Mapping the top economic indicators – may 2017

In today’s post we’ll update the top 6 economic indicators as of mid May 2017. The final indicator for April was released yesterday. Each of the 6 indicators is updated with April data. For background on the top 6 see here.

The table below shows the current heatmap for the top 6 indicators.

All of the 6 indicators remain green for this month. 2 of the indicators showed improvement, 4 showed some deterioration. None are even near a warning signal. This also means that there is no trigger for the COMP indicator which means there is no possibility for the SPY-COMP system to trigger this month. Here is a brief update on each of the 6 indicators.

  • Unemployment rate – April was another strong month for the employment rate and the jobs report, reversing all weakness from the March report. UER is down to 4.5%. Below it’s 12 month SMA. No signs of weakness. The 12 month SMA is at 4.7%.
  • Real retail sales – still showing growth but very weak. April slipped to 2.2% growth. Retail is an interesting story these days that you may read a lot about A lot of weakness here is being caused by the rise of the online retailers and the effect they are having on the traditional retail industry.
  • Industrial production, durable consumer goods – big improvement this month to a growth of 3.4%. Need to see if this is just a rebound from recent weakness or a return to sustained growth.
  • Permits – April’s number was much weaker than expected. They key here is to remember that this is one of the noisiest indicators. That’s why we use the year over year change in the 3 month SMA. While that also showed weakness, it is still positive at  3.6% yr over yr growth. Also the warning from this indicator doesn’t come until a -10% reading.
  • Yield curve narrowed again this month to 150 bps. The yield curve has given back all of its gains since the election now. Something to keep an eye on. This is a very early potential indicator if it goes negative.
  • Leverage – this is the best indicator for any market trouble outside of recessions. It currently stands at -0.68, far from any warning.

A mixed bag for the month but nothing is signaling cause for recessionary concern. At least for now. Finally, here is the current status of the COMP probit model. The model is now using out of sample data. It shows very little probability of a recession.

That’s it for this month. In summary, all 6 individual economic indicators are currently green. No change from last month.

Note: my cousin Tony has posted two more articles that give some more detail on the econ indicator methodology and probit model.

Full Disclaimer - Nothing on this site should ever be considered advice, research or the invitation to buy or sell securities. These are my personal opinions only.

This entry was posted in Economic Indicators, Economy and tagged , , , , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *