May 1, 2014

April 2014 ISM Manufacturing: 54.9%, Up From 53.7%

Filed under: Economy — Tom @ 9:45 am

Prediction: Business Insider is predicting a small increase to 54.2% from 53.7% in March.

Manufacturing job gains per ADP were unimpressive (only +1,000), so it will be interesting to see how or if that gets reflected in ISM’s report, which we must always remind ourselves is a sentiment report not necessarily based on hard numbers.

The report will be here at 10 a.m.

HERE IT IS (permanent link):

Economic activity in the manufacturing sector expanded in April for the 11th consecutive month, and the overall economy grew for the 59th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

“The April PMI® registered 54.9 percent, an increase of 1.2 percentage points from March’s reading of 53.7 percent, indicating expansion in manufacturing for the 11th consecutive month. The New Orders Index registered 55.1 percent, equal to the reading in March, indicating growth in new orders for the 11th consecutive month. The Production Index registered 55.7 percent, slightly below the March reading of 55.9 percent. Employment grew for the 10th consecutive month, registering 54.7 percent, an increase of 3.6 percentage points over March’s reading of 51.1 percent. Comments from the panel generally remain positive; however, some expressed concern about international economic and political issues potentially impacting demand.”

… The only industry reporting contraction in April is Nonmetallic Mineral Products.

All the direct GDP drivers were strong.

We’ll take it, especially given the awful first quarter news yesterday.

Ohio Primary Issue 1: The 1851 Center for Constitutional Law Say Vote ‘No’; I Agree

Filed under: Ohio Economy,Ohio Politics,Taxes & Government — Tom @ 9:00 am

From the 1851 Center for Constitutional Law (HT to an emailer; bolds are mine):

Ohio Taxpayers Beware: State Issue 1
Proposed Constitutional Amendment would further increase already-historically-high state spending, result in tax increases

Columbus, OH – The 1851 Center for Constitutional Law today took action to educate on and warn Ohio taxpayers of State Issue 1, which will appear on the May 6, 2014 primary ballot.

State Issue 1 proposes to amend the Ohio Constitution “to fund public infrastructure capital improvements by permitting the issuance of general obligation bonds.” Essentially, the state seeks to borrow and spend money it does not currently have to address roads, bridges, wastewater treatment systems, water supply systems, and other infrastructure spending. State legislators voted, at the end of 2013, to place State Issue 1 on the May 6, 2014 ballot through passing Joint Resolution 6 (“SJR 6″).

There has been very little public debate on the issue leading up to the election, and many citizens are largely unaware of the details of proposed amendment. Accordingly, in its Policy Briefing on State Issue 1, released today, the 1851 Center explained the following:

  • The proposed constitutional amendment explicitly authorizes its new spending to be paid for through taxation, and if enacted, would almost necessarily result in a tax increase.
  • The proposed amendment would mandate an additional $1.875 Billion in spending at a time when Ohio has just implemented a state budget that is the largest in its history, and growing significantly larger each year. (In 2013, Ohio’s state government spent a record $27.4 Billion. In 2014, state spending is set to rise by an astounding 10.3 percent, to $30.2 Billion).
  • The proposed amendment would undermine Ohio’s constitutional balanced budget requirement and debt ceiling by unbalancing the Budget and exceeding the current debt limits; and by circumventing the budget process, the passage of State Issue 1 would likely create perverse political incentives that could further escalate state spending in the future.
  • Passage of Issue 1 will not “create jobs” because there is no evidence that government spending projects like this create jobs, rather than simply rearranging their location in the economy: while government spends more, Ohioans will have less disposal income, and will spend less to facilitate job creation.

“Given recent spending increases at the state level, passage of State Issue 1 is likely if not certain to increase taxes, undermine Ohio’s balanced budget requirement, further expand already historically large state spending and indebtedness, create perverse political incentives and cronyism, legitimize the notion of state spending as a viable means of job creation, further clutter an already bloated-beyond-recognition section of the Ohio Constitution, and redistribute wealth from poor and middle-class Ohioans to wealthy out-of-state investors,” said Maurice Thompson, Executive Director of the 1851 Center.

“Those considerations are sufficient to cause us to consider Issue 1 a poor reason to amend the Ohio Constitution – - Ohioans’ foundational compact with government.”

Ohioans appear particularly unaware that the proposed amendment specifically obligates the use of taxes to pay for the spending, meaning that spending must either be cut elsewhere, or taxes on the public will necessarily increase over time to pay for the spending.

The proposed Section 2s(D) explicitly contemplates that that the additional $2 Billion in spending will be paid for through “the full faith and credit, revenue, and taxing power of the state,” “excises, taxes, and revenues so pledged,” and “the levy, collection, and application of sufficient excises, taxes, and revenues to the extent needed for that purpose.”

A state debt study released in early 2014 by State Budget Solutions – - a national think tank – - concluded that even without the passage of Issue 1, Ohio already maintains the nation’s 4th-highest state debt per capita, second highest debt as a percentage of gross state product, and second highest debt as a percentage of spending.

The Center’s Policy Brief is here.

This should be an obvious “no” vote. I particularly resent the idea that the issue is on the primary ballot — a move that reeks of cynical politics.

