Economic Indicators

The monthly leading economic indicators, which key heavily on
new orders, remain strong. The weekly leading indicator sets
made interim cyclical highs at the end of April and were quite
weak in May. Notable were lower stock and sensitive materials
prices and an unexpected increase in initial unemployment ins.
claims. (The weeklies have a time edge on the monthlies.)

The increases in the weekly leader data sets from cycle troughs to
recent peaks were the strongest on record and, I believe , reflected
the strongest ever readings on my long term leading indicators. The
longer term indicators are positive but have lost momentum. The
main reasons for more modest longer term readings are an easing in
the growth of the real wage and in the advance of monetary liquidity.
So, a loss of momentum in the short term weekly data was to be
expected, but the sharp turn to weakness is a surprise. Moreover,
further sharp weakness in the near term would in my view raise
suspicion about the viability of the recovery. At this stage, I am
planning to wait until mid-July to cross that bridge.

there are plenty of scary stories out there, but what has caught my
attention has been the strength of total new factory orders ( up 20%
yr / yr) relative to US final demand. This is a very uneven
comparison even after one takes into account the strong export
order book and consequent sales. The suggestion here is that the
inventory pipelines could be getting filled more rapidly than final
sellers desire.