Tuesday, May 15, 2007

Manufacturing and Housing: Which Way is the Economy Going?

The monthly reports on April's Housing starts and industrial production give us some insight into which way the economy is headed. The April employment report had demonstrated weakness in each.

Construction: Housing Starts 19% Below Last Year

The Wall Street Journal reported, "Home construction unexpectedly rose during April, making a surprise increase despite bloated inventories and tighter credit for subprime borrowers, but building permits took their sharpest fall in 17 years." Bloomberg's consensus forecast for housing starts were 1.475 million new units. The actual (a 1.528 million annual rate) was better, but that level is 19 percent below the year before.

Manufacturing, especially Aerospace, Is Up

The Federal Reserve Board published its April Index of Industrial Production. America' mines and factories produced 1.9% more than a year ago and their capacity usage (80.2% ) was 2.3% higher. Motor vehicles were a little stronger, a good sign.

Aerospace production was up 9.7 percent over last year.

Friday, May 04, 2007

Jobs Grew Modestly in April

Low expectations. Even lower job growth.

Wall Street expected a weak employment report for April and it got it. According to Bloomberg, the consensus estimate was for a growth of 100,000 jobs. According to the Wall Street Journal, the expectation was for 110,000. The Bureau of Labor Statistics announced April's job growth was 88,000.

April's payroll's were 1.4% higher than a year ago. The economy has produced slower year over year job growth in first four months of 2007 than we saw last year. Yet 1.4 percent growth is fast enough to keep up with labor force growth and slowly pull down the unemployment rate. These comparisons need to be weighed against the very rapid growth experienced the same time last year.

The unemployment rate increased from 4.4 percent to 4.5 percent. This reflects the month to month sampling fluctuation more than it does a fundamental reversal of trend.

Aircraft manufacturing booming

The Bureau did not report separate jobs data for aircraft manufacturing. However it did report that total jobs in the transportation equipment sector fell by 200,000 and that motor vehicles and parts fell by 4.8 million. This implies the rest of the sector grew by 4.6 million jobs which would be principally in the aerospace industry.

Wednesday, May 02, 2007

Wichita Job Growth is Strong and Accelerating

Jobs grow 4.1 percent.

Employment grew a rapid 4.1 percent in the Wichita labor market since March of last year according to the federal Bureau of Labor Statistics. Not only was Wichita's job growth strong, but it is accelerating compared to the 3.9 percent year over year growth recorded in February. By way of comparison payrolls nationwide grew only 1.4 percent. Wichita’s economy produced twelve thousand new jobs over the last twelve months.

The unemployment rate is down and well below the national rate.

The Wichita unemployment rate was 4.1 percent well below the national average of 4.5 percent. Things have changed dramatically over the last twelve months. A year ago, both the national and the local unemployment rates stood at 4.8 percent. One major reason is the booming aircraft industry. Commercial aircraft order backlogs are up 40 percent over a year ago. The financial recovery of the domestic airline industry, its aging fleet of planes, and a huge demand abroad are all contributing to this sanquine cycle in a very boom and bust business. The Eagle reports that passangers on Air Tran grew 12.9 percent in April.

Tuesday, May 01, 2007

Murdoch Bids $5 Billion for Dow Jones

Want a Journal Mate?

The rule of media empires is he who owns the content rules. Whether content pays is another matter! Wall Street seems convinced that top shelf journalism and having a business model in the black are two diferent things after all. (And I do not mean Conrad Black!)

Rupert Murdoch's News Corp has bid $ 5 billion for Dow Jones, publisher of the Wall Street Journal, Barrons, and the Dow Jones Newwires among other media properties.

Is Murdoch paying too much? he does not think so: "[W]e feel it's worth this. This is the greatest newspaper in America, one of the greatest in the world. It has great journalists which deserve, I think, a much wider audience. We feel that with coming both online and offline, there's a great deal to be done here. It's got great journalists, it's got great management, but it's got a rather confined capital. It's got to be part of a bigger organization to be taken further."

The Bancrofts say "No."

Although the bid is a 67% premium over the stock price that does not mean it is a deal.

Like many traded newspaper companies, Dow Jones has more than one class of shares. In this instance, the Bancroft family, which has a minority of the shares has a voting majority. The Financial Times quotes Michael Elefante, a Dow Jones director and lawyer representing the Bancroft family, as saying “Members of the family and the trustees of trust for their benefit have advised him that they will vote shares constituting slightly more than 50 per cent of the outstanding voting power of Dow Jones against the proposal.”

Stay tuned, the fun has just begun.