Initial Unemployment Claims (050114); 344K SA; Raw Claims UP 5.1% Over Same Week Last Year

Filed under: Economy,Taxes & Government — Tom @ 7:45 am

Predictions:

  • Bloomberg — no specific prediction here or here.
  • Business Insider — “Expectations are for a decrease to 320,000 from 329,000.”

Seasonal Adjustment Factors:

  • Week ended April 26, 2014 — 92.2
  • Week ended April 27, 2013 — 90.8

Raw Claims:

For the actual result to meet or beat Business Insider’s prediction, raw claims will have to be 295,000 or lower (295K divided by .922 is 320K, rounded). That raw claims number would be slightly below last week’s pre-revision figure and only a couple of percent below last year’s.

That seems like what’s going to happen, but keep in mind that last week’s raw claims were probably tamped down a bit by Good Friday. The week before that (i.e., the week ended April 12) came in at 318,793 (after revisions, per last week’s report). A return to that level will generate a 345K seasonally adjusted result.

We’ll see here at 8:30 a.m.

Here it is — Ouch (permanent link):

SEASONALLY ADJUSTED DATA

In the week ending April 26, the advance figure for seasonally adjusted initial claims was 344,000, an increase of 14,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 329,000 to 330,000. The 4-week moving average was 320,000, an increase of 3,000 from the previous week’s revised average. The previous week’s average was revised up by 250 from 316,750 to 317,000.

… UNADJUSTED DATA

The advance number of actual initial claims under state programs, unadjusted, totaled 317,184 in the week ending April 26, an increase of 18,002 (or 6.0 percent) from the previous week. The seasonal factors had expected an increase of 5,284 (or 1.8 percent) from the previous week. There were 301,622 initial claims in the comparable week in 2013.

So raw claims came in over 5 percent above last year. We’re supposedly improving, if you believe the White House and the press. Really? (No, I don’t think the Good Friday spillover effect explains the difference, not when YOY raw claims have declined consistently for a long, long time.)

This doesn’t bode well for bringing down the nominal unemployment rate tomorrow, despite the press mantra that consistent seasonally adjusted readings below 350,000 should do that. Additionally, I obviously can’t know this for sure, given BLS vagaries, including unpredictable seasonal adjustments, but the people expecting 215,000 in job additions tomorrow might want to reconsider.

Thursday Off-Topic (Moderated) Open Thread (050114)

Filed under: Lucid Links — Tom @ 6:05 am

This open thread will stay at or near the top today. Rules are here. Possible comment fodder may follow. Other topics are also fair game.

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8:05 a.m.: We didn’t need more bad news (see 8:00 a.m.) about mortgage lending, but here it is

Mortgage applications decreased 5.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 25, 2014.
… The Refinance Index decreased 7 percent from the previous week. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. …

“Both purchase and refinance application activity fell last week, and the market composite index is at its lowest level since December 2000,” said Mike Fratantoni, MBA’s Chief Economist.

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8:00 a.m.: For those looking for a silver lining hiding in the mortgage lending market … It’s not here

More Than a Decade Since Fannie’s Business This Bad
March secondary volume down 10% from February

It’s been at least 13 years since secondary activity at the Federal National Mortgage Association has been this weak. But more than five years have passed since loan performance has been this strong.

Fannie Mae generated 10 percent less in new business acquisitions during March than it did a month easrlier, monthly operational data indicate.

It was the worst month for the Washington, D.C.-based company since at least 2000 based on the oldest available data maintained by Mortgage Daily.

To be clear, we’d be better off if Fannie Mae and Freddie Mac didn’t exist, but for now, that’s where the data is.

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Positivity: Breathtaking Picture of 21-Week Unborn Baby

Filed under: Health Care,Life-Based News,Marvels,Positivity — Tom @ 6:00 am

Here it is:

UnbornBaby21Wks.

Here’s the story (paragraph breaks added by me):

(The) following picture began circulating in November. It should be “The Picture of the Year,” or perhaps, “Picture of the Decade.”

It won’t be. In fact, unless you obtained a copy of the U.S. paper w hich published it, you probably would never have seen it. The picture is that of a 21-week-old unborn baby named Samuel Alexander Armas, who is being operated on by surgeon named Joseph Bruner. The baby was diagnosed with spina bifida and would not survive if removed from his mother’s womb.

Little Samuel’s mother, Julie Armas, is an obstetrics nurse in Atlanta. She knew of Dr. Bruner’s remarkable surgical procedure. Practicing at Vanderbilt University Medical Center in Nashville, he performs these special operations while the baby is still in the womb.

During the procedure, the doctor removes the uterus via C-section and makes a small incision to operate on the baby. As Dr. Bruner completed the surgery on Samuel, the little guy reached his tiny, but fully developed hand through the incision and firmly grasped the surgeon’s finger. Dr. Bruner was reported as saying that when his finger was grasped, it was the most emotional moment of his life, and that for an instant during the procedure he was just frozen, totally immobile.

The photograph captures this amazing event with perfect clarity. The editors titled the picture, “Hand of Hope.

Little Samuel’s mother said they “wept for days” when they saw the picture. She said, “The photo reminds us pregnancy isn’t about disability or an illness, it’s about a little person” Samuel was born in perfect health, the operation 100 percent successful.

Now see the actual picture, and it is awesome…incredible….and hey, pass it on! The world needs to see this one!