Wednesday
Jul172013

Huge Misses in Housing Starts and Building Permits

This morning's reports of Housing Starts and Building Permits for the month of June both came in well below forecasts.  In the case of Housing Starts, total starts came in at 836K, which was 124K below the consensus forecast of 960K.  This was the weakest report relative to expectations since January 2008.  Building permits were nearly as weak.  Coming in at a level of 911K versus expectations of 1,000K, the miss was the largest relative to expectations since May 2007!

The table below breaks down today's Housing Starts and Building Permits report by type of unit and region.  For each category, we show the actual levels this month, last month, and last year.  We also show how each has changed on a percentage basis in the last month and over the last year.  As shown, on a month/month basis, we saw declines in every category except single unit Building Permits and Building Permits in the northeast.  The increase in Building Permits of single units was probably one of the lone silver linings in this morning's report, and to a lesser degree, the fact that single unit Housing Starts only declined by 0.8% in the last month was a slight positive.  It is often said that single unit Housing Starts and Building Permits have more of an economic impact than multi-family units, so at least those are holding up.  

Following this morning's report, below we have also updated our charts for each category in the table. 

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Wednesday
Jun052013

ISM Non-Manufacturing Rises More Than Expected

Following Monday's weaker than expected ISM Manufacturing report, we noted that the more important report for investors to watch was the ISM Non Manufacturing report, given that services makes up a much larger slice of the US economy than manufacturing.  That report was released this morning, and it came in better than expected.  While economists were looking for the index to increase from 53.1 to 53.5, the actual reading came in slightly better than expected at 53.7.

The chart below shows the charts of the ISM Non Manufacturing Index going back to 1997, as well as the combined ISM reading which accounts for the size of the Manufacturing and Non Manufacturing sectors in the US economy.  On a combined basis, the ISM index not only remained above 50 (threshold for growth), but also rose modestly from 52.8 to 53.1.

The table below breaks out the ISM Non Manufacturing Index based on each of the individual subcomponents.  We then compare each of those components to its reading last month and last year.  In this month's report, the only components that did not show growth (50 and below) were Export and Import Orders.  While weak exports makes sense when you consider the dollar's strength, the steep decline in imports is a little more puzzling.  This month we saw growth in Business Activity and New Orders relative to last month and last year, which is encouraging.  On the downside, five subcomponents saw declines relative to last month, and eight saw declines compared to a year ago.  All in all, this month's ISM Non Manufacturing report fits in perfectly with the Bernanke-Locks scenario of sub-par economic growth and low inflation.

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Monday
Jun032013

ISM Manufacturing Drops Below 50

With economists expecting a reading of 50.5, this morning's release of the ISM Manufacturing report for May came in at a level of 49.0, which was weaker than expected.  This was the first sub 50 reading since November 2012, and the weakest reading since June 2009.  While this month's reading was certainly negative, we would remind readers that Manufacturing sector is only a small slice of the US economy.  The more important ISM reading will be Wednesday's release of the ISM Non-Manufacturing.

The table below breaks down this month's ISM Manufacturing report by each of its sub-components.  As shown, only two components (Business and Customer Inventories) showed growth this month, while every other component declined.  Furthermore, seven of the ten subcomponents were under 50, which is indicative of contraction.  Relative to one year ago, the report was a little better as five components showed improvement while five declined.

This month also saw weakness in the number of industries seeing growth in overall business, production, new orders, and employment.  As shown at the bottom of the table, all four categories were lower in May than they were last year, while Employment was the only category where the number of industries seeing growth was unchanged relative to April. 

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Thursday
May302013

Jobless Claims Rise More Than Expected

This week's release of initial jobless claims came in slightly higher than expected this morning, rising from 344K up to 354K.  Although it is higher than expected, today's reading is right in the middle of the recent range of readings we have seen.  Additionally, given the holiday week, numbers for five states were estimated so we will need at least another week to get a more accurate read of the numbers.

Looking at the four-week moving average, claims rose by just under 7K.  This is within 10K of the post-recession low reached earlier this month, but given the fact that we drop a reading of 328K next week, claims will need to see a large drop next week in order to get the four-week moving average heading lower.

