Spain, QE chart, Wholesale trade, UK and France industrial production, Import and export prices

Posted on September 10, 2015 @ 12:32 pm (Thursday) by WARREN MOSLER

Fyi, we will be in Spain next week.

Here are some of the details:

There is a newly formed MMT Group in Spain called APEEP which stands for “Asociación para el Pleno Empleo y la Estabilidad de Precios”.

In an effort to bring MMT into the political debate in Spain, they will be hosting me for a presentation of the Spanish translation of “The Seven Deadly Innocent Frauds of Economic Policy”, starting with a presentation in Madrid on the 14th of September, Valencia on the 15th of September, and Vila-real on the 17th of September.

Here are links for the events, including time/date/location

14th September Madrid
15th September Valencia
17th September VilaReal

And this is the press release for the events containing more details.

Also:

Asociación Para el Pleno Empleo y la Estabilidad de Precios (APEEP) (Association for Full Employment and Price Stability), is a non-profit organization devoted to raising awareness and disseminating Modern Monetary Theory amongst the Spanish public. APEEP believes that full employment and price stability are compatible if public policy is conducted within an MMT framework. The current economic crisis within the Eurozone highlights the need for a Post Keynesian and MMT approach to public policy.

You’d think by now word would be out it’s just a placebo, but ancient beliefs tend to linger on…

Not good- sales down and inventories remain elevated:

United States : Wholesale Trade

Highlights
Factory inventories held stable in July as did wholesale inventories, down 0.1 percent against a 0.3 percent decline in sales that leaves the stock-to-sales ratio unchanged at 1.30. Wholesale inventories look light for machinery and apparel but heavy for farm products and metals.

The nation’s inventories are heavier than they were last year which may limit future production and hiring. Next data on inventories will be the business inventories report on Tuesday.

MONTHLY WHOLESALE TRADE: SALES AND INVENTORIES July 2015 Sales. The U.S. Census Bureau announced today that July 2015 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $449.5 billion, down 0.3 percent (+/-0.5)* from the revised June level and were down 4.2 percent (+/-1.4%) from the July 2014 level. The June preliminary estimate was revised upward $1.0 billion or 0.2 percent.

This chart is now looking a lot like prior recessions:

Inventories/Sales Ratio. The July inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.30. The July 2014 ratio was 1.19.

Great Britain : Industrial Production

France : Industrial Production

United States : Import and Export Prices

None of this is considered the ‘some improvement’ Chairman Yellen was looking for going into the Fed meeting next week…

France PMI, Germany PMI, EU PMI, EU Retail Sales, UK service PMI, US Trade, ISM Non Manufacturing, Saudi Pricing

Posted on September 6, 2015 @ 3:22 pm (Sunday) by WARREN MOSLER

France : PMI Composite

Highlights
French private sector activity in August expanded at a significantly slower pace than indicated in the flash report according to the final PMI data for the month. At just 50.2, a 7-month low, the key composite output index was revised down an unusually large 1.1 points versus its preliminary reading to stand 1.3 points below its final July mark and close enough to 50 to signal a period of virtual stagnation in economic activity.

The flash service sector PMI was reduced by 1.2 points to 50.6, also a 7-month trough. As previously indicated, what growth there was reflected stronger new orders and rising backlogs although the growth rate of both hit multi-month lows. Certainly firms were not confident enough to add to headcount although, rather surprisingly, business expectations still climbed to their highest level since March 2012.

Meantime, another increase in input costs saw margins squeezed still further as service provider charges continued to fall.

The final PMI figures suggest that the French economy was really struggling last month. Total output was only flat in the April-June period and the survey data so far suggest little better this quarter.

Germany : PMI Composite

Highlights
August’s flash composite output index was revised up a full point to 55.0 in the final data for the month. The new level was 1.3 points above July’s final reading, a 5-month high and strong enough to indicate a solid performance by the economy in mid-quarter.

