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By New_Deal_democrat November 9, 2013 5:25 pm
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Weekly indicatorrs: Oil choke collar disengaged, post-shutdown bounceback continues edition

 In the rear view mirror, the first estimate of third quarter GDP came in at nearly +3%.  Monthly reports in the last week featured October jobs, up strongly, while the unemployment rate rose slightly.   Personal income also rose strongly. Personal spending also rose.  ISM services were more positive.  Only consumer sentiment continued to fall.  Despite that, the index of Leading Indicators rose sharply, continuing an improvingly positive trend since earlier this year.
 
To reiterate, I follow these high frequency weekly indicators precisely because they are an almost simultaneous "nowcast" of the economy, and although they can be noisy, taken together they will show a continuation or turning of a trend before it shows up in the monthly data.   I've been watching the data bounce back since the week the government shutdown ended.  Let's start again with consumer spending.
 
Consumer spending

ICSC -0.6% w/w. +1.9%
Johnson Redbook +3.8% YoY
Gallup daily consumer spending 14 day average at $89 up $24 YoY

 

Gallup's 14 day average of consumer spending has completely rebounded from its poor showing a few weeks ago. Last year the ICSC varied between +1.5% and +4.5% YoY in, while Johnson Redbook was generally below +3%.  Johnson Redbook pulled back from its recent readings at the high end of its range.  The ICSC, however, was only weakly positive.
 
Steel production from the American Iron and Steel Institute
+0.9% w/w
+7.4% YoY

 Steel production over the last several years has been, and appears to still be, in a decelerating uptrend,  but has been strongly positive in  the last month.
 
Transport

 Railroad transport from the AAR
+14,200 carloads up +5.1% YoY
+15,500 carloads up +9.3% ex-coal
+39,700 or +17.7% intermodal units
+54,300 or +10.8% YoY total loads

Shipping transport

Harpex unchanged at 400
Baltic Dry Index up +56 from 1525 to 1581

Rail transport had been very mixed YoY during midyear, but has strenghtened considerably since then, and now is very strong.  The Harpex index had been improving slowly from its January 1 low of 352, but flattened out for the last few months. The Baltic Dry Index hit a 3 year high a month ago, but has backed off signifiantly. In the larger picture, both the Baltic Dry Index and the Harpex declined sharply since the onset of the recession, and have been in a range near their bottom for about 2 years, but stopped falling earlier this year, and now are in uptrends.
 
Employment metrics

 Initial jobless claims
336.000 down -4,000
4 week average 348,250 down -8,000

The American Staffing Association Index remained at 101. It is up +7.0% YoYTax Withholding

$45.3 B for the first 5 days of Noember vs. $40.2 B last year, up +$5.1 B or +12.7%
$148.0 B for the last 20 reporting days vs. $133.5 B last year, up +14.5 B or +10.9%
The 4 week average of initial jobless claims  is still affected by claims by federal government workers.  In a week or two that effect should be overr.
 
Temporary staffing had been flat to negative YoY in spring, but broke out positively for the last four months. Tax withholding, after a strong September, was awful in October, also presumably due to the federal government shutdown.
 
Oil prices and usage

Oil down -$3.25 to $94.60 w/w

Gas down -$0.03 at $3.26 w/w
Usage 4 week average YoY up +5.4%

The price of Oil has fallen a 52 week low. The 4 week average for gas usage was slightly positive for over a month, and was strongly positive this week. In the larger picture, it looks like the Oil choke collar is finally loosening its hold on the economy.
 
Interest rates and credit spreads

5.23% BAA corporate bonds up +0.02%
2.57% 10 year treasury bonds +0.02%
2.66% credit spread between corporates and treasuries unchanged

Interest rates for corporate bonds had been falling since being just above 6% in January 2011, hitting a low of 4.46% in November 2012. Treasuries fell to a possible once-in-a-lifetime low of 1.47% in July 2012, but decisively rose more than 1.5% above that mark by September. They have declined somewhat since then. Spreads have also declined back to being close to their recent 2 year low. Their recent high was over 3.4% in June 2011.

 
Housing metrics

Mortgage applications from the Mortgage Bankers Association:
-5% w/w purchase applications
unchanged YoY purchase applications
-8% w/w refinance applications

 

Refinancing applications decreased sharply since April due to higher interest rates. Purchase applications also declined from their multiyear highs in April, and for the last month also turned negative YoY. Applications have generally been mixed for the last several weeks.
 
Housing prices
YoY this week +11.1%

 

Housing prices bottomed at the end of November 2011 on Housing Tracker, and averaged an increase of +2.0% to +2.5% YoY during 2012. This weeks's YoY increase remains near a 7 year record.
 
Real estate loans, from the FRB H8 report:
-0.2% w/w
-0.6% YoY
+1.4% from its bottom

Loans turned up at the end of 2011 and averaged about 1% gains YoY through most of 2012.  Over the last half year, the comparisons stalled and more recently have turned negative.
 
Money supply
M1
-1.1% w/w
+3.1% m/m
+9.0% YoY Real M1

 M2
-0.1% w/w
+1.2% m/m
+5.7% YoY Real M2

 

Real M1 made a YoY high of about 20% in January 2012 and decelerated since then.  Real M2 also made a YoY high of about 10.5% in January 2012.  Its subsequent low was 4.5% in August 2012. Earlier this year both moderated, but in the last month both have accelerated again.
 
Bank lending rates
0.187 TED spread up down -0.201 w/w
0.1685 LIBOR unchanged w/w

 

The TED spread decreased this week to near the bottom of its 3 year range. LIBOR established yet another new 3 year low during this week.
 
JoC ECRI Commodity prices
down -0.22 to 120.87 w/w
+1.58 YoY

 There were no outright negatives this week.  Interest rates have retraced about 40% of their spike since April. As a result, mortgage applications have did decline slightly this  week but have generally stabilized. Money supply has also picked up in the last month. 
 
The shorter leading indicators of temporary employment remained strongly positive as it has been in the last three months. The oil choke collar has disengaged, as gas prices are at near three year lows. Commodities are neutral. Only initial jobless claims appear to still be elevated  from the federal government shutdown.
 
Coincident indicators are mixed. Rail traffic continues to become even more positive, while shipping has turned neutral. Steel production is positive. Bank lending rates remain at or near  record lows. House prices remain strongly positive. Tax withholding, after an awful October, has improved a little. Gallup consumer spending has returned to being  very positive, and Johnson Redbook remains strong, although the ICSC index has become more weak.
 
The post-shutdown bounceback is nearly complete, and the oil choke collar has disengaged. Have a nice weekend.

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