September 20, 2018

Initial Jobless Claims (week ended 9/15/2018)

- New Claims seasonally adjusted   201,000. Previous was 204,000
- New Claims  unadjusted, totaled 168,801 an increase of 6,468 from  previous
- 4-week Moving Average seasonally adjusted  205,750. Previous was 208,000

The total number of people claiming benefits in all programs for the week ending September 1 was 1,519,707, a decrease of 105,019 from the previous week.

Philadelphia Fed Business Outlook Survey (September 2018)

- General Business Conditions Index    22.9. Previous was 11.9 

Existing Home Sales  (August 2018)

- Existing Home Sales seasonally adjusted, annualized rate  5,340,000. Previous was 5,340,000
- Existing Home Sales month/month  0.0%. Previous was -0.7%
- Existing Home Sales year/year   -1.5 %. Previous was -1.5%

The data is best analyzed regionally. The national number was brought down by slower sales in the west.  Existing Home Sales is the west was -5.9% month/month and -7.4% year/year.
Lack of supply has driven prices to levels which not enough people can afford.  The consequence is fewer sales.

Leading Indicators  (August 2018)

- Leading Indicators month/month +0.4%. Previous was +0.7% 

This is a composite of 10 forward-looking components

September 19, 2018

MBA Mortgage Applications (week ended 9/14/2018)


- Purchase Index week/Week +0.3%. Previous weeks were +1.0%, +1.0%, -1.0%, +6.0%, -3.0%, -2.0%, -3.0%, -1.0%, -5.0%, +7.0%, +1.0%, -6.0%, and +4.0%
- Refinance Index Week/Week +4.0%. Previous weeks were -6.0%, -1.0%, -3.0%, +3.0%, 0.0%, -5.0%. -2.0%, +1.0%, +2.0%, -2.5%, -2.0%, -4.0%, and +6.0%
- Composite Index Week/Week +1.6%. Previous weeks were -1.8%, -1.0%, -1.7%, +4.2%, -2.0%, -3.0%, -2.6%, -0.2%, -2.5%, +2.5%, -0.5% -4.9%, and +5.1%

Housing Starts (August 2018)

- Starts seasonally adjusted, annualized rate 1,282,000. Previous was 1,174,000
- Permits seasonally adjusted, annualized rate 1,229,000. Previous was 1,303,000

The reality is that Housing Starts have been miserable since 2007. We need 1,500,000 Starts/year in order to keep pace with population growth and units lost to disasters or scrappage.

Take a look at this paper from 2008.  https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/reports/11-17-housingstarts.pdf
This was released just as the mortgage mess/liquidity crisis happened and attempted to answer the question "When would we recover to 1,500,000 Starts."

The paper offered optimistic, Cyclical Downturn, and pessimistic scenarios.  The Pessimistic Scenario estimated that we would not get back to 1,500,000 starts until the second half of 2012.

The question no one has a good answer to is "What the heck happened?"

Current Account Deficit  (2ndQ2018)

- Current Account Deficit  $101.5 Billion. Previous was $121.7  

The Current Account is a broader version of the trade Deficit. It measures international trade balance in goods, services, and unilateral transfers.

September 18, 2018

Redbook Chain Store Sales (week ended 9/15/2018)

- Chain Store Sales year/year +5.4%. Previous was +6.3%

This takes no account for chain store outlets which have closed in the past year.

Housing Market Index (September 2018)

- Housing Market Index  67. Previous was 67  

This is from a survey of home builders conducted by the National Association of Home Builders.  It measures builder confidence in the economy in general and the housing market in particular.  It is about single family homes only.  This shows a relative healthy market and has been more or less stuck at this level for almost 2 years. The index was below 10 post-Lehman.

September 14, 2018

Retail Sales  (August 2018)

- Retail Sales month/month  0.1%. Previous was +0.7%
- Retail Sales less autos month/month  0.3%. Previous was  +0.9%
- Less Autos & Gas month/month  0.2%. Previous was +0.9%

Welcome to Three Card Monte.  Follow Retail Sales closely and guess which month the gains took place in. August? You lose.  Look here they were in July.  Sorry.  Better luck next time.
July was revised from +0.5% to +0.7% and this will help 3rdQ 2018 GDP.


