Sunday, October 28, 2012

3rd quarter GDP, september durable goods and new home sales, the LPS “first look”, et al

the key economic report of this past week was the advance estimate of 3rd quarter GDP from the BEA which was released on Friday; our real (inflation adjusted) gross domestic product, which is a dollar denominated measure of the goods & services produced during the quarter, rose at a seasonally adjusted annual rate of 2.0% over the period from july thru september...as always, the caution on these first GDP estimates is that they are usually revised substantially when more complete data about the recent quarter becomes available...ie, the 2nd quarter GDP was first estimated to have grown at an annual rate of 1.5%, which was revised to 1.7% a month later, & then unsettlingly lowered to 1.3% when the final regular revision came in last month...and remember too that, unlike europe, the US reports GDP at an annual rate, which means our growth from June 30 to Sept 30 was really a half a percent, whereas Britain, which also just reported 3rd quarter GDP growth at 1%, largely due to the Olympics, would report growth an annual rate over 4% by the US method...so our actual year to date annual growth rate of 1.74% is really anemic, & not considered high enough to lower unemployment...

nonetheless, a few surprises contributed to what was a better than expected report...probably most unexpected was the 0.71% added to GDP by government spending and investment, the largest contribution from the government sector since the 2nd quarter of 2009, a time when the full impact of the stimulus was being applied, as defense spending increased 13% in the 3rd quarter...and while private investment was generally weak, with investment in equipment & software declining slightly and non-residential building decreasing 4.4% in contrast to its 0.6% 2nd quarter gain, residential fixed investment increased 14.4% in the 3rd quarter, compared with an increase of 8.5% in the 2nd...so as weak as homebuilding has been, what counts for GDP is that it's continued to be better than it was previously...and as is usually the case, the lion's share of 3rd quarter GDP growth, 1.42%, came from personal consumption expenditures, which increased 2.0% in the third quarter, compared with an increase of 1.5% in the second; of the components of PCE, spending on durable goods increased 8.5% compared to the 0.2% decrease in the 2nd quarter; spending for nondurables was up 2.4%, while spending for services, which is nearly 2/3 of PCE, was only up 0.8%, in contrast to their 2nd quarter increase of 2.1%...and while our trade deficit always decreases GDP as exports are added and imports are subtracted, the steep decline in trade generally connected to the slump in europe & slowdown in china created the seemingly contradictory situation wherein the 1.6% 3rd quarter decline in exports in contrast to the 5.3% gain in the second subtracted 0.23% from GDP, while a much smaller decline of 0.2% in 3rd quarter imports added just .04% to GDP when compared to the second import increase of 2.8%...to the above right we have a bar graph from zero hedge for a visual on how each of the components affected the 3rd quarter GDP growth, as well as the components of earlier GDP readings from 2010 & 2011; with segments above the dashed line being positive contributors and those below that line subtracting from each quarter's GDP, which is tracked by the solid black line...the dark blue segments represent personal consumption, which has contributed positively throughout the recovery; the orange segment is government spending, which has subtracted from GDP for every recent quarter except Q2 2010 and the current one; even in quarters where federal spending has risen, state and local spending has been a major drag...the red segment represents private investment, which has now been a contributor to GDP for 6 quarters running: business investment in software & equipment was strong early in the recovery, but as that waned, residential investment has picked up the slack...the green segment below the line represents the .12% subtraction from GDP from a decrease in private inventory investment, less than declining inventories subtracted in the 2nd, so BEA calls that a contributor to acceleration in real GDP in the 3rd quarter vis-a-vis the 2nd; much of the hit from declining inventories this year is obviously an unwinding of the large inventory buildup in the 4th quarter of 2011...the last two segments in each bar are purple for exports and light blue for imports...in this recent quarter, exports declined for the first time in 3 years, hence the normally positive export contribution is shown as negative because it's less than the 2nd quarter, while imports, which subtract from GDP, are positive because they subtracted less this quarter than the last...