On a non-seasonally adjusted basis, initial claims rose by 13.6K to 317.7K.  For the current week of the year, this is the lowest reading since 2007, and well below the average for the current week going back to 2000 (349K).  Here again, there is little in this week's data that was out of the norm from the recent trend.

Thursday
May092013

Jobless Claims Fall to Lowest Level Since January 2008

Jobless claims came in lower than expected this week (323K vs. 335K) and fell to another post-recession low in the process.  This represents the lowest level since 1/18/08.  For the last several weeks, we have been highlighting the fact that jobless claims have been the one bright spot among the weaker than expected economic data recently, and with claims being one of the only indicators issued this week, the bulls are happy.

This week's decline also brought the four-week moving average down to 336.8K, which is also a post-recession low.

On a non-seasonally adjusted basis, first time claims were also impressive as they fell below 300K (298.5K) for the first time since September and were at their lowest level since 10/5/07.  For the current week of the year, claims were also at their lowest level since 2007 and well below the historical average for this time of year (350.6K) going back to 2000.

Thursday
May022013

Jobless Claims Fall to a Five Year Low

While most of the economic data we have been seeing lately has been weaker than expected, one bright spot over the last few months has been initial jobless claims.  This week proved to be no exception as jobless claims came in considerably lower than expected (324K vs 342K).  It was also the lowest weekly reading in claims going all the way back to January 2008!

Looking at the four-week moving average of jobless claims, we also saw a notable drop this week from 358.3K down to 342.3K.  While it was not enough to make a new post-recession low (340.8K), it was the largest weekly drop in the four-week moving average since December.

On a non-seasonally adjusted basis, first time jobless claims fell down to 298.7K.  This represents the lowest weekly reading for this time of year dating back to 2007 (267.7K).

Thursday
Apr252013

Jobless Claims Fall More Than Expected

While it seems that just about every economic indicator being released these days has been weaker than expected, today's jobless claims reading provided a little bit of a bright spot.  While economists were forecasting claims to come in at 350K, the actual reading came in 11K lower at 339K, which is just 5K above the post-recession low.

This week's decline caused the four-week moving average to fall to 357.5K from 362K.  This level still has a ways to go before the post-recession low of 340.8K comes into play.

On a non-seasonally adjusted basis (NSA), jobless claims fell to 323.5K from last week's reading of 358.2K.  For the current week, this is the lowest reading in claims since 2007, and it's well below the historical average of 371.4K for the current week dating back to 2000.

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Thursday
Apr182013

Jobless Claims Rise Slightly More Than Forecast

Following last week's large drop in initial jobless claims, economists were looking for a modest increase this week and that is exactly what we got.  Compared to last week's revised level of 348K, first time claims rose by 4K to 352K, which was 2K more than the 350K consensus estimate.  In the recent environment of weak economic data, though, a miss of just 2K in claims is almost a win.

The four-week moving average for initial jobless claims also increased this week rising from 358.5K up to 361.3K.  This is more than 20K above the post-recession low of 340.8K that we saw a month ago and represents the fifth straight week of increases.

On a non-seasonally adjusted basis (NSA), initial claims dropped by a little more than 1K.  For the current week of the year, claims are at their lowest point since 2007, and well below the average of 355K for the current week going back to 2000.

Tuesday
Apr162013

Empire Manufacturing Weaker Than Expected

Yesterday's release of the April Empire Manufacturing came in slightly weaker than expected and set the table for what could be another batch of subpar monthly economic data for April.  While economists were expecting the headline reading to come in at 7.00, the actual level came in at 3.05, which was down from March's reading of 9.24.  In addition to the decline in General Business Conditions, we also saw slower momentum in New Orders and Shipments.  At the same time, Unfilled Orders, Delivery Times, and Inventories all saw outright contractions.  Perhaps the biggest bright spot in the report was the fact that plans to increase capital spending increased to 20.5 for the third straight monthly increase. 

Thursday
Apr112013

Initial Claims Drop More Than Expected

After last week's surge in jobless claims and the weak employment report on Friday, bulls were understandably on edge heading into today's report.  Thankfully, today's report essentially reversed the gains of last week as first time claims dropped by 32K from 388K down to 346K.  This week's drop brought the weekly reading back down to the lower end of its recent range.

