Last week I asked when the last time the Yankees and Red Sox held the bottom two positions in Baseball at the end of the season. The answer is 1966. The Red Sox ended that season in last place, just behind the Yankees. The Baltimore Orioles finished first and faced the Dodgers in the World Series. The Orioles swept the Dodgers in four games to become World Champs. Sadly, this past week we lost one of the members of that team. The greatest third baseman in history, Brooks Robinson passed away at 86 years of age. I was able to see Brooks play on many occasions as a kid growing up. He was always incredible to watch either on the field or at bat. Yes, I do have multiple baseball cards of him, including one from the 1970 World Series where he had just made a diving catch at third to record a crucial out against the Reds. Brooks was always a class guy and true idol to look up to. He will be missed.
Durable goods in August rose a very slight .2%. This was after a big drop of 5.6% in July. The rebound was the result of new business investments in machinery. This area of the report increased .9%, much stronger than expected. The reason for the purchases by companies is not yet clear. It very well could be the higher wages and the inability to find workers is pushing an increase in automation. Time will tell.
The energy markets show no let-up in the supply shortages. Crude oil stocks fell another 2.17 million barrels in the last week. When you dig deeper into the industry on a global basis the concern grows. Beyond the US, Saudi Arabia and other middle east oil producers are not investing in any new production projects. There is nothing planned through 2026 at this time. That clearly indicates that future investments in fossil fuels will not provide sufficient returns to support themselves, even at much higher oil prices. This is a long-term concern not just for the US, but for the world as our energy needs grow.
In spite of all the strikes and news about layoffs, the job market continues to perform well. Initial jobless claims are holding at pre-pandemic levels, reflective of a strong economy. Continuing jobless claims are also at levels reflective of 2014 to 2020. The market is calling for more trained workers to fill jobs. A year ago the US had over 11 million job openings. This June that dropped to just over 9 million. In August the number is just under 9 million. The largest demand areas are in manufacturing, transportation, health care and professional services. This report is often an early indicator of growth or decline. The weakest industries for open positions include mining, including energy, also real estate and arts and entertainment. So far the UAW strike appears to have had no impact on layoffs hitting the unemployment roles.
Manufacturing continues to be a mixed, soft bag of results. The Dallas Fed Manufacturing index in September fell 18.1% exceeding the July contraction of 17.2. The Richmond Fed rebounded from a negative 7 in July to a positive 5 in August. The Kansas Fed Index fell back into negative numbers where it was 12 in July and in August a negative 13. The ISM will be out today and I would figure it will again be flat from August. Look for a number around or just under 48 reflecting continued contraction.
Personal spending appears to have flattened out. At .4% this past month it has been in a very narrow range this year. Two areas continue to be the focus of spending. First, services including housing, transportation and health care. Second is goods, which has been concentrated on gasoline and motor vehicle fuels. This is not good and not something that a growing economy can rely on for future growth.
Lastly, retail inventories are growing. Even pulling out autos the level jumped .6%. While this will assist in keeping inflation down, it is not a good sign for manufacturing.
Have a great weekend.
