The summer micro-recession appears over as industrial natural-gas scheduling finally ignited last week on the heals of three-straight weekly gains to the consumption index.The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) broke its string of seven down-weeks in a row and took off, rising to 117.7 (vs last weeks 116.4), after reaching its lowest point since October-2010 the week before. In its raw dailies (above), the measure firmed early, surged Tuesday, and finished the week strong.
The Consumption Index also climbed (for its fourth week-in-a-row), gaining to 135.5 (from last weeks revised 134.5). In its raw dailies the measure was choppy though generally firm, with a one-day surge on Tuesday coinciding with the surge in the Production Index.
The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index), continues to re-accelerate to the downside as the spread between consumption and production widens.
Also of note... the "polarity" (phase) of the economy shifted back from negative to positive (even as the economy shifted from contraction to expansion), meaning that the leadership within the economy is assumed to have changed back to consumption (as is normal in both upturns and downturns), and away from the strange patterns throughout the summer downturn of industrial production leading consumption.
Within the gas-flows, there remains good support for the consumptive upturn (of the past 4 weeks) in food-group scheduling, which remains well-off of their bearish-looking strength of the summer.
Steel-group scheduling, however, remained flat for the week... an indication that the emerging uptrend has yet to hit the durable-goods sector.
Outlook for 3rd-quarter equity earnings remains positive as consumption never broke down below production (as it did three years ago when the deep recession appeared unanticipated in the gas flows), and 4th-quarter earnings outlook remains positive as well given the quarter-beginning economic strength within the gas-flows.
For the longer-term... Federal Reserve policy remains repressive to the economy, maintaining and encouraging strong liquidity flows out of the US and into foreign interests (by way of the enormous trade deficits siphoning liquidity out of the US, where that liquidity is not subsequently replaced by the Federal Reserve), so substantial economic gains will be difficult probably once past the Christmas-shopping rush (if not before).
-Robry825
