Paulo's Econ Watch

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US October Payroll: Phew!

Posted on November 6th, 2015

Main takeaways:

Very strong report, across the board; 268k jobs were created in the private sector, and Aug/Sep job gains were revised up by 56k.
Weak job creation in August / September raised concerns about the health of the economy, but the October report seems to confirm my take that labor market was not as weak as portrayed by the previous two reports (see US labor market conditions suggest job creation higher than observed in Aug/Sep).
The pickup in wage growth (0.4% mom and 2.5% yoy) may be a reminder that the Phillips Curve is not dead.
Measures of labor slack kept shrinking, particularly those measures Yellen likes to focus (e.g., part time for economic reasons, marginally attached,...).
Particularly worrying is the decline in labor force participation (LFPR), which seems to be heading down after a brief respite.
If LFPR remains flat a mere 135k/month payroll for the next 14 months is needed to reach the 2016 median unemployment forecast.
- Job growth above 135k/month or falling labor force will result in unemployment rate undershooting Fed's forecasts.
If employment growth slows from the current 2.3% to 1.5% yoy and LFPR remains constant (against structural trend), then unemployment rate would reach 4.4% by the end of 2016.
Allowing the LFPR to continue its down trend since 2010, 135k/month would lead unemployment rate to 4.0% by the end of 2016!
As for the timing of liftoff... last month I wrote: "Since I believe the payroll slowdown is temporary and that global risks are likely to recede in the coming months, I think December is still the most likely date for moving out of the ZLB". That remains the case since the October report confirmed my previous beliefs.

Establishment report:

Private payroll increased 268k in October, well above the bloomberg consensus. Net revisions were positive 56k.

The table below shows the expected range for private payroll (excluding outliers), the monthly surprise and revisions to the last 3 months. The actual print is in "red" (an "x" when inside the expected range and a box when outside).

It is interesting to see the shape of the gray area! The negative surprises in August and September led to a material downward change in market's expected range for private payroll.

Market has been on track forecasting the pace of job creation in the last 6 months!

One can see that the average of the median expectations for the last 12 months was 215k/month, very close to the actual releases of 223k/month in the same period (after revisions, private payroll averaged 226k/month in the last 12 months).

In the last 6 months the median expectations averaged 205k/months and the actual release averaged 204k (201k/month after revisions).

In the last 3 months the median expectations averaged 190k/m and the actual release averaged 175k/month (181k/month after revisions).

Payroll trend

The trend in private payroll (measured by the 12-month moving average) moved up to 226k/month from 217k/month (unrevised) in September. The chart below shows the current vintage (orange line) as well as the real time path observed in each of the last few months.

It is clear that the pace of job creation has slowed from the excessively high pace observed in Q4 2014 and Q1 2015.

The chart below shows that annual growth rate in private payroll is growing at 2.3% yoy -- off the highs but is still a healthy pace of growth.

The current yoy growth (2.3%) continues very close to the growth observed in private payroll in the last 3 years, which is above the peak observed in March/2006 during the previous expansion period and is closer to the growth rate observed in the late 1990´s.

Labor input:

The volume of total hours worked in the economy increased in October recovering from September drop and seems to be back on the trend ince 2009. Total hours worked increased 1.8% (annualized) in the last 3 months (blue line in the chart below).

The recovery in hours worked was mostly due to the goods sector. But it is probably too soon for manufacturing and mining jobs and hours to rebound substantially in the coming months.

Hours worked in the services sectors continued performing well.

Wages:

Wages (average hourly earnings) increased In October.

Wages for all employees rose by 2.45% yoy (vs 2.2% in September) and for production worker rose 2.2% yoy (vs 1.9% in September). Overall, as the chart below shows, average hourly earnings have consistently grown at about 2.1% p.a in the last three years.

Household income:

Good. Close to the trend observed in the last three years.

Goods sector nominal income rebounded.

Services sector income also back to a healthy trend.

Household report:

The labor force participation rate moved 'sharply' down in September to 62.4% and remained at the same level in October, breaking what had appeared to be a stable level. It is interesting to highlight that the most LFPR managed to do was to stabilize in 2014 -- a year in which job creation and labor market conditions improved quite substantially. If the LFPR resumes its structural downtrend it could put the Fed in a position where they see labor slack shrinking faster than what they forecast, despite a similar economic growth outlook.

