Monday, March 26, 2012

Monday Morning Economic Assessment

The US Industrial economy extended its recent slump again last week (if pipeline scheduling is correct), even as consumption continued to gain momentum.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) retreated for its third week in a row, declining to 120.8 (vs last weeks 121.8), and is now at its lowest level since November 23rd (2011). In its raw dailies (above) the week was soft Sunday through Wednesday, firmed up (vs the prior week) Thursday & Friday, then softened slightly again on Saturday.

Conversely, the Consumption Index added to its recent surge (its fourth up-week in a row and second strait record high), climbing to 160.3 (from last weeks 157.6). In its dailies the measure started the week strong, softened Tuesday, then came back over the weekend.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index), continued its long-term decline. The chart (above) this week was redrawn to cut the sensitivity to changes within the inventories measure.

The rapidly growing gap between consumption and production is alarming, reflective to re-emerging bearishness within the business sector of the economy (even while consumers find their confidence). The rising gap is very conducive to a continuation and acceleration of healthy corporate profitability, although it also raises fears of renewed unemployment gains going forward, a further surge in imports, and an increased danger to acceleration in the core measures of inflation.

It may also signal that industry is starting to reassess the 2012 election returns as less likely to be bullish (White house not as likely to go Republican as thought before, therefore forget new hiring to go after new business... just in case), although investors (conservative, "Tea-Party" end of the Republican party) have not yet joined that bearishness in the realm of the equities markets.

I don't at all like the look of the industrial side stealing the initiative from the consumptive side of the economy (which it is trying to do right now). Should the investment side of the economy get spooked (and the stock market corrects), the economy looks dangerously vulnerable.

Food-group scheduling, while improving slightly with the consumptive surge, remains at strongly-bearish levels... implying little depth to the mile-wide width of that consumptive surge.

Still, I like that consumption surge (shallow as it is) and if the US government could get its act together and say the right things to that "other" half of the US economy (or if the industrial sector gets mesmerized by consumption before it collapses under its own weight) the economy could be built upon.



-Robry825

Monday, March 19, 2012

Monday Morning Economic Assessment

The US Industrial economy gave ground again last week (if pipeline scheduling is correct), as consumption continued its surging ways.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) dropped for its second week in a row, declining to 121.8 (vs last weeks 122.6). In its raw dailies (above) the week was overall flat the first four days of the week then softened sharply Thursday-on.

Conversely, the Consumption Index surged (its third up-week in a row), rising to a record 157.6 (from last weeks 149.2). In its dailies the measure was strong all week.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index), continued its long-term decline.

The record-breaking consumptive-surge looks very good in here... with retail sales likely surging... and corporate profits implied at very healthy levels, especially given the caution implied in the production-side of the economy.

The declines in industrial activity (especially given the bullishness in consumption) is disheartening.

I am somewhat doubtful of recent media reports that are giving credit to mild weather for recent economic strength. While a help, this surge in consumption appears much greater than that.

Unfortunately, the easing of the production index takes away from all that... blunting potential retailing employment-gains with industrial-employment stagnation. Probably the real gainer in all this is imports. We will see.

Still, I like the consumption surge, and hope to see some follow through on the industrial end (especially on the transition to the second quarter on April 1st). That is, if that consumption can hold. But we have got to get some follow-through somewhere in the industrial scheduling, where (at first glance) only the Mining / Minerals group is surging in tandem with the consumption (paperboard) indicator.



-Robry825

Monday, March 12, 2012

Monday Morning Economic Assessment

The US Industrial economy turned and retreated last week (if pipeline scheduling is correct), as consumption continued to rally.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) broke its string of three up-weeks, dropping to 122.6 (vs last weeks 123.2). In its raw dailies (above) the week was mildly soft throughout.

The Consumption Index surged (second gain in a row), rising to 149.2 (from last weeks revised 138.1). In its dailies the measure was soft early (over the weekend) then firmed Monday-on.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index), continued its long-term decline.

The split between the gaining ways of consumption (breaking above previous short-term highs) vs retreating industrial production reversed the "polarity" of that relationship to negative (consumption trends diverging from industrial production), another worry to add to the bearishness of the internals.

If we could only get the industrial numbers back in line with consumption, we would have something meaningfully bullish for the economy.

Overall, the economy still looks uncertain going forward, with possibilities of either rapid-strengthening or rapid-weakening well-evident in the split between industry and consumers.

Overall... back to a flip of a coin (or flip of a political poll, or flip in current events, or flip in news reporting, etc).



-Robry825

Tuesday, March 6, 2012

Tuesday Morning Economic Assessment

The US Industrial economy advanced again last week (if pipeline scheduling is correct), as consumption turned up after its previous pause.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) advanced for its third consecutive week, advancing to 123.2 (vs last weeks 122.7). In its raw dailies (above) the week was mildly soft.

The Consumption Index also gained (breaking its string of 3 down-weeks in a row), gaining to 138.1 (from last weeks revised 134.1). In its dailies the measure softened sharply mid-week.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index), continued its long-term decline.

While it was good to (finally) see the two lead indexes (Production and Consumption) sync in the recent industrial advance, the advance still retains its weak look... with food-group scheduling hovering at highly-bearish levels, and steel-group scheduling (indicative of durable-goods) softening in the latest week.

Overall, the 2011-4th qtr strength is now long-gone... and the economy still looks adrift... awaiting cues as to which direction to turn.



-Robry825