Today’s data release showed y-o-y growth in the Index of Industrial Production: this was at +2.7% in November when compared with the previous value of 11.3%. Some analysts have conjectured that this was driven by seasonal fluctuations including the placement of Diwali, holidays related to Diwali and the reduced number of working days in November. In the jargon of seasonal adjustment, Diwali is termed a `moving holiday’: it’s a holiday which shows up in different months in different years.
Our work on seasonal adjustment includes treatment of the overall IIP and some of its components while controlling for the Diwali effect. Even after this adjustment, the seasonally adjusted annualised growth rate for the month is negative (-1.97%) while the average growth over three months including the current month is 0.18%.
IIP consumer goods fared particularly badly (a value of -6.48% for the 3-month average of the annualised point-on-point change of the seasonally adjusted level). Another weak performer was IIP manufacturing (0.017%). However, IIP capital goods shows an encouraging picture with a 3-month average of seasonally adjusted annualised rate of 41.10%.
The year-on-year change is the sum of 12 shocks. Ordinarily it has a lot of inertia. It is, indeed, surprising that the y-o-y change flipped from +11.3% to +2.7% for two consecutive months. There may well be major difficulties in the statistical system which are leading to this. We can be pretty confident that the odd behaviour is not caused by seasonal effects.
I think Jim already has some comments on this, but note the latest from Brookings: Migration Declines Further: Stalling Brain Gains and Ambitions
In particular check out their Table 2.II. Looks to me that if you skip New Orleans and their particular circumstances (euphemism for flood, disaster or calamity, pick your semantics)… Pittsburgh has the biggest magnitude of swing in that table in terms of shifting from migration loss to migration gain among folks with college degrees.
Bafflegab I tell you… Bafflegab.
At 8:30 AM EST, the U.S. government will release its weekly Jobless Claims report. The consensus is that there were 405,000 new jobless claims last week, which would would be 4,000 less than the number released last week.
Also at 8:30 AM EST, the International Trade report for November will be released. The consensus is a deficit of $41 billion, which would be $2.3 billion less than October.
Also at 8:30 AM EDT, the Producer Price Index for December will be released. The consensus is that the index increased 0.9% over last month, and increased 0.2% when food and energy are excluded.
At 10:30 AM EST, the weekly Energy Information Administration Natural Gas Report will be released, giving an update on natural gas inventories in the United States.
At 1:00 PM EST, Federal Reserve Chairman Ben Bernanke will participate on a panel discussing small business lending.
At 4:30 PM EST, the Federal Reserve will release its Money Supply report, showing the amount of liquidity available in the U.S. economy.
Also at 4:30 PM EST, the Federal Reserve will release its Balance Sheet report, showing the amount of liquidity the Fed has injected into the economy by adding or removing reserves.
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