The broader measure of unemployment (U-6), which includes marginally attached, discouraged workers, and employed part time for economic reasons is falling faster than the headline unemployment.

The median forecast for unemployment rate in the Fed's SEP (Summary of Economic Projections) is 4.8% for 2016, 2017 and 2018. Assuming a flat LFPR, a forecast of 4.8% unemployment rate by the end of 2016 is compatible with average employment growth of 135k/month, substantially lower than the current pace of job growth.

As a reference, even a slowdown in employment growth from 2.3% currently to 1.5% yoy (the floor observed since mid-2011 was 1.8% yoy) would be equivalent to monthly employment gains of 178k and this would lead to a 4.4% unemployment rate by the end of 2016. Bottom line: LFPR needs to rebound (or job creation to settle at a very low level) for a 4.8% unemployment forecast to be attainable.

See detailed charts below:

The chart below shows unemployment rate (and short-term unemployment) and the recent tightening cycles (yellow). The short-term unemployment rate is at the lows.

Long term unemployment rate is improving faster. Moreover, the 'shadow' labor (i.e., the gap between U-6 and the headline unemployment rate) is also improving faster in the recent months. This is a clear sign that the labor market continues improving.

October employment by category - chart pack

Posted on November 6th, 2015

The charts below show employment by category. The blue line is total employment in the category, the orange bar is monthly change and the red line is the linear regression in the last two years.

Total payroll increased 271k in October, after a 137k growth in September (which was revised down from 142k). The trend for the last 6 months slowed from 280k/month by the end of last year to 215k in the 6 months to October.

Private payroll increased 268k in October, after 149k growth in September (revised up from 118k).

The trend for the last 6 months slowed from 270k/month by the end of last year to 201k in the 6 months to October.

Most of the slowdown in the pace of job creation was concentrated in the goods producing sector (mining and manufacturing); a concern last month was that this slowdown could be spreading to the services sector but October's data (and revisions) showed a healthy pace of job creation. Overall, the 6-month pace of job creation in the goods sector slowed from 50k (at the end of last year) to close to zero, while in the services sector it slowed from 220k to 201k in the same comparison.

Employment categories

Total nonfarm

Total private

Goods-producing

Mining and logging

Construction

Manufacturing

Private service-providing

Trade, transportation, and utilities

Wholesale trade

Retail trade

Transportation and warehousing

Utilities

Information

Financial activities

Professional and business services

Temporary help services

Education and health services

Educational services

Health care and social assistance

Leisure and hospitality

Other services

Government

Total nonfarm (trend from 243.9 to 242.7 to 242.1/m)

Total private (trend from 238.2 to 235.6 to 235.0/m)

Goods-producing (trend from 37.5 to 34.8 to 32.4/m)

Mining and logging (trend from -0.5 to -1.1 to -1.5/m)

Constructions (trend from 23.2 to 22.4 to 21.8/m)

Manufacturing (trend from 15 to 14.1 to 13.0/m)

Private service-providing (trend from 200.8 to 200.8 to 202.6/m)

Wholesale trade (trend from 8.2 to 7.9 to 7.8/m)

Retail trade (trend from 24.1 to 24.0 to 23.9/m)

Transportation and warehousing (trend from 12.7 to 12.4 to 12.1/m)

Utilities (trend from 0.6 to 0.7 to 0.7/m)

Information (trend from 3.9 to 3.9 to 3.8/m)

Financial activities (trend from 11.4 to 11.6 to 11.8/m)

Professional and business services (trend from 53.5 to 53.7 to 54.2/m)

Temporary help services (trend from 12.2 to 11.9 to 11.7/m)

Educational services (trend from 4.6 to 4.2 to 4.1/m)

Health care and social assistance (trend from 37.8 to 39.1 to 40.9/m)

Leisure and hospitality (trend from 37.2 to 37.1 to 37.1/m)

Other services (trend from 6.6 to 6.2 to 6.1/m)

Government (trend from 5.7 to 7.0 to 7.1/m)

US labor market conditions suggest job creation higher than observed in Aug/Sep

Posted on November 4th, 2015

Labor Market Conditions

Extracting a common trend

One possibility to summarize labor market conditions is to extract a common trend from several labor market indicators.

