Thursday’s Econ Reports
Note: This post was carried forward to Thursday evening because of new information.
___________________________________________________
Yesterday’s post covered Wednesday’s releases on employment (ADP report), ISM manufacturing, construction, and vehicle sales. The results were collectively referred to as “a mixed bag.”
Now, on to Thursday’s releases.
ISM Services
AP said that expectations were 57.0 earlier in the week. It came in at 57.1, down from 58.9 in November. That’s 86% of the economy that’s still in pretty strong expansion mode.
Factory Orders
Expectations were for a 1.5% pickup for November (adjusted to 1.4% later), after a revised 4.5% decline in October. They came in at 0.9%, which has to be considered a disappointment.
Retail Sales
This link says that the overall increase came in at 4.5%, below the expectation of 5.0%. There sure seems to be a lot of wailing and gnashing of teeth over what I think is a pretty small variance. I would also suggest that the increasing reliance on gift cards (which are NOT recorded as sales until merchandise is purchased with them) is spreading December sales more into January with each passing year (and the retailers already have already pocketed the cash flow). Of course the test of that theory will be a month from now. The AP story notes the gift card point, and makes an additional one:
Sales results were also hurt by two big shifts in the way consumers are shopping: the increasing popularity of gift cards and robust online buying, which is not included in same-store results. Gift card sales are only posted when they are redeemed rather than bought, helping to extend the holiday season into January.
Assuming that online Christmas shopping was up by the same percentage as it was during the entire year (up 26% overall in 2006 vs. 2005), that’s a fairly significant shift that isn’t being picked up in the reported retail sales numbers.
Retail sales update — This link says that the International Council of Shopping Centers expected an increase of 3.0% for whatever they measure, and got 2.8%. I would assume that this excludes all of the big-box stores.
Additional report noted Thursday evening at 8PM — “The National Association of Realtors’ pending home sales index for November - a measure of future demand for homes - slipped 0.5 percent to 107.0 from a revised 107.5 in October.” This was seen as a disappointment, and the bond market rallied (i.e., effective interest rates went LOWER) in reaction.
Still to Come Friday — The Bureau of Labor Statistics Employment Report (New Jobs and Unemployment Rate). ADP’s minus-40,000 number from yesterday looms.
