U.S. Industrial Production Flat in October Industrial output was flat in October, as unusually warm weather depressed demand for home and office heating, but the U.S. manufacturing and mining sectors showed continued signs of stabilization.
(…) Utilities production dropped sharply in October and September, offsetting modest gains in factory output. Mining production surged last month at the fastest pace in 2½ years. (…)
Total production fell 0.9% over the past year.
Capacity utilization, a gauge of slack in the industrial economy, ticked down 0.1 percentage point to 75.3% last month. Economists had expected an October reading of 75.5%.
In October, output rose 0.2% from the prior month in the manufacturing category, matching its September increase. Still, factory production was down 0.2% last month from a year earlier.
Utilities production was down 2.6% in October after falling 3% in September. The Fed said warmer-than-normal temperatures reduced the demand for heating. It was the warmest October since 1963 across the 48 contiguous U.S. states and the third-warmest October on record, according to the National Oceanic and Atmospheric Administration. (…)
Manufacturing production rose 0.2% in both October and September after falling 0.5% in August. Construction Supplies are stronger but Consume Goods and Biz Equipment remain weak.
(…) Surveys point to the production trend picking up as we move towards the end of the year. PMI data from IHS Markit showed manufacturers reporting the strongest upturn in new orders for a year in October, with sales boosted by rising domestic and export demand.
The surveys have also revealed service sector growth to have accelerated to the fastest since late last year, pointing to a broad-based strengthening of the economy.
The production data come on the heels of better than expected retail sales numbers, which showed shoppers starting the fourth quarter on a sound footing. Sales rose 0.8% in October, building on a 1.0% rise in September. Core sales, which tend to provide a useful guide to the underlying trend in consumer spending by excluding volatile expenditure on building materials, autos, gas stations and food services, also rose 0.8%, signalling the strongest monthly gain since April. (…)
Trumpflation: Not Now, Maybe Later Bond markets since Donald Trump’s election victory have gone from obsessing over deflation to worrying about inflation. It’s an overreaction, Greg Ip writes.
(…) This is an overreaction. Presidents and policies make U-turns; inflation and economic growth don’t. The U.S. and the world have been stuck in a low-growth, low-interest rate rut since 2009, and Mr. Trump’s policies can at best change that at the margin.
That said, Mr. Trump’s election is part of a rising tide of global populism, a phenomenon that in the past has usually brought inflation—a risk for a later date. (…)
U.S. Producer Prices Hold Flat in October A gauge of U.S. business prices held flat in October, suggesting inflation pressures remain mild.
(…) From a year earlier, prices rose 0.8%. That was the strongest annual gain since December 2014, but still historically soft.
When excluding often-volatile food, energy and a jumpy measure of wholesaler and retailer margins known as trade services, prices were down 0.1% from September. That core measure advanced 1.6% on the year. (…) (Charts from Haver Analytics)
Home Builder Sentiment Holds Steady U.S. builders say they are upbeat about the market for single-family homes, reflecting steady sales and a stable economy.
The National Association of Home Builders, a trade group, said Wednesday its housing-market index stood at 63 in November, unchanged from the prior month. (…)
Wednesday’s report showed a measure of builders’ views about the present market held steady at 69 in November. An index of their outlook for the market over the next six months fell two points to 69. A third component measuring traffic of prospective buyers climbed a point to 47. (…) (Chart from Haver Analytics)
The Atlanta Fed’s Wage Growth Tracker indicates that the median U.S. worker saw pay rise by 3.9 percent year-over-year in October, the fastest rate of growth since November 2008. (…)
Wage growth among college-educated employees also outstripped the headline figure — something it hasn’t done for the most of the past year — demonstrating that wage pressures are broadening to the upper end of the income spectrum, which has been noted by economists like Macquarie Capital Markets’ David Doyle. (…)
In Surprise Move, Bank of Japan to Buy Unlimited Bonds at Fixed Rates The BOJ, in a surprise move, is offering to buy an unlimited amount of Japanese government bonds at fixed rates—a sign of its concerns over recent rises in yields.
China’s residents are now even more desperate to move their money out of yuan accounts, putting funds into equities, commodities, and of course real estate. (The Daily Shot)
(…) After a record 54 weeks where the AAII’s weekly bullish sentiment reading was below 40%, this week’s reading, which was the first survey to be fully conducted after the election, surged above 40% for the first time since October 2015. After increasing from 23.6% to 38.9% in last week’s survey, which straddled the election, this week saw another 7.8 percentage point increase to 46.7%. The last time bullish sentiment was this high was all the way back in February 2015! Since the bull market began in 2009, there have only been two other periods where bullish sentiment saw a larger two week increase than the last two weeks.
As one might expect given the increase in bullish sentiment, bearish sentiment declined this week, falling from 29.3% down to 26.6%. The bulk of the new bulls, however, came from the neutral camp which shrunk five percentage points down to 26.8%. (…) (Bespoke Investment)