Based on previous work from Atlanta Fed (Labor Spider Chart) and from Kansas Fed (Assesing Labor Market Conditions), among others, I’ve compiled a list of labor market indicators: unemployment rate, employment to population ratio, labor force growth, U6 unemployment, short-term unemployment,job losers, unemployment longer than 27 weeks, involuntary part-time, hires, separations, quits, NFIB employment, NFIB plans to hire, Challenger job cuts, jobs plentiful, jobs hard to get, initial claims, Michigan consumer confidence, ISM employment, temp help, average hourly earnings, weekly hours index, weekly payroll index, employment diffusion index, Gallup job creation index.

It is possible to consolidate all the information in the list of labor market indicators in a few orthogonal components using principal component analysis (PCA). The table below shows that the first seven factors explain 92.9% of the data set variance. The first two factors explain 79% of the variance.

The table below illustrates this:

Table: Principal Components - proportion of variance accounted by each PC
	PC1	PC2	PC3	PC4	PC5	PC6	PC7
Standard deviation	4.064	2.366	1.204	0.900	0.788	0.730	0.691
Proportion of Variance	0.590	0.200	0.052	0.029	0.022	0.019	0.017
Cumulative Proportion	0.590	0.790	0.842	0.871	0.893	0.912	0.929

It is possible, then, to reconstruct the private payroll time series using just the main principal components (PCs). The idea is that the filtered private payroll built this way would embed the common trend among all the labor market variables in the data set, and therefore filter away the idiosyncratic part of the payroll leaving only the true underlying data.

The table below shows the results of a linear regression of private payroll on the first two principal components. One can see that the first two factors are able to explain a high proportion of private payroll variability (R2=0.85).

Adding factors three to seven increases R2 to 0.91. Results can be seen in the table below.

**Regression Results**

	Private Payroll
	(1)	(2)

Constant	63.31^*** (7.00)	63.31^*** (5.49)
PC1	50.63^*** (1.73)	50.63^*** (1.35)
PC2	23.60^*** (2.96)	23.60^*** (2.32)
PC3		-42.02^*** (4.57)
PC4		-4.16 (6.13)
PC5		-16.34^** (6.99)
PC6		-20.76^*** (7.53)
PC7		23.83^*** (7.99)
N	166	166
R²	0.85	0.91
Adjusted R²	0.85	0.91
Residual Std. Error	90.16 (df = 163)	70.70 (df = 158)
F Statistic	461.55^*** (df = 2; 163)	229.75^*** (df = 7; 158)

Notes:	^***Significant at the 1 percent level.
	^**Significant at the 5 percent level.
	^*Significant at the 10 percent level.

Results for Sep/2015

The chart below plots the actual payroll printed (dots) and the underlying trend using the first two PCs.

The latest private payroll was 118 thousands (Sep/2015), while the underlying trend suggest payroll running at 233 thousands/month.

The underlying trend obtained adding factors three to seven becomes a bit more volatile, but suggest an uderlying trend running at around 194 thousands/month.

Bottom line

Latest payroll was 118 thousands (Sep/2015).
The average of the last 3 months was 138 thousands/month.
The common trend extracted from labor market indicators suggests underlying payroll running at around 194 thousands/month.

Dr. Paulo Gustavo Grahl, CFA (2015-11-04)

US Personal Income and Outlays in September: strong consumption if you exclude energy

Posted on October 30th, 2015

Main takeaways:

Slowdown in consumption in September mirrors the slowdown earlier this year, since it is all due to energy:
- Consumption of energy goods and services dropped 5.3% (not annualized) in the month.
- Excluding energy, consumption rose 0.4% in the month.
Consumption and income seem to have weathered well the tightening of financial conditions.
Nominal (real) disposable income trend growth in the last 12 months growing at 3.3% (2.9%) and consumption trend growth at 3.6% (3.0%).
Core nominal (real) consumption (ex food and energy) growing at 4.5% (3.3%) in the last 12 months.

Personal spending and household income both rose 0.1% in September. Savings rate almost flat at close to 5% (the average observed since 2013).

Disposable income seems to be in a steady trend, while household consumption rebounded from the lows early in the year and is back to its previous trend growth.

Chart 1a) Income and expenditures, nominal, since 2010

The growth trend in the last 12 months for disposable income remained at 3.3% in September (3.2% in July and 3.1% in June), while the growth trend for consumption moved up to 3.6% from 3.4% in August (2.8% in July and 2.6% in June).

