1)Those initially filing for Pandemic Unemployment Assistance fell all the way down to just 28k from 94k in the week prior. Continuing claims declined by 187k just as enhanced unemployment benefits expired and they stand at the lowest since Covid broke out.
2)August retail sales rose 2.5% ex auto’s, building materials and food, well better than the estimate of zero but partially offset by a 9 tenths downward revision to July and higher prices also account for the increase as these are nominal prints. Due to a lack of inventory, auto sales for the 4th straight month while building material sales rose after 4 months of declines. Online sales rebounded after the July drop while spending on eating/drinking establishments were flat m/o/m.
3)The September NY manufacturing index jumped to 34.3 from 18.3 and that was well above the estimate of 17.9. New orders more than doubled to 33.7 and shipments spiked by 23 pts. Backlogs rose to 20.9 while Delivery Times are at a record high, reflecting continued supply strains. Inventories were up a touch because of the shortages. In turn, prices received rose to a record high for the 3rd straight month and prices paid held just below one, down slightly to 75.7. Employment was higher by almost 8 pts to 20.5 and the workweek was up sharply to 24.3 from 8.9. The six month business outlook rose to 48.4 from 46.5 and that is the best since June 2020. Capital spending plans, particularly on tech, rose sharply m/o/m.
4)The September Philly manufacturing index rose to 30.7 from 19.4 and that was well better than the forecast of no change. The internals though were very mixed as new orders, backlogs, employment and the inflation components fell m/o/m. Delivery times came in too. Also, the 6 month business outlook dropped to just 20 from 33.7 and that is well below the 6 month average of 48.5. Capital spending plans declined as well.
5)Headline CPI rose .3% m/o/m in August and the core rate was higher by .1% m/o/m but both were under expectations with the former by one tenth and the latter by two tenths. Versus last year, headline inflation is up by 5.3% and the core rate by 4% vs 5.4% and 4.3% in July respectively. Notwithstanding the miss relative to expectations, core CPI is running at a 6 month annualized pace of 6.4% and the headline rate by 7.4%. The main reason for the miss relative to expectations was the zero change m/o/m in services ex energy after a long run of .3%+ monthly gains. The y/o/y increase was 2.7%. The rent calculation in particular continues to bear no resemblance to the reality on the ground as the BLS said Rent of a Primary Residence and Owners’ Equivalent Rent were each up just .3% m/o/m even though other surveys show them up about 2% in the month. On a y/o/y basis Rent of Primary Residence is shown to be up 2.1% and OER by 2.6%. Core goods prices rose .3% m/o/m and are up 7.7% y/o/y.
6)According to the MBA, the average 30 yr mortgage rate held at 3.03% for the 4th straight week. Purchases jumped by 7.5% w/o/w after little change in the week prior. Versus last year though they are still down almost 12%.
7)With respect to the Cass Freight shipments index, it grew 12% y/o/y in August “and should slow to mid single digit growth into year end on tougher comps.” They also said “The recovery after a skid in June and July amid further slowdowns in rail volumes suggests trucking is picking up slack from the railroads, currently snarled by the chassis shortage. But shipment volumes remain limited by the capacity of the freight network, as shown by the backlog of 125 or so containerships at anchor off North American ports.”
8)The August NFIB small business optimism index rose a touch to 100.1 from 99.7 in July and vs 102.5 in June. I highlighted last week the labor market components where we saw 48 year record highs in Plans to Hire, Positions Not Able to Fill and Compensation. Higher Selling Prices rose another 3 pts to 49%, a level last seen 41 years ago in 1980. There was an increase in Capital Spending Plans by 4 pts to 30% as companies in the current environment continue to invest in making their operations more efficient. But, those that said it’s a Good Time to Expand fell 3 pts. Also, those that Expect a Better Economy fell another 8 pts to -28%, the most negative since January 2013 and thus well below March 2020 when it printed +5. Those that Expect Higher Sales remained below zero but did rise 2 pts to -2. Plans to Increase Inventory got back the drop in August as it seems that every company needs to rebuild inventories. The NFIB said “As the economy moves into the 4th quarter, small business owners are losing confidence in the strength of future business conditions. The biggest problems facing small employers right now is finding enough labor to meet their demand and for many, managing supply chain disruptions.”
9)In the UK, they’ve recovered just about all the Covid jobs lost thru July. Employment rose by 183k in the 3 months ended July, just under the 199k estimate. The 4.6% unemployment rate was down one tenth as expected. Also, and a month later in reporting, August jobless claims fell by 59k and continues the trend of sharp declines. It is also good timing that the furlough program is ending in September because there is a record number of job openings too. Wage pressures as a result of all of this continues to intensify with weekly earnings ex bonuses up 6.8% y/o/y for the 3 months ended July but that was as forecasted.
