Sunday Night Economic Assessment

The US Industrial economy eased again last week (if pipeline scheduling is correct), while consumer-spending inched ahead a little more.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) declined again (its 4rd down week in a row), dropping to 114.2 (from last weeks 115.2). In its dailies (See the "Part 7" posts on the InvestorVillage site) the index started the week soft, then firmed just a bit late-week. September (vs its seasonals) continues to look soft, especially in contrast to the month of August.

The steel sector looked quite strong last week (in spite of flat automotive scheduling). Steel lead both the recession and recovery over the past couple years, and climbing steel scheduling is quite a welcome sign for the possibility of a stronger November.

The paperboard-based Consumption Index gained a little more ground (second up weeks in a row), rising to 139.5 (from last weeks 139.2). In its dailies the measure started the week very strong through Tuesday, then declined sharply through Saturday before turning up somewhat Sunday (as if something spooked the public Tuesday night?).

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) is continuing its pattern of re-accelerating decline.

Overall, the US industrial economy (in spite of the last 3 weeks) looks to continue to be firmly underpinned by an excess of consumption over production, a recent surge in consumption, and the ever-declining Inventories measure.

Continuing concerns continue to be the dismal mood of the business/Investment side of the US citizenry (and its whithering effect on capitol/formation and new business starts), massive monetary outflows from the US (believed driven by demand from foreign sources for US dollars), and poor US monetary, fiscal, and political posturing.




-Robry825

Sunday Night Economic Assessment

The US Industrial economy gave back a little more ground last week (if pipeline scheduling is correct), while consumer-spending rose aggressively.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) backtracked (its 3rd down week in a row), dropping to 115.2 (from last weeks 116.2). In its dailies (See the "Part 7" posts on the InvestorVillage site) the index started the week firm, then softened a bit late-week. September (vs its seasonals) continues to look soft, especially in contrast to the month of August.

The paperboard-based Consumption Index conversely turned around and gained ground (breaking a string of three down weeks in a row), rising to 139.2 (from last weeks 134.0). In its dailies the measure looked strong.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) is continuing its pattern of re-accelerating decline.

Overall, the US industrial economy (in spite of the last 3 weeks) looks to continue to be firmly underpinned by an excess of consumption over production, a recent surge in consumption, and the ever-declining Inventories measure.

Continuing concerns continue to be the dismal mood of the business/Investment side of the US citizenry (and its whithering effect on capitol/formation and new business starts), massive monetary outflows from the US (believed driven by demand from foreign sources for US dollars), and poor US monetary, fiscal, and political posturing.




-Robry825

Sunday Night Economic Assessment

The US Industrial economy backtracked slightly again last week (if pipeline scheduling is correct), as both industrial production and consumer-spending eased.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) declined for its 2nd week in a row, dropping to 116.2 (from last weeks 116.7). In its dailies (See the "Part 7" posts on the InvestorVillage site) the index started the week soft, then firmed midweek. In spite of the firming in the dailies, we are starting the month of September on the weak side, especially in contrast to August.

The paperboard-based Consumption Index also gave a little more ground (its 3rd down- week in a row), settling to 134.0 (from last weeks 134.2). In its dailies the measure looked strong (maintaining the prior weeks surge), though the "official" 28-day average (shown in the chart) could not reflect the strength as an equally strong week rolled off the back end of it's 4-week moving average.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) is continuing its pattern of re-accelerating decline.

Overall, the US industrial economy looks to continue to be underpinned by an excess of consumption over production, a recent surge in consumption, and the ever-declining Inventories measure.

Continuing concerns continue to be the dismal mood of the business/Investment side of the US citizenry (and its whithering effect on capitol/formation and new business starts), massive monetary outflows from the US (believed driven by demand from foreign sources for US dollars), and poor US monetary, fiscal, and political posturing.




-Robry825

Sunday Night Economic Assessment

The US Industrial economy retreated last week (if pipeline scheduling is correct), as both industrial production edged down while earlier-reinvigorated consumer-spending is taking a two-week summer vacation

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) broke its short string of 2 up weeks in a row and slipped back a notch to 116.7 (from last weeks 116.8). In its dailies (See the "Part 7" posts on the InvestorVillage site) the index opened the week strongly and maintained its firmness through midweek... then stair-stepped down on September 1st, presumably on factory adjustments to production scheduling.

There is a propensity for the Production Index to stair-step up or down on the day a calender-month changes, and we saw a real good example of that last week. Industrial gas deliveries were modeled at 26.40, 26.31, 26.02, and 26.40 for the first four days of the week (which were also the last days of August). Then, for the last three days of the week (the first three days of September) Industrial gas deliveries were modeled at 25.19, 25.39, and 25.42. That works out to about a 4% drop in natural-gas inputs, which would imply a 4% cut in planned manufacturing of goods at these industrial facilities.

Now there is a wrinkle to all this... there could be distortions in the pipeline data itself (Holidays can produce such distortions, as can sudden fluctuations in climate (as we are having now as the natural-gas industry is just now leaving its summer-demand season and entering its fall shoulder-season). But September (at least in its first few days) looks weak.

Now seasonally, we tend to like to get a bump-up at the start of September (once seasonal-distortions surrounding Labor-day are factored out) so we should be going the other way. Even in 2008 (when the bottom fell out of industrial natgas deliveries) we got a bump up in early September (though things absolutely fell apart a few weeks later when the Economy rolled over). So we will hope the early September weakness is either a pipeline-distortion or something funny (unseasonal) regarding Labor-Day-Weekend scheduling.

Getting to the paperboard-based Consumption Index, it also backtracked (its 2nd down- week in a row), settling to 134.2 (from last weeks 135.0). In its dailies, however, the measure (though beginning the week soft) surged strongly as the week progressed, seemingly climbing with the stock market and suggesting the good press of the last week or so is encouraging consumers.

The Consumption Index is much more volatile than the Production Index, and has appeared in the past to reflect much more highly upon emotion as it tends to surge or crash in reflection to the "goodness" (or "badness") in the news of each day. Thus, as the highly-emotional Consumption Index tends to lead the more subdued Industrial Index, and the news of the day tends to lead consumption, the "mood" of the media can be the prime driver of an economy at times (probably one reason why authoritarian countries tend to try and control it). The past few weeks it seems we have had a manic-depressive media... speaking in the tone it believes its readers/watchers/listeners want to hear... back and forth between good and bad. Makes for a lousy economy.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) is continuing its pattern of re-accelerating decline.

Overall, the US industrial economy looks to continue to be underpinned by an excess of consumption over production, a recent surge in consumption, and the ever-declining Inventories measure.

Continuing concerns continue to be the dismal mood of the business/Investment side of the US citizenry (and its whithering effect on capitol/formation and new business starts), massive monetary outflows from the US (believed driven by demand from foreign sources for US dollars), and poor US monetary, fiscal, and political posturing.

-Robry825