Flash Update
FLASH UPDATE - Aug. 5, 2007
JOHN WILLIAMS' SHADOW GOVERNMENT STATISTICS
FLASH UPDATE
August 5, 2007
__________
July Jobs Report Shows Managed Numbers
July Annual M3 Growth Notches Lower to 12.8%
July Financial-Weighted Dollar at All-Time Low
Systemic Problems Begin to Surface
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The SGS-Alternate Dollar series database has been updated for the July averages and posted (Alternate Data Series tab at www.shadowstats.com). July's SGS Ongoing M3 will be posted next weekend, when full-month data are available. -- Best wishes to all, John Williams
Last week saw mounting financial-market stress as an increasing number of firms indicated losses from or difficulties with mortgage- and asset-backed securities and collateralized-debt obligations. Circumstances are exacerbated by an intensifying inflationary recession, and market disorders should get much worse. It would not be surprising if the Fed found itself being called upon, or felt the need, to provide some systemic liquefaction. Still missing from the unfolding crisis, however, remains heavy flight from the U.S. dollar, which will come sooner rather than later. So far, flight to safety and quality has been into the dollar and into Treasury securities, but that will become a flight out of the greenback, particularly if the Fed moves to liquefy the system. Then, pressures on the U.S. central bank will shift heavily in favor of raising interest rates to defend the dollar. On the economic front, last week's data showed not only weakening business conditions, but also indications of data manipulation in the payroll survey.
July Jobs Report Was Massaged. The only thing surprising about the July employment and unemployment report was that the rigging was not set to show stronger numbers. The seasonally-adjusted July nonfarm payrolls rose by 92,000 (84,000 net of revisions) +/- 129,000 for the month. June payrolls were up a revised 126,000 (previously 132,000). Annual growth slowed sharply from 1.47% in June to 1.34% in July.
As with other recent monthly reports, applying consistent not-seasonally-adjusted year-to-year change to the seasonally-adjusted numbers yielded lower than advertised jobs growth. Applying July's unadjusted annual growth rate to the adjusted numbers yields suggestes an adjusted monthly July payroll increase of 47,000, about half of the official 92,000 gain.
The statistically-sounder household survey, showed employment down by 30,000 for the month, with the seasonally-adjusted U.3 unemployment rate rising to 4.65% +/- 0.23% in July from 4.53% in June. Unadjusted U.3 rose to 4.9% from 4.7% in June, while broader U.8 measure rose to 8.6% from 8.5% (unadjusted) and to 8.3% from 8.2% (adjusted).
The payroll data appear to be under careful management, as seen in the most recent revisions and seasonal-adjustment gimmicks. In revision, the unadjusted total nonfarm payrolls in May and June were revised higher, respectively, by 32,000 (138,623 to 138,655) and by 34,000 (139,127 to 139,161). What is unusual is that the adjusted series were nearly unchanged in revision, down by 2,000 in May (137,906 to 137,904) and down by 8,000 in June (138,038 to 138,030). Normally, the changes in the unadjusted series would flow through to the adjusted series with little variation. Where revisions to the data came in on an unadjusted basis, seasonal adjustments for May and June were altered so as to maintain something close to the original reporting level. Why, remains a question, but the data have been carefully adjusted to maintain someone's reporting agendum.
Purchasing Managers Survey for July Reverses Recent Strength. Both the manufacturing and service-sector versions of the ISM's Purchasing Managers Survey took solid hits in July, dropping to 53.8 from 56.0 and to 55.8 from 60.7. Of some meaning, manufacturing new orders declined to 57.5 from 60.3, while employment declined for both series, to 50.2 from 51.1 (manufacturing) and to 51.7 from 55.0 (services). The prices paid indices also were a little softer, but both series remained in inflationary territory, above 60.0.
Inflationary Pressures Intensify. Beyond the high level of oil prices, broad measures of the dollar are at record lows, and annual M3 growth remains near a highly inflationary 13%. While the Fed's major currencies trade-weighted dollar (TWD) has hit successive monthly lows in past months, dominated by the heavy weighting of the Canadian dollar in that series, the SGS financial-weighted dollar (FWD) had been hovering above its record low, until July. The FWD is weighted by respective currency trading volume, instead of by the merchandise trade weightings used in the TWD. Accordingly, weakness in the FWD is a better indicator of pressure on the U.S. financial markets.
In July, the monthly average FWD fell to a record low of 49.25 (January 1985 = 100.00), down 2.03% from June, and down 6.08% from the year before. The July TWD also fell to a record low, 55.78 (January 1985 = 100.00), down 1.80% from June, and down 5.41% from the year before.
July Ongoing M3 Growth Remained Close to 13%. Lack of acceleration in M2 annual growth and softer large time deposits contributed to a slight slowing in the annual growth rate for the preliminary estimate of monthly average July M3 to roughly 12.8%, from 13.0% in June and 13.1% in May. Estimated July M2 annual growth held at 6.1% in July and June, down from 6.3% in May, while annual growth in large time deposits slowed to roughly 13% from 18% in May. A final July M3 estimate and updated data file will be posted around August 11th.
Additional detail will follow in the August SGS newsletter.
___________________________________________
The August "Shadow Government Statistics" monthly newsletter is targeted for the week of August 13th, due to vacation this week. An e-mail advice will be made of same and intervening Flash Updates/Alerts.
