Thursday, December 1, 2011
The November ISM manufacturing index was a bit stronger than expected (52.7 vs. 51.8), and it reinforces the growing list of indicators which point to moderate growth and not a double-dip recession. As the chart above suggests, the current level of the ISM index is consistent with real economic growth in the current quarter of 3% or so, which is also consistent with the views of an increasing number of forecasters.
Construction spending was flat in October. Residential construction spending has been flat since mid-2009, continuing its worst performance on record. Total construction spending is now a mere 2% of GDP, also the lowest on record. This sector has been down and out for so long now that the only question is when the rebound will start. The more time passes, the more likely we are to see a rebound, and when it gets underway it could be very powerful. But that good news will probably come after we have seen more good news from other sectors of the economy.
Weekly claims for unemployment haven't changed much in the past few weeks, but the next few weeks could be very interesting. Seasonal adjustment factors anticipate a surge in claims in the coming week, so if actual claims don't surge, then the adjusted number will decline. Seasonal factors then anticipate another surge in claims towards the end of December and the first two weeks of January. If actual claims don't almost double from current levels in the next 6 weeks, then reported claims will decline. I suspect that companies are running at very lean and mean levels, and that would suggest that actual claims will not surge by as much as they have in the past around this time of the year. Something to look forward to in any event.
Posted by Scott Grannis at 9:43 AM