The US Industrial economy advanced last week (if pipeline scheduling is correct), already-brisk consumer spending accelerated further, and signs in the gas flows continue to point to a very strong 2009 Christmas-shopping season.The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) after two consecutive soft weeks gained ground in the latest week. The measure (at 106.8) remains just shy of 2008's September pre-plunge peak (108.1) and 2007's high of 110.2 (It bottomed May 28th at 86.7).
In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) the week was red-hot, starting firm early then ramping to fresh 2009 highs on Wednesday, then again on Thursday, then yet again for Saturdays preliminary scheduling (if Saturdays preliminaries hold up).
The Paperboard-based Consumption again advanced last week (second weekly advance in a row following of six consecutive declines. Over the past several weeks, the Consumption index has fallen short of the ramp implied by seasonal factors, presumably because it attained that ramp prematurely weeks earlier when the Christmas shopping rush looks to have begun prematurely.
The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continues to drop and remains well-below pre-recessionary levels.
The latest spike in industrial flows (with just days left until Christmas) is encouraging, as some of this will (if not shortly) be intended for post-Christmas delivery. Also encouraging... steel-sector gas-flows (which have been front and center in the recovery) looked very perky, and some of the economies poorest performers (such as the Auto and Lumber groups) have been doing quite well lately.
The present uptrend in consumer spending, the deficit of the Production Index to the Consumption Index, the deep and continuing decline of the Inventories Measure... all argue for a fourth leg up for the economy (if not many more). That fourth leg up may have just begun last week.
-Robry825
