Lotta data

The October NY manufacturing survey blew past expectations, coming in at 34.6, twice the forecast. It’s the highest level since May ’04. The number only measures the direction of improvement, not the degree so don’t extrapolate that we are partying like its May 2004 but there is no question today’s figure was impressive. New Orders rose to 30.8 from 19.8 while Backlogs rose 6 pts to positive territory for the 1st time since Mar ’08. Employment rose to 10.4 from -8.3 and positive for the 1st time since June ’08 which is nice to see. Inventories remained firmly negative but less so as they rose 7 points to the highest level since Feb. Prices Paid and Received both fell a touch. The 6 month Business Condition outlook rose 4 pts, the highest since Nov ’04. The NY survey is very volatile and we’ll need to see other regional data and the national ISM in order to confirm but manufacturing is expected to be a main contributor to the 2nd half recovery.

Sept CPI rose .2% both headline (in line) and core (.1% higher than expected). The y/o/y decline has slowed to 1.3%, a level last seen in May. The core gain rose 1.5% y/o/y and has remained stubbornly positive all through the economic turmoil proving that the deflation that we saw was mostly in food and energy and for everything else we saw was just disinflation. Owners Equivalent Rent, 24% of the overall CPI, fell .1%, only the 2nd drop since 1992 as rent pressures on landlords continue with rising unemployment and competition from unsold homes. Vehicle prices rose .5% led by used cars and trucks thanks to the taking off the market of many Cash for Clunkered cars, oh the unintended consequences. New vehicles prices rose .4% due to the limited supply of new cars. The implied inflation rate in the 10 yr TIPS is rising 2 bps to 1.96%, a 2 month high.

Initial Jobless Claims totaled 514k, 6k less than expected and are at the lowest level since early Jan but the prior week was revised up by 3k. Continuing Claims were 8k below estimates and down 75k from last week but those receiving Emergency Unemployment Compensation rose by 10k and those getting Extended Benefits rose by almost 6k. The EUC gain though is below the recent weeks but there is no way to know if a slowdown is due to people finding new jobs or are because they are running out of benefits. The monthly jobs data will answer that. The insured unemployment rate did tick down .1% to 4.5%. The amount of firing seen continues its downward trend with the timing and pace of hiring still being uncertain.