Economic Reports 10/16 - 10/20/06

Summary: Declining new orders, falling Philly Fed, slowing leading indicators, slowing housing, falling industrial output, rising producer & consumer prices, record net foreign inflows.

Declining Orders, Oct NY Empire Index UP 22.9 from 13.8
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Inside the number: Decent activity, rising end prices, but declining orders. New orders DOWN 11.8 from 14, employees UP 19.4 from 12.5, prices paid DOWN to 30.8 from 41, prices received UP 17.5 from 16, shipments UP 22.5 from 20.6.

Falling Oct Philly Fed -0.7% vs prior -0.4%
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Inside the number: The overall index fell for the 2nd straight month, however... New orders index +13.4 vs. prior -1.3. Shipments index +5.3 vs prior -6.8. Price paid index fell to 32.0 vs. prior 38.1. Prices-received index fell to 17.8 vs prior 21.6.

Slowing Sept Leading Indicators +0.1% vs prior -0.2%
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Inside the number: Despite the rise, the index has fallen in five of the past eight months, and is down 0.9% in the past six months.

Five of the indicators rose in September: Consumer expectations, money supply, stock prices, jobless claims and core capital equipment orders.

Five others fell: Building permits, factory working hours, delivery times, the interest-rate spread and new orders for consumer goods.

Slowing Housing, Sept Housing Starts +5.9% to 1.772M
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Inside the number: These permits were already pulled and the builders were committed, overall starts are down 18% on the year.

Looking forward, building permits fell 6.3% to a five year low of 1.619M. Permits have fallen 8 months in a row and are off 28% on the year.

Falling Sept Industrial Output -0.6% vs prior flat
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Inside the number: Manufacturing output fell 0.3%, utility output sank 4.4%. Capacity utilization in manufacturing fell to 80.8% from 82.1%.

Durable goods fell 0.4%, with big declines seen in wood products, minerals, motor vehicles, furniture and electrical equipment. Production of business equipment dropped 0.2%.

Motor vehicle and parts production -2.1% and has dropped 6.9% in the past year. Production of vehicles has plunged 12.8% from a year earlier. Ex auto, manufacturing output fell 0.2%.

Rising producer prices Sept PPI -1.3% vs prior +0.1%
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Inside the number: A record 22.2% drop in gasoline prices pushed the PPI down. However, ex food & energy Core PPI was raging +0.6% vs prior -0.4% as capital goods prices rose +0.6%.

A hefty increase in motor vehicle weighed in, ex auto core PPI +0.1%. Core consumer goods +0.5%, core intermediate goods +0.1% and basic industrial materials +1%.

Rising consumer prices Sept CPI -0.5% vs prior +0.2%
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Inside the number: Core CPI steadily rising +0.2%, up 2.9% in the last year, the largest jump in 10 years. The median consumer price index +0.3% or 3.6% annual, its highest level in 4 years.

Record Aug Net Foreign Purchases $116.8B vs prior $32.9B

Inside the number: Foreign inflows at a new record. Keeping interest rates low in an attempt to save the housing market, keep the dollar afloat and keep the American consumer spending. Remember, we catch cold, they get the flu.

Private buyers purchasing $89.4 billion in assets, up from $31.8 billion in July. Official buyers, mainly foreign central banks, bought $30.1 billion, up from $22.7 billion.

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