Economic Reports 12/28/06
Summary: Todays economic reports prove that the devil is in the details.
Media spin indicated a significant rise in consumer confidence, improving existing home sales, flat initial claims, and a surprise improvement in Chicago area manufacturing.
On the news, the dollar strengthened and bonds sold off as fear that the "improving" data will keep the Fed from lowering rates in the near term.
A look at the details inside the reports indicates otherwise.
EIA Inventories Crude -8.1Mb; Gasoline +3Mb; Distillates +500Kb Full Report
Inside the nuber: EIA inventory draw down in crude as production is cut. A build in unleaded & distillates as demand pulls back.
Initial Claims +1K to 317K vs prior 316K Full Report
Inside the number: A worsening employment situation as continuing unemployment claims seasonally adjusted and otherwise are still on the rise.
Initial claims 4 week MA -10.25K @ 326K; continuing claims +16K @ 2.53M; continuing claims 4 week MA +15.75K @ 2.507M. Unseasonally adjusted initial claims +61K.
Consumer Confidence Dec 109 vs prior 105.3 Full Report
After falling for 2 months, consumer confidence is up, but its nothing to write home about.
"There is little to suggest that the pace of economic activity in the final quarter of 2006 is anything but moderately better than its uninspiring performance earlier this year," said Lynn Franco, head of the Conference Board's consumer research center.
"Given the see-saw pattern in recent months, it is too soon to tell if this boost in confidence is a genuine signal that better times are ahead," Franco added.
Existing Home Sales Nov +0.6% 6.28M vs prior 6.24M Full Report
Inside the number: Inventories -1% @ 3.82M as home owners who cant sell pull their home off the market; Sales -10.7% in the last year; Median Price -8.1% YOY.
Lower interest rates in Nov gave existing home sales a small reprieve as slow moving over priced inventory is being pulled off the market for winter. Spring will bring an increase in inventories and further price reductions.
Chicago PMI Dec rising to 52.4 vs prior 49.9 Full Report
Without seasonal adjustments, Chicago PMI actually shows business conditions and employment are in contraction, while input prices are rising and backorders are disappearing. Not good.
Inside the Non seasonally adjusted numbers: production falling to 50 from 53; order backlogs falling to 38.5 from 43.5; new orders rising to 51 from 50.5.
Employment falling to 45 from 49; prices paid rising to 60.5 from 58; actual PMI falling to 47.5 from 48.8
Media spin indicated a significant rise in consumer confidence, improving existing home sales, flat initial claims, and a surprise improvement in Chicago area manufacturing.
On the news, the dollar strengthened and bonds sold off as fear that the "improving" data will keep the Fed from lowering rates in the near term.
A look at the details inside the reports indicates otherwise.
EIA Inventories Crude -8.1Mb; Gasoline +3Mb; Distillates +500Kb Full Report
Inside the nuber: EIA inventory draw down in crude as production is cut. A build in unleaded & distillates as demand pulls back.
Initial Claims +1K to 317K vs prior 316K Full Report
Inside the number: A worsening employment situation as continuing unemployment claims seasonally adjusted and otherwise are still on the rise.
Initial claims 4 week MA -10.25K @ 326K; continuing claims +16K @ 2.53M; continuing claims 4 week MA +15.75K @ 2.507M. Unseasonally adjusted initial claims +61K.
Consumer Confidence Dec 109 vs prior 105.3 Full Report
After falling for 2 months, consumer confidence is up, but its nothing to write home about.
"There is little to suggest that the pace of economic activity in the final quarter of 2006 is anything but moderately better than its uninspiring performance earlier this year," said Lynn Franco, head of the Conference Board's consumer research center.
"Given the see-saw pattern in recent months, it is too soon to tell if this boost in confidence is a genuine signal that better times are ahead," Franco added.
Existing Home Sales Nov +0.6% 6.28M vs prior 6.24M Full Report
Inside the number: Inventories -1% @ 3.82M as home owners who cant sell pull their home off the market; Sales -10.7% in the last year; Median Price -8.1% YOY.
Lower interest rates in Nov gave existing home sales a small reprieve as slow moving over priced inventory is being pulled off the market for winter. Spring will bring an increase in inventories and further price reductions.
Chicago PMI Dec rising to 52.4 vs prior 49.9 Full Report
Without seasonal adjustments, Chicago PMI actually shows business conditions and employment are in contraction, while input prices are rising and backorders are disappearing. Not good.
Inside the Non seasonally adjusted numbers: production falling to 50 from 53; order backlogs falling to 38.5 from 43.5; new orders rising to 51 from 50.5.
Employment falling to 45 from 49; prices paid rising to 60.5 from 58; actual PMI falling to 47.5 from 48.8
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