The adjustment to the composite output gauge came courtesy of the service sector for which the preliminary PMI was revised some 1.3 points firmer to 54.9, also its best reading in five months. New orders rose strongly, backlogs were up and employment posted its largest gain since February. Against this backdrop, business expectations for the year ahead climbed to a 4-month peak.

What little progress they continue to make will evaporate with a strong euro, which I see as inevitable given their trade surplus:

European Union : PMI Composite

Highlights
The final composite output index for August weighed in at 54.3, a couple of ticks stronger than its flash estimate and 0.4 points above its final July mark.

The flash services PMI was nudged just 0.1 points higher but, at 54.4, now matches June’s 4-year high. Increased output was supported by rising new orders and a sizeable increase in backlogs which, in turn, helped to ensure that employment growth remained respectably buoyant. Firms also became more optimistic about the economic outlook and business expectations for the year ahead climbed higher following July’s 7-month low. Meantime, inflation developments were mixed. Hence, although higher wages and salaries prompted another rise in input costs, margins were squeezed further as service provider charges declined for a remarkable forty-fifth consecutive month.

Regionally, the best performer in terms of the composite output measure was Ireland (59.7) ahead of Spain (58.8) and Italy (55.0 and a 53-month high). Germany (55.0) also had a good month but France (50.2 and a 7-month low) all but stagnated and remains a real problem for Eurozone economic growth.

The final PMI figures suggest that the Eurozone economy is on course for something close to a 0.4 percent quarterly growth rate in the current period, a slight improvement on the second quarter’s 0.3 percent rate. While this would be good news, faster rates of expansion will likely be needed if inflation is to meet the ECB’s near-2 percent target over the central bank’s 2-year policy horizon.

European Union : Retail Sales

Highlights
Retail sales were slightly weaker than expected in August but with July’s decline more than halved, annual growth of purchases still comfortably exceeded the market consensus. Volumes were 0.4 percent firmer on the month after a 0.2 percent drop in June for a workday adjusted yearly rise of 2.7 percent, up from 1.7 percent last time.

July’s monthly rebound was led by a 0.8 percent jump in purchases of auto fuel and without this, non-food sales were just 0.1 percent higher having only stagnated in June. Food recorded a 0.2 percent advance. As a result, overall sales in July were 0.3 percent above their average level in the second quarter when they also increased 0.3 percent.

Regionally the advance was dominated by a 1.4 percent monthly jump in Germany. Spain (0.6 percent) also made a positive contribution but France (minus 0.2 percent) saw its first decline since March. Elsewhere, there were solid gains in Estonia (2.5 percent), Malta and Portugal (both 1.1 percent) but Slovakia (minus 0.2 percent) struggled.

Growth of retail sales has slowed in recent months, in keeping with signs that consumer confidence may have peaked, at least for now. According to the latest EU Commission survey, household morale improved slightly in August but still registered its second weakest reading since January. Consumption may continue to rise over coming months but the signs are that its contribution to real GDP growth will be only limited.

I’ve been suggesting exports would slow more than what’s been reported so far, though year over year numbers are in decline. It may show up in revisions down the road:

International Trade

Highlights
The nation’s trade gap narrowed to a nearly as expected $41.9 billion in July following an upward revised gap of $45.2 billion in June (initially $43.8 billion). The improvement reflects a monthly rise of 0.4 percent in exports, which were led by autos, and a 1.1 percent contraction in imports that reflected a decline in pharmaceutical preparations and cell phones which helped offset a monthly rise in imports of oil where prices were higher in July.

Aside from autos, exports of industrial supplies, specifically nonmonetary gold, were strong in July while exports of capital goods also expanded. This helped offset a monthly decline in exports of civilian aircraft and consumer goods. Turning again to imports, other details include a rise in capital goods in what is the latest sign of life for business investment.

By nation, the gap with China widened slightly, to an unadjusted $31.6 billion in the month, while the gap with the EU widened more substantially to $15.2 billion, again unadjusted which makes month-to-month conclusions difficult. Gaps with Mexico and Canada both narrowed.

