Monday, January 28, 2013
Durables Fold YoY
Motor vehicles remains one of the more positive segments, but that is clearly coming to an end. If we haven't topped out we are close to it.
There is a notable decline in nondefense capital goods, continuing ex-aircraft. Motor vehicles unfilled orders have dropped over the year (-7.1%) and inventories have risen (+5.3). That's more than just Volts. The durable manufacturing slowdown is taking hold, and one must believe that the Pentagon is going to have to stop spending so much this year, which will have further negative impact. The end of March is two months away.
The other part of manufacturing is non-durable. The energy boom continues at a rapid pace - US production is up about 20% over the year. And there's always a market for oil, so that can continue indefinitely. On the ag side, where exports could also grow, we have to wait and see what the weather brings us. The last segment of manufacturing is non-durable consumers, and there hangs a big question mark. Consumers are short on cash and due to be shorter this year!
I am waiting for CMI January in some suspense. There was a pretty negative trend in December Services, and if it doesn't unbend in January things may get unpleasant fast. Sales fell for December services an epic 6.4 points, suggesting that everyone was kind of hitting the brakes in retail. There was an unpleasant echo of December 2007 about that, and the YoY decline for December 2012/December 2011 was unpleasant. What really bummed me out about it was that the Sandy storm should have picked up that index, so it may be worse than it seemed. Trucking was really good in November and December, which kind of confirms that Sandy did show up.
Rail figures for January really aren't that comparable YoY yet due to calendar effects, but I am taking some hope from relatively good intermodal YoYs through January 19.
Dallas Manufacturing came in just fine, which is what I expected. Prices for finished goods were up notably. Unfilled orders are still declining (-7.9), but materials inventories are low, shipments were up, and finished goods inventories were declining, so those orders are going to come in. It's worth reading the report because it's nice.
Kansas was quite disappointing, so once you apply the protective coating of Dallas to your psyche, you might as well read Kansas. Aside from prices, there's remarkable YoY negativity. There is, however, a grain of hope in that inventories were beginning to fall, so one would hope that we are nearing the lows. Employment was a strong negative in Kansas. Richmond was negative in January, as were Philly and Empire. I wouldn't recommend reading Richmond without an antacid.
I'm waiting for CMI, thouigh.Thursday. Also, with some interest, initial claims. As I have noted, the SA adjustments are producing a very odd discrepancy YoY. I'm - curious.
Pending home sales declined in December. The NAR take is that tight inventory is pushing down sales. I don't buy all of that. In the Midwest, perhaps. Not in the West and in the NE. On a YoY basis, pendings in the West dropped 7%. For the US as a whole they are still up 4.9% YoY. NAHB data is still quite favorable, although the Q4 remodeling index would have been shifted upward by Sandy. Construction activity and remodeling activity has more impact than raw sales. Multi-family continues strong because vacancy rates are favorable.