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By New_Deal_democrat April 26, 2014 12:08 pm
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Weekly Indicators: mixed and muted edition
Monthly data for March reported in the last week included rising Leading Economic Indicators, confirming no recession for the next 6 months or so, and positive durable goods and consumer sentiment, although expectations have been going generally sideways, negative existing home sales, and not just poor, but downright ugly new home sales.
 

My weekly report on the high frequency weekly indicators is meant to provide an up-to-this-week snapshot of the economy.  They will confirm a trend or indicate a switch in trend well before monthly reports.  They are also a way to mark my, and your, opinions to market and keep us close to reality.

 

Let's start with employment again:

 

Employment metrics

 Initial jobless claims

  • 329,000 up +25,000
  • 4 week average 316,750 up +4,750

Initial claims rose this week, as did the 4 week average, but are still in a good range.

 

The American Staffing Association Index was up 1 to 96.It is up +3.32% YoY.

 

This Index tied its all-time high for this week in April. The YoY comparison faded in February but since then has stabilized and then rallied.

 

Tax Withholding 

  • $136.0 B for the first 18 days of April vs. $138.2 B last year, down -$2.8 B or -1.6%
  • $159.7 B for the last 20 days ending Thursday vs. $150.8 B for 20 days ending Thursday 1 year ago, up +$8.9 B or +5.9%.

 

April has so far been poor, but the rolling 20 day sum improved this week. I have suggested previously that the poor retail sales during the winter might presage a poor month or two of hiring this spring.  While firing is at a low, it could be that hiring - at least of permanent employees - has also paused.

 

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 was between from +2% to a high over +4%.  This week was totally mixed, with Johnson Redbook in midrange, ICSC in the low end of its range, and a negative Gallup.

 

Steel production from the American Iron and Steel Institute 

  • +1.3 % w/w
  • -1.6% 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 and have been mixed since, and decidedly so in the last three weeks.

 

Transport

 Railroad transport from the AAR 

  • +19,800 carloads up 7.2% YoY
  • +8,200 carloads up 4.8% ex-coal
  • +12,100 or +4.8% intermodal units
  • +16,800 or +3.1% YoY total loads

Shipping transport

Rail transport ended 2013 on a very positive note.  Rail traffic was very volatile in February but has rebounded sharply since.  Although it rose again this week, the Harpex index slowly rose, then stabilized, but slowly declined since July 2013. The Baltic Dry Index made a new 3 year high in December 2013, then fluctuated and declined, but increased 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

  • 4.86 BAA corporate bonds down -0.01%
  • 2.67% 10 year treasury bonds down -0.01%
  • 2.19 credit spread between corporates and treasuries unchanged

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 since the beginning of January, and this week were in the bottom of that range.  Spreads remained at their post-recession low this week.  Their recent high was over 3.4% in June 2011.

Housing metrics

Mortgage applications from the Mortgage Bankers Association:

  • w/w purchase applications down -2%
  • YoY purchase applications down -18%
  • w/w refinance applications down -4%

Both refinance applications and purchase applications are still near their recent post-recession lows.

Housing prices

  • YoY this week +10.6%

Housing prices bottomed in November 2011 on Housing Tracker, and YoY comparisons rose to just shy of +12% in late 2013. In early March the YoY reading has declined silightly since then.  The still sharp YoY increase in prices, which are now roughly halfway between their 2006 peak and 2012 trough, might actually be a negative, given higher mortgage rates. 

Real estate loans, from the FRB H8 report:

  • +0.2% w/w
  • +0.4% YoY
  • +4.0% from their bottom

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

Money supply

M1 

  • +1.0% w/w
  • +0.5% m/m
  • +9.1% YoY Real M1

 M2 

  • +0.2% w/w
  • +0.4% m/m
  • +4.7% 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 then decelerated.  Real M2 made a new 2 year low several months ago.  Both Real M1 and Real M2 improved substantially since, at YoY rates that have stabilized in the last few weeks.

 

Oil prices and usage

  • Oil down -$3.70 to $100.60 w/w
  • Gas up +.03 to $3.68 w/w
  • Usage 4 week average YoY up +1.8%

The price of gas began its seasonal climb in February.  It is slightly higher than it was exactly one year ago, but remains below 2 and 3 years ago.  The 4 week average for gas usage was again positive this week.  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 still quite, although both are up slightly from their recent lows.

 

JoC ECRI Commodity prices

  • Up +0.84 to 129.49 w/w
  • +1.86 YoY 

As to the long leading indicators, treasury rates remained steady but below their December highs. Money supply continued its recent rebound.  Bank lending rates remain low.  Even real estate loans, were slightly positive. Only mortgage applications remained negative.

 

The short leading indicators were mixed.  Initial jobless claims increased but were still in a positive range Credit spreads were steady at their post-recession low. Temporary jobs tied for an all-time high.  Commodities were slightly positive.  Gas increased, but oil  backed off enought to slightly disengage the oil choke collar.

 

The coincident reports were more mixed.  Consumer spending was mixed.  Rail transport was strongly positive. Shipping was up.  Tax withholding and steel were mixed.

 

The economy appears to be in good shape for now, although consumer spending and tax withholding indicate at least some weakness.

 

Have a nice weekend!

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