Initial Claims; Personal & Construction Spending; ISM
Summary: Hook in mouth media headlines...
Initial claims increase surprises. Personal spending exceeds expectations and income increased.
Construction spending declined as estimated. ISM number better than estimated.
A peek under the sheets reveals a horrid mess which investors buried in a stinkin pile under the bed.
Initial Claims 04/26 +35K at 380K vs prior 345K Full Report
Inside the number: Unemployment at a four year high, now exceeding April 2004; long term worsens; prior revised up 3K.
4 week MA -6.5K at 363.75K; Continuing unemployment +74K at 3.019M; 4 week MA +16.75K at 2.975M
Personal Income Mar +0.3% vs prior +0.5% Full Report
Inside the number: Personal Spending Mar +0.4% vs prior +0.1%; PCE Core Inflation Mar +0.1% vs prior +0.1%.
Spending increased on higher prices for services such as medical care and utilities, with strapped consumers buying fewer big ticket items such as cars and furniture.
Real spending is anemic and income is negative or flat. In chained 2000 dollars: Income +0.0%; NO INCREASE; Spending +0.1%
Table 8: Real PCE % change: Q108 durable goods -6.1%; non durable -1.3%; services +3.4%
The increase in spending was bigger than the income "gain"; therefore, the savings rate fell to 0.2%.
Jane Thompson, president of Wal-Mart's financial services: "We see the strain on the consumer as they get near the end of the month."
Ryan Sweet, an economist at Moody's Economy.com: "Consumers are struggling. Their finances are being squeezed on two fronts:
they're getting pressure from higher energy prices and slower income and job growth."
Construction Spending Mar -1.1% vs prior -0.3% Full Report
Inside the number: Homebuilding posted the largest single month decline on record. Total Construction Yoy -3.4%; Residential -4.6%; Yoy -19.7%.
Total Private Construction -1.7%; Yoy -6.7%; Residential -4.6%; Yoy -19.9%.
SFR private construction: -5.3%; Yoy -36.1%
ISM Index Apr 48.6 vs prior 48.6 Full Report
Inside the number: 3rd straight month of contraction. New orders 46.5 vs 46.5; Employment contracting faster 45.4 vs 49.2;
Inventories growing 48.1 vs 44.9; Customer Inventories restocking slower 45 vs 51; Prices increasing faster 84.5 vs 83.5
Manufacturers are in a situation where both new orders and production are slowly declining, but prices continue to rise at highly inflationary rates.
"The decline in the value of the dollar is dramatically affecting our material prices because we purchase over half of our material requirements from overseas." (Transportation Equipment)
"Higher energy rates, unfavorable exchange rates, high levels of inflation in Asia and a drop in demand are challenging our business and supply chain." (Nonmetallic Mineral Products)
"Continued bio-fuel/spec investor driven inflation of commodities is stifling!" (Food, Beverage & Tobacco Products)
"Still strong in spite of general business slowdown." (Primary Metals) "Oil, oil, oil, energy, energy, energy, metals, metals, metals." (Fabricated Metal Products)
Initial claims increase surprises. Personal spending exceeds expectations and income increased.
Construction spending declined as estimated. ISM number better than estimated.
A peek under the sheets reveals a horrid mess which investors buried in a stinkin pile under the bed.
Initial Claims 04/26 +35K at 380K vs prior 345K Full Report
Inside the number: Unemployment at a four year high, now exceeding April 2004; long term worsens; prior revised up 3K.
4 week MA -6.5K at 363.75K; Continuing unemployment +74K at 3.019M; 4 week MA +16.75K at 2.975M
Personal Income Mar +0.3% vs prior +0.5% Full Report
Inside the number: Personal Spending Mar +0.4% vs prior +0.1%; PCE Core Inflation Mar +0.1% vs prior +0.1%.
Spending increased on higher prices for services such as medical care and utilities, with strapped consumers buying fewer big ticket items such as cars and furniture.
Real spending is anemic and income is negative or flat. In chained 2000 dollars: Income +0.0%; NO INCREASE; Spending +0.1%
Table 8: Real PCE % change: Q108 durable goods -6.1%; non durable -1.3%; services +3.4%
The increase in spending was bigger than the income "gain"; therefore, the savings rate fell to 0.2%.
Jane Thompson, president of Wal-Mart's financial services: "We see the strain on the consumer as they get near the end of the month."
Ryan Sweet, an economist at Moody's Economy.com: "Consumers are struggling. Their finances are being squeezed on two fronts:
they're getting pressure from higher energy prices and slower income and job growth."
Construction Spending Mar -1.1% vs prior -0.3% Full Report
Inside the number: Homebuilding posted the largest single month decline on record. Total Construction Yoy -3.4%; Residential -4.6%; Yoy -19.7%.
Total Private Construction -1.7%; Yoy -6.7%; Residential -4.6%; Yoy -19.9%.
SFR private construction: -5.3%; Yoy -36.1%
ISM Index Apr 48.6 vs prior 48.6 Full Report
Inside the number: 3rd straight month of contraction. New orders 46.5 vs 46.5; Employment contracting faster 45.4 vs 49.2;
Inventories growing 48.1 vs 44.9; Customer Inventories restocking slower 45 vs 51; Prices increasing faster 84.5 vs 83.5
Manufacturers are in a situation where both new orders and production are slowly declining, but prices continue to rise at highly inflationary rates.
"The decline in the value of the dollar is dramatically affecting our material prices because we purchase over half of our material requirements from overseas." (Transportation Equipment)
"Higher energy rates, unfavorable exchange rates, high levels of inflation in Asia and a drop in demand are challenging our business and supply chain." (Nonmetallic Mineral Products)
"Continued bio-fuel/spec investor driven inflation of commodities is stifling!" (Food, Beverage & Tobacco Products)
"Still strong in spite of general business slowdown." (Primary Metals) "Oil, oil, oil, energy, energy, energy, metals, metals, metals." (Fabricated Metal Products)
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