This report is another positive start to the quarter and will lift early third-quarter GDP estimates. But these will be cautious estimates as recent market turbulence pushes back conclusions and will make August’s trade data especially revealing.

Lower but still indicating ok expansion:

Saudi price setting adjustment:

Aramco Cuts All October Crude Pricing to U.S., Northwest Europe

By Anthony DiPaola

Sept 3 (Bloomberg) — Saudi Arabia, the world’s largest crude exporter, cut pricing for all October oil sales to the U.S. and Northwest Europe and reduced the premium on its main Light grade to Asia by 30 cents a barrel.

State-owned Saudi Arabian Oil Co. cut its official selling price for October sales to Asia of Arab Light crude to 10 cents a barrel more than the regional benchmark, the company said in an e-mailed statement. The discount for Medium grade crude for buyers in Asia widened 50 cents to $1.30 a barrel less than the benchmark.

Brent, a global oil benchmark, fell almost 50 percent last year as Saudi Arabia and other OPEC members chose to protect market share over cutting output to boost prices. Brent fell from over $100 a barrel in July 2014 to less than half that six months later. It traded at about $50 on Thursday.

The Organization of Petroleum Exporting Countries led by Saudi Arabia decided on June 5 to keep its production target unchanged to force higher-cost producers such as U.S. shale companies to cut back. The producer group has exceeded its target of 30 million barrels a day since May 2014.

Saudi Arabia reduced production in August to 10.5 million barrels a day, the first decline this year, according to data compiled by Bloomberg.

MTG Purchase Apps, EU Industrial Production, China Industrial Production, JOLTS

Posted on August 12, 2015 @ 6:53 pm (Wednesday) by WARREN MOSLER

Yes, purchase apps are up 20% vs last year, but you can see from the chart the
number of applications has leveled off and declined a bit more recently this year, and remains
at depressed levels:

The slump in industrial production is global:

European Union : Industrial Production

Highlights
Industrial production declined more than expected in June. Following a decline of 0.2 percent on the month, output excluding construction dropped 0.4 percent. Annual workday adjusted growth was 1.2 percent, down from 1.6 percent last time.

Durable consumer goods led the monthly declines, falling by2.0 percent from the previous month, followed by capital goods (down 1.8 percent) and intermediate goods (down 0.5 percent). Energy production (up 3.2 percent) was the sole sub-category to record a monthly advance.

Regionally, the biggest declines were seen in Portugal (down 2.1 percent) and Ireland (down 2.0 percent) while the Netherlands (up 3.9 percent) and Slovakia (up 1.4 percent) led to the upside. In the larger countries, Germany’s industrial output contracted 1.4 percent on the month while output in France also weakened 0.1 percent.

The disappointing figures will likely impact analysts’ expectations for Eurostat’s flash estimate of second quarter Eurozone GDP, which is scheduled for Friday.

And the latest from China was below expectations as the downtrend continues:

This turned a bit lower which ordinarily doesn’t mean much, but when the Fed is looking for ‘some’ improvement this is not that:

United States : JOLTS

Highlights
Job openings contracted in June to 5.249 million from 5.357 million in May. The decline likely reflects, at least in part, new hiring as the hiring rate rose 1 tenth to 3.7 percent. But layoffs point to weakness in labor demand with the layoff rate up 1 tenth to 1.3 percent. The quits rate was unchanged at 1.9 percent. Job growth has been no better than moderate this year and this report, which is mixed, doesn’t point to acceleration.

Mortgage Purchase Apps, EU Retail Sales, Payroll Tax, ADP, Trade, Equity Comment

Posted on August 5, 2015 @ 10:28 am (Wednesday) by WARREN MOSLER

While still historically very low, purchase apps are now way up over last year’s particularly depressed levels. Some are replacing all cash buyers, but the increase is also in line with increased existing home sales.

While new home sales were soft, turnover of existing homes has been increasing, and while not directly increasing GDP, existing home sales are generally associated with purchases of furniture, appliances, and other home improvements, and of course real estate commissions.

