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August 15, 2013

Initial Jobless Lowest since October 2007

August 15, 2013

Initial Jobless Lowest since October 2007

Jobless Claims  (week ended 8/10)

– Initial Claims (seasonally adjusted) 320,000.  Previous revised to 335,000

– 4-week Moving Average 332,000. Previous reading was 336,000

– Initial Claims (unadjusted)  were 280,502 in the week ending August 10, a decrease of 8,142 from the previous week.

This is very rosy data for the economy.

Not only are the Treasury techs bearish but they are in a place where outsized moves are likely.  Initial Jobless Claims gets a lot of attention and the positioning of the techs could drive the 10-year yield to a technical objective of 3.01%.

Consumer Price Index  (July 2013)

– CPI Month/Month +0.2%.  Previous was +0.5%.

– CPI Year/Year  +2.0%. Previous was +1.8%.

– CPI core (less food & energy) Month/Month +0.2%

– CPI core (less food & energy) Year/Year +1.7%.  Previous was +1.6%

With overall CPI hitting 2.0% Year/Year we are approaching the point where the Fed might be concerned about its monetary policy.  Since the core is +1.7% that concern is not yet likely to affect policy.

Housing Market Index (August 2013)

– Housing Market Index 59. Previous was 56.

This is a survey index from The National Association of Home Builders.

This reading indicates strength.  Home Builders are the Starship Enterprise of housing. They boldly go out and build home even if economic data is less than encouraging.  Housing Starts have been so much lower than the 1.5 million annual units needed to keep pace with population growth and scrappage that increased building is not likely to have adverse results. Housing is still regional and the levels of homebuilding vary significantly from region to region.

This is a survey index produced by The National Association of Home Builders rating the economy in general and housing market conditions in particular.

Empire State Manufacturing Survey (August 2013)

– General Business Conditions Index 8.24.  Previous was 9.46.

This is a survey index from the NY Fed measuring manufacturing in New York State. It is a relic from a time when upstate New York had significant manufacturing.

Industrial Production  (July 2013)

– Production Month/Month +0.0%.  Previous was +0.3%

– Capacity Utilization Rate 77.6%. Previous was 77.7%

– Manufacturing Month/Month -0.1%

When folks ask “Why are corporations investing more of their gigantic pile of cash” one answer is in this Capacity Utilization datum.  They have excess domestic capacity at present. Investment is not likely to increase while Capacity Utilization is under 80%.

Philadelphia Fed Survey (August 2013)

– General Business Condition Index 9.3.  Previous was 19.8.

In summary:  Inflation is just contained, Jobless Claims are at a the lowest level since October 2007, manufacturing is weak, and homebuilding is strong.