Industrial Production (September 2015)

- Production month/month  -0.2%. Previous was -0.1%

- Manufacturing month/month  -0.1%. Previous was -0.4%

- Capacity Utilization Rate   77.5%. Previous was 77.8%

Industrial Production has decline in 8 of the past 9 months.  Industrial Production includes mining and also electricity generation and much of the change over the 9 month period is due to oil well shut-downs.  In September there was a spike upward due to increased electricity usage due to warmer weather.  Nonetheless, manufacturing is down.

 

JOLTS (August 2015)

- Job Openings 5,370,000. Previous was 5,668,000.

The JOLTS report is the Labor Department’s Job Openings and Labor Turnover Survey. JOLTS has had steady improvement since August 2009.  Whether the drop for August is a trend or a blip remains to be seen.  However, this coupled with the weak BLS Employment Situation Report of 2 weeks ago argues against the Fed hiking the Fed Funds target.

 

Consumer Sentiment  (October 2015)

- University of Michigan Consumer Sentiment Index  92.1. Previous was 87.2.

No matter what else may be happening consumers continue to report that they will spend more money in the next 90 days.  It is my belief that much of this is a reaction to gasoline prices which are conspicuously posted everywhere. 

 

Consumer Price Index (September 2015)

- CPI month/month  -0.2%. Previous was -0.1%

- CPI year/year   +0.0%. Previous was +0.2%

- CPI core (less food & energy) month/month +0.2%. Previous was +0.1%

- CPI core (less food & energy) year/year  +1.9%. Previous was +1.8%.

In the big picture inflation is tame. The overall number is bouncy because of the variation in gasoline prices. The areas of expense showing the largest increases in September are food (both at home and restaurants), rent, owner equivalent rent (home prices) and motor vehicle insurance.  Rent and insurance increases are sticky.  Food and energy price changes are not sticky.

 

Initial Jobless Claims (week ended 10/10/2015)

- New Claims seasonally adjusted 255,000. Previous was 262,000

- Initial  claims unadjusted, totaled 255,059, an increase of 27,883 from previous

- 4-week Moving Average  265,000.  Previous was 267,250

 

Philadelphia Federal Business Outlook Survey (October 2015)

- General Business Conditions Index -4.5. Previous was -6.0.

This is a survey index  of manufacturing conditions within the Philadelphia Federal Reserve district.  This is the second consecutive month of contraction.

MBA Mortgage Applications  (week ended 10/9/2015)

- Purchase Index Week/Week -34.0%. Previous weeks were +27.0%, -6.0%, +9.0%, -4.0%, -1.0%, +4.0%, +2.0%, -1.0%, -4.0%, +3.0%, +0.8%, -0.1%, and +1.0%.

- Refinance Index Week/Week -23.0%. Previous weeks were +24.0%, -8.0%, +18.0%, -9.0%, -10.0%, +17.0%, -1.0%, +7.0%, +3.0%, +6.0%, +2.0%, and -1.0%.

- Composite Index Week/Week -27.6%. Previous weeks were +25.5%, -6.7%, +13.9%, -7.0%, -6.2%, +11.3%, +0.2%, +3.6%, -0.1%, +0.8%, -1.9%, and +4.6%.

Implementation of the new disclosures and rules known as TRID on October 4 pushed folks to making applications in the week ended 10/2 making loan application data irrelevant the past two weeks.  TRID will have the effect of slowing the loan process and affecting lending this month and could also hurt Home Sales.  There is concern about whether CFPB will penalize lenders for mistakes.  CFPB informally said that it would not penalize anyone until the start of 2016.  The House passed a bill making that formal.  The President threatened to veto.  With policy such as this eventually no sane people will remain in the mortgage business.

 

 PPI -FD (September 2015)

- PPI-FD month/month -0.5%. Previous was +0.0%

- PPI-FD year/year   -1.1%. Previous was -0.8%

- PPI-FD core (less food & energy) month/month -0.3%. Previous was +0.3%

- PPI-FD core (less food & energy) year/year  +0.8%. Previous was +0.9%  

- PPI-FD less food, energy & trade services month/month -0.3%. Previous was +0.2%

- PPI-FD less food, energy & trade services year/year +0.5%. Previous was +0.7%

Talk of concern about deflation is premature.  Prices have been driven down by lower commodity prices and a stronger US$.  The problems causing this are not going to be fixed by a change in US monetary policy (increasing Fed Funds rate.)  Modest deflation is not a serious problem.  Sustained deflation becomes a problem when it affects spending as people put off purchasing things because they will be less expensive in the future.  

 

Retail Sales (September 2015)

- Retail Sales month/month +0.1%. Previous was +0.0%

- Retail Sales less autos month/month  -0.3%. Previous was -0.1%

- Less Autos & Gas month/month  +0.0%. Previous was +0.2%.

Retail sales are the heart of GDP and what we have here is sluggish spending.  This is not the  picture of a healthy economy but rather a stagnant one. 

 

 Business Inventories (August 2015)

- Inventories month/month +0.0%. Previous was +0.0%.

This is a component of 3rdQ2015 GDP. Can't get any flatter.

NFIB Small Business Optimism Index (September 2015)

- Level  96.1. Previous was 95.9.

Business optimism should translate into jobs but recent Employment Reports have disappointed.  We are seeing, to some extent, a mismatch between job openings and the skills that young people have upon leaving college.  Worse yet, we are seeing too many people graduate with college degrees which give them no skills for the jobs which exist and instead leave them with significant debt.  A Bloomberg piece of today states that the World Bank believes that this is a worldwide problem.

