1)Initial jobless claims totaled 293k, below the estimate of 320k and down from 329k last week and finally a print with a 2 handle for the 1st time since pre Covid. The 4 week average fell to 334k from 345k. Also positive, continuing claims dropped by 134k w/o/w to 2.59mm and well below the estimate of 2.67mm and the lowest since pre Covid. They have now fallen by 259k since August.
2)The number of job openings in August totaled 10.4mm after seeing 11.1mm opportunities in July. For perspective, Friday’s BLS payroll report told us that the Pool of Available Labor was 13.6mm (which equals the number of unemployed plus those not in the labor force but would take a job) of which the number of unemployed was at 7.7mm. Hiring trends though remain sketchy as hiring’s fell by 439k in August but the number of quitters jumped by 242k and the quit rate rose to 2.9%, the highest since this was first calculated in 2001.
3)Nominal core retail sales in September rose .7% m/o/m, 3 tenths more than expected and August was revised up by one tenth to a rise of 2.1%. Over the past six months though inflation is running faster than sales.
4)For the sake of wage earners in this new era of higher inflation, the Atlanta Fed Wage Growth Tracker rose 4.2%, the fastest pace since November 2007. If you’re taking a job for a higher wage and are considered a ‘job switcher’, you saw an increase of 5.4%, the quickest since January 2002.
5)Headline PPI rose .5% m/o/m in September after a .7% increase in August. That was one tenth below the estimate. Taking out food and energy saw a .2% m/o/m gain which was 3 tenths less than forecasted and follows a .6% rise last month. Versus last year, price gains are robust with a headline gain of 8.6% and core increase of 6.8%. Over the past 6 months, core PPI is running at an annualized rate of 8.2%. A sharp drop in passenger services is the main reason why the numbers missed the estimate.
6)Import prices in September rose .4% m/o/m and 9.2% y/o/y but both 2 tenths less than expected. Ex petro they rose .1% m/o/m and 5.4% y/o/y. The import inflation remains in industrial supplies with a 35% y/o/y increase. For perspective, that 5.4% ‘core’ rise compares with a 40 yr average of up .9%.
7)While the average 30 yr mortgage rate rose to 3.18%, the highest since late June, purchase apps rose 1.5% w/o/w after two weeks of declines. They are still down 10% on easy comps and the slowdown in the pace of transactions because of high prices and little inventory. Refi’s fell .5% and are down 3 weeks in a row with the rise in rates. They are down 16% y/o/y.
8)Needing to delever but under pressure to grow and offset stress in residential real estate, China said its aggregate loan number for September totaled 2.9T yuan, 150b less than expected and of which bank loans made up 1.66T of this tally.
9)China exports rose by 28.1% y/o/y in September, above the estimate of up 21.5%. If only they could deliver all the stuff the rest of us need. Imports grew by 17.6% vs the forecast of up 20.9% and likely beginning to show a slowing on the domestic side.
10)Singapore’s economy grew by 6.5% y/o/y, about as expected.
11)The Monetary Authority of Singapore tightened monetary policy.
12)The Chilean central bank hiked interest rates a whopping 125 bps to 2.75%. ‘Only’ 100 bps was expected. They are not messing with around inflation as our Fed dilly dailies.
13)With the UK furlough program now over, these job numbers are now dated but still good. For the 3 months ended August, employment rose by 235k, just off the estimate of 250k and up from 183k in the prior time frame. The unemployment rate fell to 4.5% from 4.6% and that is the lowest since July 2020. As labor shortages exist in the UK too, weekly average earnings ex bonus’ rose 6% y/o/y thru August. For September, jobless claims fell by another 51k and August was revised down by 30k to -88k.
14)For those Rush fans out there, this was AWESOME last Saturday at halftime of the Ohio State football game. //www.youtube.com/watch?v=2gdMLg9Jvqw
1)The October NY manufacturing index was 19.8, about 5 pts less than expected, down from 34.3 in September and below the 6 month average of 26.2. The overall 6 month business activity component was 52 vs the half yr average of 45.1. Capital spending plans for both equipment and technology fell from September but are above their 6 month averages.
2)The preliminary October UoM consumer confidence index fell to 71.4 from 72.8 and that was below an expected rise to 73.1. it’s also the 2nd lowest print in 10 years. Both Current Conditions and Expectations rose m/o/m. One year inflation expectations were up again, by 2 tenths to 4.8%, the highest since July 2008. Looking out 5-10 yrs though and they fell to 2.8% from 3% and Richard Curtin at UoM on tv said that is because people have faith that the Fed will stamp out inflation as more people expect higher interest rates. We’ll see on that with the Fed. Income expectations fell 2 pts but after rising by 5 last month and “A median annual income gain of 2.5% was expected across all households, up from 1.5% last month, and 2% last year” said UoM. Employment expectations fell too to the lowest since February. Business expectations moderated further. To the question is the government doing a good job fighting inflation and unemployment, the answer fell to the lowest since 2014. As for spending intentions, those that said it’s a good time to buy a vehicle fell to the lowest level on record dating back to 1978. Off the lowest since 1982, those that want to buy a home did rise by 9 pts. On the other hand, those that said it’s a good time to sell rose 7 pts. Those that want to buy a major appliance is just above its April 2020 low and near its lowest since 1980.
