January 3, 2018

November 2017 Construction Spending Up 0.8 Percent; Prior Months Far Stronger Than Originally Reported

Filed under: Economy,Taxes & Government — Tom @ 10:34 am

From the Census Bureau:

Construction spending during November 2017 was estimated at a seasonally adjusted annual rate of $1,257.0 billion, 0.8 percent (±1.2 percent)* above the revised October estimate of $1,247.1 billion. The November figure is 2.4 percent (±1.5 percent) above the November 2016 estimate of $1,227.0 billion. During the first eleven months of this year, construction spending amounted to $1,138.3 billion, 4.2 percent (±1.0 percent) above the $1,091.9 billion for the same period in 2016. 

Continuing a mostly consistent pattern seen this year, prior months were revised up — this time by a lot:

  • October seasonally adjusted annual rate went from an originally reported 1,241.5 billion to the $1,247.1 billion above, an upward revision of 0.5 percent.
  • September went from an originally reported $1,219.5 billion to the $1,224.6 billion in October’s revision to the $1,236.3 billion seen in the Census Bureau’s detailed table. That’s a combined upward revision of 1.4 percent.
  • The detailed table shows that seasonally adjusted construction spending is up by 2.96 percent in just the past three months. If sustained for a year, that kind of increase would be well into double digits. You wouldn’t know that if you read the individual monthly reports and didn’t look back at the revisions.

This pattern, especially big revisions like the one seen made to September two months later, which is almost guaranteed to remain virtually invisible, should lead people to wonder if the Census Bureau isn’t sandbagging this data to minimize its positive impact.

December 2017 ISM Manufacturing: 59.7 Percent, Up from 58.2 Percent in November; New Orders Hit 13-Year High

Filed under: Economy — Tom @ 9:45 am

Predictions, per Yahoo’s Economic Calendar, are for no change from last month’s 58.2 percent.

On Tuesday, MarkIt’s December Purchasing Managers Index “came in at a better than expected 55.1,” the best since March. MarkIt’s index tends to come in with lower figures, which may be because it doesn’t have the positive selection bias the ISM’s survey seems to have. That said, if the economy is going strong, there should be fewer manufacturers in dire straits who don’t have the time or interest in completing surveys, and maybe the positive selection bias might mitigate.

HERE IT IS: From the Institute for Supply Management, an upside surprise (paragraph breaks added by me; bolds are mine):

December Manufacturing ISM® Report on Business®

Economic activity in the manufacturing sector expanded in December, and the overall economy grew for the 103rd consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report on Business®.

… The December PMI® registered 59.7 percent, an increase of 1.5 percentage points from the November reading of 58.2 percent.

The New Orders Index registered 69.4 percent, an increase of 5.4 percentage points from the November reading of 64 percent. The Production Index registered 65.8 percent, a 1.9 percentage point increase compared to the November reading of 63.9 percent.

The Employment Index registered 57 percent, a decrease of 2.7 percentage points from the November reading of 59.7 percent. The Supplier Deliveries Index registered 57.9 percent, a 1.4 percentage point increase from the November reading of 56.5 percent. The Inventories Index registered 48.5 percent, an increase of 1.5 percentage points from the November reading of 47 percent.

The Prices Index registered 69 percent in December, a 3.5 percentage point increase from the November reading of 65.5 percent, indicating higher raw materials prices for the 22nd consecutive month.

Comments from the panel reflect expanding business conditions, with new orders and production leading gains; employment expanding at a slower rate; order backlogs expanding at a faster rate; and export orders and imports continuing to grow in December. Supplier deliveries continued to slow (improving) at a faster rate, and inventories continued to contract at a slower rate during the period. Price increases continued at a faster rate. The Customers’ Inventories Index declined and remains at low levels.

Of the 18 manufacturing industries, 16 reported growth in December in the following order: Machinery; Computer & Electronic Products; Paper Products; Apparel, Leather & Allied Products; Printing & Related Support Activities; Primary Metals; Nonmetallic Mineral Products; Petroleum & Coal Products; Plastics & Rubber Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Furniture & Related Products; Transportation Equipment; Chemical Products; Fabricated Metal Products; and Electrical Equipment, Appliances & Components. Two industries reported contraction during the period: Wood Products; and Textile Mills.

I don’t think I’ve ever seen the New Orders Index almost hit 70 percent (Update: Zero Hedge says it’s a 13-year high), and I’m almost certain we have seen the total of New Orders and Production both get to 135 percent in a very, very long time. Backlog of Orders, the other major direct GDP indicator, increase by a point to 56.0 percent, which is obviously quite acceptable.

Though it obviously beats the alternative of sub-50 percent numbers indicating contraction, I remain somewhat concerned about overheating and inflation if New Orders and Production numbers this strong. I’ve been saying this for months, though, so maybe those concerns are overblown.

Wednesday Off-Topic (Moderated) Open Thread (010318)

Filed under: Lucid Links — Tom @ 6:00 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: Woman pulls gun, foils robbery

Filed under: 2nd Amendment,Positivity — Tom @ 5:55 am

From Harrisburg, Pennsylvania:

Updated: Dec 23, 2017 09:04 AM EST

A woman turned the tables on a would-be robber who pointed a gun when she pulled a handgun of her own, police said.

Swatara Township police said the woman and a friend were at a parking in the 500 block of South 29th Street on Wednesday afternoon to buy a video gaming system that was advertised on Facebook.

The seller’s accomplice pointed a gun and demanded money, and that’s when the woman pulled her own handgun that she has a permit to carry and confronted the would-be robber, police said.

The robber and his two friends took off running. Penbrook police officers found and arrested them at 26th and Brookwood streets, and they recovered a BB gun from one of the youths.

The three juveniles from Harrisburg were charged with robbery and conspiracy to commit robbery. …

Go here for the rest of the story.