the other two major reports this week both covered what are ultimately components of GDP; we'll look at the September Report on Durable Goods Shipments, Inventories and Orders from the Dept of Commerce (pdf), which are mostly watched for the forward looking new orders, which showed that new orders for manufactured durable goods increased $19.6 billion to a seasonally adjusted $218.2 billion in september, a 9.9% increase over new orders booked in August and the largest single month gain in nearly three years; however, that large gain only managed to reverse part of the major decrease of 13.2% in new orders that we saw in August, which was the worst report since the worst months of the recession...new orders for durable goods tend to fluctuate around orders for defense and transport goods but are not normally as volatile as we've seen these past two months, but just as the August decline came as the result of a very unusual dearth of orders for civilian aircraft, the rebound in September comes from a return of aircraft orders to a more normal level, as orders for civilian aircraft added $14.66 billion to the $16.8 billion increase in orders for transportation equipment, which were up 31.7% to a seasonally adjusted $69.6 billion for the month...excluding those transport orders, new orders increased only 2.0% in September...and if we also exclude orders for defense goods, the other volatile category, we find that orders for core durable goods rose 0.4% in September, up from a rise of 0.2% in August core durables orders...non-defense orders for capital goods, representing business investment in productive equipment, rose $13.7 billion or 23.7% to $71.4 billion, but taking aircraft out of that total reduces the september gain to statistical insignificance at 0.0%, which you can see on the chart to the right from J. Picerno at the capital spectator, which shows non-defense orders for capital goods except aircraft in red, and total durable goods for each month since last september in black ...
looking forward from the durables report at manufacturing activity in October, we've seen a handful fairly weak reports from the regional Fed banks; New York's Empire State Manufacturing Survey showed an increase from september's -10.41 reading, but remained mired in contraction at -6.16; the Philly Fed's October Manufacturing Survey showed expansion for the first time in 6 months as their broadest diffusion index rose to 5.7, but the Richmond Fed Manufacturing Composite, covering Virginia, Maryland, the Carolinas, the District of Columbia and West Virginia, fell from a slightly expansionary reading of 4 in september to a negative 7 in october...and the Kansas City Fed’s manufacturing composite index, covering a broad swath of the plains states, dropped to the contractionary level of -4 in October, the first time this year KC has gone negative...
Residential Investment
the major housing report of the past week was for New Residential Home Sales in September from the census bureau and HUD (pdf)...the new home sales numbers dont correspond much with the new housing construction report, such as we saw last week, because a significant number of the home starts are by owner or private parties who may or may not occupy the home themselves but have no intention of putting it on the market for sale...and it is the total of residential investment, which comes not only from new single family homes being built, but also from mufti family structures and home improvement spending, which is the component of GDP which had the big percentage gain in this week's 3rd quarter GDP report...nonetheless, the economic impact of new homes built &/or sold is far greater than with existing homes sales, because with the new homes comes new appliances, furniture, decor, and a plethora of other retail purchases & services such as landscaping...and, as you can see from the adjacent chart from bill mcbride, residential investment at less than two & a half percent of GDP is far from it's normal 4% to 5% contribution to the economy, and has lingered in that low range for four years because of the overhanging existing supply of housing brought about by high levels of defaults & subsequent foreclosures, so residential investment isnt leading the economy out of this recessions as it normally does (recessions are marked by vertical light blue bars)... but as is the case with most current housing data, there are wide margins of error; ±14.8% on this month's figures, ±19.3% on the annual comparisons....according to the census, 31.000 single-family home were sold in September; but census & everyone else reports these at a seasonally adjusted annual rate of 389,000, which was 5.7% (±14.8%) above the revised August annual rate of 368,000 and 27.1% (±19.3%) above the year ago estimate of a 306,000 annual sales rate; the seasonally adjusted estimate of new houses for sale at the end of September was 145,000, pretty close to the actual 146,000 new homes on the market; census calls this a 4.5 month supply at the current sales rate; math says it's a 4.7 month supply (146 / 31)...and the median sales price of new houses sold in September 2012 was $242,400; the average sales price was $292,400; table 2 on page 3 of the pdf has further sales price ranges details (table one has sales breakdown by regions which are rendered incoherent by 90% confidence interval as high as ± 111.5%)

another housing report we should take a quick look at is the LPS “First Look” Mortgage Report for September because there has been a substantial & inexplicable rise in mortgage delinquencies over the past month; LPS reported the  mortgage delinquency rate (home loans 30 or more days past due, but not in foreclosure) increased to 7.40% from 6.87% in August, as 3,700,000 of us had not made their most recent mortgage payment at month end; LPS offers no explanation for the delinquency increase, although one may be forthcoming when their complete Mortgage Monitor is released at the end of next week; in the years we've covered the mortgage crisis we have never seen a major jump in mortgage delinquencies at this time of year (typically, there is an increase around the holidays as some homeowners apparently skip a house payment in order to buy toys, but they usually catch up by march and delinquencies resume their downward trend)...retail sales did jump in september, driven by higher gas prices and purchases of the new iphone, and there were a number of articles at the time that most of the new gadget buyers were going into debt to buy the latest, but that correlation is just speculative...nonetheless, the rest of the LPS report didnt show any deterioration; longer term delinquencies of more than 90 days rose just 10,000 to 153,000, which is less than one percent, and the number of homes in foreclosure fell from 2,020,000 in August, which was 4.04% of all mortgages, to 1,940,000 at the end of September, which is 3.87% and the first time homes in foreclosure have been below 4% since the crisis started...the decrease in foreclosures was confirmed by the third quarter report from RealtyTrac, which this week was updated with data for the 212 largest cities; they report 131 of those cities with a population of 200.000 or more saw their foreclosure activity decrease in the 3rd quarter...the New York metro area remains a sore spot, however, as foreclosures in the big apple are running 69% higher than a year ago... 

