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By New_Deal_democrat March 8, 2014 10:14 am
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Weekly Indicators: the good jobs report hid weakness edition
Monthly news for February was highlighted by the employment report, with a moderate increase in jobs and wages, but a decline in hours and an increase in the unemployment rate.  ISM manufacturing was up, but services were down to a multiyear low, although they still showed expansion.  Auto sales were up slightly. January personal income and spending increased.  In the rear view mirror, productivity in the 4th quarter of 2013 was up, but unit labor costs were slightly down.


As always, my reminder that the purpose of my weekly reports on the high frequency weekly indicators is to provide an up-to-this-week snapshot of the economy, a way to "mark to market" my own opinions and a vehicle for you to do so with yours as well.


Let's start with consumer spending again:


Consumer spending

Gallup's 14 day average of consumer spending averaged between $80 and $100 for most of 2013, with frequent YoY comparisons over $20, and few less than +$10.  In 2013 the YoY range for the ICSC declined to between +1.5% and +3.0%, while Johnson Redbook YoY rallied from +2% to a high over +4%.  Both the ICSC and Redbook are at the low end of their recent ranges, but Gallup's negative reading is very unusual.


Steel production from the American Iron and Steel Institute 

  • +1.6% w/w
  • -0.7% YoY

Steel production over the last several years has generally been in a decelerating uptrend.  After a strongly positive move late in 2013, YoY comparisons turned negative again in January.



 Railroad transport from the AAR 

  • -900 carloads down -0.3% YoY
  • -1,200 carloads down -0.7% ex-coal
  • +500 or +1.2% intermodal units
  • +2,200 or +0.4% YoY total loads

Shipping transport

Rail transport had been very mixed YoY at midyear 2013, but almost continuously improved after that, ending 2013 on a very positive note.  After rebounding from January's polar vortex, rail traffic was volatile in February.  The Harpex index slowly rose, then stabilized, but has slowly declined since July 2013. The Baltic Dry Index made a new 3 year high in December 2013, seasonally retreated, but continued to rise this week.  Both the Baltic Dry Index and the Harpex Index were in a range near their bottom for about 2 years, but rose significantly above those ranges in 2013.


Interest rates and credit spreads

  • 5.06% BAA corporate bonds down -.07%
  • 2.69% 10 year treasury bonds down -0.04%
  • 2.37% credit spread between corporates and treasuries down -0.03%

Interest rates for corporate bonds made 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 rose over 1.6% above that mark in late 2013.  Yields declined significantly ever since the relatively poor December employment report nearly two months ago.  Spreads are near their 3 year low set three weeks ago.  Their recent high was over 3.4% in June 2011.

Housing metrics

Mortgage applications from the Mortgage Bankers Association:

  • w/w purchase applications up +10%
  • YoY purchase applications down -19%
  • w/w refinance applications up +9%

Both refinance applications and purchase applications at their post-recession lows set a short time ago.

Housing prices

  • YoY this week +10.4%

Housing prices bottomed in November 2011 on Housing Tracker, and YoY comparisons rose to just shy of +12% in late 2013. This weeks's YoY comparison is below its recent range.  The continuation of the sharp YoY increase in prices might actually be a negative, given the pasting that housing has taken due to higher mortgage rates.

Real estate loans, from the FRB H8 report:

  • -0.4% w/w
  • -0.7% YoY
  • +3.1% from their bottom

Loans turned up at the end of 2011, but with higher interest rates, the comparisons rolled over and have been almost consistently negative since April 2013.

Money supply


  • +0.5% w/w
  • +1.0% m/m
  • +8.9% YoY Real M1


  • -0.1% w/w
  • +0.7% m/m
  • +4.9% YoY Real M2

In January 2012, YoY Real M1 made a high of about 20%, and YoY Real M2 made a high of about 10.5%.  Growth in both decelerated since then.  Real M2 reading made a new 2 year low two months ago, but has improved substantially since, as has Real M1.


Employment metrics

 Initial jobless claims

  • 323,000 down -25,000
  • 4 week average 336,500 down -1,750

Initial claims seem to have stabilized at their autumn levels, but have made no further progress.


The American Staffing Association Index was unchanged at 91. It is up +1.52% YoY.


Seasonality has now dissipated. Only late 2007 and early 2008 were better than 2013. The YoY measures has been fading, however, in the last month.


Tax Withholding 

  • $177.1 B for February 2014  vs. $164.0 last year, up +$13.1 B or +8.0%
  • $184.8 B for the last 20 days ending Thursday vs. $172.1 B for 20 days ending Thursday 1 year ago, up +12.7 B +7.4%.

YoY Tax withholding comparisons are now clean.  Both measures show substantial improvement YoY.


Oil prices and usage

  • Oil up +$0.03 to $102.62 w/w
  • Gas up $0.04 to $3.48 w/w
  • Usage 4 week average YoY down -1.5%

The price of Oil made its yearly seasonal low in November, but held nearly steady until beginning its seasonal climb in February. The 4 week average for gas usage was negative this week for the sixth consecutive week, and may be the result of the particularly nasty winter weather, although continued weakness will be problematic.  In the larger picture, it continues to look like in 2013 the Oil choke collar finally loosened its hold on the economy slightly.

Bank lending rates

The TED spread and LIBOR are both somnolent, and both near 3 year lows.


JoC ECRI Commodity prices

  • Up +0.52 to 128.67 w/w
  • +1.52 YoY 

Among the long leading indicators, treasury rates are significantly below their December highs. Money supply continued its rebound.  Bank lending rates remain low.  On the other hand, mortgage applications remain near post-recession lows.


The recent relative weakness in the short leading indicators continues.  Temporary jobs, initial jobless claims, gas, oil and other commodities were  all close to neutral again this week.


The coincident reports were also mixed.  Consumer spending was weakly positive to negative, but tax withholding was very positive.  Shipping and rail transport were mixed and steel production was neutral.  YoY comparisons of gas usage are negative again.


Last year's weakness in the long leading indicators has fed through into the short leading and coincident indicators.  This has probably been aggravated both by the unusually severe winter and the termination of extended unemployment benefits to 2,000,000 people in the last two months.  Because consumer spending leads jobs,  I expect that job reports in the next several months may be weak.  At the same time, the long leading indicators did not roll over and have recently rebounded somewhat and suggest this will not lead to actual contraction. 


Have a nice weekend!

Replies: Weekly Indicators: the good jobs report hid weakness edition

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    xardas's picture
    xardas Posts: 1

    I wonder how it would look in a this year



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