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.
Tuesday, May 15, 2007
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.
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.
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.
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.
Monday, April 30, 2007
Federal Prosecutors will retry Former Westar Energy Executives David Wittig and Douglas Lake
According to the Kansas Star via Kansas.com "The government will retry former Westar Energy executives David Wittig and Douglas Lake on charges of defrauding the company."
According to the Kansas City Business Journal, the two former executives had been convicted on 39 and 30 counts of defrauding the utility. An appeals court threw out the convictions due to insufficient evidence on one of the isues in the case. Although prosecutors will not be able to pursue all of the original convictions, "Wittig will face 14 counts of circumventing internal controls and one count of conspiracy, [a federal spokeperson] said Monday. Lake will face 13 circumvention counts and one count of conspiracy ."
This will be their third trial.
This will be their third trial.
Tuesday, April 24, 2007
New Orders
The Commerce Department's durable goods orders data release showed significant strength in manufacturing.
New orders for durable goods were up 3.4 percent compared with a 2.2 percent consensus estimate according to Bloomberg and 2.7 percent polled by the Wall Street Journal. Particularly relevant to Wichita, new orders for commercial aircraft were up by 37.6 percent more than offsetting a 48.8 percent decline in military arircraft orders. In a significant reverse of form, motor vehicles and parts were up 3.3 percent. Boeing announced 27 percent higher profits based on its revenues which are being driven by its strong order book.
Will the delating housing bubble pull us down?
The national housing market remains a worry for the economic outlook. Yesterday we learned existing home sales were down by 8.4 percent in March, the largest drop in eighteen years. Weather has caused these numbers to bounce like a yo-yo. Indeed they spiked in February setting up a snap back. Thomas Lawler, the Vienna, Virginia housing economist, predicted a 7 percent drop in house prices this year (fourth quarter, 2007 over fourth quarter, 2006.) Lawler's prediction was quoted in today's Wall Street Journal. More encouraging was a 1.6 percent drop in the inventory of unsold homes and higher than expected new home sales in March of 1.213 million.
New orders for durable goods were up 3.4 percent compared with a 2.2 percent consensus estimate according to Bloomberg and 2.7 percent polled by the Wall Street Journal. Particularly relevant to Wichita, new orders for commercial aircraft were up by 37.6 percent more than offsetting a 48.8 percent decline in military arircraft orders. In a significant reverse of form, motor vehicles and parts were up 3.3 percent. Boeing announced 27 percent higher profits based on its revenues which are being driven by its strong order book.
Will the delating housing bubble pull us down?
The national housing market remains a worry for the economic outlook. Yesterday we learned existing home sales were down by 8.4 percent in March, the largest drop in eighteen years. Weather has caused these numbers to bounce like a yo-yo. Indeed they spiked in February setting up a snap back. Thomas Lawler, the Vienna, Virginia housing economist, predicted a 7 percent drop in house prices this year (fourth quarter, 2007 over fourth quarter, 2006.) Lawler's prediction was quoted in today's Wall Street Journal. More encouraging was a 1.6 percent drop in the inventory of unsold homes and higher than expected new home sales in March of 1.213 million.
Thursday, April 05, 2007
NLRB Levels Unfair Labor Practice Complaints Against FedEx Home Delivery
FedEx has always tried to avoid unions. Management, from Fred Smith on down, sees unions as a barrier to the flexibility and entrepreneurial drive that it views as essential to FedEx's culture and profitability. Doubtlessly, there is a sprinkle of ideology as well.
Not surprisingly, the Teamsters see things differently. If you click on the title link for this posting, you will find their press release proclaiming a victory of sorts in their skirmishing with FedEx.
A key element in FedEx's business model for their package delivery operation and in particular for FedEx Home Delivery is its use of nonunion contractors.
This might develop into an interesting story to follow.
Not surprisingly, the Teamsters see things differently. If you click on the title link for this posting, you will find their press release proclaiming a victory of sorts in their skirmishing with FedEx.
A key element in FedEx's business model for their package delivery operation and in particular for FedEx Home Delivery is its use of nonunion contractors.
This might develop into an interesting story to follow.
Wednesday, April 04, 2007
The Wichita economy is Steaming ahead
Wichita's unemployment rate falls further below the national average
The Bureau of Labor Statistics reported this morning that Wichita's job market was stronger than the national job market. Our unemployment rate dropped to 4.4 percent in February compared to 4.6 percent in January and 4.9 percent in the America as a whole.
Strong job growth
Employment, as measured by the Bureau's survey of Wichita's payrolls, grew 3.9 percent over February last year an increase of thirty nine hundred jobs. Strong orders in the aerospace industry have fueled this growth. Recent new orders data confirm that this sector is booming even while other key parts of manufacturing weaken. The news in the automotive industry, for example, continues to be weak.
Aerospace leads the way
Aerospace seems to be on the boom part of traditional boom and bust cycle. Although the domestic economic growth appears to be cooling off, foreign demand continues strong and a strong replacement demand exists in the U.S. as it battered airlines nurture their balance sheets back into health. Moreover, a new IMF study argues that the rest of the world is less vulnerable to a U.S. economic slowdown.
The Department of Commerce reported that the unfilled order backlog for the aerospace indutry was up 31.3 percent in February. The growth was almost entirely in the non defense book was up almost 40 percent.
The Bureau of Labor Statistics reported this morning that Wichita's job market was stronger than the national job market. Our unemployment rate dropped to 4.4 percent in February compared to 4.6 percent in January and 4.9 percent in the America as a whole.
Strong job growth
Employment, as measured by the Bureau's survey of Wichita's payrolls, grew 3.9 percent over February last year an increase of thirty nine hundred jobs. Strong orders in the aerospace industry have fueled this growth. Recent new orders data confirm that this sector is booming even while other key parts of manufacturing weaken. The news in the automotive industry, for example, continues to be weak.
Aerospace leads the way
Aerospace seems to be on the boom part of traditional boom and bust cycle. Although the domestic economic growth appears to be cooling off, foreign demand continues strong and a strong replacement demand exists in the U.S. as it battered airlines nurture their balance sheets back into health. Moreover, a new IMF study argues that the rest of the world is less vulnerable to a U.S. economic slowdown.
The Department of Commerce reported that the unfilled order backlog for the aerospace indutry was up 31.3 percent in February. The growth was almost entirely in the non defense book was up almost 40 percent.
Wednesday, March 21, 2007
Mortgage Meltdown
Andy Laperriere argues that we see in the subprime mortgage market debacle the bursting of the housing bubble. But it is just the begginning. He asks "[w]hat role did the Fed's loose monetary policy from 2002-2004 play in fueling the housing bubble? Should the Federal Reserve reexamine its policy of ignoring asset bubbles?"
Mr. Laperriere, a managing director in the Washington office of ISI Group, comments in today's Wall Street Journal.
He goes on to say, "Stock markets world-wide have sold off the past few weeks over concerns the collapse of the subprime mortgage industry could prolong and deepen the housing slump and threaten the health of the U.S. economy. Federal Reserve officials and most economists believe the problems in the subprime mortgage market will remain relatively contained, but there is compelling evidence that the failure of subprime loans may be the start of a painful unwinding of a housing bubble that was fueled by easy money and loose lending practices."
The "wealth effect" has been a the tail wind boosting consumption growth and GDP. If house prices do fall 10 percent this year, it will feel like a Kansas gale in our faces. How far will it push us back?
Mr. Laperriere, a managing director in the Washington office of ISI Group, comments in today's Wall Street Journal.
He goes on to say, "Stock markets world-wide have sold off the past few weeks over concerns the collapse of the subprime mortgage industry could prolong and deepen the housing slump and threaten the health of the U.S. economy. Federal Reserve officials and most economists believe the problems in the subprime mortgage market will remain relatively contained, but there is compelling evidence that the failure of subprime loans may be the start of a painful unwinding of a housing bubble that was fueled by easy money and loose lending practices."
The "wealth effect" has been a the tail wind boosting consumption growth and GDP. If house prices do fall 10 percent this year, it will feel like a Kansas gale in our faces. How far will it push us back?
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