The US Industrial economy (if pipeline scheduling is correct) continued to backtrack last week, while consumer spending continued to rise.The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) declined for its sixth straight week, easing to 116.5 (vs last weeks 116.8), and at its lowest point since November 22nd, 2010. In its raw dailies (above), the measure was soft throughout the week.
The Consumption Index, on the other hand, continued to build on its gains of the past two weeks and accelerated... rising to 129.1 (from last weeks revised 124.3). In its raw dailies the measure was strong throughout the week.
The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index), long in decline, continues its attempt to flatten out as consumption trends have been falling faster that production.
Last weeks noted "sliver of hope" has blossomed quite nicely (in the gas flows) into a respectable attempt at recovery, with good support building in the food-group, which finally completed a decent month in September... breaking a long string of bearish record-breaking months
We now look to the Production index for signs of conformation as the new quarter begins. (Major changes to the Production Index like to occur on monthly or quarterly changeovers... presumably as industrial production scheduling gets adjusted to prior months/quarters actuals.)
We very much need to see the unfolding consumer-gains both (A) continue, (B) spread into the production index, and (C) spread into steel-group scheduling (as per the "Part 8" posts on InvestorVillage CWEI board) to abort recession.
The US consumer has had to overcome a mountain of negativism in press, government, and finance (declining equities) th achieve what it has so far, and industry will have to overcome its own negativism and allow consumption to lead once again (as consumption has led the economy in prior years).
If consumption can keep it going a couple more weeks, I think it will get a boost from a turn in equities as investors should like what they see in 3rd quarter earnings (Production has held below consumption on industrial negativity, which in the past has lead to good quarterly-earnings results... so I look for rising stock markets as the fourth-quarter unfolds).
The longer-term-downside-risk remains, however, with the Federal Reserve remaining on the sidelines as trade-deficits continue to hemorrhage liquidity and build US debt. While the economy can gain on a bounce, serious longer-term economic (and employment) gains remain to look unlikely... without Fed accommodation.
-Robry825