Cart 1b) Income and expenditures, nominal, last 2 years

Chart 2a) Income and expenditures, volume, since 2010

When looking at volumes (constant prices) the trend growth in real disposable income slowed to 2.9% in September (from 3.0% in August and 3.2% in July), while real consumption rose remained stable at 3% (2.8% in July).

Chart 2b) Income and expenditures, volume, last 2 years

The chart below shows slightly different measures of income. The green line shows private sector wages have clearly slowed down in recent months (from above average growth) and are now more aligned with the broader concept of disposable income. Overall, all measures are growing at close to 4% in the last 6 months.

Chart 3a) Different measures / concepts of household income, since 2010

Chart 3b) Different measures / concepts of household income, last 2 years

The chart below shows that almost all the recent stagnation in consumption was due to 'energy' consumption.

Chart 4a) Household consumption, core vs total, nominal, since 2010

Chart 4b) Household consumption, core vs total, nominal, last 2 years

Chart 4c) Household consumption, core vs total, volumes, since 2010

Chart 4d) Household consumption, core vs total, volumes, last 2 years

Breaking household consumption into goods and services show that the recent soft patch was entirely due to goods consumption -- but take a look in the chart of volumes: it shows goods consumption growing even faster than its recent growth trend.

Chart 5a) Goods and services consumption, nominal, since 2010

Chart 5b) Goods and services consumption, volume, since 2010

Digging further into goods consumption it is evident that most of the hit happened in nondurable (which includes gasoline), but when adjusting for prices nondurable goods seem to be back to the previous growth trend.

Chart 6a) Goods consumption (durables and nondurables), nominal, since 2010

Chart 6b) Goods consumption (durables and nondurables), volume, since 2010

Chart below focus only on nondurable goods (volume) to better spot the trends.

Chart 6c) Goods consumption (nondurables), volume, since 2010

US October ISM Manufacturing preview: regional PMIs suggest a small upside risk vs bloomberg consensus

Posted on October 30th, 2015

Bottom line: the average of forecasting models suggest October ISM Manufacturing at 50.6, a bit above market consensus of 50.0. Looking only at the regional PMIs suggest ISM @50.5.

With all the key regional PMI's and the flash Markit PMI already released let's take a look at what can be inferred for the ISM. The chart below plots the ISM against the first principal component of all the remaining PMI's (also adding the GSAI - Goldman Sachs Analyst Index). It suggests October ISM at 50.5, a bit above market consensus.

Expanding the analysis, one can torture the numbers to come up with several competing forecasting models. This can range from simple Box-Jenkins and univariate time series filters to models using the principal components of regional PMI's and a mix of both.

Important to note that a simple random-walk forecast for the ISM Manufacturing is very competitive in terms of the measures of forecasting accuracy.

The literature on forecasting often suggest that combining different forecasting models produces, on average, better forecasts -- so let's give it a try.

Table below show the average point forecast for June's ISM Manufacturing as well as the range of point forecasts provided by the models I've tried.

Important: do not confuse this range with forecasting uncertainty; the error margins of the forecasting models are well wider than what is implied in the range of point forecasts.

	Average forecast	Point forecast range	Bloomberg survey	Bloomberg range	Actual
Sep 2014	59.1	58.3-60.6	58.5	57.0-60.0	56.6
Oct 2014	57.4	56.5-60.2	56.2	55.0-58.6	59.0
Nov 2014	58.0	57.2-59.0	58.0	54.5-61.0	58.7
Jan 2015	54.3	52.9-55.6	54.5	52.0-56.5	53.5
Mar 2015	52.1	49.6-52.9	52.5	49.5-55.0	51.5
Apr 2015	51.4	50.2-52.4	52.0	50.3-54.0	51.5
May 2015	51.1	49.6-52.3	52.0	50.0-52.5	52.8
Jun 2015	53.0	51.4-53.9	53.2	52.0-55.0	53.5
Oct 2015	50.6	50.1-52.3	50.0	48.9-51.5

US Univ. of Michigan Sentiment: inflation expectations at lowest rate ever recorded

Posted on October 30th, 2015

Main takeaways:

Final Michigan Sentiment in October at 90.0, down 2.1 points from the preliminary estimate.
This was largely due to less favorable assessments of buying conditions (due to fewer discounts).
The overall tone of the report was very positive (see quotes below).
Historical episodes show that real consumption grows in the 2.5%-4.0% range while Sentiment is near current levels.
5-10y inflation expectation ticked down to 2.5%, the lowest rate ever recorded.