1)Initial jobless claims rose 20k w/o/w to 332k and that was 10k more than expected. The 4 week average fell to 336k from 340k. Delayed by two weeks and just before the extra unemployment benefits expired, those still getting PUA jumped by 397k after the drop of 322k in the week prior. Those was no change to those still getting the emergency kind.
2)The August NY Fed’s consumer expectations survey said one year inflation are now reaching 5.2% from 4.8% in July. It was 4% in May. It was 3% in January. Looking out 3 years it is now 4% vs 3.7% in July and 3% in January. The NY Fed said “Both increases were broad based across age and income groups.”
3)The Cleveland Fed’s 16% trimmed mean CPI, that takes out volatile components, rose .4% m/o/m and is running at a 4.6% six month annualized pace.
4)Import prices in August ex petro was about as expected when including the upward revision to July. Versus last year prices ex petro rose 5.9% and also taking out all fuels/food, grew by 5.2%. The prices we are charging our international customers rose .4% m/o/m and 17% y/o/y. At the core level, export prices rose .2% m/o/m and 8.2% y/o/y with a 40% rise in industrial supply prices.
5)In the August Cass Freight Index their inferred shipping price index (comparing expenditures vs shipments) said “the average m/o/m increase over the past six months has been 2.5%, with a 15% total increase. For full year 2021, if normal seasonality were to play out, this index would be up 20% from 2020. Outside of mix shifts impacting the m/o/m data patterns, this data series shows broad and material increases in freight rates across modes.”
6)Zillow confirms what Apartment List did in its National Report that apartment rental prices were up sharply in August, rising by 1.7% m/o/m after the record 2% increase in July. Prices were up 11.5% annually in August.
7)After the sharp increases seen from last year, used car prices moderated in June, July and August but according to Manheim, have reaccelerated again with a 3.6% increase in the 1st 15 days of August from July. They are up 25% y/o/y.
8)Refi’s fell by 3.2% w/o/w and is lower for the 4th week in the past 5. They are also down by 3.2% y/o/y.
9)The first look at the September UoM consumer confidence index saw a slight rise to 71 from 70.3 but only off a 10 year low and that was 1 pt below expectations. The components were mixed as Current Conditions slipped by 1.4 pts while Expectations were 2 pts higher. One yr inflation expectations rose to 4.7% from 4.6% in August and vs 4.6% in July. The longer term expectations index of 5-10 yrs came in at 2.9%, unchanged with August. After a sharp decline of 24 pts in August, employment expectations rebounded by 6 pts. The Income component rose 4 pts but only after falling by 5 last month. The mean percentage of those who think income will beat inflation over the next 5 years fell to 37.3% from 38.4% and that is the least since 2016. What’s most disappointing within the data was the continued deterioration in spending intentions. Those that plan on buying a car fell 5 pts to 62, about half the level seen in April and go back to 1974 to see a similar print. Those that said it’s a good time to buy a house fell 8 pts, also about half seen in April and the lowest since 1982. There was a 10 pt drop in those who said it’s a good time to buy a major appliance to the least since 1980.
10)The no tolerance for Covid spread and the consumer reaction was clearly apparent in the retail sales figure out of China for August. Sales rose just 2.5% y/o/y, well below the estimate of up 7%. Also out was industrial production which increased 5.3% y/o/y vs the estimate of up 5.8%. Fixed asset investment was about as expected with an 8.9% ytd y/o/y print.
11)There was an unexpected drop in non oil domestic exports out of Singapore m/o/m of 3.6%, below the estimate of up 2.4%. It was mostly pharma products that account for this but this category is lumpy and we know there is no lack of demand for pharma. Evidence of this was a 48% spike in July exports of pharma, to be followed by the 12.4% drop in August. Electronic exports were higher.
12)August UK CPI rose .7% m/o/m and 3.2% y/o/y, both above expectations. The core rate rose 3.1% y/o/y, two tenths more than anticipated. There was an easy comp, particularly with last year’s “Eat Out to Help Out” program but m/o/m gains are still pretty aggressive with a 5.4% six month annualized rate. Wholesale pressures jumped as well with the m/o/m increase of .4% twice the estimate and higher by 11% y/o/y. Output charges grew by 5.9% y/o/y.
13)UK retail sales in August saw ex fuel sales fall 1.2% m/o/m, worse than the estimate of up .8% and July was revised lower by 8 tenths. This is definitely disappointing but some of it reflects the shift of spending towards eating out from supermarkets and less stuff on the shelves because of all the supply problems, especially for department stores where 18% said they couldn’t get all the inventory they needed according to the ONS.
14)Sweden said its CPI rose .5% m/o/m in August, more than double the .2% estimate with prices up 2.1% y/o/y. The core rate was higher by .3% m/o/m vs the estimate of no change.
15)PPI in August in Japan was flat m/o/m but only after a 1.1% jump in July and the year to date annualized rate is 9.3%.