Even after this week's decline, the four-week moving average for claims actually saw a modest increase, rising from 355K up to 358K.  The reason for the increase was the dropping of a 334K reading on March 8th, which was actually the lowest reading of the recovery.  In spite of the increase, though, the four-week moving average is also still close to its lows of the recovery.

On a non-seasonally adjusted basis (NSA), jobless claims actually rose from 316.9K up to 354K.  While that may sound noteworthy, it really isn't due to the fact that it is typical for NSA claims to rise in the first week of April.  For this time of year, NSA claims are at their lowest point since 2007 and well below the historical average of 392.7K dating back to 2000.

Thursday
Apr042013

Initial Jobless Claims Rise More Than Expected

In what has been a steady streak of weaker than expected economic data, jobless claims kept the streak going as first time claims rose to their highest level since late November.  While economists were expecting claims to come in at 353K, the actual reading came in much higher at 385K.  Bulls can only hope that the seasonal adjustments were skewed as a result of the early Easter holiday.

This week's increase in the weekly reading caused the four-week moving average to rise by more than 11K from 343K up to 354.3K.  This is the highest reading in this indicator since February 22nd.

The only hope for bulls in this week's jobless claims reading was the non-seasonally adjusted (NSA) level of claims which actually fell slightly from 315.6K down to 314K.  At this level, NSA claims are the lowest for this time of year since 2007, and well below the average of 349.7K for the current week going back to 2000.

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Wednesday
Apr032013

ISM Services Weaker Than Expected

It certainly has not been a great week for economic data relative to expectations at least.  Following the weaker than expected ISM Manufacturing report on Monday and this morning's weaker than expected ADP Employment report, the ISM Non-Manufacturing report for March came in weaker than expected as well.  While economists were expecting a level of 55.5, the actual reading came in a little more than a point lighter (54.4).  While the size of the miss was not as large as the miss in the ISM Manufacturing report and is still indicative of decent growth, it was just another in what has become an unusual string of weaker than expected data.  Additionally, with this month's decline, some chart watchers may be growing worried about a second lower high in the ISM Services Index (first chart below table).

As shown in the table, like last month, all ten subcomponents were above 50 once again.  That being said, only two of the components (Supplier Deliveries and Import Orders) increased this month relative to last month, while four are higher now than they were last year.  Combining the Manufacturing and Non-Manufacturing reports together, this month's overall ISM reading was 54.0, which was down from last month's level of 55.8 and last year's reading of 54.8.

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Monday
Apr012013

ISM Manufacturing Weaker Than Expected

This morning's release of the ISM Manufacturing survey for March was above fifty and indicative of growth, but given expectations there was not much to like about the report.  While economists were forecasting a reading of 54.0 the actual reading came in at 51.3.  In the table below, we summarize the current reading of the headline index and each of its ten sub-components relative to last month and last year.  As shown, just three of the components (customer inventories, employment, and prices paid) in this month's report increased this month.  Compared to a year ago, only four components are higher now than they were then.

Interestingly, the highest reading of any subcomponent this month came from export orders (56.0).  Given the stronger dollar, one would think that if any area of manufacturing was going to show weakness it would be exports.

The chart below shows the ISM headline index going back to 1990, and below that we show charts of each of the ten components.  

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Thursday
Mar212013

Philly Fed Moves Back to Positive Levels

This morning's release fo the Philly Fed report for March came in better than expected (2.0 vs -3.0).  The table to the right shows the change in the headline index and each of its subcomponents relative to February.  As shown, the headline index saw a nice jump this month from last month's level of negative 12.5.  Interestingly, while the General Business Index increased by 14.5 points, none of the subcomponents saw a greater increase and only slightly more than half (5 out of 9) increased.  The largest decline came in the average workweek which declined from negative 1.6 to negative 12.9.

The charts below show the historical readings of the headline index and each of its subcomponents going back to 1980 with recessions highlighted in gray.

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Thursday
Mar212013

Initial Jobless Claims Rise Less Than Expected

Today's release of initial jobless claims showed a smaller than expected increase as total claims came in at 336K versus forecasts of 340K.  Even though claims actually rose from last week, it is hard not to like when the level is still just 336K.