 

 

Redbook Chain Store Sales (week ended 10/10/2015)

- Store Sales year/year  +1.1%. Previous was +0.7%

As time goes on the percent of Retail Sales which are done online increases.  In 2ndQ2015 it was 7.2% of all Retail Sales. Chain Store sales will slowly become a less important metric. 

This move to online has negative implications for retail chains and shopping malls.

Import and Export Prices  (September 2015)

- Import Prices month/month -0.1%. Previous was -1.6%

- Export Prices month/month -0.7%. Previous was -1.4%   

- Import Prices year/year -10.7%. Previous was -11.4%

- Export Prices year/year -7.4%. Previous was -7.0%

These numbers are essentially about declines in commodity prices. Exports are mostly about agricultural products and the decline in export prices is being caused by a weak economy in the EU and weakening growth in China.  Low export prices reduce GDP. Deflation is something economists and the Fed are always concerned about.  Deflation is of serious concern to those who owe debt. 

The recovery in oil prices is probably temporary and crude prices are likely to fall again.  Falling crude prices threaten the economies of exporting nations which depend on their oil exports.  This threaten not only the economy but also political and social order. 

 

 

Wholesale Trade  (August 2015)

- Inventories month/month  +0.1%. Previous revised from -0.1% to -0.3%.

This is a GDP component and both the August data and the revision to July will take small bites out of 3rdQGDP.

Initial Jobless Claims (week ended 10/3/2015)

- New Claims seasonally adjusted Level  263,000. Previous was 276,000

- New Claims unadjusted were 227,659 an increase of 12,543 from previous

- 4-week Moving Average  267,500. Previous was 270,500

It is of note that while layoffs have been low, job growth has been weak. Initial Jobs Claims as an indicator of the strength of the jobs market misses several important points: 1) the number of people each month who complete temporary jobs and are not eligible for unemployment is about 3 times the size of those who can collect unemployment 2) the number of people who leave their jobs is about 3/4 of the number of people who can collect unemployment 3) those unemployed making jobless claims represent only about 1/8'th of the total movement in the jobs market.

 

Bloomberg Consumer Comfort Index (week ended 10/4/2015)

- Level  44.8. Previous was 43.0

This is another survey showing that consumers are happy with the economy.  Whether this translates into spending remains to be seen.

MBA Mortgage Applications  (week ended 10/2/2015)

- Purchase Index Week/Week +27.0%. Previous weeks were -6.0%, +9.0%, -4.0%, -1.0%, +4.0%, +2.0%, -1.0%, -4.0%, +3.0%, +0.8%, -0.1%, +1.0%, and -8.0%.

- Refinance Index Week/Week +24.0%. Previous weeks were -8.0%, +18.0%, -9.0%, -10.0%, +17.0%, -1.0%, +7.0%, +3.0%, +6.0%, +2.0%, -1.0%, and +4.0%.

- Composite Index Week/Week +25.5%. Previous weeks were -6.7%, +13.9%, -7.0%, -6.2%, +11.3%, +0.2%, +3.6%, -0.1%, +0.8%, -1.9%, +4.6%, and -4.7%.

This gigantic spike in applications was due to the fact that the new TRID regulations regarding the initial disclosures and the settlement statement went into effect last Saturday. The new regulations create delays in the lending process which will likely translate into higher costs is longer locks become necessary.

US Trade Deficit (August 2015)

- Trade Deficit  $48.3 billion. Previous was $41.8.

While part of this is a one time thing about imports of the new iPhone the larger concern is about declining exports.  Declining exports are a consequence of a weakening economy in the EU and slower growth in China. Add to that a stronger US $ which make our exports more expensive to foreign buyers. 

The most important thing for the  world economy at this time is the sharp decline in commodity prices.  This has very serious social and political consequences for many nations.

The stronger US$ is the largest reason why it is best for the Federal Reserve to not attempt to raise rates.  Raising rates will strengthen the US$ and worsen the problem for EU Nations, China and emerging nations.  While the Fed's stated mandate is not to worry about the economy of the rest of the world the fact is that a stronger US$ and lower commodity prices would likely have worse consequences for US employment and GDP than keeping rates low.

 

 

Redbook Chain Store Sales (week ended 10/3/2015)

- Store Sales year/year +0.7%. Previous was +0.9%.

Chain Store Sales are presently less a surrogate for retail as on-line sales increase and make it difficult for the chain stores in malls business model to remain healthy and survive.

PMI Services Index  (September 2015)

- Level  55.1. Previous was 56.1

The Service Sector is growing but at a slower pace.

 

Labor Market Conditions Index (September 2015)

- Index Level 0.  Previous was +1.2.

This would have been a very surprising number before last Friday's much weaker that expected BLS Employment Situation Report. 

 

ISM Non-Manufacturing Index

- Composite Index  56.9. Previous was 59.0.

Again, growing but at a slower pace. 

BLS Employment Situation Reports (September 2015)

- Nonfarm Payrolls month/month  +142,000. Previous revised from +173,000 to +136,000

- Unemployment Rate  5.1%. Same as previous

- Private Payrolls month/month 140,000  118,000. Previous was revised from  +140,000 to +100,000   

- Participation Rate    62.4 . Previous was 62.6%

- Average Hourly Earnings month/month +0.0%. Previous was +0.4%

- Average Workweek - All Employees  34.5 hours. Previous was 34.6

This is much weaker than expected.

 

Factory Orders (August 2015)

- Factory Orders month/month  -1.7%. Previous was +0.2%.