1)Initial jobless claims totaled 268k, 8k more than expected and after a print of 269k last week. This though brings the 4 week average down to 273k from 279k, a post Covid low. Continuing claims, delayed by a week, fell by 129k to 2.08mm, also a new post Covid low.
2)Core retail sales in October rose by 1.6% m/o/m, above the estimate of up .9% partly offset by a 3 tenths downward revision to September to a gain of .5% m/o/m. Inflation though is a key factor and since the March jump in retail sales driven by the government checks, inflation is running faster than nominal sales.
3)The November Philly manufacturing index rose to 39 from 23.8 and that was 15 pts better than expected. On prices, prices paid rose to 80 vs 73.2 over the past 6 months and that is .7 pts from the highest since 1979. Those received was 62.9 vs 52.9, the average over the past half year. In fact, this prices received print is the highest since 1974. The 6 month business outlook was 28.5 vs the average of 37.4.
4)The November NY manufacturing index rose to 30.9 from 19.8 in October and that was better than the estimate of 22 and compares with 34.3 in September. Prices received rose to a record high. What was disappointing within the data was the 6 month business outlook which fell to 36.9 from 52 in October and vs 45.2 for the 6 month average. That also is a 6 month low.
5)With respect to housing permits, they were 1.65mm, 20k more than forecasted and up from 1.586mm in September. Single family permits rose 28k m/o/m to 1.069mm and that is a 5 month high so hopefully the starts figure will pick up from here in response. Multi family permits totaled 581k, vs 545k in September.
6)The MBA said purchases rose 1.5% w/o/w but remain down almost 6% y/o/y.
7)The November NAHB home builder sentiment index rose to 83 from 80 and better than the estimate of no change. That matches the highest since February 2021. The Present Situation rose another 3 pts to 89 but the Future component was unchanged at 84. Prospective Buyers Traffic improved by 3 pts to 68 but is still off its recent peak of 77. The caveat, NAHB said “In addition to well publicized concerns over building materials and the national supply chain, labor and building lot access are key constraints for housing supply. Lot availability is at multi decade lows and the construction industry currently has more than 330,000 open positions.”
8)The noteworthy line item in the October industrial production figure that beat expectations (in part because of electric utility output keep in mind), was the 11% m/o/m rebound in motor vehicle/parts after a sharp decline in the two months prior. They are still down 3.6% y/o/y but we are hearing anecdotal stories of auto companies bringing back plants that were temporarily closed because of chip shortages. Manufacturing capacity utilization did rebound too to 76.7% from 75.8% in September and 76.4% in August with motor vehicle utilization in particular at 69.8% vs the depressed 62.9% in September and is back to its July level.
9)The Cass Freight Shipments index rose .8% y/o/y in October after a .6% increase in September. They said “Freight volumes remain capacity constrained, as shown by declining rail volumes and the ongoing backlog of containerships at anchor waiting to unload, but the 2.9% m/o/m improvement shows a modest rebound as restocking demand remained elevated. A pickup in automotive volumes likely also helped, as October rail carloadings in the motor vehicle category rose about 15% m/o/m.” Also of note, Cass Freight infers what freight rates are by dividing its expenditures index by shipments. “The freight rates embedded in the two components of the Cass Freight Index were 36% higher y/o/y in October, accelerated from the 31% y/o/y increase in September, partly on easier comparison.” From September, prices were up 1.6%. They said “Chassis production improved this month but remains far from what is needed to address rail network congestion, so West Coast imports continue onto truckload, considerably raising the length of haul in the largest freight market.” They said these “excess miles” are part of the 36% price rise but also “includes higher fuel surcharges, sharper increases in air cargo rates, and mix shifts between modes, with a smaller proportion of low cost intermodal and rail, and a larger proportion of relatively higher cost air and refrigerated truckload.” For the full year 2021, Cass said “if normal seasonality were to play out, this index would be up about 20% from 2020.”
10)The Atlanta Fed’s wage growth tracker showed a 4.1% y/o/y increase in October after rising by 4.2% in September. These are the two highest reads since 2008 and in Q1 this year it averaged 3.4% and in Q2 it was 3.1%. After touching its quickest pace since 2002 at 5.4% from 4.8% in the month prior, the ‘job switcher’ category moderated to 5.1% growth, but still the 2nd fastest since 2002.
