A dramatic swing in the gas-flows last week, as a first-of-the-month surge in the consumption index Sunday lead to sharp-strengthening in the industrial index three days later.The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) gained for the fifth time in the last six weeks, to 122.6 (vs last weeks 122.1) (highest was 123.0). In its dailies (raw, non-seasonally adjusted flows) the week started flat through midweek, then strengthened Wednesday-on.
The Consumption Index pushed ahead sharply last week (first up-week in seven weeks), climbing to 142.3 (from last weeks revised 134.5). In its dailies the measure surged Sunday and was strong the week throughout.
The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) again continued in its long-term decline.
We very much needed to see a turn in consumption following the slowing implied within the gas-flows and the listlessness of the Easter-Holiday break, and we appeared to get it last week. The short-term dip in the economy (evidenced by last weeks reported bump in the unemployment numbers) was very much threatening to snowball as the raw dailies on the consumption index were threatening the dailies on the production index... leading into a period of traditional seasonal softness.
Food Group scheduling (see "Part 8" posts on the Investor Village site) also joined the first-of-the month party... backing off of its bearish strength starting the same day as the consumption index took off.
On the turn, the economy (for the moment) appears well-supported by the surge in the consumption index, continuing gains in the production index, a widening gap/lead of the production index, and continuing declines in the inventories measure.
Concern remains on the upcoming end of the Fed's second round of quantitative easing (My preference would be to see to see at least a meek "QE-3"... perhaps 1/2 of QE-2), as well as the continuing threat of government saber-rattling leading to ineptitude within the present split government.
-Robry825
