On 2/21 the Conference Board Index of Leading Economic Indicators (LEI) was reported to have risen 0.2 percent in January, to 94.1 (2004 = 100), following a 0.5 percent increase in December and no change in November.
Says Ataman Ozyildirim, an economist at the Conference Board, “The US LEI rose again in January pointing to a slow but continued expansion in economic activity in the near term. Despite continued weakness in manufacturers’ new orders and consumer expectations, improvements in housing permits and financial components helped boost the LEI in January.”
Ken Goldstein, also an economist at the Conference Board, says “The indicators point to an underlying economy that remains relatively sound but sluggish. Credit use has picked up, driven in part by relatively strong demand for auto loans. The biggest positive factor is housing. The housing market is now at twice the level reached during its recessionary lows, and will likely continue to improve through the spring, delivering some growth momentum to the labor market and the overall economy. “
The Precision Machined Products Association issued its Report on Business Trends for January 2013. The index spiked to its highest January level ever and ended just one point off the Index’s all time high (March 2006 & 2007). January is typically a strong resurgent month following the usual year end” hold no inventories” policies of customers and suppliers.
The Institute of Supply Management’s Purchasing Managers Index (PMI) registered 53.1% in January, an increase of 2.9 percentage points from December’s seasonally adjusted reading of 50.2, indicating expansion in manufacturing for the second consecutive month.
On Monday 2/25/13 the Chicago Fed released its National Activity Index. Led by declines in production related indicators the CFNAI decreased to 0.32 in January from +0.25 in December. The index’s 3 month moving average, or CFNAI-MA3, increased to+0.30 in January from +0.23 in December. Given the substantial upward revisions for November and December, January’s CFNAI-MA3 marked the third consecutive reading above zero. Additionally, January’s reading suggests that growth in national economic activity was somewhat above its historical trend and also suggests limited inflationary pressure from economic activity over the coming year.
Just an FYI here regarding the revisions to economic reports issued by government agencies. The Wall Street Journal reported on 2/26/13
Nearly a month ago (end of January) the government’s official scorekeeper said the US economy shrank at a 0.1% annual rate in the fourth quarter. On Thursday, the same scorekeepers will say, in effect, “never mind.” In this case, private forecasters expect the Commerce Department to revise the figure and declare that the GDP actually grew in the fourth quartetr – probably at about a 0.5% pace.
That is at least until the next revision which is due at the end of March.
“The markets really shouldn’t react because even the first numbers are backward looking – markets should be more concerned about the fourth quarter of 2013” said John Canally, economist and investment strategist at LPL Financial. The major reports “are not the game changers that some would like to make them out to be.” I happen to disagree with this statement as I believe future conditions can be seen coming down the road by paying attention to this type of information regarding the past.
On average, the final GDP growth figure falls between 1.3 percentage points higher and 1.3 percentage points below the Commerce Departments first estimate. However, the initial reports correctly indicate the direction of the economy 97% of the time. The first read on GDP is nearly always revised because the government lacks exact figures on trade, inventories and services for the final month of the quarter involved.
Why are reports put out based on incomplete information? Government agencies say that, to meet financial markets’ and policy makers’ demands, precision must sometimes be sacrificed for speed.
Historically, the advance estimate does a pretty good job of indicating where the final numbers will end up.”
On Wednesday 2/27 the US Department of Commerce issued the following Advance Report on Durable Goods
- New orders for manufactured durable goods in January decreased following four consecutive monthly increases.
- Shipments of manufactured durable goods in January were down following four consecutive monthly increases.
- Unfilled Orders for manufactured durable goods were down in January following four consecutive monthly increases.
- Inventories of manufactured durable goods in January, up 15 of the last 16 months increased following a small decrease in December.
The American Metal Market reports raw steel production last week climbed 1.6 percent from the previous week to the highest level since August of last year, operating at an average capability utilization rate of 76.9%.
For the year mills have operated at an average capability utilization rate of 75.5% down 7.3% from the same period last year.
On Thursday February 28 the US Dept. of Commerce released its second revision to Q4 2012 GDP: the output of goods and services produced by labor and property located in the United States increased at an annual rate of 0.1 percent. While today’s release has revised the direction of change in real GDP the general picture of the fourth quarter remains largely the same as was presented in the first estimate last month….stuck in the mud.
It’s is Friday, “The Day the Earth Stood Still” (an old aliens invade the U.S. movie…to stop us from hurting ourselves…… we could use a little extraterrestrial help right now)
Anyway, the sequestration will begin this evening. Our lawmakers have already “left the building” for the weekend. I believe everyone will find that tomorrow morning or over the weekend or next week, that not much will change. The spending “cuts” are actually reductions in the growth of spending for the year. They will spend as much this year as last. What is bad is the way both sides have chosen to not deal with the fiscal realities we face as a nation. This spending in overdrive has to cease.
As the president says “we can’t CUT our way to prosperity….” Neither can we TAX our way to prosperity….We need a firm budget (we are going on 5, yes, FIVE years without a budget), we need our legislators to exhibit fiscal restraint. Tax Reform, Entitlement Reform. The president, flying all over the country campaigning (through scare tactics) to defeat the Republican, calls for addressing the above issues is preposterous, misleading, and likely, if pursued legally, a reason to impeach. With all due respect, you are the President of the United States for crying out loud, act like it.
Have a wonderful weekend,
God Bless America