11)Chinese retail sales in October grew by 4.9% y/o/y, above the estimate of up 3.7% and after a 4.4% increase in September. Industrial production was higher by 3.5% vs the forecast of 3% and vs 3.1% in the month prior. Fixed asset investment ytd was up 6.1% as expected.
12)Singapore said its non oil exports rose 4.2% m/o/m and 17.9% y/o/y, above the estimates of up .4% and 15.1% respectively. It was both electronics and non electronic products that drove the gain, including machinery, and petrochemicals.
13)Japan said its October CPI fell .7% y/o/y ex food and energy as expected and again it’s because of a sharp drop in mobile phone fees. Those fees are down 54% y/o/y. If you take this out, CPI ex food would be up around 1.5%. Energy prices rose 11% y/o/y.
14)The UK September jobs figure revealed a gain of 247k in employment, well more than the estimate of 190k and the unemployment rate fell to 4.3% from 4.5% in the month prior and vs the forecast of 4.4%. The ONS said 160k jobs were created in October. The more timely jobless claims figure fell another 14.9k after a drop of 86k in September which was revised lower by a sharp 34k.
15)Congrats to Shohei Ohtani for unanimously winning the MVP award and for an absolutely unique and incredible season. He hit 46 hrs and stole 26 bases, only the 6th player in history with at least 45 hrs and 25 sb’s. He also pitched 130 innings and had an ERA of only 3.18 and struck out 156. Bryce Harper, congrats too but you can’t pitch.
1)Housing starts in October totaled 1.52mm at an annualized rate, 60k less than expected, the lowest since April and September was revised down by 25k to 1.53mm. Blame the single family category in particular as starts here fell to 1.039mm from 1.081mm, the weakest since July 2020 and compares with the 6 month average of just under 1.1mm. Multi family starts rose to 481k from 449k in September and 485k in August. That is about in line with the 6 month average.
2)Refi’s were lower by 5.1% w/o/w, are down 10 out of the last 12 weeks and 31% below last years mid November level.
3)Import prices in October rose 1.2% m/o/m and .5% ex petro products with both 2 tenths more than expected. From last year, import prices are up 10.7% and 6.1% respectively. They are higher by 5% if we also take out food. Robust price increases of industrial supplies continues to lead the price moves. As for what we sell overseas, export prices are up by 1.5% m/o/m and 18% y/o/y. At the core, prices were up .3% m/o/m and 7.9% y/o/y.
4)Likely clinching a rate hike next month, the UK said its headline CPI rose 4.2% y/o/y in October and 3.4% at the core, both 3 tenths more than anticipated. PPI, both input and output charges, also jumped more than expected. PPI in particular is up 13% y/o/y for input charges and 8% for output. The retail price index, which feeds into the inflation linked gilts, rose 6% y/o/y.
5)While I understand the difficult spot they are in, we should ask the Austrian government that decided to shut their economy down for 20 days what they think will happen after the 20 days in terms of Covid. Will Covid still be here?
6)The German October PPI rose 3.8% m/o/m, DOUBLE the estimate and is up 18.4% y/o/y.
7)For seemingly bureaucratic reasons, German postpones approval of Nordstream2 and natural gas prices in Europe rise 17% on the week.
8)New home prices in China fell .25% m/o/m in October and lower for a 2nd month. It was early 2015 the last time we saw m/o/m price declines. Only 13 of 70 cities surveyed saw a price increase from September with 52 seeing a fall. For existing homes, only 4 saw gains with 64 saying prices fell. At the same time, new construction is falling off a cliff with a 33% y/o/y drop in starts after a 13.5% decline in September.
9)Japan’s exports, now benefiting from a weaker yen but challenged by the same supply issues as the rest of us, rose 9.4% y/o/y, just under the estimate of up 10.3%. Imports, thanks in part to higher prices of energy that they import, jumped almost 27% but less than the forecast of 31.8%.
10)Thanks to challenges with the supply and transportation of goods along with selective Covid restrictions, the Japanese economy contracted at a 3% q/o/q annualized rate in Q3. The estimate was for a decline of .7%.
11)Under continued pressure from president Erdogan, Turkey’s central bank cut rates by another 100 bps to 15% even with inflation at 20%. The Turkish lira fell almost 11% this week. Ten years ago it took just 1.87 lira to buy a US dollar. Today is costs 11.25 lira as of this writing.