Friday, July 24, 2009
This week, a compilation of indicators shows that the recovery is tentative at best - more likely, a global bottom has not yet been found. The leading indicators are stronger in some countries; exports are still declining at an annual pace of 20+ percent but stabilizing; and volatile retail sales growth rates are, well, quirky. Must wait for a trend - the US stock market(s) certainly see one coming!
In June, offset by the housing component, the Canadian leading indicator index slides for the second month. In contrast, the US leading indicator took its third consecutive bump. The leading indicator index is more like a coincident index, as many of the components are already known. According to the Conference Board (US), the bump was widespread:
Seven of the ten indicators that make up The Conference Board LEI for the U.S. increased in June. The positive contributors – beginning with the largest positive contributor – were interest rate spread, building permits, stock prices, weekly initial claims (inverted), average weekly manufacturing hours, index of supplier deliveries (vendor performance), and manufacturers' new orders for consumer goods and materials*. The negative contributors – beginning with the largest negative contributor – were real money supply*, manufacturers' new orders for nondefense capital goods*, and index of consumer expectations.The real money supply is slightly worrisome - the Fed is letting it slip.
Export growth stabilizing in Asia and Europe - the EU (16) (i.e., the Eurozone), ran a surplus in May. On the surface that is great news - exports drive much of the growth in big EU countries (i.e., Germany). But below the surface and on a seasonally adjusted basis (page 5 of the EU's trade report release), the May surplus was driven by a drop in imports rather than an increase in exports. Over the year, exports are stabilizing, but this report shows that global trade with Europe is still very, very weak.
Discounts on food and clothing drove retail sales in the UK up 2.8% over the year in June (see jka economics blog for a nice take on the report). Obviously, though, UK consumers have been quite fickle, as this series has proven to be very volatile in 2009. Same for Italy and Canada - a trend, i.e., at least three consecutive months of data, should be formed before any conclusions can be made.
And finally, the crash of energy prices has brought global inflation into negative territory. Stephen Gordon's take of the Canadian report is good:
"Happily, the good people at Statistics Canada went to great lengths to point out exactly how and why the y/y headline number was negative, so - with the notable exception of the Globe and Mail - journalists were able to put together stories that weren't teeth-grindingly stupid."And that's all (well, some of) what she wrote, folks.