NEW$ & VIEW$ (8 AUGUST 2013)

Jobless Claims in U.S. Fall Over Month to Lowest Since 2007

The number of claims in the four weeks ended Aug. 3 declined to 335,500 on average, the least since November 2007, a Labor Department report showed today in Washington. They rose to 333,000 last week, in line with the median forecast of 50 economists surveyed by Bloomberg, from 328,000 the prior week.

Auto Loans Drive Consumer Lending Increase

Nonrevolving credit, which consists primarily of student loans and auto financing, rose by $12.6 billion in June to a nonseasonally adjusted $1.987 trillion, according to Federal Reserve data released Wednesday.

Within this category, student loans from the federal government rose $3.3 billion, indicating that auto loans were responsible for the bulk of the $12.6 billion overall increase. The Fed doesn’t break out precise data on auto financing.

The Fed data also showed that revolving credit, primarily credit cards, rose by $300 million in June to $816.7 billion. Growth of revolving credit, which is usually used for smaller discretionary purchases and carries higher interest rates than nonrevolving credit, has been largely flat in the aftermath of the Great Recession.

Total consumer credit, defined as household borrowing excluding mortgages, rose by $13 billion in June to $2.803 trillion. On a seasonally adjusted basis, consumer credit rose by $13.82 billion in June to $2.848 trillion.

But these Haver Analytics charts show a topping pattern:


Million-Dollar Home Sales Jump in U.S. as Wealthy Return

Sales of homes priced at more than $1 million jumped an average 37 percent in 2013’s first half from a year earlier to the highest level since 2007, according to DataQuick. Transactions priced at less than $1 million rose 11 percent in the same period to the highest since 2009, data from the National Association of Realtors show.

Homes priced at more than $1 million lost about 46 percent of their value during the housing crash, according to a Bloomberg survey of sales in the top four cities, based on valuation data from Since then, their value has more than doubled. Home prices in the broader market fell to $154,600 in early 2012 and increased to $214,200 in June, according to the Realtor’s group.

This Haver chart also reveals a topping, sorry, a negative trend in mortgage demand.

Cass Freight Index Report™ ‐ July 2013

In addition to falling from June, shipment volume was also lower than in the same month last year, as it has been in five of the first seven months of 2013 (volumes were 3.1 percent lower than July 2012). Both June and July shipment volumes were lower than in the same months in both 2011 and 2012. Despite this, cumulative shipment volume year‐to‐date through July is still 3.4 percent above the same seven‐month period last year. (But the July decrease hurt: at the end of June, year‐to‐date shipments were up 5.8 percent from the year before.)

Railroads led the way in declines with drops in both carloadings and intermodal shipments in the last four weeks. Carloadings were up two weeks and down the other two, resulting in a 3.6 percent decline, while
intermodal loadings fell sharply for the first two weeks and surged in the third, ending with a 2.5 percent drop.

The decrease in intermodal rail is consistent with the decline in imports and weak exports, which limited the number of trailers to be moved. The trucking sector showed some signs of capacity constriction, but it is too
early to determine if or to what extent this is being caused by the new Hours of Service Rules. At this point, most shippers are still reporting adequate capacity. The American Trucking Association’s Truck Tonnage Index rose only 0.1 percent in June after posting a revised 2.1 percent increase in May.


OECD Points to Growth Shift

The Paris-based think tank said its leading indicator of economic activity in its 34 developed-country members rose to 100.7 in June from 100.6 in May.

Released Thursday, the composite leading indicators for June suggest Germany will lead the euro zone out of its longest postwar contraction, with Italy poised for a pickup in growth after almost two years of declining activity. The leading indicator for the U.K. also points to a rise in growth following a number of years of near-stagnation.

The leading indicators continue to point to firming growth in the U.S. and Japan, the two largest developed economies.

However, just as the euro zone appears set to return to modest growth, there are signs expansion in a number of large developing economies is set to weaken, with the leading indicators for June pointing to continued slowdowns in China, Brazil and Russia.



