Economic data

The July NY Fed survey was -.6, above expectations of -5 and up from -9.4 in June. New Orders jumped to +5.9 from -8.2, the first positive reading since Sept ’08 but Backlogs fell 2 points to -12.50. Employment was up a modest one point at -20.8 but it’s the least negative reading since it was -3.7 in Oct ’08. Shipments, which follow new orders, rose to 11 from -4.8, the highest since July ’08. Inventories fell to a new record low in this survey, falling 11 points and this provides the backdrop for the inventory rebuild thesis and the jump in new orders. Prices Paid went positive for the first time since Nov ’08 while Prices Received remained negative but less so by 4 points. The 6 month outlook did fall to 34 from 47.8 but still remains well off its low of -6.6 in Feb ’09. This is the first July industrial number and we thus need to see many others in order to confirm today’s near neutral reading. The Philly Fed survey is out tomorrow.

June CPI rose .7% m/o/m, .1% more than expected and the core rate rose .2%, also .1% more than forecasted. The y/o/y CPI reading is still down 1.4%, the biggest drop since 1950 while ex food and fuel it was up 1.7%, the slowest rate since the recession began but is clearly well above zero and provides an inflationary backdrop if commodity prices continue higher. The 17.3% rise in gasoline led the headline gain as food prices were flat. Owners equivalent rent, 24% of CPI, rose .1% and is up 1.9% y/o/y and remains a key swing component in where the CPI goes from here as it responds to the tug of war between a fall in the home ownership rate on one hand and higher vacancy rates due to rising unemployment on the other. Apparel prices rose .7% after 3 straight months of declines. Vehicle prices rose .4%.

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