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Weekly Indicators: good riddance to lousy August monthly data edition

Commodity prices as measured by industrial metals bottomed last November. ECRI subsequently turned up as well, enough so that both turned positive.  After briefly turning down enough to be negative, industrial metals turned back positive this week.


Stock prices S&P 500


Stock prices became a positive having made new all-time highs during the last few months.


Regional Fed New Orders Indexes

(*indicates report this week)

  • Empire State down -8 to -7.5
  • Philly up +8.6 to +1.4
  • *Richmond up +13 to -7
  • Kansas City up +19 to +12
  • *Dallas down -8.2 to -2.9
  • Month over month rolling average: up +1 to -1

In March and April, the turning up of these indexes forecast the positive readings in the ISM.  Then in May and June there was a serious divergence between the two, but in July the regional indexes became on balance positive, again forecasting the positive ISM.  In August there was a serious downdraft which again forecast the poor ISM. September turned better, forecasting a positive ISM manufacturing reading this week.


Employment metrics

 Initial jobless claims

  • 254,000 up +2,000
  • 4 week average 256,000 down -2,500


Initial claims remain well within the range of a normal economic expansion, as does the 4 week average. 


The American Staffing Association Index


  • Unchanged at 95 w/w
  • Down -2.32 YoY

This index turned negative in May 2015, getting as bad as -4.30% late last autumn.  Since the beginning of the year it became progressively “less bad” and for the last few months has been so close to positive YoY as to be a neutral.  This week, however, it is bad enough to be negative again.


Tax Withholding 

  • $170.0 B for the first 20 days of September vs. $161.4 B one year ago, up +$8.6 B or +5.3%
  • $170.0 B for the last 20 reporting days ending Thursday vs. $161.0 B one year ago, up +$9.0 B or +5.6%

Beginning with the last half of 2014, virtually all readings were positive, but turned more mixed and choppy, and occasionally even negative, since August 2015.  With the sole exception of 2 weeks ago, the last few months have shown a marked improvement.


Oil prices and usage 

  • Oil up +$3.46 to  $48.05 w/w 
  • Gas prices unchanged at $2.22 w/w 
  • Usage 4 week average up +3.6% YoY


The price of gas bottomed last winter at $1.69.  Usage has been almost uniformly positive. Gas prices are off their summer seasonal high.


Importantly, however, for the first time since mid-2014, YoY Oil prices are virtually unchanged. This is enough to move them from positive to neutral.  In short, Oil is no longer a tailwind for the economy.


Bank lending rates


Both TED and LIBOR were already rising since the beginning of last year to the point where both have usually been negatives, although there were some wild fluctuations.  Of importance is that TED was above 0.50 before both the 2001 and 2008 recessions.  Both have now reached that level.


Consumer spending 


Both the Goldman Sachs and Johnson Redbook Indexes progressively weakened in pulses during 2015, before improving somewhat since the beginning of last November.  Redbook has recently turned very weak.  Goldman and Gallup have both been generally more positive, but Gallup has turned negative for the last 2 weeks.



Railroad transport 

  • Carloads down -6.1% YoY
  • loads ex-coal down -2.2% YoY
  • Intermodal units down -3.5% YoY
  • Total loads down -4.8% YoY

Shipping transport

Rail traffic turned negative and then progressively worse in pulses throughout 2015. Rail loads became “less worse” in January and showed continued improvement until going over the proverbial cliff all spring (typically down -10% or more) in spring.  It trended incrementally less awful since June, even scoring neutral 3 times in the last 7 weeks, including this week.

Harpex has recently resumed its decline again to repeated multi-year lows. On the other hand, BDI has improved to a 12 month high, and higher then 20 of the last 24 months, and so has become positive. I am wary of reading too much into price indexes like this, since they are heavily influenced by supply (as in, a huge overbuilding of ships in the last decade) as well as demand.

Steel production


  • Down -1.7% w/w
  • Down -4.9% YoY

Until spring 2014, steel production had generally been in a decelerating uptrend.  It then gradually rolled over and got progressively worse in pulses through the end of 2015. This year it started out as “less worse” and turned positive a few months ago, but recently turned negative again.





The recent wobbling continues. While long leading indicators remain almost universally positive, different short leading and coincident indicators have been fluctuating from week to week.  For example, this week oil broke its long positive streak, and temp staffing turned negative, while rail and the Regional Fed indexes improved enough to score neutral.


Among long leading indicators, interest rates for corporate bonds, treasuries, the yield curve, real money supply, real estate loans, mortgage rates, and mortgage applications are positive. A significant negative, however, is that mortgage rates have not made new lows for over 3 years.


Among short leading indicators, stock prices, jobless claims, gas prices, gas usage, and industrial commodities, are all positive. Oil prices, however, have turned neutral from being positive for over 2 years. Both readings of the US$ are now neutral.  The volatile regional Fed average have improved enough to score as neutral. 


The coincident indicators remain mixed. Rail has improved enough again this week to score neutral. Consumer spending remains neutral to negative.  The BDI is now positive. Steel, the Harpex shipping index, and bank rates remain negative. Tax withholding is positive. Temp staffing turned from neutral to negative.


This coming week will give us our first important September reads, on jobs, manufacturing, and vehicle sales.


Have a nice weekend!

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