(the above is my weekly commentary that accompanied my sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion, and also includes other links of interest…if you’d be interested in getting my weekly emailing of selected links that accompanies these commentaries, most coming from the aforementioned GGO posts, contact me…)

Friday, October 26, 2012

Sunday, October 21, 2012

September retail sales, consumer prices, industrial production, residential construction, & existing home sales

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it's been a fairly busy week for new economic releases, with several monthly reports we normal cover generally showing good headline numbers, yet each with its own caveats...we'll start with the advance report on retail sales for September from the department of commerce, which headlined with a 1.1% seasonally adjusted sales increase over August's sales, which themselves were revised from a 0.9% to a monthly increase of 1.2%; the confidence interval is ±0.5%...total retail and food service sales for September were $412.9 billion, which was 5.3 percent (±0.7%) above sales reported for September 2011...the first caveat to this better than average sales gain is that retail sales are reported without accounting for price changes, and as gas prices were up over the month, gas station sales, which now account for 15% of all retail sales, were up 2.5% by themselves...the other factor which made this month extraordinary was that sales at electronics and appliance stores, about 5% of the total, rose 4.5% over August sales, presumably on the strength of sales of the new iphone5...that boosted this september's electronics sales to 3.6% over last septembers; in contrast, August electronics sales were 2.2% below the level of August 2011...the other strong sectors in this report were sales of automobiles, up 1.3% over August, and food & beverage, up 1.2% for the month...on the other side of the ledger, department stores saw sales fall at a 0.2% seasonally adjusted rate, while miscellaneous retailers were off 0.1%...comparative weakness was also seen in food services and health & drug stores, which both scored a small 0.4% monthly gain...on a year over year basis, car sales sales are up 9.3% and non store retail (which includes online sales) are up 15%, while department store sales are off 1.3% & general merchandise stores have seen their sales decline 1.1%...since this report shows retail sales up 24.6% from the bottom, and up 9.0% above the pre-recession peak, but doesnt take price changes into account, it's useful to look at sales adjusted for inflation, which you'll see in the adjacent chart from doug short, starting 1992, when the census began tracking the retail data ..the top red graph is unadjusted retail sales as reported; you'll see they're nominally up 151.7% over the span; the next graphed line adjusts for population; on a per capita basis, sales are up 104.1%; the light blue line adjusts for inflation, which shows retail sales up 50.4% on that basis, while the bottom blue line adjusts for both population growth and inflation, leaving retail sales up only 22.0% over the past two decades...we must caution, though, that doug short uses the consumer price index to adjust for inflation, which is computed including housing and medical expenses, which are not included in retail sales...in correspondence, he indicates he does this to match the methodology used by FRED, which is also replicating the NBER's method of tracking retail sales....(FRED is charting service of the StLouis Fed, NBER is the official arbiter of recessions) 

having mentioned the consumer price index, we'll next look at what that popular measure of inflation did in september; the BLS reported that the "Consumer Price Index for All Urban Consumers" (CPI-U) increased 0.6% on a seasonally adjusted basis; this was the same rate that the price index increased by in August, and like August, almost the entirety of the increase could be attributed to the increase in the price of gasoline, which rose 7.0% in September after increasing 9.0% in August; this increase in prices more than offset the 0.3% increase in average hourly earnings for all employees, hence, in a related release, the BLS reported that average hourly earnings for all employees fell 0.3% from August to September, on a seasonally adjusted basis...the September food index was up just a tenth of a percent, and the core CPI, which eliminates the volatile prices for food & energy & is still watched by the Fed, was also up just 0.1%...since we mentioned it, we'll include here a pie graph showing the weighting for each of the 8 major components that go into computing the CPI; starting at the vertical, and reading clockwise, the slices are for food, housing, apparel, transportation, medical care, recreation, education and communication, and other; clicking on the graph will link to doug short's discussion of these components, with a larger copy of the same graph...alternate measures of core inflation are also provided from this release by the Cleveland Fed: the median CPI rose 0.2%, and the 16% trimmed-mean CPI, which excludes the most extreme 16% of price movements for the month, also increased 0.2%...on a annual basis, the median CPI rose 2.3%, and the trimmed-mean CPI rose 1.9%; doug short computes the annual change in the core CPI at 1.98%, and contrasts that to the annual change in core PCE (personal consumption expenditures) inflation at 1.58% in showing via long term graphs that the latter is less volatile, & hence is the Fed's preferred measure...with this report, we are also able to compute the COLAs (Cost-Of-Living Adjustments) for the coming year, which are based on the year over year change in the 3rd quarter CPI-W (CPI for Urban Wage Earners and Clerical Workers); with 1982-84 equal to 100, the CPI-W increased to 228.184 in September, making Q3 average 226.936, which is 1.66% over the 3rd quarter of 2011 CPI-W average of 223.33; thus, social security recipients and others can expect a 1.7% increase in their monthly paychecks starting January

