Up a bit, but until permits increase not much chance of home building increasing:

Been going from bad to worse:

Highlights

Redbook’s sample is not pointing to any September improvement for core retail sales. Year-on-year same-store sales rose only 0.2 percent in the September 17 week, about in line with August and noticeably lower than July — two months when the government’s ex-auto ex-gas reading posted 0.1 percent monthly declines. Rates in this report don’t always match those in actual government data which focuses our attention on trends, and the trend for this report is not favorable.

Down for reasons previously discussed, and new permits are down as well:

The slow motion train wreck that began in late 2014 with the collapse of oil capex continues unabated, with no sign of reversal that I can detect, and the annual rate of growth is consistent with prior recessions:

Highlights

After spending heavily in the second quarter, the consumer has stepped back so far in the third quarter. Retail sales, after inching up a revised 0.1 percent in July, fell 0.3 percent in August and do not just reflect expected weakness in auto sales. Excluding autos, sales slipped 0.1 percent while excluding both autos and gasoline, which is an important core reading, sales also fell 0.1 percent which is the second straight decline.

Details show special weakness for building materials and garden equipment, down 1.4 percent for what is also a second straight decline. This specific reading will lower estimates for the residential investment component of the third quarter GDP report. Non-store retailers, which were flying high in prior months, fell 0.3 percent to underscore the month’s disappointment. Motor vehicles fell 0.9 percent in the month though this does follow a 1.7 percent gain in July.

This report puts the backs of the policy hawks at the Fed to the wall, confirming other signs that the third quarter may not prove that strong after all.

Industrial production tells much the same story. And watch for auto production to decline next month in line with falling sales:

Highlights

There was some life in the factory sector during July but it proved brief, at least for production. Held down by a 0.4 percent decline in the manufacturing component, industrial production also fell 0.4 percent in data for August. But motor vehicles continue to be a plus in the report, rising 0.5 percent and offsetting a 0.5 percent decline in hi-tech production.

And mining is an increasing plus in the report, emerging from deep weakness with a second straight gain and a solid one at plus 1.0 percent. Utility production, which had up in prior months, fell back 1.4 percent in August. Total capacity utilization edged 4 tenths lower to 75.5 percent.

This report isn’t as weak as the headline readings suggest but, given weakness in other data including this morning’s Philly Fed and Empire State reports, won’t build much confidence that the factory sector will contribute much to the nation’s third-quarter growth.

So far the expected boost to GDP from inventory building isn’t happening. Probably because, as previously discussed, sales are falling just about as fast as inventories, as the inventory to sales ratio remains elevated:

Highlights

Inventories were unchanged in lagging data for July while sales retreated 0.2 percent. The stock-to-sales ratio was unchanged at 1.39. Retail inventories fell 0.3 percent with auto inventories down 0.2 percent. Wholesale inventories were unchanged in July while inventories at manufacturers, a sector where demand is soft, edged up 0.1 percent.

An outright drop in inventory investment subtracted almost 1.3 percentage points from second quarter GDP growth — the largest drag in more than two years. Inventories have weighed on GDP growth since the second quarter of 2015. Expectations are for inventory accumulation to rebound in the third quarter adding to GDP growth.

Highlights

The Empire State report, like the bulk of this morning’s Philly Fed report, points to continuing trouble for a factory sector that is being held down by weakness in exports and weakness in business investment. September’s headline came in at minus 1.99 for a second straight contractionary reading. New orders are even more negative at minus 7.45 with unfilled orders at minus 11.61. Employment is in deep contraction, at minus 14.29, as is the workweek at minus 11.61 (same as unfilled orders). Input costs do show some pressure but not selling prices which are flat. Watch later this morning for industrial production which will cover the month of August.

In this particular survey the headline number doesn’t add up to the individual categories:

Highlights

The headline and the details of the Philly Fed report continue to take their own paths, once again showing strength at the headline level, at plus 12.8 in September, and weakness elsewhere. New orders did move into the plus column, to 1.4 vs August’s minus 7.2, but the gain is marginal. And unfilled orders remain very weak at minus 10.8. Shipments are in contraction this month, at minus 8.8, with employment at minus 5.3. Price data show some pressure for inputs but less for selling prices. This report, outside the headline, matches the weakness of the Empire State also released this morning. The nation’s factory sector seems to be dead in the water.

Working it’s way lower as actual data is released, as previously discussed:

So I count 3 or 4 increases and 3 or 4 decreases, so hard to say overall policy has changed, which is to keep the price just low enough to keep global investment to a minimum?

Still very bad:

This index went up with the shale boom and now down since the bust pulled the rug out from under oil capital expenditure:

As previously discussed, this ‘nowcast’ is working its way lower as more data is released, much like it did last quarter. Still to come are weaker retail sales due to weakening car sales, weaker residential investment due to weakening housing permits, more inventory reductions due to weaker sales, and generally weaker consumption as employment growth continues to decelerate. And I also suspect the trade deficit to resume it’s climb as exports continue to weaken and the import bill increases:

Note the progression of the q1 and q2 nowcasts:

Rick Davis commentary on the Q2 GDP report:

As mentioned above, real per-capita annual disposable income was revised upward $101 in this report (and is now up $151 from the prior quarter), and the household savings rates was also revised upward. Although the household savings rate was revised upward in this report, it is still down from the prior quarter — and most of the increased quarter-to-quarter consumer spending came from that decreased savings rate. It remains important to keep this line item in perspective. Real per-capita annual disposable income is up only +6.32% in aggregate since the second quarter of 2008 — a meager annualized +0.77% growth rate over the past 32 quarters.

The key items in this report:

All things not consumer either weakened or remained in contraction.

Consumer spending growth improved yet again, with most of that coming from savings.

All of the reported growth disappears when a third party deflator (the BLS CPI-U) is applied to the data.

Note that the consumption numbers outlined tend to revert:

Consumption, like most everything else, has been decelerating ever since the collapse in oil related capital expenditures at the end of 2014, and is already very low vs prior cycles. And, at least so far, I have no reason to expect this general deceleration not to continue: