April 5, 2017

Alleged: Haberman at the NY Times Sat on Susan Rice Unmasking Story

In a claim which echoes episodes from the 1990s but is arguably even worse, blogger Mike Cernovich has alleged that information in his Sunday evening tweeted scoop reporting that “Susan Rice requested unmasking of incoming Trump administration officials” was known for some time by reporter Maggie Haberman at the New York Times. Specifically, in his full late Sunday post at Medium.com, Cernovich claimed that he was “informed that … Haberman has had this story about Susan Rice for at least 48 hours, and has chosen to sit on it in an effort to protect the reputation of former President Barack Obama.”

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March ISM Indices Decline, But Still Sufficiently Expansionary

Filed under: Economy — Tom @ 5:02 pm

First, Manufacturing, issued Monday (paragraph breaks added by me and bolds are mine throughout this post):

Economic activity in the manufacturing sector expanded in March, and the overall economy grew for the 94th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The March PMI® registered 57.2 percent, a decrease of 0.5 percentage point from the February reading of 57.7 percent. The New Orders Index registered 64.5 percent, a decrease of 0.6 percentage point from the February reading of 65.1 percent. The Production Index registered 57.6 percent, 5.3 percentage points lower than the February reading of 62.9 percent.

The Employment Index registered 58.9 percent, an increase of 4.7 percentage points from the February reading of 54.2 percent.

Inventories of raw materials registered 49 percent, a decrease of 2.5 percentage points from the February reading of 51.5 percent. The Prices Index registered 70.5 percent in March, an increase of 2.5 percentage points from the February reading of 68 percent, indicating higher raw materials prices for the 13th consecutive month.

Consistent with generally positive comments from the panel, all 18 industries reported growth in new orders for the month of March.

Of the 18 manufacturing industries, 17 reported growth in March in the following order: Electrical Equipment, Appliances & Components; Printing & Related Support Activities; Furniture & Related Products; Textile Mills; Machinery; Primary Metals; Miscellaneous Manufacturing; Wood Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Paper Products; Transportation Equipment; Chemical Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; and Petroleum & Coal Products. No industry reported contraction in March compared to February.

The GDP drivers are all still quite positive: New Orders and Production above, and Backlog of Orders, which at 57.5 percent (up from 57.0 percent) is surely at its highest level in many years or darned near it. There doesn’t seem to be any way that the first two numbers can stay in the 60s for a long time.

Backlog of Orders is underappreciated in significance. If there is a hefty reliable backlog of orders manufacturers can better plan their production runs and achieve efficiencies. Responding to orders on an “as they come in” basis is by definition more chaotic.

Even after considering the positive-selection bias I believe is present in this report, this Monday news was very strong.

Now, to Non-Manufacturing, released Wednesday morning:

Economic activity in the non-manufacturing sector grew in March for the 87th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The NMI® registered 55.2 percent, which is 2.4 percentage points lower than the February reading of 57.6 percent. This represents continued growth in the non-manufacturing sector at a slower rate.

The Non-Manufacturing Business Activity Index decreased to 58.9 percent, 4.7 percentage points lower than the February reading of 63.6 percent, reflecting growth for the 92nd consecutive month, at a slower rate in March. The New Orders Index registered 58.9 percent, 2.3 percentage points lower than the reading of 61.2 percent in February.

The Employment Index decreased 3.6 percentage points in March to 51.6 percent from the February reading of 55.2 percent. The Prices Index decreased 4.2 percentage points from the February reading of 57.7 percent to 53.5 percent, indicating prices increased for the 12th consecutive month, at a slower rate in March.

According to the NMI®, 15 non-manufacturing industries reported growth in March. The sector continues to reflect growth; however, the rate of growth has declined since last month. The majority of respondents’ comments indicate a positive outlook on business conditions and the overall economy. There were several comments about the uncertainty of future government policies on health care, trade and immigration, and the potential impact on business.

INDUSTRY PERFORMANCE

The 15 non-manufacturing industries reporting growth in March — listed in order — are: Management of Companies & Support Services; Utilities; Wholesale Trade; Mining; Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Accommodation & Food Services; Retail Trade; Health Care & Social Assistance; Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; Construction; Finance & Insurance; Other Services; and Public Administration. The three industries reporting contraction in March are: Information; Educational Services; and Professional, Scientific & Technical Services.

The three GDP drivers remained strong, though Business Activity and New Orders pulled back from what I believe were unsustainable levels above 60 percent in February. Backlog of Orders pulled back a little to 54 percent from 53 percent.

The Non-Manufacturing Index shows expansion slowing. But if you cut its value for positive-selection bias, it’s still sufficiently positive not to be alarming.

Zero Hedge doesn’t agree, claiming that “The ‘Soft Data’ Euphoria Is Over.” I would agree that the very favorable confidence survey data is stronger than the underlying reality, but that the underlying reality, at least in reflected in these two reports, is still quite positive.

March 2017 ADP Employment Report: 261K Private-Sector Jobs Added, Feb. Revised Down 53K (Also See Conference Call Notes)

Filed under: Economy — Tom @ 7:19 am

Predictions: Per Yahoo’s Economic Calendar, +160,000 to 175,000 private-sector jobs added. That seems like a pretty modest number, given that the past two months have averaged 280,000.

We’ll see here at 8:15 a.m. I will also sit in on the conference call which takes place from 8:30 – 9:00 a.m.

HERE IT ISTold ya:

Private-sector employment increased by 263,000 from February to March, on a seasonally adjusted basis.

From the press release:

“The U.S. labor market finished the first quarter on a strong note,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Consumer dependent industries including healthcare, leisure and hospitality, and trade had strong growth during the month.”

Mark Zandi, chief economist of Moody’s Analytics said, “Job growth is off to a strong start in 2017. The gains are broad based but most notable in the goods producing side of the economy including construction, manufacturing and mining.”

Prior-month revisions:
- February — from 298K to 245K
- January — From 261K to 249K (originally 246K)

The first-quarter average of 252K annualizes to 3 million if sustained.

Overall, a beat vs. expectations, but well over half of it disappeared in downward revisions to the previous two months. The overall picture is quite strong.

CONFERENCE CALL NOTES:

ZANDI: Strong report, on track to create 2.5 million jobs, more than double the rate needed to absorb new workers.

Goods-producing side of the economy (mfg and mining) has seen great improvement. Mining was in doldrums and mfg was soft and construction side. That has changed. Goods side is strong. Resource and mining now adding to payrolls. Mfg is now adding pretty strongly recently, big boost is from global economy. Major trading partners are doing better, value of $ is remaining stable.

The big add recently is construction, with a big boom in construction jobs. Surprised that we didn’t see some weakness in construction in March, because earlier months were helped by mild weather and March was cold. So ADP may be overstating. Construction now adding pretty consistently and it should continue through the remainder of the year.

Service side of the economy adding a lot of jobs, and that’s consistent.

Looks like large companies are doing well again in term of adding employees at a pretty prodigious pace.

Anticipating some slowing because we’re near full employment. At some point, the supply side is going to change and employers will have a hard time finding people. Job adds at double new entrants can’t continue, so he expects slowing in job gains.

Also, Fed is watching and with interest rates ver low and monetary policy accommodative, they’re going to have to normalize their policy with consistent, steady interest rate increases.

Great number, strong by any standard, can’t ask for much more.

ME (ADP Feb. Revisions and trade balance): ADP data changes minor, translation to BLS estimate has variables which can be revised minor, but the larger element is the new model which is more accurate in theory but subject and more sensitive to swings (now being affected by prior BLS revisions). More accurate in terms of predicting the current BLS estimate. (GOAL SEEKING?) We should expect to see more and bigger revisions with the new model.

ME (re trade): Trade won’t be less of a drag, but doesn’t expect it to turn positive. Also, dollar changed by 15% during 18 mos. ended in 2015. US consumer is doing well, and when that’s the case, we’ll tend to import more stuff.

RICHARD YOUNG (re wage pressure, at a fast pace or delayed): Will develop more fully going forward. Over last year, wage growth is roughly 2.5 pct to 3 percent (up from 2 pct in previous years). Expects further tightening and for wage growth to pick up even more. A year from now, expects close to 3.5 percent. In a well-functioning economy, wage growth should be 3.5 percent (less 2 percent inflation, leaving 1.5 percent real growth).

We may blow past that given the current circumstances. In parts of the world where things have tightened, wage growth hasn’t met what typically happens. Possible contributor: continued weak productivity growth constraining wage growth. Doesn’t think that will happen here. This labor market is tight, it’s going to get tighter, and businesses are going to have a harder time finding labor. Labor shortage is going to exacerbated by fewer new immigrants and departing immigrants.

If (net) immigration continues at the previous pace, labor force growth will continue. If it doesn’t, labor force growth will come to a halt. (Zandi lays down a marker — Ed.)

RICHARD YOUNG (what sectors affected): Zandi thinks it’s going to be a broad-based acceleration in wages. There will be pockets of weakness, but overall very tight, and will be defining characteristic of the economy over the next several years. First time that will be true on a sustained basis since the late-1990s.

Wednesday Off-Topic (Moderated) Open Thread (040517)

Filed under: Lucid Links — Tom @ 5:55 am

This open thread is meant for commenters to post on items either briefly noted below (if any) or otherwise not covered at this blog. Rules are here.

Positivity: There’s a generation that didn’t know John Paul II – this film is for them

Filed under: Positivity,Taxes & Government — Tom @ 5:55 am

From Denver:

Apr 3, 2017 / 04:42 pm

Thousands of people gathered in St. Peter’s Square and around their television sets to pray for Pope John Paul II as he passed away on April 2, 2005. They remembered the more than 26 years he served as the Holy Father; the courage he had in fighting communism; his immense love; and his adventurous spirit.

But that was 12 years ago.

The generation of young people who grew up during the papacies of Benedict XVI and Pope Francis might only know St. John Paul II for his canonization, which took place April 27, 2014.

The recent documentary Liberating a Continent: John Paul II and the Fall of Communism hopes to educate this younger generation on the heroic life of the Roman Pontiff – telling the stories they cannot find in their textbooks.

“One of the reasons we set out to make this film is to kind of cement the legacy of Pope John Paul II,” David Naglieri, the film’s writer and director, told CNA.

“There’s a generation now that’s graduating college, entering the workforce, that didn’t necessarily live through all these events with the fall of Communism. Perhaps they didn’t … have the chance to see Pope John Paul II in person.”

Like a real life super-hero movie, the 90-minute film focuses on the saint’s role as an integral part in the fall of communism in central and eastern Europe – except St. John Paul II did not use destructive weapons to take down some of the world’s toughest leaders.

Rather, he used prayer and solidarity to encourage those oppressed by communism in Poland to keep their hope and will alive.

According to Naglieri, this documentary is unlike any other John Paul II film.

“What helps separate our film from past works is that we looked at the entire span of central and eastern Europe and how his message not just impacted Poland, but other countries as well,” he said.

“And then we tried to connect it to the modern day and to see how John Paul’s legacy continues to impact those who are striving for freedom in Europe.” …

Go here for the rest of the story.