THE BASIS POINT

Fundamentals 6/16: Housing, Jobs Better. Manufacturing Worse.

Housing:
-May Starts 560,000 (annualized), up 3.5% from April, above 540k expected.
-May Permits 612,000 (annualized), up 8.7% from April, most in 2011.
-We need about 1,500,000 Housing Starts a year to keep pace with population growth and units scrapped to disaster or obsolescence.

Jobs:
-414,000 for week ended June 11, down 16,000 from previous week.
-4-week moving average 424,750, unchanged from previous week.

Philadelphia Fed Manufacturing Outlook
June Philly Fed Index -7.7, down 3.9 from May, lowest since July 2009
-Readings below zero signal shrinking manufacturing activity in eastern Pennsylvania, southern New Jersey, Delaware.
-Future activity index -14 points, posting its lowest reading in 31mo.
-Prices paid (inflation) index down sharply: -22 points.
-Still, 37% percent of firms reported higher prices, 10% reported a decline.
-17% of firms reported higher prices for their own goods, 12% reported reductions.
-Prices received index -12 points, its second consecutive monthly decline.

The Consumer Metrics Daily Growth Index (a leading indicator measuring online Retail Sales) shows online sales contracting on a year-over-year basis. This index has been negative for 516 consecutive days. The implication is that the increased government spending of the stimulus has not translated into lasting gains in consumer spending. This index is 1st graph here.