Data Watch

The unofficial, “flash” PMI for the manufacturing sector from Markit did not show the upturn seen in some recent regional Fed manufacturing surveys. The Philly Fed last week and the Kansas City Fed yesterday had both shown significantly positive readings for manufacturing in their regions. The lack of follow through will disappoint bulls, especially after some positive readings from the NAHB about the confidence of builders of single-family homes in September. All in all, the early trends for September look mixed and likely unable to recover a lot from the bland-looking August. The implication being that 3Q 2016 GDP growth… Read More

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The headlines are wrong: Inflation is not “firming” On the CPI release today we read versions of this headline: Consumer prices moved higher in August, a sign that U.S. inflation may be continuing to firm after years of sluggish price growth. There can only be an “inflation problem”, by which it is meant that inflation is on a rising trend, if NGDP growth is also on a rising trend. The charts illustrate. I use the PCEPI because that´s what the Fed targets, but the picture for the CPI would be the same. From the mid-1960s to the late 1970s, rising… Read More

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It´s not, as the WSJ would have it that “Cooling Indicators Suggest Slower Recovery”, but that the slowing recovery is cooling indicators! In mid-2010, the Fed consciously capped the recovery that had begun four quarters earlier, in June 2009. For the past two years, since it began its on/off threat of rate hikes, the already slow recovery is slowing down further. No wonder retail spending, industrial production and other spending categories are deflating. It´s not the Fed that is data-dependent, but the data that appears to be Fed-dependent. And there´s no end in sight to the Fed´s misguided reasoning, in… Read More

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August surveys of manufacturing have been almost uniformly poor, showing negative growth. It was no surprise that consensus expectations for Industrial Production were low, but the figures came in even lower and the prior month was revised down. The negative YoY trend for the index was thus reinforced, down more than 1%. the subset of Manufacturing Production, that excludes energy production, was also expected to be weak and yet came in even weaker and with the prior month downgrade too. As a result, a sort of promising break to actual growth YoY became a negative YoY trend. Since 1919, a… Read More

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The August NFIB survey fitted in with other industry-side surveys from both manufacturing and services sectors. Current job openings rose quite strong mirroring the Job Openings survey, but it is unclear how meaningful these indicators are. Increased ease of advertising openings may mean there is a secular change occurring in the job search market. It may mean that strong secular change within employment as tech employees are more needed than ever but are hard to find at any price. That said the trend probably means most of all that there is just not enough money or sales to bid up… Read More

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The official PMI from ISM for the huge non-manufacturing sector fell heavily in August. It had been holding up remarkably well at 55 or so, but was oddly above the much poorer trend seen in its less well-established competitor survey of services from Markit. Well, now it has fallen to the same barely growing level of 50. Within the components it seems as if new orders and export orders were very weak, and retail and wholesale trade particularly hit. The employment component did weaken but service sector firms are not yet laying off staff. This is a positive sign for… Read More

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The auguries for the August payrolls have not been good judging by industry-side surveys of August activity, and they still disappointed expectations. Monthly jobs growth was relatively weak. With the participation rate flat there were not enough jobs created to keep pace with entries into the labour force and so the unemployment rate ticked up to 4.9%. No big deal and certainly nothing to move markets or expectations about Fed action. What should trigger Fed action and more concern generally is the very weak Average Weekly Earnings (AWE) number. It is derived from two more commonly watched numbers, Average Hourly… Read More

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July Personal Consumption Expenditure and Personal Income were both in line with expectations. Although June growth was revised up a tiny amount the trends of the last several months were unbroken. Nominal Expenditure has accelerated to 3.8% YoY but only financed by a lower savings rate due Personal Income running at a 3.2% trend. Perhaps confidence amongst consumers has risen, but that does not seem to be the case looking at surveys. While Nominal Disposable Income is running a bit closer to Nominal Personal Expenditure, Disposable Income per capita growth, is in line with nominal weekly wages at an ugly… Read More

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Although July surveys and data appeared mixed, with manufacturing doing OK and services less well, August surveys are running remarkably poorly. First off was NY Empire State manufacturing and it was bad, even if in a volatile series. The Philly Fed was in line for manufacturing within a dull trend but its employment survey was very poor. Markit’s “flash” manufacturing PMI did not follow through on July’s strong data point. Richmond Fed had a very weak reading for manufacturing in an another admittedly volatile series. Its services survey fell back to zero. Today, the “flash” Markit services PMI was weak… Read More

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CPI YoY disappointed the hawks for the third month in a row, and the fourth out of five. Although for many of them one month annualised is often a trend, the less obtuse will see three months of trending lower YoY CPI to just 0.9% as something concrete. Personally, I can’t get my ahead around the point of the trimmed mean CPI as the price level is the thing, not some kooky CPI that excludes stuff, but the hawkish inflation-phobes love it. However, the fact that we have heard a lot less about the trimmed mean assures me that it… Read More

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