MBA Mortgage Applications

Highlights
A drop in rates helped boost mortgage activity in the July 31 week both for home purchases, up 3.0 percent in the week, and for refinancing which rose 6.0 percent. The strength in purchase applications, which are up 23 percent vs this time last year, is a positive indication for home sales. The average 30-year fixed mortgage for conforming loans ($417,000 or less) fell 4 basis points in the week to 4.13 percent.

EU retail sales

European Union : Retail Sales

Highlights
Retail sales were surprisingly weak in June. A 0.6 percent monthly fall was the first decline since March and followed a slightly smaller revised 0.1 percent rise in May. Annual workday adjusted growth of purchases was 1.2 percent, down from 2.6 percent in both mid-quarter and April.

June’s setback was primarily attributable to a 0.8 percent monthly drop in sales of food, drink and tobacco. Non-food products, excluding auto fuel, were off only 0.2 percent, although even this was enough to wipe out May’s entire rise. Fuel purchases were flat on the month after a 0.2 percent dip last time.

Regionally, headline weakness was dominated by a 2.3 percent monthly slump in Germany although Spain (minus 0.4 percent) also struggled. More promisingly, France (0.1 percent) saw sales increase for a third consecutive period and there were decent gains in Austria (1.3 percent), Belgium, Latvia and Lithuania (all 0.8 percent) and Estonia (0.7 percent).

The June data make for a second quarter increase in Eurozone retail sales of only 0.3 percent, less than a third of the rate achieved in the previous period and just half of the fourth quarter pace. This does not bode well for real GDP growth. Moreover, the EU Commission’s economic sentiment survey found consumer sentiment falling in July so it may be that the third quarter got off to a less than robust start too. That said, Greek developments are clearly having some impact and a more concrete resolution of the crisis there might be enough to get households happy to spend again.

Big drop in Federal withholding:

Lower than expected, and June revised down a bit as well, all in line with many recent surveys:

ADP Employment Report

Mark Zandi, chief economist of Moody’s Analytics, said, “Job growth is strong, but it has moderated since the beginning of the year. Layoffs in the energy industry and weaker job gains in manufacturing are behind the slowdown. Nonetheless, even at this slower pace of growth, the labor market is fast approaching full employment.”
Read more at Calculated Risk Blog

About as expected with last month’s revision:

United States : International Trade

Seems the drop in oil prices has been offset by non oil imports, as the trade deficit is looking somewhat wider:

Both exports and imports are down which indicates a weakening global economy:

The chart shows the trend of the non petroleum deficit has resumed it’s increase:

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products (wild swings earlier this year were due to West Coast port slowdown).
Read more at Calculated Risk Blog

Didn’t know we exported any consumer goods!
;)

Exports (Exhibits 3, 6, and 7) Exports of goods decreased $0.2 billion to $127.6 billion in June. Exports of goods on a Census basis decreased $0.5 billion. • Capital goods decreased $0.8 billion. o Telecommunications equipment decreased $0.3 billion. • Industrial supplies and materials decreased $0.6 billion. o Finished metal shapes decreased $0.3 billion. Consumer goods increased $0.8 billion.

Stocks up because jobs were weak and a fed spokesman thought the economy was too weak for a rate hike. ;)

Futures jump on ADP miss, Powell comments

By Jenny Cosgrave

August 5 (CNBC)

EU Industrial Production, Credit Check, Atlanta Fed

Posted on June 15, 2015 @ 9:24 am (Monday) by WARREN MOSLER

Even with increasing net exports, over all GDP isn’t benefiting all that much, as fiscal policy and structural reforms that assist exports do so by restricting incomes and domestic demand to achieve ‘competitiveness’. Additionally, negative rates and QE remove some interest income from the economy, which also restricts domestic demand to some degree. And, ironically, the subsequent current account surplus puts upward pressure on the euro until there are no net exports, obviating the efforts and sacrifices that went into achieving the competitiveness. Further note that a Greek default, for example, fundamentally removes net euro financial assets from the economy, further tightening the euro, as Greek debt is nothing more than bank deposits in the ECB system:

European Union : Industrial Production

Highlights
The goods producing sector began the second quarter on a surprisingly soft note. A 0.1 percent monthly rise in production (ex-construction) was comfortably short of expectations and followed a steeper revised 0.4 percent decline in March. As a result, annual workday adjusted output growth dropped from 2.1 percent to 0.8 percent, its slowest pace since January.