FLASH UPDATE
August 5, 2007
__________
July Jobs Report Shows Managed Numbers
July Annual M3 Growth Notches Lower to 12.8%
July Financial-Weighted Dollar at All-Time Low
Systemic Problems Begin to Surface
__________
The SGS-Alternate Dollar series database has been updated for the July averages and posted (Alternate Data Series tab at www.shadowstats.com). July's SGS Ongoing M3 will be posted next weekend, when full-month data are available. -- Best wishes to all, John Williams
Last week saw mounting financial-market stress as an increasing number of firms indicated losses from or difficulties with mortgage- and asset-backed securities and collateralized-debt obligations. Circumstances are exacerbated by an intensifying inflationary recession, and market disorders should get much worse. It would not be surprising if the Fed found itself being called upon, or felt the need, to provide some systemic liquefaction. Still missing from the unfolding crisis, however, remains heavy flight from the U.S. dollar, which will come sooner rather than later. So far, flight to safety and quality has been into the dollar and into Treasury securities, but that will become a flight out of the greenback, particularly if the Fed moves to liquefy the system. Then, pressures on the U.S. central bank will shift heavily in favor of raising interest rates to defend the dollar. On the economic front, last week's data showed not only weakening business conditions, but also indications of data manipulation in the payroll survey.
July Jobs Report Was Massaged. The only thing surprising about the July employment and unemployment report was that the rigging was not set to show stronger numbers. The seasonally-adjusted July nonfarm payrolls rose by 92,000 (84,000 net of revisions) +/- 129,000 for the month. June payrolls were up a revised 126,000 (previously 132,000). Annual growth slowed sharply from 1.47% in June to 1.34% in July.
As with other recent monthly reports, applying consistent not-seasonally-adjusted year-to-year change to the seasonally-adjusted numbers yielded lower than advertised jobs growth. Applying July's unadjusted annual growth rate to the adjusted numbers yields suggestes an adjusted monthly July payroll increase of 47,000, about half of the official 92,000 gain.
The statistically-sounder household survey, showed employment down by 30,000 for the month, with the seasonally-adjusted U.3 unemployment rate rising to 4.65% +/- 0.23% in July from 4.53% in June. Unadjusted U.3 rose to 4.9% from 4.7% in June, while broader U.8 measure rose to 8.6% from 8.5% (unadjusted) and to 8.3% from 8.2% (adjusted).
The payroll data appear to be under careful management, as seen in the most recent revisions and seasonal-adjustment gimmicks. In revision, the unadjusted total nonfarm payrolls in May and June were revised higher, respectively, by 32,000 (138,623 to 138,655) and by 34,000 (139,127 to 139,161). What is unusual is that the adjusted series were nearly unchanged in revision, down by 2,000 in May (137,906 to 137,904) and down by 8,000 in June (138,038 to 138,030). Normally, the changes in the unadjusted series would flow through to the adjusted series with little variation. Where revisions to the data came in on an unadjusted basis, seasonal adjustments for May and June were altered so as to maintain something close to the original reporting level. Why, remains a question, but the data have been carefully adjusted to maintain someone's reporting agendum.
Purchasing Managers Survey for July Reverses Recent Strength. Both the manufacturing and service-sector versions of the ISM's Purchasing Managers Survey took solid hits in July, dropping to 53.8 from 56.0 and to 55.8 from 60.7. Of some meaning, manufacturing new orders declined to 57.5 from 60.3, while employment declined for both series, to 50.2 from 51.1 (manufacturing) and to 51.7 from 55.0 (services). The prices paid indices also were a little softer, but both series remained in inflationary territory, above 60.0.
Inflationary Pressures Intensify. Beyond the high level of oil prices, broad measures of the dollar are at record lows, and annual M3 growth remains near a highly inflationary 13%. While the Fed's major currencies trade-weighted dollar (TWD) has hit successive monthly lows in past months, dominated by the heavy weighting of the Canadian dollar in that series, the SGS financial-weighted dollar (FWD) had been hovering above its record low, until July. The FWD is weighted by respective currency trading volume, instead of by the merchandise trade weightings used in the TWD. Accordingly, weakness in the FWD is a better indicator of pressure on the U.S. financial markets.
In July, the monthly average FWD fell to a record low of 49.25 (January 1985 = 100.00), down 2.03% from June, and down 6.08% from the year before. The July TWD also fell to a record low, 55.78 (January 1985 = 100.00), down 1.80% from June, and down 5.41% from the year before.
July Ongoing M3 Growth Remained Close to 13%. Lack of acceleration in M2 annual growth and softer large time deposits contributed to a slight slowing in the annual growth rate for the preliminary estimate of monthly average July M3 to roughly 12.8%, from 13.0% in June and 13.1% in May. Estimated July M2 annual growth held at 6.1% in July and June, down from 6.3% in May, while annual growth in large time deposits slowed to roughly 13% from 18% in May. A final July M3 estimate and updated data file will be posted around August 11th.
Additional detail will follow in the August SGS newsletter.
The August "Shadow Government Statistics" monthly newsletter is targeted for the week of August 13th, due to vacation this week. An e-mail advice will be made of same and intervening Flash Updates/Alerts.