3)Headline CPI in September rose .4% m/o/m, one tenth more than expected while the core rate was higher by .2% as expected. Versus last year, the headline gain is now 5.4% and the core is up by 4%. Food prices rose .9% m/o/m and 4.6% y/o/y. Energy was higher by 1.3% m/o/m and 25% y/o/y. Services prices ex energy rose .2% m/o/m and by 2.9% y/o/y as it still is WAY under calculating what rents are doing. Medical costs were benign. On the goods side, core prices rose .2% m/o/m and 7.3% y/o/y. They are up 14% annualized over the past 6 months. Anything related to the home in particular saw sharp price increases. Used car prices fell m/o/m but new ones jumped.
4)The Cleveland September median CPI rose .5% m/o/m and 2.8% y/o/y while the 16% trimmed mean CPI was higher by .5% m/o/m and 3.5% y/o/y. That trimmed y/o/y gain is the most since the oil driven spike in 2008. One more tenth gain from here and you have to go back to 1991 to see something faster.
5)The Atlanta Fed’s Sticky CPI rose 4% y/o/y and the Sticky core was up 3.8% y/o/y. The ‘flexible’ CPI was up 8.4% and while the core fell .8% in September and 3.5% in August, it was up 14.5% in July and 70% in June.
6)At the cost of profit margins and eventually price inflation, the Atlanta Fed Wage Growth Tracker rose 4.2%, the fastest pace since November 2007. If you’re taking a job for a higher wage and are considered a ‘job switcher’, you saw an increase of 5.4%, the quickest since January 2002.
7)The trajectory remained upward in September in the NY Fed inflation expectations survey with the median one yr inflation expectations at 5.3% from 5.2% in August, the highest seen in this short lived survey. Looking out three years, expectations for inflation rose to 4.2% from 4%, also a high.
8)The September NFIB small business optimism index fell 1 pt from August to 99.1 and that is the weakest since March. Positions Not Able to Fill went to another record as to Compensation. Off the highest level since 1980, those planning on Higher Selling Prices fell back by 3 pts to 46%. For perspective, since 1974, this number has averaged 11.1. The NFIB chief economist said “Small business owners are doing their best to meet the needs of customers, but are unable to hire workers or receive the needed supplies and inventories. The outlook for economic policy is not encouraging to owners, as lawmakers shift to talks about tax increases and additional regulations.”
9)The Cass Freight Shipments Index for September saw just a .6% y/o/y growth rate and some of the blame is Hurricane Ida but they also blamed the chip shortage and being “capacity constrained, as shown by the armada of containerships at anchor off North American ports.” But, “Signs are emerging that rail network congestion is improving, which could help things unlimber a bit, but we think intermodal volumes will be limited by chassis tariffs for some time.” How much did it cost to deliver these goods? According to Cass, “The freight rates embedded in the two components of the Cass Freight Index were 31.4% higher y/o/y in September, accelerated from the 26.6% y/o/y increase in August on a similar prior year comparison.” From August prices were up 2.6% and rising by 6.1% in August.
10)Driven by higher commodity prices, particularly coal and now power prices, PPI in China in September rose 10.7% y/o/y, above the estimate of up 10.5%. That’s the quickest since 1995. Margins though are getting squeezed as CPI was up by just .7% y/o/y, one tenth below the forecast. It was a 5.2% drop in food prices that capped CPI as it was up 2% non food. Ex food and energy they are up 1.2% y/o/y, still well below the rise in PPI.
11)In Japan in September PPI rose .3% m/o/m, one tenth more than expected and up 6.3% y/o/y. It was 2008 when oil prices were spiking the last time Japan saw something like this and 1981 before that.
12)The German ZEW investor expectation index for October fell to 22.3 from 26.5 and that was just under the estimate of 23.5. The Current Situation is what suffered the most as it fell to 21.6 from 31.9. Again, this is all supply driven. ZEW said the decline in the ZEW “is mainly due to the persisting supply bottlenecks for raw materials and intermediate products. The financial market experts expect profits to go down, especially in export oriented sectors such as vehicle manufacturing and chemicals/pharmaceuticals.”