However, April’s minimal monthly rebound would have been rather more impressive but for a 1.6 percent slide in energy. Elsewhere there were gains in intermediates (0.3 percent), capital goods (0.7 percent) and consumer durables (1.0 percent). Non-durable consumer goods were down 0.8 percent but, apart from this category, all sectors reported increases versus a year ago.

Amongst the larger member states output rose a solid 0.8 percent on the month in Germany but there were falls in France (1.0 percent), Italy (0.3 percent) and Spain (0.1 percent). Elsewhere Finland, already technically in recession, only saw output stagnate following a cumulative 2.4 percent loss since the end of last year while Greece (also back in recession) posted a hefty 2.3 percent reversal.

April’s advance leaves Eurozone industrial production just 0.1 percent above its average level in the first quarter when it increased fully 0.9 percent versus October-December. This provides early warning of a probable smaller contribution from the sector to real GDP this quarter and so underscores the need for the ECB to see out its QE programme in full.

Portfolio selling from blind fear of QE and negative rates and Greece, etc. drove down the euro, but fundamentally inflation was falling and ‘competitiveness’ increasing so the trade surplus was pushed higher by the lower levels of the currency. Now it looks like the increasing trade flows are ‘winning’ and beginning drive the euro higher, with portfolios ‘sold out’ of euro, all of which should continue until the trade flows subside:

Back to the US:

I see no sign of whatsoever of accelerating credit growth:

This got some attention when the growth rate was increasing, but not anymore since it rolled over and remains well below prior cycles:

They make point of potential growth every time one of the little wiggles bends up, but just look at how low the growth rate actually is, especially compared to prior cycles:

Nothing happening with consumer lending:

This shows how competitive banking is as banks compete by narrowing their spreads over their cost of funds:

The Atlanta Fed forecast ticked up with the latest retail releases, but still remains well below mainstream forecasts and is also indicating what would be a very weak ‘bounce’ from the negative Q1 print, as the implied first half GDP growth rate would only be around .6%- very close to an ‘official’ recession. And as you’ve seen from the charts, those same releases indicated continued year over year deceleration of growth (including autos and retail sales) as well as elevated inventories, which doesn’t bode well for Q3 and Q4:

IMF re France, truck tonnage, China PMI, Japan PMI

Posted on May 22, 2015 @ 11:56 am (Friday) by WARREN MOSLER

More of same pro cyclical pressure:

France slammed by IMF for record-high spending

By Holly Ellyatt

May 20 (CNBC) — The International Monetary Fund (IMF) has warned France that it must reduce government spending and debt levels, as well as tackling its sticky unemployment rate.

The IMF said in its latest economic outlook on France, published on Tuesday, that although it sees a “solid short-term recovery (in France), structural rigidities continue to weigh on medium-term prospects.”

“Continued efforts are needed to tackle France’s fundamental economic problems: high structural unemployment, low potential growth, and record-high public spending,” the group added.

Indeed, the IMF noted that high and rising government spending has been “at the heart” of France’s fiscal problems for decades.

Trucking Tonnage Index Slumps in April 2015. Lowest Level In One Year.

Econintersect: The American Trucking Associations’ (ATA) trucking index declined 3% following an downwardly revised improvement of 0.4% in March. From ATA Chief Economist Bob Costello:

Still headed south. Maybe just a few more rate cuts…

New export orders declined means exporters putting more pressure on the govt to buy its euro back…

China : PMI Flash Mfg Index

Highlights
May’s flash manufacturing PMI remained mired in contraction with a reading of 49.1 which was an improvement over April’s reading of 48.9. The output index which was at the breakeven point between growth and contraction in April, skidded to a reading of 48.4. New orders decreased at a slower rate while new export orders declined after increasing in April. Five sub-indexes decreased but at a slower rate. These included employment, output and input prices, backlogs of work and stocks of purchases.

