The US Industrial economy advanced again last week (if pipeline scheduling is correct), chasing strengthening consumer spending.The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) racked up its third record high in as many weeks, rising to 119.2 from the prior weeks 117.3. In its dailies the week appeared robust from start to finish. Mays surge continues to look especially good given that May tends to be the weakest month of the year.
The paperboard-based Consumption Index also continued higher (its fifth up-week in a row), rising to 131.7 (from the previous weeks 129.6).
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 is strange watching the disconnect the past few weeks between the economically-indicative gas flows vs the markets, with the sharp contrast between the implied surge in the economy vs the pessimism in the markets. One has to wonder if the markets are reflecting April gas-flow weaknesses (as being recognized now?), reflecting European concerns (bear trap to set up a summer rally?), or perhaps looking ahead to discount fall mid-term elections (discounting the loss of unilateral Democratic rule as a depressant to Democratic consumers?) or other troubles.
For the time being, 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
