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Thursday, June 15, 2006

Economic News 06/15/06

In our top story tonight, the leader of al-Qaida in Iraq, Abu Musab al-Zarqawi, is STILL dead.

EIA Inventory
Full Report

Crude -0.9M Barrels, Gasoline +2.8Mb, Distillate +2.1Mb Crude prices fell on the news.

Initial Claims -8K to 295K the lowest in six weeks
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Inside the number: the number of people collecting unemployment +15,000 to 2.425 million in the week ending June 3. The highest level of continuing claims in six weeks.

Philly Fed @ 13.1 vs prior 14.4
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Inside the number: new orders index UP @ 17.7 from 2.7. Shipments UP @ 17.7 from 11.7.

Inflationary pressures were mixed as prices paid index DOWN to 48.7 from 55.3, prices received index UP to 14.0 from 10.3, indicating some elevated pass through of higher costs.

NY Empire Index @ 12.4Vs prior 15.8
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Inside the number: slowest pace of growth since June 2005. new orders UP to 16.4 from 14.1. Shipments UP to 17.3 from 14, unfilled orders index UP to 2.1 from -2.9.

Employment DOWN to 9.1 from 17.4, prices paid UP to 42.6 from 37.9, prices received UP to 14.8 from 14.5. Expectations of price increases six months ahead jumped to 59.8 from 50.

Industrial Production -0.1% & Capacity Utilization -0.2% @ 81.7%
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Inside the number: A slight pullback, but YOY production and utilization are UP. Output of motor vehicles fell by 1.3%, Industrial Production ex auto was flat.

Consumer nondurable output +0.2%, reflecting a 2.8% increase in gasoline production. Business equipment - 0.2% vs prior + 2.1%. Output of construction materials -0.6%vs prior +0.3%.

YOY % change in production: Final products +4.9%; Business Equipment +11.8%; Total index +4.3%. YOY % change in utilization: Manufacturing +2.4%; Primary & Semifinished +2.6%; Total index +1.9%

Conclusion on Philly Fed, NY Empire, Industrial Production, Capacity Utilization: Costs and prices are rising. New orders & shipments are up. Expansion continues in these areas with tight capacity utilization. Inflation concerns are warranted.

Capital Flows or Net Foreign Purchases @ $46.7B
Full Report, previous press releases & complete TIC data

Inside the number: The pullback by private investors forced primary dealers to absorp the difference, leading to a liquidity drain which pulled down equities. Private investors pulled back in their purchases and central banks stepped up theirs.

Central banks and other official foreign institutions bought $10.7 billion in Treasurys, vs March's sales of $6.3 billion.

Private investors sold $7.4 billion in Treasury bonds and notes and bought $3.2 billion in U.S. equities, vs $17.5 billionin March and $17.1 billion in February.

Private investors bought $9.7 billion of government agency bonds vs $15.2 billion purchased in March.

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