French government hails signs of recovery Unemployment remains a challenge after rising towards 11%

A welcome new indicator appeared on Wednesday with figures showing that the trade deficit shrank by a third in June to €4.4bn compared with the same period last year, reducing the deficit in the first half below €30bn for the first time since 2010.

Much of the improvement was due to a drop in imports as French consumers tightened their belts. But there was a small uptick in exports in June that signalled some hope for recovery from an alarming slide in competitiveness in recent years. (…)

A survey for Les Echos, the financial newspaper, of 31 of the top 40 companies in the CAC 40 stock market index to have reported first-half results so far, showed that although profits were down overall by 1.4 per cent on the same period last year, almost 70 per cent exceeded analysts’ expectations and many had seen improved performance in the second quarter. The CAC 40 itself has surged recently above 4,000 from a low of 3,341 last November.


China Shows More Signs of Stabilizing

China’s economy is showing signs of stabilizing after a six-month slowdown, a prospect that could boost the outlook for world growth as the U.S. steadily improves and Europe edges out of recession

Exports beat expectations, rising 5.1% year-over-year in July after a 3.1% fall in June. Imports were also strong, up 10.9% year-over-year compared with a fall of 0.7% the previous month.

Unlike previous figures this year, China’s trade data didn’t appear to be affected by companies attempting to channel funds illegally into the country. Exports to Hong Kong, the main channel for exaggerating sales, were up just 2.3% year-over-year. Chinese authorities cracked down on over-invoicing earlier this year.

Behind the improvement in exports: stronger demand from the U.S. and Europe. Shipments to the U.S. rose 5.3% year-over-year, while sales to the European Union managed a 2.8% increase—a turnaround after several months of contraction.


High five  From FT Alphaville:

SocGen’s Wei Yao has some interesting observations. The year-on-year export growth rate, she says, benefits from a base effect — the July 2012 data displayed an unusual decline from the previous month.

The import data, however, has no such obvious issues (apart from the little matter of Taiwan). Emphasis ours:

In comparison, the bounce of import growth from -0.9% yoy to +10.9% yoy without any base effect was much more surprising and difficult to explain. By origin, there was improvement across the board and the major contributors were the euro area, Taiwan, Korea and Australia. Imports from the euro area rose 8.3% yoy in July, improving for two months in a row. However, we noticed that the difference between China’s data and Taiwan’s diverged again. Chinese imports from Taiwan grew 16.6% yoy in July (vs. 6.7% in June) using the mainland’s data, but increased only 1.1% yoy (vs. 8.6% in June) using Taiwan’s data.

(…) However, the import strength is not necessarily a good indicator for the Q3 GDP growth numbers. Yao points out that the stronger relative performance of imports vs exports means the trade surplus is narrowing — something that is likely continue in the coming months due to the base effect, she says. And this shows up on national accounts as a negative for GDP growth. (…)

One last point: remember how the HSBC/Markit manufacturing PMI diverged rather sharply (again) from the official one? Both of them showed growth in new export orders continuing to contract, albeit at a reduced pace from June.

And From Zerohedge:

What better way to capture the data discrepancy – as in someone here is lying – than the following chart showing the reported China trade surplus to the US and the reported US trade deficit with China. Just a $10 billion/month recurring “difference”…

Pointing up Also consider this: CEBM Research surveys reveal that

(…)  industrial demand remained weak among most sectors. (…) weak demand has not significantly changed, it also suggests that enterprises do not expect fundamentals will deteriorate further in the next month.

Exports Outlook Worsened in July. Container exports remained weak in July, weaker than respondents’ expectations. 

Sales in the consumer sector remained weak in July.  New property sales were in-line with developers’ expectations, but the inventory-to-sales ratio has increased and developers have become more cautious in their view towards 2H13. Property prices continued rising in July, and property developers remained concerned about the possibility of further tightening measures in the property sector in the second half. Banks have continued to raise lending rates, particularly rates offered to small and medium-size enterprises.


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