Natural gas pipeline scheduling continued to suggest an improving industrial economy last week, the Production Index (in terms of its 28-day moving average) rose for the fourth week in a row, pushing further off of its May-28th bottom. In its dailies, scheduling of natgas deliveries into industrial facilities hit a multi-month high on Wednesday before tailing off late week.Within the industrial index, the much-beleaguered steel component once again edged higher last week (taken as a good sign of confirmation). Everything-Auto , however, again remained in the doghouse; and Michigan (Robry's home state) gas-flows remained a mess. A good sign for California... industrial gas-flows showed their second good weekly performance... hopefully a good sign for that state.
The Consumption Index also pushed higher to just under its 2009-peek two weeks prior. It remains well above its year-ago levels.
The Inventory Index (If the other indexes are correct) has now given up nearly all of its overhang, and will likely begin to carve out a deficit to year-ago levels... reflecting perhaps the long-term damage done to some industries (especially auto) by the length and severity of the recession.
Overall, I continue to believe the industrial-recession ended at the May-28th Production-Index bottom, and anticipate a turning in the employment numbers in the month(s) ahead. With the implied inventory overhang now gone, and production lagging consumption by a wide margin, I believe the recovery has (to borrow a term from nuclear physics) reached its point of critical mass. As long as consumption holds at current levels, production should ramp up very quickly to meet it.
That is not to say that the economy is free of risk. There is always the risk of news events (acts of war/terrorism, natural catastrophes, political events/blunders, etc) that could cause consumers to panic, leading to a "double-dip" type recession. It is to say, however, that momentum appears on the side of recovery, and that momentum would have to be broken.
-Robry825
