Monday 29 August 2011
This Week Is Likely To Provide More disagreeable situation
While what Bernanke might promise in his speech was getting all the attention, still more individual reports this week for July and August indicated the very weak economy of the first half slowed still further in July and August.
This week’s reports were that the Chicago Fed’s National Business Activity Index remained negative in July. And its 3-month moving average improved only very slightly to minus –0.3 from minus –0.5, remaining just fractionally above the minus –0.7 that has marked the beginning of all the recessions since 1970.
New home sales fell again in July, for the 3rd straight month, and June’s sales were revised down to a decline of 2.9% instead of the previous report of a decline of 1%.
Durable Goods Orders rose 4% in July versus the consensus forecast for a rise of 2%. But the important number economists were looking for was orders excluding aircraft and defense orders, in other words spending in the general economy. The consensus forecast was for a rise of 0.5% in orders excluding aircraft and defense. It was thought that anything less than that would point to a further loss of economic momentum having taken place in July even before the debt-ceiling debacle and stock market sell-off cratered consumer and business confidence further in August. And this week’s report was that excluding aircraft and defense orders, durable goods orders actually fell by 1.5% in July.
New unemployment claims rose by 5,000 last week to 417,000, and the previous week’s claims were revised up to 412,000 from the originally reported 408,000. The four-week moving average rose by 4,000 to 407,500.
Yesterday, GDP growth for the 2nd quarter was revised down to just 1.0% from the dismal 1.3% initially reported.
And it was reported that the Thomson Reuters/University of Michigan’s Consumer Sentiment Index fell to 55.7 in August, from 63.7 in July (and from 76 in June), not good news for consumer and business spending going forward.
But next week will be an even more important week for data, including from the housing industry and the jobs situation, areas we haven’t had data from for several weeks.
The reports will include Pending Home Sales, the Case/Shiller Home Price Index, Consumer Income and Spending, the ADP Jobs Report for August, the Chicago PMI Index, the ISM Mfg Index, Factory Orders, Construction Spending, Productivity, Auto Sales, and culminating with the Labor Department’s Employment Report for August on Friday.