Even after this week's increase, the four-week moving average of jobless claims fell by 7.5K down to 339.8K.  This represents another post-recession low, and it's the lowest level since February 2008.

On a non-seasonally adjusted basis (NSA), claims fell from 317.5K down to 299.1K.  This represents the lowest level for the current week dating back to 2007, and it's well below the average for the current week dating back to 2000 (353.2K).

Thursday
Mar142013

Jobless Claims Decline to 332K

Jobless claims for the latest week came in lower than expected this morning (332K vs. 340K).  This week's reading of 332K represents the second lowest reading in the post-expansion period, and it continues to highlight steady improvement in the employment sector. 

With this week's decline, the four-week moving average dropped by nearly 3K from 349.5K down to 346.8K.  This is not only the lowest reading of the post-recession period, but it is also the lowest reading since March 2008.

Even on a non-seasonally adjusted (NSA) basis, claims were also positive, dropping by more than 20K down to 315.4K.  For the current week of the year, this is the lowest reading since 2007, and it's well below the historical average of 377K for the current week going back to 2000.

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Thursday
Mar072013

Initial Claims Drop More Than Expected

Initial jobless claims for the latest week fell to 340K, which was below the consensus forecast of 355K.  It was also the third lowest reading of the entire recovery, indicating that the labor market continues to show signs of life.

With this week's low weekly claims reading, the four-week moving average also fell to 348.8K, which marks a new post-recession low.  In fact, the last time the four-week moving average was this low was back in early March 2008.

Looking at claims on a non-seasonally adjusted (NSA) basis, the weekly reading rose this week to 333.4K.  It is typical for claims to rise as February shifts to March, so this week's increase in the NSA level should not be concerning.  Going back to 2000, in fact, claims remain well below their average level of 390K for the current week.

 

Friday
Mar012013

ISM Manufacturing Surprises to the Upside

Today's release of the ISM Manufacturing report for February came in stronger than expected (54.2 vs 52.5) and was the highest monthly reading since June 2011.  As shown in the table below, not only did the headline index improve, but seven out of ten subcomponents increased relative to last month, while all but one of the subcomponents were either flat to up relative to last year.  

The biggest area of strength this month was in Backlog Orders which rose 7.5 points.  Other components seeing sharp increases on the month were Prices Paid, New Orders, Production, and Imports.  On the downside, Supplier Deliveries, Customer Inventories, and Employment were the only components that declined.  Relative to last year, Export Orders was the only component that declined indicating that global economic weakness is acting as a drag on US manufacturing.  On a positive note, Production, New Orders, and Backlog Orders all saw some of the largest increases compared to last year.

Thursday
Feb282013

Chicago PMI Surprises to the Upside

Today's release of the Chicago PMI for February came in stronger than expected (54.0), rising from 55.6 to 56.8.  This month's reading represented the second straight monthly increase, which hasn't happened since January 2011.  As shown in the lower chart, the two month increase from 50.0 to 56.8 is the largest two-month increase since November 2009.

The table below breaks down the current reading of the Chicago PMI and each of its subcomponents and compares them to their levels last month and last year.  On a positive note, all seven components of the headline index are currently above 50, which is the threshold for growth for the first time since July 2012.  Furthermore, four of the index's subcomponents increased on a month over month basis.  On the downside, it is hard to ignore the fact that all seven components are lower now than they were at this time last year.  At least they are moving in the right direction though!

Thursday
Feb282013

Initial Claims Surprise to the Downside

While Q4 GDP was not revised as high as most economists were expecting, initial jobless claims came in considerably lower than expected.  While the consensus was expecting a level of 360K, the actual reading came in at 344K, representing a drop of 22K from last week's level.  Weekly claims readings have been rather volatile in the last thirteen weeks, bouncing around from the 330K range up to the 370K range, but it is nice to see this week's reading near the lower end of that range.

With this week's decline, the four-week moving average dropped by nearly 7K down to 355K.  This is just 4K above the post-recession low of 351K that we saw on February 1st.

On a non-seasonally adjusted basis, jobless claims dropped to 307.6K.  This is the lowest reading for the current week of the year since 2007, and it's below the average of 361K for the current week dating back to 2000.  In fact, going back to 2000, there have only been three other years where claims for the current week were lower than they were this week (2005, 2006, 2007).