Weekly Indicators: Jobless claims, consumer spending are the stars of the show edition

 - by New Deal democrat

There was a full plate of July monthly data this past week. Industrial production laid a big goose egg, unchanged for July. It is still lower than its recent March peak. The Empire State and Philly Fed indexes declined to slightly less expansionary. Capacity utilization declined. Retail sales were up, but after inflation were flat. The U. Michigan consumer sentiment index declined as to both the present and future expectations. The only unequivocal good news was that both housing permits and starts were up.

Turning to this week's look at the high frequency weekly indicators, let's start with employment metrics, one of which made a major positive breakout:

Employment metrics

Initial jobless claims

• 320,000 down -13,000


• 4 week average 332,000 down -3500

The American Staffing Association Index was unchanged at 96. It is up +3.1% YoY

Tax Withholding

• $80.9 B for the first 11 days of August vs. $76.5 B last year, up +4.4 B or +5.8%


• $139.5 B for the last 20 reporting days vs. $131.6 B last year, up +7.9 B or +6.0%

This week initial claims broke through to the downside of their recent range of between 325,000 to 375,000. Interestingly, it has been at this point in the year for each of the last three years that this same, good, downside breakout has occurred. The 4 week moving average also made a new post-recession low this week. Initial claims have now entered the realm of completely normal readings for an expanding economy.

Temporary staffing had been flat to negative YoY for a few months, but has now also broken out positively. Contrarily, tax withholding, while positive, had one of its worst readings in the last 7 months.

Consumer spending

• ICSC -0.2% w/w +2.6% YoY


• Johnson Redbook +3.7% YoY


• Gallup daily consumer spending 14 day average at $103 up $25 YoY

Gallup's 14 day average of consumer spending was over $100 this week for the second week in a row, its best showing since the financial crisis of September 2008, almost 5 years ago. The ICSC varied between +1.5% and +4.5% YoY in 2012, while Johnson Redbook was generally below +3%. The ICSC had a decent week this week as well, and Johnson Redbook remains close to the high end of its range.

Oil prices and usage

• Oil up +$1.49 to $107.46 w/w


• Gas $3.56 down -0.07 w/w


• Usage 4 week average YoY up +2.6%

The price of Oil remained near its 52 week high. The 4 week average for gas usage was, for the sixth week in a row after a long streak to the contrary, up YoY.

Interest rates and credit spreads

•  5.34% BAA corporate bonds up +0.02%


• 2.62% 10 year treasury bonds down -0.02%


• 2.72% credit spread between corporates and treasuries up +0.04%

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 previously were at a 2.4% high in late 2011, falling to a low of 1.47% in July 2012, but remain back above that high. Spreads backed off their new 52 week low this week. Their recent high was over 3.4% in June 2011.

Housing metrics

Mortgage applications from the Mortgage Bankers Association:

• -5% w/w purchase applications


• +4% YoY purchase applications


• -4% w/w refinance applications

Refinancing applications have decreased sharply in the last 12 weeks due to higher interest rates, and are now just about as bad as they have been at any point in the last 7 years. Purchase applications have also declined from their multiyear highs in April, but are still slightly up YoY.

Housing prices

• YoY this week +8.7%

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 is still close to a 7 year record.

Real estate loans, from the FRB H8 report:

• down -7 or -0.2% w/w


• unchanged YoY


• +1.7% from its bottom

Loans turned up at the end of 2011 and averaged about 1% gains YoY through most of 2012.  Over the last few months, the comparisons have completely stalled.

Money supply

M1

• -0.1% w/w


• +2.1% m/m


• +9.4% YoY Real M1

M2

• +0.2% w/w


• +1.1% m/m


• +5.1% YoY Real M2

Real M1 made a YoY high of about 20% in January 2012 and eased off thereafter. Earlier this year it increased again but has backed off its highs significantly.  Real M2 also made a YoY high of about 10.5% in January 2012.  Its subsequent low was 4.5% in August 2012. It increased slightly in the first few months of this year and has generally stabilized since, although it has declined slightly in the past few weeks.

Transport

Railroad transport from the AAR

• -500 carloads down -0.2% YoY


• +3800 carloads or +2.3% ex-coal


• +14,800 or +6.1% intermodal units


• +13,400 or +2.7% YoY total loads

Shipping transport

• Harpex flat at 403


• Baltic Dry Index up +41 to 1102

Rail transport has been both positive and negative YoY in the last several months. This week was its most positive since that began. The Harpex index had been improving slowly from its January 1 low of 352, but has flattened out in the last 9 weeks. The Baltic Dry Index has retreated from its recent 52 week high. 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 have stopped falling.

Bank lending rates

• 0.22 TED spread unchanged w/w


• 0.184 LIBOR down -0.001% w/w

The TED spread is still near the low end of its 3 year range, and has fallen back from its slight rise in the last month.  LIBOR established yet another new 3 year low.

JoC ECRI Commodity prices

• up +1.23 to 124.99 w/w


• +6.02 YoY

Once again this week the positives far outweighed the negatives. Negatives were mortgage applications, tax withholding, and interest rates. The Oil choke collar engaged a little more. Shipping rates were neutral.

Everything else was positive. Rail had a very positive week, gas prices were lower, gas usage was higher, house prices were very positive, bank rates were very positive, money supply remained positive, and temporary jobs were positive again.

But the star of the show once again was the American consumer especially as measured by Gallup, this week joined by initial jobless claims, at new post-recession lows measured both at 1 and 4 weeks.

Have a nice weekend.