The paperboard-based Consumption Index says the recession (in terms of consumers) is over, as it has now extended its recovery to just above year-ago levels, as stock markets continued to recover.
The Production Index, as it has done for the previous two weeks, balked at the trend and slid to a new recession low. We now have a serious discrepancy between these two indexes to consider.
Within the Production index (which is based upon pipeline-scheduled natural gas flows into many key industrial plants across the US), steel-plant flows are the main culprit... collapsing 75 % from year-ago levels, and off sharply from month-ago levels as well. Whether the problem is simply temporary plant shut-downs (we are now into the Easter holiday week) or something more serious for the steels (ie a wave of foreign dumping) remains to be seen.
The suggested weakness of the Industrial Index is well-supported by both electrical-generation flows (which are influenced by industrial activity) and the EIA's weekly storage reports (roughly a third of US gas-flows are for industry). The magnitude of the steel-plant weakness in the gas-flows is now adding probably 3-4 BCF per week to EIA-reported injections, and I would not touch a steel-stock as 1st-quarter earnings roll out (unless closely connected to concrete roadway construction, in which case it might be time to back up the truck).
Within the Consumption Index, I very much like the dynamics of the day-to-day scheduling (though I very much wish there were more paperboard plants reported by the pipelines), and I want to believe them to be accurate as well.
Seasonally, it is the norm for cardboard plants to draw more gas-flows in March than April (In preparation for Easter & Spring-break sales), then tail off starting in April. But April this year has remained strong, perhaps indicative of a strong Easter period for the retailers (as opposed to Christmas... which the gas-flows correctly represented as a disaster).
What I don't like is the divergence between the Production Index and the Consumption Index. Something looks off. But is it simply Easter-related industrial shut-downs, or a hint of something more serious? Right now (in this weekends model runs) I am unsure. And given that the upcoming week is Easter week, next weekends runs may be similarly inconclusive.
The consumer, though, appears to be doing OK.