Data Watch

The Industrial Production and Manufacturing Production figures were a bit better than expected. The IndPro figures MoM were a 2nd positive month and allowed the YoY negative growth rate to shrink to just -0.5% . The Manufacturing Production figures were better than expected but not good enough to raise the rate of YoY growth which shrank again to just 0.4%. Capacity Utilization was a further bright spot. At the end of the day the figures merely confirmed the various surveys of July manufacturing that also suggested a decent month for the sector, at least that is what the regional Fed surveys… Read More

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Misses at both the headline retail sales and core retail sales unnerved markets today. Much lower than expected MoM growth showed up flat at headline and -ve at the core level. Although it is only goods and food service sales (ie restaurants and takeaways, not the full service sector) the divergence seen between weak personal income and stronger personal expenditure may now be starting to close. Growth in nominal retail sales of just 2.25% YoY is a bad sign. The payroll data was quite strong for July last week but some signs of flattening out may be also continuing and… Read More

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The Small Business Confidence Index for July recorded a small miss versus expectations but was still up on the prior month. Employment trends and actual conditions are muted by optimism about the economy as a whole has risen. The overall trend is now one of modest improvement although well down on normal levels for an expansionary period. The NFIB survey echoes other surveys from the two PMIs (ISM and Markit) for manufacturing in particular and from data like payrolls and the broader Change in LMCI. It seems as if the FOMC’s rapid and dovish response to those very poor May… Read More

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Retail Goods and Food Services Sales A better than expected June figure, up 0.6% MoM vs 0.1% expected was offset by a downward revision to the May growth (0.5% to 0.2%). The big growth seen in April is as yet un-revised. The upshot from all this was that the YoY growth in nominal, yes nominal, retail sales remains a paltry 2.7%. Confusingly, to my mind, the BLS Census Bureau also release a figure for CPI that covers their version of service sector inflation as well as retail goods and food services inflation. Whatever. The core CPI was as expected and… Read More

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Markit’s “unofficial” flash Services PMI for June was worse than expected – even before the Brexit vote. It showed no rebound from a poor May. Some earlier manufacturing surveys had shown a bounce last week, but these do not appear very consistent now given the very poor run of the Dallas Fed manufacturing survey showed no recovery whatsoever and is still stuck in the -10 to -20 range. It was vital for the service sector to follow the more positive manufacturing surveys in order to see a broad-based recovery in the US. But, no, it remained weak at 51.3 unchanged… Read More

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Manufacturing production is ‘courting the devil’. The pattern shows that the trend (as measured by the 12-month accumulated growth) of manufacturing industrial production was still positive, sometimes significantly so, when a recession began, turning negative as the recession progresses. At the moment, that indicator is barely positive and has been bracing zero growth for some time.

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A very modest increase in small business optimism did nothing to alter small business owners’ view that the economy is struggling. The opening paragraphs of the press release say it all: The Index of Small Business Optimism rose two tenths of a point in May to 93.8, a negligible increase showing no real enthusiasm for making capital outlays, increasing inventories, or expanding, according to the National Federation of Independent Business (NFIB). “The bottom line is that without an empowered small business sector, the economy will grow at a mediocre pace,” said NFIB Chief Economist Bill Dunkelberg. There seems to be… Read More

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The Federal Reserve Board’s composite labor market indicator came out with the really awful figure expected by us since last Friday’s payrolls data. The consensus was probably a little bit stale for this not-so-well-regarded indicator, but it was expecting a far smaller decline of -0.8 versus the -4.8 actually shown. It was the worst figure for seven years. Recent history was also revised lower so that the apparent modest reduction in the decline shown in the last data point was now just part of a steadily worsening one way bet. The chart indicates that it is worsening since the Fed… Read More

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The release this morning of the PCE for April was “cheered”. Some decried it was “a solid start for Q2”. Let us take a closer look. The data that “mesmerized” observers is shown in the chart below. April registered the highest jump in the month on month nominal PCE growth for the past six years. In our view, however, month on month growth is very uninformative. Last month, for example, growth was almost nonexistent. A better view is of the hard trend, as reflected in the accumulated 12-month growth rate. And the trend bears a close relation to what´s happening… Read More

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Well, that wasn’t expected by the market. The somewhat surprising (to us) upward trend in the bi-weekly Markit Services PMI (and reflected also in the “official” monthly ISM Non-Manufacturing PMI) came to a halt today. Instead of rising from 52.8 to 53.1 it fell back to 51.2. We had suspected the improving trend to be a false steer given the consistently poor manufacturing surveys and other data. Service sector hiring intentions were also weak. The “optimism” survey was awful, as Markit reported: May data highlighted a renewed fall in business optimism across the service economy. Reflecting this, the balance of service… Read More

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