next report will resume on march 04
Durable orders continued to shrink in January. Indeed, durable orders fell a steeperthan- expected 5.2% M/M following a downwardly revised 4.6% M/M in December, earlier reported as -2.6% M/M. It was the sixth consecutive month of decline in orders. The report shows a manufacturing sector in distress. On a yearly basis, orders were down a staggering 23.3%. All broad categories showed a decline. Orders excluding the volatile transportation orders didn’t fare much better down 2.5% M/M following a 5.5% M/M drop in December. The Non defence capital shipments excluding aircraft, a gauge for business investment dropped 6.6% following a flat figure in December, but the series about 25% below Q4 average in nominal terms. It suggests that business investment will show another steep decline in Q1.
Initial claims rose by 36 000 to a new cyclical high of 667 000 in the most recent week, defying expectations for a stabilization. Continuing claims jumped above the 5 million threshold to 5 112 000, up another 114 000 in the latest reported week. The report suggests that job losses may even have accelerated from the near 600 000 a month loss in the past three months. So the February payrolls to be published next week might be again very weak.
New Home sales dropped another bigger-than-expected 10.2% M/M to 309 000 units, the lowest reading on record. On a yearly basis, sales of single-family homes plunged 48.2%. Three of the four regions reported a drop, the Northeast bucking the trend (+12.5%) Home prices fell 13.5% Y/Y, while the supply of homes (inventories to sales) widened to 13.3 months, a new record high. These figures show that the sector has still a long way to work off excess inventories.
EMU: Downbeat economic confidence and rising German unemployment
The EMU economic confidence survey showed no sign of improvement whatsoever. Indeed, the headline, economic confidence, index dropped to 65.4 in February from 67.2 previously (expectations 68.5). Both industrial and consumer confidence fell to record lows (series started in 1985). Consumer price expectations edged closer to zero, while hiring intentions continued to drift lower. Also services confidence hit a low, while construction sentiment deteriorated, but not yet hitting historic lows. The survey didn’t come as a surprise though after the releases of the timelier PMI surveys and some national data. Italian business confidence was reported weaker-than-expected at 63.2 in February (record low).
German unemployment increased by 40 000 in February, the fourth monthly increase and strong evidence that the trend in unemployment that was down until recently has now clearly changed to higher unemployment. The increase fell nevertheless short of the 60 000 rise expected by consensus, suggesting that the deterioration is not yet severe. Employment reported with a one-month lag showed a third consecutive monthly increase. On a positive side, GfK consumer confidence unexpectedly edged up to 2.6 in February from 2.3 in January.
M3 money supply growth and bank lending slowed sharply in February, confirming the shrinkage in economic activity. M3 dropped a record high 0.8% M/M, slowing the Y/Y increase to 5.9% from 7.5% previously. The less volatile 3 month average slowed to 7% Y/Y from 7.9% previously. Most measures of lending data showed a sharp slowdown, but bank loans to the non-financial private sector grew marginally on a monthly basis following an unprecedented, but small, decline in January. Whether this should be looked at as a positive development is open to debate.
