NEW$ & VIEW$ (19 FEBRUARY 2014)

Empire State Factory Index Backpedals

Click to viewThe Federal Reserve Bank of New York indicated that its Empire State Factory Index of General Business Conditions for February fell to 4.48 from its two year high of 12.51 during January.The latest figure fell short of expectations for a level of 9.5, according to the Action Economics Forecast Survey.

Based on these figures, Haver Analytics calculates a seasonally adjusted index that is compatible to the ISM series. The adjusted figure declined to 50.9, but a rising level of activity is indicated by a figure above 50. Since inception in 2001, the business conditions index has a 67% correlation with the quarterly change in real GDP.

Deterioration in the overall index this month reflected sharp declines in the new orders, shipments and inventories indexes. The number of employees series also slipped marginally. During the last ten years there has been a 75% correlation between the jobs index and the m/m change in factory sector payrolls. Improved readings for unfilled orders and delivery times dampened some of the downward pressure on the overall index. The length of the average workweek reading also gained slightly to its highest level in six months. (Chart from Doug Short)

Pointing up Bespoke Investment has the best juice from the NY Fed report:

The lower chart below shows Technology and Capital Expenditure plans for manufacturers over the next six months.  As shown, both indices declined this month to multi-month lows.  While plans for Technology spending dropped to their lowest levels since last June, plans for Capital Expenditures are down to their lowest levels since July 2009.

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U.S. Housing Starts Fall 16% Construction of new homes tumbled in January, the latest sign of cooling in the U.S. housing market as much of the country shivered through a cold and snowy winter.

U.S. housing starts in January fell 16% to a seasonally adjusted annual rate of 880,000, the Commerce Department said Wednesday. That was down from an upwardly revised December rate of 1,048,000 new homes built. Single-family starts for January were down 15.9% to a 573,000 annual pace.

Building permits, a sign of future construction, fell 5.4% to a seasonally adjusted annual rate of 937,000 last month from December’s upwardly revised rate of 991,000.

Home Builders Sour on Market Home builders are losing confidence in the housing market amid severe weather, worker shortages and limited availability of land, according to an industry index.

Builder confidence in the market for single-family homes dropped to 46 in February, down sharply from a reading of 56 a month earlier, the National Association of Home Builders said Tuesday. That was the biggest one-month decline on record and the lowest level since May.

More weather blaming. Look at the NAHB’s headline: Poor Weather Puts a Damper on Builder Confidence in February re-printed just about everywhere. It apparently snowed everywhere (chart from Bespoke Investment):

Activity fell sharply around the country. Activity in the West took the largest hit and the 14 point decline reversed the gains of the prior two months. The index for the Midwest followed with a 9 point drop to the lowest level in 9 months. The 8 point decline in the index for the Northeast lowered it to the lowest point since October. Finally, the 7 point decline in the South repeated its January downdraft.

There are other reasons, however:

“Clearly, constraints on the supply chain for building materials, developed lots and skilled workers are making builders worry,” said NAHB Chief Economist David Crowe.

The HMI breakdown reveals that builders don’t expect the weather to improve much before September at the earliest.

All three of the major HMI components declined in February. The component gauging current sales conditions fell 11 points to 51, the component gauging sales expectations in the next six months declined six points to 54 and the component measuring buyer traffic dropped nine points to 31.

U.S. CHAIN STORE SALES ROSE 2.5% LAST WEEK

The 4-week m.a. bounced back to +1.7%. Fingers crossed

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Will this helps?

Americans Ramp Up Their Borrowing

U.S. consumers late last year drove the largest quarterly increase in credit outstanding since the third quarter of 2007, just before the recession started, according to figures released Tuesday by the Federal Reserve Bank of New York. Household debt, which includes mortgages, credit cards, auto loans and student loans, jumped $241 billion between October and December to $11.52 trillion.

One major factor behind the increase has been the stabilization of the nation’s mortgage debts, the biggest piece of household borrowing. Mortgage debt increased $16 billion in the fourth quarter of 2013 from a year earlier, ending a four-year streak of year-over-year declines. Fewer Americans are filing for bankruptcy or going into foreclosure, moves that bring down mortgage debt.

Meanwhile, more people are borrowing to pay for educations, cars and new homes. All told, overall debt is up $180 billion from the fourth quarter of 2012, the first increase from year-earlier levels since late 2008. Household debt remains 9% below its peak of $12.7 trillion in the third quarter of 2008.

(…) much of the recent rise in borrowing is being driven by student loans. Nearly two-thirds of last year’s overall gain in debt—about $114 billion—was from student loans.

Consumers are showing signs of being more cautious about debt this time around. Tuesday’s report showed new originations of mortgages fell for a second quarter in a row, to $452 billion, likely due to higher interest rates. Auto-loan originations also fell in the fourth quarter, to $88 billion.

imageU.S.: Re-leveraging in the works

Is U.S. deleveraging finally over? Aggregate consumer debt rose by US$241 bn in 2013Q4, the biggest quarterly increase since 2007. Student debt rose again and accounted for roughly a fifth of the increase. But as today’s Hot Charts show, even excluding student loans, household debt rose for the second consecutive quarter in Q4, the first back-to-back increase for that measure since 2008. That’s due to a second straight increase in mortgage loans and a further ramp up in auto loans, the latter hitting a new record in Q4.

The potential for re-leveraging is now starting to be fulfilled thanks to the combination of low interest rates, rising consumer confidence and improving credit ratings, particularly among those with the lowest scores (i.e. those that had been previously shut out of the formal loan market). So, looking beyond near-term weather-related disruptions to economic activity, the outlook for the U.S. economy looks good. (NBF)

EMERGING MARKETS’ DOMESTIC CRUNCH?

(…) In attempting to escape from the consequences of the credit bubbles, and the resulting Great Recession in the developed world, many emerging economies may have ended up creating similar problems of their own. The external financing aspects of the EM problem may well be less than in the 1990s, but the internal aspects could take longer to handle. Credit standards in the EM banking sectors are now tightening markedly, in contrast to the easing now underway in the DMs [2]. This needs to change before growth in the EM economies can recover.

In summary, while the emerging markets may escape the sudden stops of the 1990s, they may be facing a domestic credit crunch instead. (Gavyn Davis)

Winking smile The 1% Don’t Feel The Weather: Ferrari Posts Record Sales In US; Doubled In Jan

First Mercedes, then Porsche, and now Ferrari and Maserati post record US sales in January…

*FERRARI POSTS RECORD SALES IN U.S. AND U.K. IN 2013
*FERRARI AND MASERATI GLOBAL MORE THAN DOUBLE IN JAN TO 2,400

 

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