Industrial Productionthe 0.4% and 0.3% gains in Industrial production and Capacity Utilization for September as reported by the Fed on Tuesday were respectable, but they were tempered by the fact that much of the gain reflected resumption of oil drilling in the gulf after the shutdown caused by hurricane isaac...industrial production had fallen 1.4% in August, and although July's gain was also respectable at 0.7%, it still left industrial production down for the quarter 0.4% at an annualized rate, the first quarterly decline since the depth of the recession in Q2 of 2009...of the major components of industrial production, there was strength in the output "mines", which includes all resource extraction including oil, as the sector grew 0.9%, and in utilities, which grew 1.5% for the month...although the manufacturing sector was up 0.2% for the month, it still showed a 3rd quarter decline at an annual rate of 0.9%, which we should have seen coming in the contractionary PMI readings we've been watching...over the year ending september, manufacturing has been up 3.2%, the mining sector was up 3.8%, and output of utilities was down 1.4%, so apparently the diminished use during the warm winter & spring had a greater impact on utilities than the increased use of A/C during the summer heat waves...while total industrial production has increased 2.8% from a year ago, it's still down 3.7% from the peak level of 5 years ago, which you can see on the adjacent chart from bill mcbride, which shows manufacturing in red and total industrial production in blue...the other part of this release tells us that 78.3% of our  total industrial plant and equipment was in use during september, which was up 0.3% from the level of August, and 1.1% above the utilization level of a year ago...manufacturing capacity utilization is up 1.3% from a year ago to 76.8%, so called "mining" usage has increased 1.6% from a year ago.to  89.1%, but utility utilization has decreased -2.8% from a year ago to 74.8%...in the past year, manufacturing capacity has grown 1.4%, mining capacity is up 2%, and utilities have increased their capacity by 2.3%... 
Total Housing Starts and Single Family Housing Starts

there were also a couple of reports on housing this week; we'll look at the release on new residential construction for September (pdf) from the census bureau first; including data for building permits and completed construction, this is mostly watched housing starts and often reported as gospel despite being very volatile & subject to considerable revision; census itself cautions "statistics in this release are estimated from sample surveys and are subject to sampling variability as well as nonsampling error including bias and variance from response, nonreporting, and undercoverage", with that caveat, housing starts reportedly jumped 15% to an annual rate of 872,000 in September to their highest level in 4 years; with August starts revised from 750,000 to 758,000, the apparent increase is even larger, but the margin of error on this months report is ±12.1%, so we should be cautious rather than certain...the annual rate for housing starts in september of 2011 was 647000, so this report came in 34.8% higher than a year ago, but for that there's even a greater margin of error, at ±18.2%...included here is bill mcbride's chart on housing starts; single family homes started are in blue, the total units started, including apartment housing, are in red..new housing contributes to GDP directly as residential investment, and generates ancillary economic activity in areas such as building materials & furnishings, and should also show an increase in related employment; but checking the september payroll jobs total by selected industry, we find there were only 1100 more residential construction jobs than in august, and a decline of 13,700 home building jobs from a year ago...even worse, checking the unadjusted totals from the household jobs survey, we see 301,000 less employed in construction and related areas than a year ago, with an unemployment rate remaining intolerably high at 13.2%...so there really isnt anything to cheer about here yet...

the other major housing report this week was for september sales of previously occupied homes from the NAR (National Association of Realtors); according to the NAR, total existing-home sales fell 1.7% to a seasonally adjusted annual rate of 4.75 million in September from the revised annual rate of 4.83 million homes in August; nonetheless, this was still 11.0% than the 4.28 million-unit pace of last September...the national median selling price for all housing types was $183,900 in September, 11.3% higher than a year ago, and the 7th consecutive monthly year-over-year increase reported....the 30-year fixed-rate mortgage was reported by FreddieMac at a record low of 3.47 % in September, down from 3.60% in August and 4.11% a year earlier...according to the NAR, there were 2.32 million houses on the market at the end of september, a 5.9 month supply at the current sales pace; member realtors reported that the median time on the market for homes in September was 70 days, unchanged from August, but down from 101 days in September 2011; they reported that 32% of homes sold in September were on the market for less than a month, while 19% were on the market for six months or longer...13 percent of homes sold were foreclosures, which were discounted an average of 21%, and 11% were short sales, which were discounted an average of 13%; total distressed homes accounted for 30% of sales a year ago...first time buyers accounted for 32% of sales, same percentage that first time buyers were at a year ago; 40% of sales to new homeowners would be close to normal...on the other hand, all-cash sales were at 28% of transactions in September, up from 27% in August; near to the 30 percent all cash buyers of September last year...investors, who often buy with cash, purchased 18% of homes sold in September, unchanged from August; and down a bit from the 19% of homes sold to investors a year ago...the Atlanta Fed takes note of this trend, notes the big player participation  and wonders if it portends a more permanent change away from owner occupied housing...regional differences were notable; existing-home sales in the Northeast, the only area of the country where the unemployment rate is increasing, were weakest, falling 6.3% to an annual rate of 590,000 in September; the median price in the Northeast was $238,700, up 4.1% from last year; home sales in the Midwest slipped 0.9% in September but theyre 19.6% higher than a year ago, with a median price of $145,200, up 7.0% from a year ago, while home sales in the West fell 3.4% to an annual pace of 1.13 million, up only 0.9% on the year; this is being blamed on “inventory shortages in the region”, which served to jack the prices in the west 18.4% over last years, to a median of $246,300the South, meanwhile, saw existing-home sales increase a half percent to an annual rate of 1.93 million in September, 14.2 percent above last year’s rate, with a median price in the region at $163,600, 13.1% higher than a year ago…