Import and Export Prices (August 2018)

- Import Prices month/month -0.6%. Previous was -0.1%
- Export Prices month/month -0.1%. Previous was -0.5%
- Import Prices year/year   3.7%. Previous was 4.9%
- Export Prices year/year   3.6%. Previous was 4.3%

This is about two different things:  changes in demand and the strength of the US dollar. 

Industrial Production  (July 2018)

- Inventories month/month  0.6%. Previous was +0.1%

Business Inventories (July 2018)

- Inventories month/month  0.6%. Previous was +0.1%

This is a GDP component.

Consumer Sentiment  (September 2018)

- Sentiment Index   100.8. Previous was 96.2 

This is the index from the University of Michigan's Consumer Survey Center.  This is a strong reading.

September 13, 2018

CPI (August 2018)

- CPI month/month change  0.2%. Previous was +0.2%
- CPI year/year change 2.7%. Previous was +2.9%
- CPI less food & energy month/month  0.1%. Previous was +0.2%
- CPI less food & energy year/year 2 2.2%. Previous was +2.3%

The message is similar to that of yesterday's PPI - wage inflation has not yet crept into either wholesale or retail prices.


Initial Jobless Claims (week ended 9/8/2018)

- New Claims seasonally adjusted  204,000. Previous was 205,000
- New Claims  not seasonally adjusted totaled 161,892 a decrease of 11,665 from  previous
- 4-week Moving Average   208,000. Previous was 210,000

Unadjusted, the total number of people receiving unemployment benefits declined by  107,457 in the past week to 1,492,538.  The jobs market in extremely strong.

September 12, 2018

MBA Mortgage Applications (week ended 9/7/2018)


- Purchase Index week/Week +1.0%. Previous weeks were +1.0%, -1.0%, +6.0%, -3.0%, -2.0%, -3.0%, -1.0%, -5.0%, +7.0%, +1.0%, -6.0%, +4.0%, and -2.0%
- Refinance Index Week/Week -6.0%. Previous weeks were -1.0%, -3.0%, +3.0%, 0.0%, -5.0%. -2.0%, +1.0%, +2.0%, -2.5%, -2.0%, -4.0%, +6.0%, and -2.0%
- Composite Index Week/Week -1.8%. Previous weeks were -1.0%, -1.7%, +4.2%, -2.0%, -3.0%, -2.6%, -0.2%, -2.5%, +2.5%, -0.5% -4.9%, +5.1%, and -1.5%

PPI-FD (August 2018)

- PPI-FD month/month  -0.1%. Previous was +0.0%
- PPI-FD year/year   2.8%. Previous was 3.3%
- PPI-FD less food & energy month/month -0.1%. Previous was 0.1%
- PPI-FD less food & energy year/year   2.3%. Previous was 2.7%
- PPI-FD less food, energy & trade services month/month 0.1%. Previous was 0.3%
- PPI-FD less food, energy & trade services year/year   2.9%. Previous was 2.8%

Wages are up and Producer Prices are down.  Go figure.

Atlanta Fed Business Inflation Expectations  (September 2018)

- Business Inflation Expectations year/year +2.2%. Previous was +2.1%

September 11, 2018

JOLTS (July 2018)

- Job Openings  6,939,000. Previous was  6,822,000 

This is approaching "off the charts" territory. The number of unemployed people seeking jobs in August was 6,234,000 according to last Friday's BLS Employment Situation Report.  There are 705,000 more Job Openings than people unemployed.  While most of the people unemployed probably do not have the skills for those Job Openings the data is a sign of the strength of the jobs market.

