
United States
Initial jobless claims totaled 232k, 8k less than expected and down from 244k. This drops the 4 week average a hair to 240,500 from 241,000 as a similar 234k print drops out. Continuing claims, delayed by a week, fell by 3k. Bottom line, the bottom line remains the same with the modest pace of firing’s in light of the shrinking pool of available labor.
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Following the stronger than expected headline figure in the August NY manufacturing survey seen a few days ago, the Philly index at 18.9 was a touch above the forecast of 18 but down slightly from 19.5 in July. After falling by 23.8 pts in July, new orders bounced by 18.3 pts to 20.4 which is below the 6 month average of 23.3. Backlogs at 14.5 rebounded back to its June level and is 3.5 pts above its half year average. Inventories went negative for the first time since February. Employment fell by .8 pts to 10.1 and that is the lowest since December but the average workweek bounced by 15 pts but only after falling by 16.7 pts in July. Both prices paid and received rose m/o/m but each remains below its 6 month averages.
As for the 6 month business outlook, it rose to 42.3 from 36.9 and which is about in line with the 6 month average. After seeing a sharp decline in capital spending plans in the NY survey, cap ex plans here was down by 2.8 pts but is still holding near its best level since 2011.
Bottom line, manufacturing in the NY and Philly regions in August continued to grow in the middle month of Q3 but these confidence figures never tell us to what degree. Also, the Philly index in August is the lowest since November and saw a slowing rate of improvement for a 3rd straight month. I’m sure the softer dollar has helped the mentality of those that export on top of pretty growth overseas but the post election buzz continues to wear off. Domestically focused businesses have seen more modest growth, particularly if one is associated with the auto sector area of manufacturing production.
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Inadvertently released early, July industrial production rose by .2% m/o/m, one tenth more than expected but the internals were noteworthy. Manufacturing production shrunk by .1% m/o/m instead of rising .2% as forecasted. Not surprisingly in the context of a top in auto sales, motor vehicle/parts production fell by 3.6% m/o/m and are now down 5% y/o/y as auto markets adjust to too much inventory. Machinery production also fell too m/o/m but are still up 2.7% y/o/y. Computer/electronics production was really the only bright spot within manufacturing. Mining continued its rebound with the rise in commodity prices (and helped by rising rig counts) as it was up .5% m/o/m and 10.2% y/o/y. Weather related utility output was up by 1.6% m/o/m.
Bottom line, the auto sector is now in a recession while mining has gotten out of its. Overall capacity utilization held at 76.7%, while at the most in 2 years, remains below its 25 yr average of 78.7%. See chart.
CAPACITY UTILIZATION