(the above is my weekly commentary that accompanied my sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion, and also includes other links of interest…if you’d be interested in getting my weekly emailing of selected links that accompanies these commentaries, most coming from the aforementioned GGO posts, contact me…)

Sunday, October 14, 2012

august JOLTS, the august trade deficit, & the september PPI

it was a fairly slow week around the economic blogosphere, with very few new economic releases...early in the week there was quite a bit of rehashing of the discordant numbers from last friday's two employment surveys, but not much was uncovered that was new or particularly enlightening...Lee Adler at the wall street examiner did a fairly extensive deconstruction of how the seasonal adjustments influenced september's report, which we looked at briefly here but never really sorted out completely, if you're into the minutiae...and Bill McBride and Mish had a point-counterpoint series of posts on the labor force participation rate, which, even if it didnt resolve anything, did result in publication of a useful list of BLS definitions...and as if the BLS hadnt been under enough fire all week, on thursday they reported weekly unemployment claims at 339,000, which was widely reported as the lowest since 2008, only to later recant and note that california forgot to report 30,000 newly unemployed...
Job Openings and Labor Turnover Survey
   there was one report out from the BLS, though, that seemed to be free of controversy and in line with their other ongoing statistics...the number of job openings noted by the Job Openings and Labor Turnover Summary for August  was reported as "essentially unchanged" from July's report...noting that this report reflects labor stats on the last day of August, rather than the second week of september as the friday jobs report did, this report quantifies not only job openings but also the number of hires and job terminations, whether involuntary or voluntary, and further breaks down that data by industry and region...and for the job openings category, that unchanged was pretty much across the board; seasonally adjusted job openings fell from 3,593,000 in July to 3,561,000 in August, with only openings in accommodation and food services decreasing, while the change in the number of job openings all four regions was statistically insignificant...note that this says nothing about the quality of jobs open, nor whether they are full time...meanwhile, 4,390,000 workers were hired in August, up from July's 4,278,000 hires, up 0.1% to a hiring rate of 3.3%, while 4,354,000 jobs terminated in August, also a rate of 3.3%, & up from july's 4,088,000...job terminations are further separated into discharges, such as thru layoffs and firings, and quits, where the worker leaves the job of his own accord...bill mcbride graphs all this data monthly on one chart, with job openings charted in yellow, with job openings charted in yellow, hires in dark blue, with the two kinds of separations forning a bar graph, with quits as the light blue part of the column and layoffs & other discharges as a red column section above that...the difference between the hires and separations should roughly correspond to the payroll surveys 2 weeks later; its obvious from the chart that hires have exceeded separations most months over the past two years....while rising quits are widely read as an indication of an improving job market, it seems more likely in this recession to read many of them as those underemployed or temporary part timers just fed up with jobs they've found themselves stuck in that are obvious dead ends and walking away.. U.S. Trade Deficit

