ISM/PMI


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Karim writes:

Shocker is employment component of Chicago PMI
->up from 47.6 to 59.8; was at 38.1 in October.

ISM employment component has been above 50 for the past 3mths but hasn’t translated into real job gwth.

Full Chicago details:



Jan Dec
Activity 61.5 58.7
Prices paid 66.2 55.6
Production 66.6 64.2
New Orders 66.4 64.4
Order backlogs 54.3 52.0
Inventories 48.7 38.6
Employment 59.8 47.6

  • Final Michigan Survey up to 74.4 from 72.8 prelim and 72.5 in Dec
  • 5-10yr inflation expectations up to 2.9% from 2.8%


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Reuters: Business sales up in January

Note the negative initial spin on inventories versus the falling stock sales ratio at the end.

Business inventories, sales up in January

by Lisa Lambert

WASHINGTON (Reuters) – U.S. business inventories rose by a larger-than-expected 0.8 percent in January, the biggest gain since 2006, while sales experienced their largest increase in nearly a year, a government report showed on Thursday.

Inventories exceeded Wall Street’s expectations of a 0.5 percent gain, and stood at a seasonally adjusted $1.46 trillion the Commerce Department said. The January gain was the biggest since June 2006, when inventories also rose 0.8 percent.

January business sales rose 1.5 percent to $1.16 trillion, the biggest gain since 1.6 percent in March 2007.

The stock-to-sales ratio, which measures how long it would take to empty inventories at the current pace, dropped to 1.25 months’ worth from 1.26 months’ in December. It matched the record low set in November.

The department also reported that retail inventories rose 0.4 percent in January, after remaining unchanged in December, to $507.73 billion. Sales that month increased 0.5 percent to $343.94 billion.

GDP/ADP

From Karim:

  • GDP slows from 4.9% to 0.6%
  • Personal consumption slows from 2.8% to 2.5%
  • DGO strength in Dec shows up in modest positive in equipment and software (+3.8%)
  • Residential FI (housing) down 23.9%
  • Core PCE up 2.7% annualized for quarter and 2.1% y/y
  • Net exports add 0.4% to gwth
  • Inventories a drag by 1.25%
  • Inventory/shipment ratio still at recent highs, so unlikely that inventory drag is over yet
  • ADP gain of 130k signals upside risk to consensus 65k advance in nfp; while usually reliable, adp has also had some spectacular misses
  • In light of decline in jobs hard to get component of conference board survey and adp, will call for 90k gain in nfp Friday.
  • Pretty long period between jan and march fed meetings (next meeting march 21). So by next meeting, will have 2 nfp reports to look at as well as decent idea on Q1 gwth. Bernanke testimony likely on 2/27.

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