A bit of hope here as weak currency/lower relative wages drives a few export orders:

Japan : PMI Manufacturing Index Flash

Highlights
Japanese manufacturing returned to growth in May with its best performance since February. Japan’s flash May manufacturing PMI reading was 50.9, up a full point from the April final of 49.9. A reading above 50 signifies growth. The flash output index climbed to 51.7 from 49.3 in April. Along with these readings, new orders increased, changing direction. Both export orders and employment increased at a faster pace in May. However, backlogs decreased at a faster rate. Both the stocks of purchases and finished goods changed direction and decreased. The readings, if confirmed when the final PMI is released for May is a favorable sign that points to stabilization in the economy.

EU GDP, Mtg apps, retail sales

Posted on May 13, 2015 @ 3:18 pm (Wednesday) by WARREN MOSLER

European Union : GDP Flash

Highlights
Eurozone economic activity extended its recovery into last quarter with a provisional and slightly smaller than expected 0.4 percent increase in real GDP versus the previous period. The fourth quarter rise was unrevised at 0.3 percent and annual growth edged a tick firmer to 1.0 percent. In line with normal procedure, Eurostat provided no details of the latest GDP expenditure components.

Growth was hindered by a sharp slowdown in Germany where total output expanded a quarterly 0.3 percent following a 0.7 percent rise at the end of last year. However, France (0.6 percent after 0.0 percent) was surprisingly robust and Spain (0.9 percent after 0.7 percent) posted its strongest performance in more than seven years. Italy (0.3 percent after 0.0 percent) saw its first positive print since the third quarter of 2013. Amongst the smaller countries Cyprus (1.6 percent after minus 0.4 percent) finally pulled out of recession but Finland (minus 0.1 percent after minus 0.2 percent) saw a second successive quarter of falling output.

Early signals on the current quarter have pointed to little change in Eurozone economic momentum which will probably be seen as disappointing by policymakers and investors alike. Still, the ECB’s QE programme was only launched in March so much of its potential benefit has yet to be realised. That said, with the region’s inflation currently running at just a provisional 0.0 percent annual rate, Eurozone governments and the ECB will be hoping for a significantly stronger growth profile over the second half of the year.

Q2 not getting any help here…

United States : MBA Mortgage Applications

Still not spending that gas savings…
Q2 still not showing signs of life

Retail Sales

GDP detail, EU unemployment, personal income, ECI, Jobless Claims, chicago pmi, Bloomberg consumer comfort

Posted on April 30, 2015 @ 11:18 am (Thursday) by WARREN MOSLER

Note the inventory build:

Note the ‘bending of the curve’ for nominal spending that almost never happens:

A bit of a disconnect between headline car sales and car sales’ contribution to GDP?

Disposable income has ratched down twice recently- once from the recession and jump in unemployment, and again with the tax hikes:

European Union : Unemployment Rate

Highlights
The Eurozone labour market made limited progress in March. Joblessness fell a further 36,000 to 18.105 million but the unemployment rate held steady at 11.3 percent, a tick above market expectations.

Amongst the larger member states the national jobless rate was unchanged in France (10.6 percent) and Germany (4.7 percent) and declined another tick to 23.0 percent in Spain. However, Italy saw its rate jump 0.3 percentage points to 13.0 percent, just a couple of ticks short of last November’s record high. Top of the pile was again Greece (25.7 percent in January) while Germany remained at the bottom.

Youth unemployment was also unchanged at 22.7 percent following a downward revision to the February rate.

The income lost due to falling oil revenues might be starting to show and the growth rate remains near stall speed:

Personal Income and Outlays

Highlights
March consumer spending rebounded 0.4 percent (and was up 3.0 percent from a year ago) from a revised increase of 0.2 percent in February. But the data suggest that people remain somewhat cautious in their spending despite months of cheaper gasoline and rising confidence. Consumer spending generates more than two thirds of GDP and is a key driver of growth. Spending on services increased 0.2 percent from the prior month. Spending on goods added 1.0 percent after three consecutive monthly declines, including a 1.8 percent increase in purchases of durable goods like trucks and washing machines that are designed to last at least three years.