on thursday, the Department of Commerce reported on our August trade balance in goods and services (48 pp pdf); reflective of the global slowdown, both exports and imports decreased as our trade deficit worsened to $44.2 billion in August from a revised figure of $42.5 billion for July, first reported as $42.0 billion....imports of $225.5 billion were only $0.2 billion less than July, while total August exports of $181.3 billion were $1.9 billion less than July exports of $183.2 billion; our goods deficit increased $1.5 billion from July to $59.3 billion, while exports of services increased $0.2 billion to $52.8 billion resulting in a services surplus of $15.1 billion, $0.3 billion less than July's..the August figures show small trade surpluses with Hong Kong of $2.1 billion, with Australia of $1.8 billion, with Singapore of $0.9 billion, and with Egypt of $0.2 billion, while large deficits were recorded with China at $28.7 billion, the European Union at $11.7 billion, with OPEC at $8.1 billion, Japan at $6.7 billion, with Germany of $5.7 billion, with Mexico of $4.5 billion, and with Canada at $2.4 billion...the largest monthly import decreases were of consumer goods ($1.2 billion); auto & parts ($0.8 billion); and capital goods ($0.5 billion), while imports of industrial supplies ($1.5 billion); other goods ($0.2 billion); and foods, feeds, and beverages ($0.1 billion) increased; the decrease in exports reflected decreases in industrial supplies ($1.2 billion); foods, et al ($1.1 billion); and consumer goods ($0.4 billion); while increases were noted in capital goods ($0.4 billion) and other goods ($0.2 billion)..oil averaged $94.36 a barrel in August, up from $93.83 in July, but our imports of it declined from 275.1 million barrels to 273.9 million brl, so the cost of our net imports of it were little changed at $25.8 billion...bill mcbride's 15 year chart, which shows the trade deficit for oil in black separated from the total trade deficit in blue to give a trade deficit ex-oil in red, is included to the right...we also showed a significant trade deficit in advanced technology products in august, as our high-tech imports of $32.3 billion eclipsed our exports of $25.5 billion, leaving us with a $6.7 billion advanced technology deficit; the commerce dept pdf has itemized lists of both imports & exports, with tables of actual dollar amounts of everything from soup to nuts & seasonally adjusted data for the same... 
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on Friday, the BLS released the Producer Price Index for September, which tracks price changes at the wholesale level.... driven by rising prices for gasoline, seasonally adjusted prices rose 1.1% in September after the increase of 1.7% in August, which had been the largest one month increase in over 3 years... producer prices are reported by the stage of processing that materials are at, ie, finished, intermediate and crude, but it is the finished wholesale goods, ready for final sale, that gets the most attention; the index for finished energy goods rose 4.7% in september after rising 6.4% in august; 80% of that price increase was attributed by BLS to gasoline, although prices for diesel fuel and residential natural gas also rose; wholesale food price inflation moderated to 0.2%, after a 0.9% increase in august; as dairy prices increased 2.8% over the month...less the food and energy index, core producer prices were statistically unchanged during september, as increases in items such as light trucks were offset by decreases in prices of computers and communication equipment...the adjacent chart, from doug short's coverage, shows the year over year change in the overall (headline) PPI and the core PPI over the past dozen years, clearly showing the comparative volatility driven by wholesale food & energy prices...in the other indexes covered here, the prices of intermediate goods increased 1.5% in September, which was the biggest price jump since February 2011; intermediate energy prices were up 4.3% as diesel rose 9.2%...intermediate food prices were up 2.0%, led by the drought related 5.1% increase in the price of animal feeds...and intermediate core prices rose 0.6% for the first time in 4 months, half of which was attributed to price increases for organic chemicals...and the price index for crude goods, which are raw materials entering processing for the first time, rose 2.8% in September after jumping 5.8% in August, as the price of crude oil rose 11.4% for the month...crude goods prices have now risen 10.7% in the third quarter, just about totally reversing their 10.8% price decline over the April to June period...

(the above is my weekly commentary that accompanied my sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion, and also includes other links of interest…if you’d be interested in getting my weekly emailing of selected links that accompanies these commentaries, most coming from the aforementioned GGO posts, contact me…)

Friday, October 12, 2012

Radiation Continues Spreading and Spiking Across USA

From the Nuke Pro blog....

Oct 10, 2012 reporting from Honolulu
We noted in a prior post that "Something Happened around September 17" and radiation spiked high in a number of US cities, but especially the Pacific Northwest.

These are the areas that were the hardest hit by Fukushima the first time around, as the jet stream usually makes a beeline for them.

I was hoping that would be a week or so spike, and then back to normal, but that is not the case, and the radiation continues to spread east and south. Disturbingly, over half of the Radnet data has gone black, especially in the bigger cities. Your tinfoil hat won't protect you from this radiation fallout, no matter how thick.

This is time to alert your friends and neighbors, anything over 100 Clicks Per Minute (CPM) is time to get concerned, and now there are MANY places up over 100, some at 500. Exposure to 100CPM for a year gives you a significantly increased chance of cancer....and that is just from getting hit externally with the radiation. If you breath it in, it can be 20 times worse. Exposure to 500 CPM for 90 days gives you a significantly increased chance of cancer.

Please review this handy Cheat Sheet on radiation. Nuke Pro blog made this summary sheet in order to send a Geiger to Japan for local testing by Japanese families.


Charts available........

Is Legal Tender Next?



Thursday, October 11, 2012

life under the NWO monopoly board

American street muralist ‘Mear One’ records a stop-motion video of his London creation - a wall mural depicting world leaders playing Monopoly on the backs of the working class…

Monday, October 8, 2012

Of course I'm paranoid, but am I paranoid enough?

Seems I'm not.....