Additional highlights in the report:

"Confidence retreated in late October largely due to less favorable assessments of buying conditions"
"Largest gain was among households in the bottom third of the income distribution"
"Future financial prospects were viewed more favorably by all households than anytime since 2007"
"Consumers remain sensitive to pricing, with small decline in buying plans since mid month due to fewer price discounts than had been anticipated"
"Consumers voiced a somewhat greater willingness to use savings and debt to make major purchases"
"Net income gains were reported by the highest number of households with incomes in the bottom third in the past ten years"
"Households expressed a degree of financial optimist unseen since mid-2007"
"Two-thirds of all consumers reported hearing news of negative economic developments in early October, unchanged from September"
"News of job losses were reported slightly more frequently than job gains, the weakest in more than a year"
"October's 2.5% long term inflation rate ties the lowest rate ever recorded"

The final reading for October's Univ. of Michigan Sentiment rebounded from September (90.0 vs 87.2).

Looking closer at the relationship between Michigan Sentiment and household consumption:

The chart below plots the 3mma of Michigan Sentiment in the x-axis and real consumption (3mma, YoY) in the y-axis. The vertical black line shows the most recent monthly print. The expected growth rate of consumption based on the latest Sentiment reading would be close to 3.1%.

Perhaps even more important, the current level of Sentiment is compatible with consumption growth in the 2.5%-4.0% range, with a few outliers above this range and no episode of consumption growth below 2% in the vicinity of the current level for Michigan Sentiment.

Inflation expectations ticked down to 2.5%, the lowest rate ever recorded (since Sep/2002)

US 3Q 2015 advance GDP: domestic demand at solid rates and net exports soft

Posted on October 29th, 2015

Main takeaways:

Strong domestic demand:
- Consumption increasing at 3% yoy.
- Investment slowed to 3.4% yoy -- but excluding oil sector, investment is up 6%yoy.
Government consumption and investment turned positive in 2014 and is up 0.7% yoy.
Net exports will likely continue to contribute negatively to GDP -- but in the recent US history, soft export growth was never associated with weak overall income growth.

US GDP increased 2% yoy in Q3.

Domestic demand (GDP excluding net exports and inventories) is growing at 2.8% yoy.

Private consumption rose 3.2% yoy - similar to the growth rate observed in the last 2 years.

Private investment slowed down to 3.4% yoy...

...but excluding the direct (accounting) impact of oil, investment is growing at 6% yoy.

Government consumption and investment turned positive in 2014.

Exports increased 2% on average in the last two years (and 1.5% yoy in Q3). The slowdown in export growth started in 2013, and precedes the strengthening of the dollar, which dates mid-2014.

Imports rose 4.8% on average in the last two years (5.5% yoy in Q3).

As a result of the slowdown in exports and strong imports, net exports became a drag to GDP growth, similar to what had happened from 2000 to 2006.

Looking at 5-year cycles, the strengthening of the broad dollar index (in real terms) suggests net exports will continue to be an accounting drag to growth.

At face value, this relationship suggests that, by late 2017, the 5-year average contribution of net exports to growth will be around - 0.4pp. Given the performance of the last 3 years, this would imply an average contribution of net exports of around -0.75 percentage points over the next couple of years.

The chart below shows that it is unusual for 2-year average contribution of net exports to GDP to be close to or lower than 0.75pp...

...and all those episodes of very negative net exports contribution were associated with very strong domestic demand.

A quick look at those episodes show that exports growth slowed down. In 1997-1999 period, for example, the US dollar was strengthening, US real exports were sideways, and imports were growing fast at the same time the US economy was very strong.

US GDP in 3Q shows domestic demand growing at "solid rates"

Posted on October 29th, 2015

Main takeaways:

GDP growth in Q3 at 1.5%, close to market consensus.
Inventories cut 1.4pp from growth in the quarter...
...but quarterly swings in inventories have not changed overall growth path in the recent past.
Domestic demand growth is growing at "solid rates" -- to use the upgraded sentence in the FOMC statement.
Growth remains above potential => labor market likely to continue improving.