Personal income was flat on the month the weakest reading since December 2013. On the year, income was up 3.8 percent.

The Federal Reserve acknowledged that the economy slowed during the winter months, but they blamed the weakness on “transitory factors.” Officials said in a statement they “continue to expect that, with appropriate policy accommodation, economic activity will expand at a moderate pace.”

Personal consumption expenditures price index undershot the Fed’s 2 percent target increasing 0.3 percent in March from a year earlier, the same increase as the previous month. Excluding the volatile food and energy categories, prices climbed 1.3 percent in March from a year earlier for the fourth consecutive month.

A bit higher than expected but I attribute this to hiring getting ahead of itself as reported employment gains have been outrunning growth of output:

Employment Cost Index

In the 12 months through March, labor costs jumped 2.6 percent, the largest rise since the fourth quarter of 2008. That is still below the 3 percent threshold that economists say is needed to bring inflation closer to the Fed’s 2 percent target.

Lower than expected and the Fed knows it shows separations and not new hires, though it has correlated to hiring historically:

Jobless Claims

Highlights
The Fed is ready now to pull the trigger at anytime and today’s jobless claims data may have their finger a little itchy. Initial claims, not skewed by special factors, plunged 34,000 in the April 25 week to 262,000 which is the lowest level since all the way back to April 2000. The 4-week average is down 1,250 to a 283,750 level which is just below a month-ago and is also a 15-year low.

Bloomberg Consumer Comfort Index

Highlights
Bloomberg’s consumer confidence index declined for a third consecutive week to a six-week low of 44.7 as Americans took a less favorable view of their finances and the slowdowns at factories and oilfields soured attitudes among men. Sentiment among men showed one of the biggest decreases in the past four years, while confidence in the Midwest slumped by the most in more than a decade. While the Bloomberg comfort gauge cooled from an almost eight-year high reached earlier this month, it remains well above last year’s average of 36.7, which was the best since 2007.

Share

global glympse

Posted on April 30, 2015 @ 9:38 am (Thursday) by WARREN MOSLER

Germany : Retail Sales

Highlights
Retail sales followed a smaller revised 0.1 percent dip in February with a surprisingly hefty 2.3 percent monthly slump in March. The drop was the steepest since December 2013 but friendly base effects were enough to ensure that the first back-to-back decline since April/May 2014 still boosted unadjusted annual growth from 2.5 percent to 3.2 percent. Nonetheless, the level of sales at quarter-end was the weakest since last October.

March’s setback means that first quarter purchases were up only 0.5 percent versus the fourth quarter when they rose a solid 1.2 percent. This looks odd in the context of a raft of strong consumer surveys. In particular, at 53.0 the retail sector PMI last month posted its highest reading since last June.

France : Consumer Mfgd Goods Consumption

Japan : Industrial Production

Highlights
March industrial production dropped a much less than anticipated 0.3 percent on the month – analysts were expecting a drop of 2.2 percent. It was the second consecutive decline. On the year, output was down 2.9 percent. The monthly reading showed great fluctuations, but Thursday’s reading means it has been in negative territory for seven of the previous twelve months.

Exactly as I’ve discussed. Q1 was positive only because of the inventory build, which is likely normalize in Q2:

WSJ’s Hilsenrath says the sharp slowdown in Q1 growth has clouded the timing for rate liftoff. The piece argues the dollar’s strength, cautious consumer spending and a downturn in oil-related investment may limit the extent of a rebound in growth.

Highlighting a pattern of weak Q1 growth, the article notes that since 2010 first-quarter GDP growth has averaged 0.6%, compared to average growth of 2.9% in other quarters. It adds that the uneven nature of growth could mean the Fed takes a longer time to assess whether the economy is on track before raising rates.