Sunday, October 7, 2012

september unemployment, US & other PMIs, august consumer credit (re student debt)

let's just begin by noting the two headline job creation numbers from the september employment report from the BLS: according to the establishment survey of one-third of the businesses and agencies in the US, total nonfarm payroll employment rose by a seasonally adjusted 114,000 in september; while from the survey of about 6/10th of a percent of US households, BLS reported a spike in those employed of 873,000; since the former has a margin of error of 100,000, and the latter has a margin of error of 400,000, even allowing for the maximum deviation in each, it seems one just must be quite inaccurate...fortunately, spencer at angry bear began his charting of this month's report with a bar graph showing the monthly employment change as reported by each survey since the beginning of 2010; the change in non-farm payrolls as reported monthly from the establishment survey are in red, while the change in those reporting employment in the household survey each month are in blue...except for the slight tendency for stronger job growth early each year followed by weaker summers, which could be a function of the seasonal adjustments, we've clearly been adding non-farm payroll jobs at a fairly steady pace throughout the recovery, whereas the employment change reported out of the household survey is so regularly aberrant it's hard to see why anyone gives it credence...yet sadly, it is from that survey where the media gets the unemployment rate that is reported in the headlines monthly...so while we'll look at both surveys, at least we'll know that the numbers reported by the household survey should be taken with a rather large grain of salt...

as noted, the establishment survey reported nonfarm payroll employment increased by 114,000 in September, and the change payroll employment for July was revised from a gain of 141,000 jobs to an increase of 181,000, and the change for August was revised from 96,000 to 142,000 jobs added, so on net, we've had some modest  job gains... in addition, since september is the month when school employees are back at work, the seasonal adjustment reduces non-farm payrolls to smooth the transition; without that adjustment, there were actually 574,000 more NFP jobs in september than august...but the seasonal adjustment probably understated NFPs in september, just as we discussed how july's seasonal adjustment overstated jobs then, because school districts have cut back more than ever before previously...even though they're useful when comparing the current month to the previous one, the seasonal adjustment computations are only as good as seasonal employment in the current year reflects the same pattern as in year's past (ie, as we saw with this year's early spring)...overall, this year has only produced weak job gains, at an average of 146,000 per month, compared with an average monthly gain of 153,000 in 2011...job gains in september were concentrated in health care, which added 44,500 jobs (of which 30,000 were in ambulatory services) and in moving and warehousing goods, which accounted for 17,000 more jobs than august (seasonally adjusted), while the manufacturing sector lost 16,000 jobs and has now given up all of its job gains back to april, while the mining construction, wholesale & retail trade, information, professional & business services, leisure and hospitality, and government sectors all showed statistically insignificant changes in employment from august to september... meanwhile, the average workweek for all employees on private payrolls was up by 0.1 hour to 34.5 hours, while the manufacturing workweek was also up 0.1 hour to 40.6 hours, and factory overtime was unchanged at 3.2 hours...also, average hourly earnings for all employees reportedly rose by 7 cents to $23.58, while pay for production and nonsupervisory employees increased by 5 cents to $19.81; table B-3 further breaks average earnings down by industry sector for the last 3 months, as well as a year ago...FRED Graph


with the household survey reporting 873,000 more of us working in September than August, and 456,000 less unemployed, the official unemployment rate fell from 8.1% to 7.8%, the lowest the U-3 rate has been in 44 months...the jobless rates for adult men fell to 7.3%, while it also fell to 7.0% for adult women and for all whites; meanwhile the unemployment rates for teens, hispanics & blacks were little changed, at 23.7%, 9.9%, & 13.4% respectively...but the jobless rate for those with less than a high school education fell to 11.3%. and it has now declined by 1.4% over the last two months, to reach its lowest in nearly 4 years...the two metrics derived from this survey that we've been watching also showed improvement; after two months of slumping, the employed to population ratio popped 0.4% to 58.7%, while the labor force participation rate ticked up a tenth of a percent to 63.6%, but remains lower than july's 63.7%, as you see on the adjacent graph...it also appears that a large number of the jobs reported added in this survey were part time; the number reporting they were working part time but wanted a full time job jumped by a seasonally adjusted 582,000 to 8,613,000, leaving the U-6 unemployment rate unchanged at 14.7%...there was also a seasonally adjusted increase of 58,000 farm workers in september (which are not reported by the establishment survey), so it's possible some of the job gains here may be due to a weather-related early harvest...

the two major surveys of US purchasing managers by the Institute for Supply Management:, which had been showing weakness over the summer months, seem to have stabilized now that fall has arrived; the September ISM Manufacturing Report;, which had shown slight contraction over the previous three months, is now showing renewed expansion, as the PMI increased 1.9 percentage points to 51.5%; the important new orders index rose to 52.3%, up from 47.1%, while the employment index was at 54.7%, up from 51.6%; the production index was still showing contraction for the 2nd month at 49.5, but it also tacked on 2.3 points in september, while the order backlog at 44.0, exports at 48.5, and imports at 49.5 all increased, indicating the were all contracting slower...11 of the 18 manufacturing industries reported growth, led by textiles, the food groups, printing and wood products, while mineral products, electrical equipment, appliances, transports, machinery, chemical products & electronics all noted slowdowns...meanwhile, in another metric of manufacturing health, the census released Manufacturers' Shipments, Inventories, and Orders for August (pdf); this is the full report which echoes the report on durables manufacturing which we discussed last week; with new orders for durable goods already reported as down 13.2%, it wasnt much of a shock to see the total factory orders report down $24.9 billion, or 5.2% for the month, which was also the largest drop since january 2009, but reflecting the weakness we saw in durables, excluding transportation new orders were up a a decent 0.7%...factory shipments, which like orders were down two of the last three months, decreased $1.3 billion or 0.3% to $476.9 billion, while unfilled orders were down following two consecutive monthly increases, decreasing $17.0 billion or 1.7% to $978.8 billion, leaving the unfilled orders-to-shipments ratio at 6.27, up from 6.23 in July...inventories were up again, by $3.7 billion or 0.6% to $611.8 billion, which, like durables inventories, were at the highest level since this tracking started in 1992...

