Economic Reports 12/05/06
Summary: Good news, the Bank of Canada held rates unchanged at 4.25%. BOE & ECB announce Thurs, BOJ later this month. Why is no raise good news? Read todays other post "Which Way Is Up?".
Bad news: pending home sales are falling; the ISM showed growth but a rise in prices paid, increase in imports and contraction in exports.
More bad news, an eroded manufacturing base is also showing contraction as hurricane Katrina, large aircraft & Iraqi war orders are shrinking. In the months to come, add on the automotive & housing contractions for good measure.
Even more bad news, productivity has hit a wall, "growing" at the slowest rate in 10 years.
Even worse news, wages are not rising and consumers have $100 Billion less to spend this year as the negative savings rate hit a level not seen since the great depression.
Pending Home Sales Oct. @ 107.2; -1.7% vs prior -1.1% Full Data Set
Inside the number: the Pending Homes Sales index is down 13.2% in the last year. No surprise here as less homes sell while inventory grows and prices fall.
Factory Orders Oct. -4.7% vs prior revised down +1.7% Full Report
Inside the number: The 3rd drop in the last 4 months, and the largest drop in factory orders since July 2000. Showing a large drop in aircraft, military, non defense & durable goods orders.
Our emasculated manufacturing sector and non durable economic base is in contraction.
Orders for non defense capital goods -15.5%, durable goods orders -8.2%, transportation orders -21.6%, ex transportation factory orders -0.8%; defense capital goods -41.5%, ex defense factory orders -3.6%.
Q3 Productivity +0.2% vs prior FLAT Full Report
Inside the number: No really those are just warm rain drops falling on your head... productivity went up on the headline, but it has hit a wall and is growing at the slowest rate since 1997. However, the real story is....
The huge Q2 spike in wages was an illusion, good news for inflation, but...
Unit labor costs revised down to +2.3% vs prior est. +3.8%. Manufacturing wages -5.8% vs prior est +4%, thus lowering wages from +1.2% annual to -8.3% in Q2.
This is really bad news for growth as compensation was up only +1.4% vs the previous est of +7.4%. Thus real disposable income FELL -1.5% vs prior est +1.7%. This revision eliminates $100 Billion in disposable income annually.
Q1 income "gains" were the illusory result of one time stock option & year end bonus payouts. Q2 spending increases came from consumer borrowing as the savings rate went -1.4%, the largest since the great depression.
ISM Services Nov 58.9 vs prior 57.1 Full Report
Inside the number: The NON manufacturing sector showed some growth with RISING input prices, MORE imports and CONTRACTING exports.
New orders UP 57.1% from 56.5%, inventories DOWN to 51.5 from 53.0, backlogs UP to 54.5 from 51.5, prices paid UP to 55.6 in from 51.9%, imports UP to 59.5 from 57.5, exports DOWN to 58.5 from 63.5.
Bad news: pending home sales are falling; the ISM showed growth but a rise in prices paid, increase in imports and contraction in exports.
More bad news, an eroded manufacturing base is also showing contraction as hurricane Katrina, large aircraft & Iraqi war orders are shrinking. In the months to come, add on the automotive & housing contractions for good measure.
Even more bad news, productivity has hit a wall, "growing" at the slowest rate in 10 years.
Even worse news, wages are not rising and consumers have $100 Billion less to spend this year as the negative savings rate hit a level not seen since the great depression.
Pending Home Sales Oct. @ 107.2; -1.7% vs prior -1.1% Full Data Set
Inside the number: the Pending Homes Sales index is down 13.2% in the last year. No surprise here as less homes sell while inventory grows and prices fall.
Factory Orders Oct. -4.7% vs prior revised down +1.7% Full Report
Inside the number: The 3rd drop in the last 4 months, and the largest drop in factory orders since July 2000. Showing a large drop in aircraft, military, non defense & durable goods orders.
Our emasculated manufacturing sector and non durable economic base is in contraction.
Orders for non defense capital goods -15.5%, durable goods orders -8.2%, transportation orders -21.6%, ex transportation factory orders -0.8%; defense capital goods -41.5%, ex defense factory orders -3.6%.
Q3 Productivity +0.2% vs prior FLAT Full Report
Inside the number: No really those are just warm rain drops falling on your head... productivity went up on the headline, but it has hit a wall and is growing at the slowest rate since 1997. However, the real story is....
The huge Q2 spike in wages was an illusion, good news for inflation, but...
Unit labor costs revised down to +2.3% vs prior est. +3.8%. Manufacturing wages -5.8% vs prior est +4%, thus lowering wages from +1.2% annual to -8.3% in Q2.
This is really bad news for growth as compensation was up only +1.4% vs the previous est of +7.4%. Thus real disposable income FELL -1.5% vs prior est +1.7%. This revision eliminates $100 Billion in disposable income annually.
Q1 income "gains" were the illusory result of one time stock option & year end bonus payouts. Q2 spending increases came from consumer borrowing as the savings rate went -1.4%, the largest since the great depression.
ISM Services Nov 58.9 vs prior 57.1 Full Report
Inside the number: The NON manufacturing sector showed some growth with RISING input prices, MORE imports and CONTRACTING exports.
New orders UP 57.1% from 56.5%, inventories DOWN to 51.5 from 53.0, backlogs UP to 54.5 from 51.5, prices paid UP to 55.6 in from 51.9%, imports UP to 59.5 from 57.5, exports DOWN to 58.5 from 63.5.
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