Auto sector’s effect on non-recession reading
This daily will have to be quick since I am in transit. The best highlight here is jobless claims and how the auto sector is affecting both production and employment positively, potentially keeping the US from falling into outright recession. I mentioned just over a week that auto inventory restocking was the only thing between US and recession. Retail sales have been negative for three straight months and the manufacturing PMI has fallen into negative territory as well. Particularly alarming with the last manufacturing PMI was the drop in new orders. All of this speaks to recession.
But auto companies are building inventory by getting workers to work through the typical summer re-tooling period and that’s throwing off jobless claims:
The reading for jobless claims has been volatile this month because of the timing of the annual auto plant shutdowns for retooling. The number of new claims had touched a four-year low in the July 7 week at 352,000. One measure that tries to smooth out this volatility, the four-week moving average, fell 8,750 last week to 367,250.
"The good news there is on average over the last four weeks the number is improving," said Art Hogan, managing director of Lazard Capital Markets in New York.
This year, automakers are carrying out fewer temporary plant shutdowns, throwing off the model the department uses to smooth the data for typical seasonal patterns.
A Labor Department official said they were still experiencing volatility related to the auto layoffs that usually happen at this time of year. Otherwise, the data had few blips.
I should note that Ford announced earnings with weakness in Europe dragging down results. I expect this to move to the US, leading to lower production and worsening jobless claims.
Jobless claims fall, still volatile due to auto jobs | Reuters
Bridgewater Sees ‘Dangerous Dynamic’ as Largest Economies Slow – Bloomberg
Europe
Europe’s Crisis Hits Corporate Profits – WSJ.com
Greek bank deposits hit six-year low in June: ECB | Reuters
FT Alphaville » Buiter’s now predicting Grexit probability of 90%
Insight: Slovenia rues bank mismanagement as bailout talk grows | Reuters
Spanish debt to GDP rises to 81% from 68% if all
Debt crisis: Greece’s bondholders could face more losses, says Berlin – Telegraph
French jobless total close to 13-year high | Reuters
Tech
Apple says Samsung patent royalty demands unfair | Reuters
The Apple-Samsung Trial: What Samsung Will Attempt to Prove – Law Blog – WSJ
Roku gets $45M in funding from News Corp., BSkyB — Online Video News
Apple’s China Growth Slows as Market Awaits New iPhone – WSJ.com
Zynga Posts Loss, Slashes Outlook, Shares Tank – MarketBeat – WSJ
Other links
Hussman Funds – Weekly Market Comment: Extraordinary Strains – July 23, 2012
Macro and Other Market Musings: Chuck Norris Central Banking Promoted by Fed Official
Interior of the Lusitania, 1905-1907 | Retronaut
List of countries by incarceration rate – Wikipedia, the free encyclopedia
The recession: Osborne’s mess | Editorial | Comment is free | The Guardian
EconoMonitor : Great Leap Forward » ON THE SUPPOSED WEAKNESSES OF MMT: RESPONSE TO PALLEY
FT Alphaville » Risk premium or deflation charge?
Margaret Thatcher knew the single currency would devastate Europe – Telegraph Blogs
Thomas Palley » More on the spurious victory claims of MMT
UK GDP slump: Osborne’s blundering incompetence made the economy sicker | Business | guardian.co.uk
Comments are closed.