  the other ISM report was for the September Non-Manufacturing Indices, which cover the service industries; the overall business PMI, referred to as the NMI, showed another surprise to the upside, as it showed the 3rd consecutive month of faster growth at 55.1%, 1.4 percentage points higher than the 53.7% logged in August; the business activity index registered 59.9%, which was 4.3 percentage points higher than the 55.6 percent reported for August, while the new orders index also jumped 4 points to register a 57.7%; the weakness in this report was the employment index, which decreased 2.7 points to 51.1%, which nonetheless still indicates growth, as do all numbers over 50%...the service industries leading the gains in this report were transportation & warehousing; retail; construction; utilities and education, while only mining; entertainment & recreation; and real estate rental & leasing.reported contraction...historical graphs for both of the overall ISM PMIs, as well as several real estate reports that we wont cover today, can be viewed at bill mcbride's summary for the week ending oct 5th, which also includes a selection of his graphs on the employment report..
as is typical, the first week of the month brings on a raft of worldwide manufacturing and service purchasing managers reports, most of which are released in pdf form by London data firm Markit; the closely watched Eurozone Manufacturing PMI rose to 46.1 in September from 45.1 in August and higher than the earlier flash reading of 46.0; however, that was the 14th consecutive reading below the neutral 50 reading and still indicates that manufacturing in the 17 nation bloc continues to contract, just a bit slower this month than last...moreover, the Eurozone Services Business Activity Index fell from 47.2 in August to 46.1 in September, indicating that the continent's recession is spreading deeper into the service sector...that brought the Final Eurozone Composite Output Index:(pdf) down to 46.1 from it's August reading of 46.3...particularly weakness was shown in France;  the French Manufacturing PMI, which fell from an August reading of 46.0 to 42.7, the second worst PMI reading worldwide after Greece, indicating severe contraction (chart shows select eurozone manufacturing PMIs)...the Markit Services Activity Index for France at also fell, to an 11 month low of 45.0, from August's 49.2, leaving the Final Markit French Composite Output Index (pdf) at 43.2, down to a 42 month low, from a reading of 48.0 in August...worldwide manufacturing activity is also compiled monthly by JPMorgan, who releases a Global Manufacturing PMI (pdf) – a composite index produced by JPMorgan and Markit in association with ISM & others; global contraction continued in September, following further a slowdown in both output and new orders, as the JP Morgan global index posted a 48.9, up slightly from August's 38-month low of 48.1, but below 50 for the fourth month running...the WSJ has a sortable interactive table of worldwide factory PMI readings by country; as they note in another article, US manufacturing is the best horse in the glue factory...


another report released on friday that was completely overshadowed by the hullaballoo over the employment release was the August consumer credit from the Fed, which returned to the form that prompted our watching it starting last year, as overall credit rose at a seasonally adjusted annual rate of 8%, or $18.1 billion, over july's level, which was the largest consumer credit increase in 3 months...$4.2 billion of the increase was revolving credit, such as credit card debt, which rose at a 5.9% rate to $854.9 billion, while the non-revolving portion of this credit report, which includes car & student loans but not real estate, showed a $13.9 billion increase from July's $1,856.8 billion to $1,870.7 billion in August, rising at an annualized 9.0% rate…the adjacent zero hedge chart shows both types of credit monthly since the Fed revision; blue is change in credit card debt, while red is the change in non-revolving credit, with the dark line tracing the monthly totals...but the big credit story this month was again in student loans provided by the federal government, which rose an amazing $23.9 billion in August alone, as federal consumer loans went from $471.8 to $495.7 over the period (see the 2nd table, Consumer Credit Outstanding, Major types of credit, by holder) which could be written as an annualized growth rate of 80.8%, although, to fair, the breakdown isnt seasonally adjusted, whereas the summary totals are...but we are talking dollars here, and in the 5 year period between 2007 and August of this year, outstanding consumer credit held by the federal government rose more than fivefold, from 93.01 billion in 2007, to $495.7 billion this month (see same line)...that sure looks like a concerted effort to bind a generation into indentured servitude from here.. 


(the above is my weekly commentary that accompanied my sunday morning links mailing, which in turn was mostly selected from my weekly blog post on the global glass onion, and also includes other links of interest…if you’d be interested in getting my weekly emailing of selected links that accompanies these commentaries, most coming from the aforementioned GGO posts, contact me…)