The paper cites analysts who now anticipate liftoff in September or later. In offering a more guarded economic outlook, the article notes the job market hasn’t improved since the last Fed meeting and that after providing a 74 bp tailwind to Q1 growth, an inventory run down in Q2 could act as a new drag on growth.

Layoffs, Claims, Trade

Posted on February 5, 2015 @ 3:43 pm (Thursday) by WARREN MOSLER

Challenger Job-Cut Report

Highlights
In perhaps the first warning of serious trouble from the oil patch, Challenger’s layoff count starts off the year with an elevated reading, at 53,041 for the highest reading since February 2013 and the highest January reading since 2012. Readings in December and November were much lower, at 32,640 and 35,940.

The energy sector represented roughly 40 percent of January’s cuts, at 20,193. Cuts in the energy sector were minimal in the fourth-quarter, averaging only 1,330 per month. The sector seeing the second largest number of cuts in January is retail, at 6,699 in downsizing following the holidays.

Jobless Claims

Highlights
The jobs market is healthy based on jobless claims where initial claims, though up 11,000, came in at a much lower-than-expected 278,000 in the January 31 week, keeping the bulk of the improvement from the prior week’s revised 42,000 fall. The 4-week week average, down a sizable 6,500 in the week to 292,750, is trending right at the month-ago level in a comparison that points to another healthy monthly employment report for tomorrow.

Continuing claims, reported with a 1-week lag, are also at healthy levels though the month-ago comparison is less favorable. Continuing claims in the January 24 week rose 6,000 to 2.400 million while the 4-week average, though down 22,000, is at a 2.421 million level that is slightly above the month-ago trend. The unemployment rate for insured workers is holding at a recovery low of 1.8 percent.

Negative productivity/jump in unit labor costs = over hiring given actual output?

Productivity and Costs

Highlights
Nonfarm productivity growth for the fourth quarter declined an annualized 1.8 percent, following a 3.7 percent jump in the third quarter. Expectations were for a 0.2 percent rise. Unit labor costs increased 2.7 percent after falling an annualized 2.3 percent in the third quarter. Analysts projected a 1.2 percent gain.

Output growth softened to 3.2 percent in the fourth quarter, following a 6.3 percent jump the prior quarter. Compensation growth posted at 0.9 percent annualized after 1.3 percent the quarter before.

Year-on-year, productivity was unchanged in the fourth quarter, down from 1.3 percent in the third quarter. Year-ago unit labor costs were up 1.9 percent, compared to up 0.9 percent in the third quarter.

International Trade

Highlights
The U.S. trade balance for December widened instead of narrowing as expected. Lower oil prices actually cut into petroleum exports.

In December, the U.S. trade gap grew to $46.6 billion from a revised $39.8 billion in November. Analysts forecast the deficit to narrow to $37.9 billion. Exports were down 0.8 percent after declining 1.1 percent the month before. Imports rebounded 2.2 percent after falling 1.8 percent in November.

Expansion in the overall gap was led by the goods excluding petroleum gap which increased to $49.7 billion from $46.3 billion in November.

The petroleum goods trade gap posted at $14.7 billion from $11.6 billion in November. Petroleum imports were up 7.7 percent while exports decreased 11.6 percent.

The services surplus was essentially unchanged at $19.5 billion.

On a seasonally adjusted basis, the December figures show surpluses, in billions of dollars, with
with South and Central America ($2.6), Brazil ($0.4), and United Kingdom ($0.1). Deficits were recorded, in billions of dollars, with China ($30.4), European Union ($12.7), Germany ($5.6), Mexico ($5.6), Japan ($5.4), Canada ($3.3), South Korea ($2.7), OPEC ($2.3), India ($2.1), Italy ($2.1), France ($1.1), and Saudi Arabia ($1.0).

Overall, the December number will likely lower estimates for fourth quarter GDP growth. But the good news is that the import numbers suggest that demand is moderately healthy.

Mosler Economics / Modern Monetary Theory

The Site of Economist Warren Mosler

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