. Instead, as January nears its end, the monthly good news index (GNI) is at 53.6, hung over well short of the breadth it had shown in January. There are five more reports to come this month, and it will take a .800 average to keep the GNI from slipping back to pre-November levels.
Summary of January releases to date:
Total construction activity for November 2009 0.6 percent below October 2009. Bad report from the weak sister sector.
New orders for manufactured goods rose 1.1 percent to $365.3 billion in November. Good.
November 2009 sales of merchant wholesalers were up 3.3 percent from the previous month. End-of-month inventories were up 1.5 percent. Both facts good at this point in the cycle.
The Nation's international trade deficit increased to $36.4 billion in November, as imports increased more than exports. Bad, even if for all the right reasons.
Retail and food service sales for December were $353.0 billion, a decrease of 0.3 percent from the previous month. Bad.
Total business sales for November 2009 were up 2.0 percent from the previous month. Month end inventories were up 0.4 percent. Good.
Housing starts in December 2009 were at a seasonally adjusted annual rate 4.0 percent below November. More bad news from this sector.
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent in December. The indexes for food, energy, and all items less food and
energy all posted modest increases.
Nonfarm payroll employment edged down (-85,000) in December, and the unemployment rate was unchanged at 10.0 percent. Neutral; “edged down” is BLS-speak for not statistically significant.
The Producer Price Index for Finished Goods moved up 0.2 percent in December. Good.
The U.S. Import Price Index was unchanged in December. The price index for nonfuel imports increased 0.4 percent for the fifth consecutive month. The price index for nonagricultural exports advanced 0.5 percent in December after rising 0.6 percent in November. All good and well-behaved.
Real average hourly earnings did not change from November to December. A 0.2 percent increase in average hourly earnings for production and nonsupervisory workers was offset by a 0.2 percent increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Neutral.
Consumer credit decreased at an annual rate of 8-1/2 percent in November. Bad; need to see some uptick as a sign that consumers are back to work.
Industrial production increased 0.6 percent in December. The gain primarily resulted from an increase of 5.9 percent in electric and gas utilities due to unseasonably cold weather. Manufacturing production edged down 0.1 percent, while the output of mines rose 0.2 percent. Thoroughly mixed.
One 2010 resolution is to make more frequent postings; another is to maintain a good news diffusion series based on reference dates in addition to the current index based on release dates. The release-based index is a sort of index of psychological inputs—the news that economic actors are getting. The somewhat more delayed reference date index will better synch to underlying conditions. I invite readers to keep me honest on both these resolutions.
The economy itself might have done well to adopt a resolution to keep up its end-of-year momentum. Instead, as January nears its end, the monthly good news index (GNI) is at 53.6, hung over well short of the breadth it had shown in January. There are five more reports to come this month, and it will take a .800 average to keep the GNI from slipping back to pre-November levels.
Summary of January releases to date:
Total construction activity for November 2009 0.6 percent below October 2009. Bad report from the weak sister sector.
New orders for manufactured goods rose 1.1 percent to $365.3 billion in November. Good.
November 2009 sales of merchant wholesalers were up 3.3 percent from the previous month. End-of-month inventories were up 1.5 percent. Both facts good at this point in the cycle.
The Nation's international trade deficit increased to $36.4 billion in November, as imports increased more than exports. Bad, even if for all the right reasons.
Retail and food service sales for December were $353.0 billion, a decrease of 0.3 percent from the previous month. Bad.
Total business sales for November 2009 were up 2.0 percent from the previous month. Month end inventories were up 0.4 percent. Good.
Housing starts in December 2009 were at a seasonally adjusted annual rate 4.0 percent below November. More bad news from this sector.
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent in December. The indexes for food, energy, and all items less food and
energy all posted modest increases.
Nonfarm payroll employment edged down (-85,000) in December, and the unemployment rate was unchanged at 10.0 percent. Neutral; “edged down” is BLS-speak for not statistically significant.
The Producer Price Index for Finished Goods moved up 0.2 percent in December. Good.
The U.S. Import Price Index was unchanged in December. The price index for nonfuel imports increased 0.4 percent for the fifth consecutive month. The price index for nonagricultural exports advanced 0.5 percent in December after rising 0.6 percent in November. All good and well-behaved.
Real average hourly earnings did not change from November to December. A 0.2 percent increase in average hourly earnings for production and nonsupervisory workers was offset by a 0.2 percent increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Neutral.
Consumer credit decreased at an annual rate of 8-1/2 percent in November. Bad; need to see some uptick as a sign that consumers are back to work.
Industrial production increased 0.6 percent in December. The gain primarily resulted from an increase of 5.9 percent in electric and gas utilities due to unseasonably cold weather. Manufacturing production edged down 0.1 percent, while the output of mines rose 0.2 percent. Thoroughly mixed.
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