Fell back this month after last month’s spike from the drop in rates and still looking to me like it’s going nowhere from historically depressed levels, and not population adjusted:

Highlights

Upward trajectory is the theme of housing starts and permits, in data where September’s headlines don’t always tell the fundamental story. Housing starts came in at a 1.256 million annual rate in September that falls not only well short of expectations but also August which is revised higher to 1.386 million. But behind the headline is a small gain, to 918,000, for single-family starts. These pack more GDP punch per unit than multi-family starts which dropped a very sharp 28.2 percent to 338,000. The three-month average for single-family starts is up very sharply, at 901,000 for the 5th straight increase.

Permits for single-family homes are keeping pace with starts, at 882,000 in the month with this three-month average up 20,000 to 862,000 for a fourth straight increase. Total permits dipped back to 1.387 million reflecting a sharp fall in multi-units to 505,000.

Year-on-year, single-family starts are up 4.3 percent with single-family permits up 2.8 percent. These are solid positives for residential investment which, after six straight quarters of pulling GDP lower, may yet contribute positively to third-quarter GDP. But the weakness in multi-family units is a risk for residential investment with starts here down 5.1 percent on the year though permits, in what points to emerging strength and only temporary weakness for starts, up a very sharp 17.4 percent.

A negative in today’s report is decline in completions, down for single-family and multi-units in results that will limit immediate improvement for new home sales. But this report, especially the monthly gains for single-family data and the year-on-year gain for multi-unit permits, does point to the possibility that the housing sector, struggling to move higher as it has all year, may begin to contribute to economic growth.

The global collapse continues:

Highlights

After a strong August, industrial production fell back more sharply than expected in September with year-on-year rates especially betraying the report’s generally weakening trends. Pulled down by manufacturing, industrial production fell a monthly 0.4 percent in September and double the expected contraction. Manufacturing volumes fell 0.5 percent, nearly double the expected decrease and reflecting wide declines across readings including a 4.2 percent monthly drop for motor vehicles, significantly reflecting the GM strike, and a 0.7 percent decline for business equipment.

The report’s two smaller components were mixed with utilities rising 1.4 percent in September but mining falling 1.3 percent. Mining had been enjoying two years of exceptional strength in this report but has since faded. Year-on-year, mining volumes are up a moderate 2.6 percent with utilities up 1.2 percent.

The trouble for manufacturing, which is being held down by weakening demand for US exports, is framed convincingly by 0.9 percent year-on-year contraction in this report. Vehicle production is down 5.4 percent on the year and improvement may be slow based not only the risk of an extended GM strike but also on yesterday’s retail sales report where vehicles sales were a major negative. Business equipment is another negative, down 0.8 percent on the year which won’t be giving the hawks at the FOMC much strength in their arguments to limit further rate cuts. Weakness in business equipment, the result of falling business expectations, is a central concern, if not the central concern, for monetary policy makers.

GDP continues to decelerate:

The economy probably only grew 1.5% in Q3 amid consumer weakness, CNBC tracker shows

Weak income and employment growth tends to coincide with weak retail sales growth, as the global trade collapse continues:

Highlights

The consumer cooled but not enough to not knock back a still rising trend for retail sales which in September fell an unexpected 0.3 percent. All the breakdowns also came in well below expectations including a 0.1 percent dip when autos (one of September’s weaknesses) are excluded and no change when also excluding gasoline.

Perhaps the best gauge to this report is the control group, which is part of the GDP mix and which came in flat. Limiting the unwelcome message from September is a revision to the upside for August, up an additional 2 tents to 0.6 percent, and also a look at the total year-on-year rate which did ease 3 tenths in September to 4.1 percent that, next to August’s 4.4 percent, is still the second best rate since October last year.

Auto sales (in contrast to a rise in previously reported unit sales) fell 0.9 percent though this does follow a 1.9 percent jump in August. Year-on-year growth for autos did slow, down 1.4 percentage points yet to a still favorable 5.6 percent. Gasoline sales, held down by low prices, once again pulled down total sales, falling 0.7 percent in the month after August’s 1.3 percent drop.

Nonstore retailers (dominated by e-commerce) are also in the negative column in September, down a monthly 0.3 percent though year-on-year growth continues to easily top all categories at 12.9 percent. Building materials fell 1.0 percent in September while general merchandise fell 0.3 percent. One of the positive showings is by apparel stores at 1.3 percent and furniture stores at 0.6 percent. Restaurants posted a 0.2 percent monthly gain for very respectable yearly growth of 4.9 percent that, like yearly growth in auto sales, underscores the fundamental strength of the consumer.

Today’s report will limit expectations for the third-quarter contribution from consumer spending, which nevertheless remains favorable and the central underpinning for economic growth. For the Federal Reserve, consumer slowing could make policy more vulnerable to the slowdown underway in global demand and the US manufacturing sector, and in turn strengthen the arguments of the doves who are pushing for more rate cuts.

Highlights

Businesses are holding back inventory growth as sales growth stalls. Total inventories were unchanged in August against only a 0.2 percent rise in sales, a modest mismatch that isn’t enough to move the inventories-to-sales ratio which held unchanged at a lean and favorable 1.40.

Inventories relative to sales look stable right across components with retailers showing the only change and that’s downward, with this ratio a bit more lean at 1.44 versus 1.45 in July.

When it comes to production and employment, nimble inventory management helps smooth out disruptions from economic ups and downs, yet however positive this may be for general economic health a slowing inventory build does hold down GDP growth.

Annual sales growth is negative:

Inventories remain elevated: