Thursday, March 17, 2011
Philly Fed and Others
Philly Fed March. A great report. The headline reading is really good - it's back to the 03 high - but what's particularly pleasing is the special question regarding changes in anticipated production in the second quarter. Over 75% of respondents expected an increase. That is about 19% better than last year. I was waiting for this report because Philly Fed often shows dependence on home construction. Home construction is not great, so I think this report is even better than it would appear. It did show the higher pricing trends that absolutely every report is showing.
Industrial Production: The monthly change is -0.1, but that's not indicative of the underlying trend. We have a little annual capacity growth!!! Capacity utilization is still rising. Because of better weather, there was drop in utilities. This is good for consumer spending long term. Detail:
The production of consumer goods fell 0.5 percent in February, largely because of weakness in consumer energy products. The output of consumer durable goods rose 2.4 percent, with gains in all of its major categories. The production of consumer automotive products advanced 3.5 percent, and the index for home electronics moved up 1.0 percent. The index for appliances, furniture, and carpeting climbed 3.1 percent, which almost offset its decline over the two previous months, and the production of miscellaneous consumer durables increased 0.6 percent. The output of non-energy nondurable goods moved down 0.2 percent. Reductions in the production of foods and tobacco, of chemical products, and of paper products more than offset an increase in clothing output. The output of consumer energy products fell 5.2 percent, largely because of a drop in residential sales by electric and natural gas utilities.
The output of business equipment rose 0.5 percent in February; the average monthly gain of nearly 1.2 percent in January and February was unchanged from the average rate of increase in the fourth quarter. Within business equipment, the output of transit equipment moved up 1.2 percent in February, and the index for information processing equipment increased 0.6 percent. The production of industrial and other equipment rose 0.2 percent--lower output of farm and construction machinery partly offset gains elsewhere in this category.
We knew consumers were pushed by prices.
Last but not least, initial claims are continuing their notch down. The trends is about 50K less initial claims YoY. Since the monthly employment report is good and monthly Treasury HI receipts were good, we have a symphony of employment positives.
I am very anxious to see the next two months of CFNAI.
The massive move in the yen against the dollar will cost Japanese manufacturers quite a bit if they have contracted for deliveries in dollars. It's too soon to tell much else.
A little commentary on changes in other germane macro details, such as your view on what your estimate of the natural rate of unemployment, would also be interesting.
My point is, that this sort of data is insufficient, and in fact ambiguous in creating a
pointillistic portrait of the national economy's state. The big picture is what's important.
Links to this post: