Lotta data
The October NY manufacturing survey blew past expectations, coming in at 34.6, twice the forecast. It’s the highest level since May ’04. The number only measures the direction of improvement, not the degree so don’t extrapolate that we are partying like its May 2004 but there is no question today’s figure was impressive. New Orders rose to 30.8 from 19.8 while Backlogs rose 6 pts to positive territory for the 1st time since Mar ’08. Employment rose to 10.4 from -8.3 and positive for the 1st time since June ’08 which is nice to see. Inventories remained firmly negative but less so as they rose 7 points to the highest level since Feb. Prices Paid and Received both fell a touch. The 6 month Business Condition outlook rose 4 pts, the highest since Nov ’04. The NY survey is very volatile and we’ll need to see other regional data and the national ISM in order to confirm but manufacturing is expected to be a main contributor to the 2nd half recovery.
Sept CPI rose .2% both headline (in line) and core (.1% higher than expected). The y/o/y decline has slowed to 1.3%, a level last seen in May. The core gain rose 1.5% y/o/y and has remained stubbornly positive all through the economic turmoil proving that the deflation that we saw was mostly in food and energy and for everything else we saw was just disinflation. Owners Equivalent Rent, 24% of the overall CPI, fell .1%, only the 2nd drop since 1992 as rent pressures on landlords continue with rising unemployment and competition from unsold homes. Vehicle prices rose .5% led by used cars and trucks thanks to the taking off the market of many Cash for Clunkered cars, oh the unintended consequences. New vehicles prices rose .4% due to the limited supply of new cars. The implied inflation rate in the 10 yr TIPS is rising 2 bps to 1.96%, a 2 month high.
Initial Jobless Claims totaled 514k, 6k less than expected and are at the lowest level since early Jan but the prior week was revised up by 3k. Continuing Claims were 8k below estimates and down 75k from last week but those receiving Emergency Unemployment Compensation rose by 10k and those getting Extended Benefits rose by almost 6k. The EUC gain though is below the recent weeks but there is no way to know if a slowdown is due to people finding new jobs or are because they are running out of benefits. The monthly jobs data will answer that. The insured unemployment rate did tick down .1% to 4.5%. The amount of firing seen continues its downward trend with the timing and pace of hiring still being uncertain.
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October 15th, 2009 at 9:47 am
U.S. BUSINESS INVENTORIES NOW DOWN 12 MONTHS IN A ROW
Business inventories for August came in lower than expected, falling 1.5% MoM versus expectations of a 1.0% decline. July was revised lower, to -1.1% from -1.0% previously. Businesses have now pared back their inventories for the 12th straight month, which brings the level down to its lowest since December 2005 at $1.311 trillion. On a year-on-year basis, inventories are now falling at a 13.3% rate – a record. The inventory-to-sales ratio (I/S ratio) for businesses are now at 1.33, down from 1.36 in July and 1.46 at the beginning of the year and given that we will still likely see further draw into inventories in the following months as we wait for production to ramp-up, total business I/S ratio could once again test it’s all time low of 1.24.
Manufacturers, retailers and wholesalers are all cutting their inventories, but the largest decline was seen in the retail sector, which cut inventories a further 2.3% in August – the largest monthly decline since October 2001 and actually the 2.3% decrease in August is the second largest in history (data back to 1967). The drop in retail inventories was not surprising because of the Cash-for-Clunkers problem, which depleted the stock of cars in dealership lots across America. Nonetheless, the level of inventories in the retail sector is now at $431.961bln – the lowest since November 2003. With this drop in inventories and the robust sales in August (due to the Cash-for-Clunkers program) the I/S ratio for retailers collapsed to 1.39 in August from 1.45 in July and from 1.62 in December 2008. In fact, the ratio of 1.39 is a new low for the retailers (data back to 1967).
October 15th, 2009 at 10:10 am
Cash for Clunkers = No pay for salesmen. I was talking to the salesman yesterday that I bought my truck from back in March. He said that CFC killed their business. They had a spurt, but he has yet to sell a car this month. Typically he has sold about 10-15 cars by this time in the month. Another example of the short sightedness of our representatives! They just can’t help but meddle in the market with no regard to letting the market do what it does best!