The chart looks true to the ‘down for the cold winter, followed by a bounce back, then back down’ narrative as previously discussed:

Industrial Production

Highlights
Industrial production slipped 0.1 percent in August after a gain of 0.2 percent the month before. Analysts expected a 0.3 percent boost for the month. The decline may be deceiving on auto assemblies on retooling schedules.

Manufacturing production fell 0.4 percent after a 0.7 percent increase in July. Weakness was led by motor vehicles which dropped a monthly 7.6 percent. In contrast, motor vehicle sales have been healthy, indicating that this is just a retooling timing issue. Manufacturing excluding motor vehicles rose 0.1 percent after a matching rise in July.

For other industries, mining rebounded 0.5 percent after slipping 0.3 percent in July. Utilities made a partial comeback of 1.0 percent, following a drop of 2.7 percent the month before.

Capacity utilization eased to 78.8 percent from 79.1 percent in July.

Consumer Sentiment up but stuck at historically low levels:

The chart shows how, over time, technology allows inventories to be lower than otherwise. The latest ‘counter trend’ drift to somewhat higher inventories have been ‘inflating’ GDP- adding over 1.5% to GDP in Q2- and could indicate inventories are getting excessive:

This came out today and was up some from last month, and touted as a show of strength.

Nothing to write home about best I can see:

Nothing happening here.

Note from the chart that it’s still near the lows of prior cycles.

From the National Federation of Independent Business (NFIB): NFIB SBET Sees Slight Bump in August

August’s Optimism Index rose 0.4 points to 96.1 making it the second highest reading since October, 2007. …

NFIB owners increased employment by an average of 0.02 workers per firm in August (seasonally adjusted), the eleventh positive month in a row but basically a “zero” net gain. emphasis added

Hiring plans decreased to 10.

Maybe some evidence the 1.2 million who lost benefits at year end and took menial jobs phenomenon has run its course, and H2 will show substantially lower employment growth than H1?

When it was going up it was ‘accelerating’, so now it must be ‘decelerating’, right?

Hardly!

Mark Zandi, chief economist of Moody’s Analytics, said, “Steady as she goes in the job market. Businesses continue to hire at a solid pace. Job gains are broad based across industries and company sizes. At the current pace of job growth the economy will return to full employment by the end of 2016.”

Productivity and unit labor cost also figure into employment.

Higher unit labor costs and lower productivity can be a sign sales are falling and headcount is too high:

The current account continues to modestly narrow as a % of GDP, which supports GDP some but not a lot.

Not withstanding that it represents a reduction in real terms of trade/standard of living, of course.

International Trade

The trade deficit in July shrank marginally to $40.5 billion from $40.8 billion in June,

Exports rose 0.9 percent in July after no change the month before. Imports gained 0.7 percent, following a 1.1 percent drop in June.

ISM Non-Mfg Index

Highlights
The ISM’s non-manufacturing sample is reporting extending acceleration in composite activity with the index rising 0.9 points to 59.6 from an already very strong 58.7 in July. The August reading is near the top end of the Econoday consensus.

The gain is led by the business index which rose 2.6 points to 65.0 in a reading that indicates exceptionally strong output. Employment is also a big plus, up 1.1 points to 57.1. This gain may offset to a small degree this morning’s weakness in ADP’s estimate for Friday’s jobs report.

One reading is not so positive and that’s new orders. Though coming in at 63.8, the rate of growth is down 1.1 points from July’s 64.9. Other readings include a slowing for supplier deliveries which is in line with the general rise in activity. Pressures on input prices slowed 3.2 points to 57.7 which is moderate for this reading.

And this housing report:

Lawler on Toll Brothers: Net Home Orders Down, Price Gains Slow; Some “Lessening” in Pricing Power

From housing economist Tom Lawler: Toll Brothers: Net Home Orders Down, Price Gains on Orders Slows; Some “Lessening” in Pricing Power but No “Need” to Increase Incentives Much — Yet

Toll Brothers, the self-described “nation’s leading builder of luxury homes,” reported that net home orders in the quarter ended July 31, 2014 totaled 1,324, down 5.8% from the comparable quarter of 2013. Net orders per community last quarter were down 15.9% from the comparable quarter of 2013. The company average net order price last quarter was $717,000, up 1.4% from a year ago. Toll’s sales cancellation rate, expressed as a % of gross orders, was 6.6% last quarter, up from 4.6% in the comparable quarter of 2013. Home deliveries last quarter totaled 1,364, up 36.8% from the comparable quarter of 2013, at an average sales price of $732,000, up 12.4% from a year ago. The company’s order backlog at the end of July was 4,204, up 5.1% from last July, at an average order price of $737,300, up 4.1% from a year ago. The company controlled 49,037 home sites at the end of July, up 3.9% from last July and up 25.1% from two years ago.

For its “traditional” home building business (i.e., ex city living), net home orders totaled 1,281 last quarter, down 5.0% from the comparable quarter of 2014, at an average net order price of $700,500, up 3.4% from a year ago.

This doesn’t look like much of a recovery?

The export game is getting tougher as well:

Tech not so hot either:

Here’s the report:

Highlights
Skewed by Boeing orders at the Farnborough Airshow, factory orders surged 10.5 percent in July. Excluding transportation equipment, which includes both aircraft and vehicles, factory orders actually slipped, down 0.8 percent in the month.

But there are important positives in the report including a sharp 1.2 percent rise for shipments and a 1.4 percent rise for shipments of nondefense capital goods excluding aircraft. Unfilled orders show an unusually outsized gain of 5.4 percent while inventories, up only 0.1 percent, will need to be refilled. Another positive is an upward revision to June orders, now at a very strong 1.5 percent vs a prior reading of plus 1.1 percent.

Aircraft orders are the standout star of the July report and mustn’t be dismissed. These orders are long term but will eventually boost factory shipments and employment. Though orders outside aircraft were soft in July, the trend is still positive. Today’s report, together with yesterday’s exceptionally strong ISM report for August, point to third-quarter strength for the manufacturing sector.

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