US GDP rose 1.5% in 3Q, close to bloomberg consensus. Consumption increased a healthy 3.2% (contributing 2.2 pp) and investment growing 2.9% (contributing 0.5pp). Domestic demand growth appears consistent with FOMC's description of "increasing at a solid rates in recent months".

Inventories were the main drag, cutting 1.4pp from growth in the quarter. The positive surprise was the flat contribution of net exports against an expected drag.

Inventory changes can be a key component of quarterly changes in growth, but they have not changed the overall trend. The charts below plot GDP and Final Sales (GDP less inventories) together with a trend since mid-2009 and a trend in the last two years.

Both GDP and Final Sales share the same 2.0% growth trend since the end of the recession and 2.5% growth trend in the last two years.

Important to highlight that current pace of growth appears to be above potential, therefore hinting that underutilization of labor resources would likely continue to diminish.

US CB Consumer Confidence drops in October, but still implies a healthy consumption growth

Posted on October 27th, 2015

Main takeaways:

Conference Board consumer confidence dropped 5 points to 97.6 in October.
Consumers' perception of the employment conditions worsened in October, but it is still above the level observed in the second half of 2014 -- a period where employment growth was booming.
Consumers’ optimism about the short-term outlook dropped 2.8 points to 88. It often leads consumption growth...
...but despite the current slowdown, CB expectations index is associated with a healthy 2.6% real growth in consumption.

The Conference Board Consumer Confidence Index reading for October dropped 5 points to 97.6. Despite the monthly drop, the level of consumer confidence appears to have stabilized at a relatively high level.

Consumers perception of the employment conditions also worsened in October.

Less consumers think jobs are plentiful...

...and more find jobs are harder to get...

... but the overall employment condition is still above the level observed in the second half of 2014 -- a period where employment growth was booming.

Consumer expectations off the highs and may have turned down...

...but the present situation index does not seem to have topped.

Consumers’ optimism about the short-term outlook often leads consumption growth...

...but despite the current slowdown, CB expectations index is associated with a healthy 2.6% real growth in consumption.

US September durable goods report was weak, but hints at improving capex

Posted on October 27th, 2015

Main takeaways:

Weaker than expected report + negative revisions => further negative revisions to growth in Q3.
Manufacturing shipments and orders of (core) durable goods peaked one year ago.
But shipments of (core) capital goods have already bottomed -- this hints at improving capex.
Most of the drop in (core) durable goods is due to primary metals (iron and steel mills) and machinery (farm, mining, oil field and gas field). Machinery shipments and orders appear to have bottomed.

September durable goods repor was weaker than expected and revisions to August were to the downside.

The report paints a weak picture for overall manufacturing but suggests some pickup in corporate capex from Q2.

Total manufacturing shipments of durable goods excluding the volatile groups transportation and defense -- the core durable goods -- have peaked last September and show no sign of improvement in the near term. New orders also do not suggest an improvement.

But when looking at the breakdown, it is clear that most of the decline in manufacturing durable shipments results from the group primary metals, which includes iron and steel mills.

The chart below shows the decline in shipments (in $bn, current prices) in the last one year and in the last six months (annualized). Most of the drop in core durable goods can be traced to the primary metals group. The group machinery is being hit by a drop in farm and mining, oil field and gas field machinery. But this category has shown an improvement in shipments in the last 6 months.

The above chart also shows core capital goods shipments have improved in the last six months. This is a positive sign, since core capital goods is a proxy for corporate investment.

The year-over-year performance of core capital goods shipments points to a weaker annual growth for investment in the Q3 (see chart below).

But the quarterly improvement in core capital goods shipments suggests a pickup in investment compared to the second quarter.

The chart below shows the quarterly association of core capital goods shipment and equipment investment. It suggests a rebound in capex from near zero in Q2 to about 4% in Q3.

The new orders data from the ISM manufacturing report suggest the weakness in durable goods orders might be overdone.

Detailed chart pack

In all the following charts, shipments measure the dollar value of products sold by manufacturing establishments and new orders are intention to buy for immediate or future delivery. Unfilled orders (or order backlog) are the inventory of open orders to be delivered in future periods, and inventories represent the value of end-of-month stock regardless of stage of fabrication.

US Core* Durable Goods (*excluding transportation and defense)

Durable goods orders and shipments peaked one year ago (Sep/14).

Inventories peaked in the first quarter.