Forget all the gloom in the markets these past few days, the US economy is surging! (according to pipeline scheduling) as Industrial production continues to chase consumer spending higher.The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) achieved its second record high in as many weeks (rising to 117.3 from the prior weeks record 115.4). In its dailies the week started moderately (in weekend scheduling) but firmed as the week progressed. The week looked especially good against seasonals as May tends to be the weakest month of the year.
The paperboard-based Consumption Index also worked higher (its fourth up-week in a row), rising to 129.6 (from the previous weeks 128.3).
The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continued its long-term decline, though the decline looks to be slowing in momentum the past few weeks.
It has been a fascinating flip from implied April-weakness to May-strength, both in terms of industrial production and consumption, and the flip is very noticeable in the "Part 8" sector breakdowns (on the Investor-Village CWEI Board). For instance the Metals/Steel groups were pressured in April but strong in May (Aluminum is surging this month so far).
The Food Group is also very suggestive on this... April was the highest (52.5 mmcf/day) in fourteen months (Food is a contra indicator... tends to rise when consumers are stressed), while May is looking much better at a lower 47.5 mmcf/day.
Why the April-May Flip? I haven't a clue! Would greatly appreciate anyone else's views as to possible reasons but I am in the dark in my thinking as to possible catalysts.
Overall, the economy appears to remain well supported by consumer spending (consumer spending is the leash that leads the dog of the economy), with the deficit of the Production Index to the Consumption Index, and the continuing decline of the Inventories Measure continuing to affirm the economic recovery.
However, it still appears to continue as a jobless-recovery, as the lag in the Production Index (vs the Consumption Index) and the softness in the Inventories Measure continues to imply a shallowness in the productive end of the US economy... which suggests a continuing defensiveness in industry toward aggressively hiring to chase market share or pursue new ventures.
-Robry825