Wholesale Trade  (July 2016)

- Inventories month/month  0.6%. Previous was +0.1%

Redbook Chain Store Sales (week ended 9/8/2018)

- Same Store Sales year/year 6.3%. Previous was 6.5%

NFIB Small Business Optimism Index  (August 2018)

- level  108.8. Previous was 107.9

September 7, 2018

BLS Employment Situation Report  (August 2018)

- Nonfarm Payrolls month/month  201,000. Previous was 147,000   
- Unemployment Rate 3.9%. Previous was 3.9% 
- Private Payrolls month/month   204,000. Previous was 153,000   
- Manufacturing Payrolls month/month  -3,000. Previous was   18,000 
- Participation Rate 62.7%. Previous was 62.9%   
- Average Hourly Earnings month/month  +0.4%. Previous was +0.3%
- Average Hourly Earnings year/year  2.9%. Previous was +2.7%
- Average Workweek  34.5 hrs. Previous was 34.5 hrs

Revisions to the 2 previous months subtracted 50,000 jobs meaning that the change from the July report was +151,000 which is not much more than what is needed to keep pace with population growth.  Considering that and the drop in Participation Rate this report shows a flat Jobs Market.  The increase in Average Earnings will not help treasuries and mortgage rates.





September 6, 2018

Challenger Job-Cut Report  (August 2018)

- Announced Layoffs  38,472. Previous was 27,122 

This is the 3rd largest total this year behind March and January.  There was an increase in companies reporting job cuts due to steel tariffs. Still tariff related job cuts were rather low at 521.




ADP Private Jobs (August 2018)

- ADP employment    163,000. Previous was  217,000. 

Lower than expectations.




Initial Jobless Claims  (week ended 9/1/2018)

- New Claims seasonally adjusted  203,000. Previous was 213,000
- New Claims unadjusted, totaled 172,355 a decrease of 3,390 from previous
- 4-week Moving Average seasonally adjusted   209,500. 

The total number of people claiming unemployment benefits in all programs for the week ending August 18 was 1,648,724, a decrease of 45,376 from the previous week.  This is the lowest total since August 1973. At that time the size of he Labor Force was about 60% of what it is at present.


Productivity and Costs (2ndQ2018)

- Nonfarm productivity quarter/quarter seasonally adjusted, annualized rate  2.9%. Previous was +2.9% 
- Unit labor costs quarter/quarter seasonally adjusted, annualized rate  -1.0%. Previous was -0.9%

This is a revision to the previous report.  Output is higher and hours worked is lower thus lower Unit Labor Costs. This may be due to investments in equipment.




PMI Services Index  (August 2018)

- Level 54.8. Previous was 56.0 

ISM Non-Manufacturing Index (August 2018)

- Composite Index 58.5. Previous was 55.7 




Factory Orders  (July 2018)

- Factory Orders month/month  -0.8%. Previous was +0.6%  





September 5, 2018

MBA Mortgage Applications (week ended 8/31/2018)


- Purchase Index week/Week +1.0%. Previous weeks were -1.0%, +6.0%, -3.0%, -2.0%, -3.0%, -1.0%, -5.0%, +7.0%, +1.0%, -6.0%, +4.0%, -2.0%, and +4.0%
- Refinance Index Week/Week -1.0%. Previous weeks were -3.0%, +3.0%, 0.0%, -5.0%. -2.0%, +1.0%, +2.0%, -2.5%, -2.0%, -4.0%, +6.0%, -2.0%, and +4.0%
- Composite Index Week/Week -1.0%. Previous weeks were -1.7%, +4.2%, -2.0%, -3.0%, -2.6%, -0.2%, -2.5%, +2.5%, -0.5% -4.9%, +5.1%, -1.5%, and +4.1%



Trade  Deficit (July 2018)

- Trade Deficit  $50.1 billion. Previous was $45.7 billion

The strong dollar tends to increase the Trade Deficit. Tariffs confuse the picture.  




Redbook Chain Store Sales (week ended 9/1/2018)

- Same Store Sales year/year 6.5%. Previous was +5.1% 

Part of this is due to more consumer spending and part is due to the fact that this excludes stores which had closed in the past year.





September 4, 2018

PMI Manufacturing Index (August 2018)

- Level 5 4.7. Previous was  55.3




ISM Manufacturing Index (August 2018)

- Index 61.3. Previous was  58.1 





Construction Spending  (July 2018)

- Construction Spending month/month +0.1%. Previous was -0.8%
- Construction Spending year/year 5.8%. Previous was +6.1%

Not very impressive.  Construction Spending is "putting your money where your mouth is."




  Archive of commentary from previous months is here.