Economic Reports 08/31/07
Summary: Core PCE "tame", but market PCE accelerating. Durable & non durable spending increasing, service spending declining as John Q pulls back.
Chicago PMI trending down as July surge vanished, showing 7th month of broad price increases and a 7 year low on order backlog.
Factory orders showing some life but not in the right areas, YTD declines in most durable economic activities.
Core PCE Inflation Jul +0.1% vs prior +0.1% Full Report
Inside the number: Current $ PCE +0.4% vs +0.2%; Chained $ PCE +0.3% vs +0.0%; Real PCE +0.3% vs +0.1%.
Personal Income Jul +0.5% vs 0.4%; Real disposable income +0.5% vs +0.2%.
Table 5 Current $ % PCE Change July vs June: durable goods +0.3% vs +1.7%; non durable goods +0.5% vs 0.0%; services +0.4% vs +0.6%
Table 6 shows a deceleration in spending for services & durable goods while non durable staples almost at 10% stagflation rates, real DPI flatlined. We don't think Q3 vs Q2 will show much improvement.
Chained 2000 $ % Change Q2 vs Q1 annual rate: durable goods +0.3% vs +6.8%; non durable goods +9.7% vs +8.2%; services +4.9% vs +7%; Real disposable income chained 2000 $: +0.1% vs +5.4%
Chicago PMI Aug 53.8 vs prior 53.4 Full Report
Inside the number: All trending down... Production 55.7 vs 59 (3rd consecutive slowing); New Orders 58.4 vs 53.4 (small recovery); Backlogs 38.8 vs 37.4 (lowest pair since 2001).
Employment 53.7 vs 61.6 (July surge vanished); Supplier Deliveries 51.9 vs 55.3 (faded strength); Prices Paid 71.8 vs 73.1 (7th month of broadened price increases).
Buying Policy: Lead time for MRO supplies reached multi-year low levels while Production Materiels lead-time recoverd a bit. Capital Equipment saw no change.
Comments:
1. “Banking challenges starting to negatively impact business... hope the initial results are not the beginning of a spreading problem.”
2. “Residential housing and credit is lowering our year end results.”
3. “Sub prime lending issue is playing havoc with all bank stocks”
4. “Cement and steel prices remain at increasing levels due to world wide demand. “
5. "...just about everything we buy has some level of non-USA component content. Windows have wood from Canada,
bricks have cement from South Korea, shingles & PVC piping use oil from Saudi Arabia, electrical cable uses copper from Chile, etc….”
6. “In retail we're experiencing a slower start to our major annual sales period, back to school,
as compared to last year. No panic yet as school start times across the country are being pushed back. Tougher overall retail/b-t-b sales environment.”
7. “Residential construction is down 55% vs. 2005”
Factory Orders Jul +3.7% vs prior +1% Full Report
Inside the number: durable goods orders +6% vs prior +1.8%; shipments +3.8% vs prior -1.1%.
Non defense capital goods ex aircraft: new orders +1.7% vs prior -0.2%; shipments +0.4% vs prior -0.8%. YTD -1.4%.
YTD orders: construction machinery -25%; computers -8%; motor vehicle bodies & parts -5.3%; ships & boats -10.4%.
By stage of process durable goods ramping up at the front end; slowing down at the rear; non durable slowing down at the front and in the pipe.
Raw Goods Durable -0.1% vs prior -0.5%; Non Durable +0.1% vs prior +0.6%;
Work In Process Durable +0.4% vs prior +0.2%; Non Durable -0.4% vs prior +0.3%
Finished Goods Durable -0.1% vs prior +0.3%; Non Durable +0.7% vs prior +0.7%
Chicago PMI trending down as July surge vanished, showing 7th month of broad price increases and a 7 year low on order backlog.
Factory orders showing some life but not in the right areas, YTD declines in most durable economic activities.
Core PCE Inflation Jul +0.1% vs prior +0.1% Full Report
Inside the number: Current $ PCE +0.4% vs +0.2%; Chained $ PCE +0.3% vs +0.0%; Real PCE +0.3% vs +0.1%.
Personal Income Jul +0.5% vs 0.4%; Real disposable income +0.5% vs +0.2%.
Table 5 Current $ % PCE Change July vs June: durable goods +0.3% vs +1.7%; non durable goods +0.5% vs 0.0%; services +0.4% vs +0.6%
Table 6 shows a deceleration in spending for services & durable goods while non durable staples almost at 10% stagflation rates, real DPI flatlined. We don't think Q3 vs Q2 will show much improvement.
Chained 2000 $ % Change Q2 vs Q1 annual rate: durable goods +0.3% vs +6.8%; non durable goods +9.7% vs +8.2%; services +4.9% vs +7%; Real disposable income chained 2000 $: +0.1% vs +5.4%
Chicago PMI Aug 53.8 vs prior 53.4 Full Report
Inside the number: All trending down... Production 55.7 vs 59 (3rd consecutive slowing); New Orders 58.4 vs 53.4 (small recovery); Backlogs 38.8 vs 37.4 (lowest pair since 2001).
Employment 53.7 vs 61.6 (July surge vanished); Supplier Deliveries 51.9 vs 55.3 (faded strength); Prices Paid 71.8 vs 73.1 (7th month of broadened price increases).
Buying Policy: Lead time for MRO supplies reached multi-year low levels while Production Materiels lead-time recoverd a bit. Capital Equipment saw no change.
Comments:
1. “Banking challenges starting to negatively impact business... hope the initial results are not the beginning of a spreading problem.”
2. “Residential housing and credit is lowering our year end results.”
3. “Sub prime lending issue is playing havoc with all bank stocks”
4. “Cement and steel prices remain at increasing levels due to world wide demand. “
5. "...just about everything we buy has some level of non-USA component content. Windows have wood from Canada,
bricks have cement from South Korea, shingles & PVC piping use oil from Saudi Arabia, electrical cable uses copper from Chile, etc….”
6. “In retail we're experiencing a slower start to our major annual sales period, back to school,
as compared to last year. No panic yet as school start times across the country are being pushed back. Tougher overall retail/b-t-b sales environment.”
7. “Residential construction is down 55% vs. 2005”
Factory Orders Jul +3.7% vs prior +1% Full Report
Inside the number: durable goods orders +6% vs prior +1.8%; shipments +3.8% vs prior -1.1%.
Non defense capital goods ex aircraft: new orders +1.7% vs prior -0.2%; shipments +0.4% vs prior -0.8%. YTD -1.4%.
YTD orders: construction machinery -25%; computers -8%; motor vehicle bodies & parts -5.3%; ships & boats -10.4%.
By stage of process durable goods ramping up at the front end; slowing down at the rear; non durable slowing down at the front and in the pipe.
Raw Goods Durable -0.1% vs prior -0.5%; Non Durable +0.1% vs prior +0.6%;
Work In Process Durable +0.4% vs prior +0.2%; Non Durable -0.4% vs prior +0.3%
Finished Goods Durable -0.1% vs prior +0.3%; Non Durable +0.7% vs prior +0.7%
Comments