Monday, November 2, 2015

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


UK Seeks "Two-Tier" Europe Enshrined in Law

Posted: 02 Nov 2015 05:23 PM PST

German chancellor Angela Merkel, EU president Jean-Claude Juncker, and French President Francois Hollande will not be pleased to learn UK Chancellor Seeks Two-Tier Europe Enshrined in Law.
George Osborne, Britain's chancellor of the exchequer, will on Tuesday set out for the first time the UK's demands for EU treaty change to protect its economy, taxpayers and the City of London in a two-speed Europe.

After months of diplomatic shadow boxing, Mr Osborne will use a speech in Berlin to set out in detail how Britain wants a new EU settlement to enshrine the rights of non-eurozone countries in the 28-member club.

"Quite frankly, the British people do not want to be part of an ever closer union," the chancellor will tell a business audience. "I believe it is this that is the cause of some of the strains between Britain and our European partners."

Mr Osborne will call for "principles embedded in EU law and binding on EU institutions" to govern a two-tier Europe, with an integrated eurozone surrounded by a looser group of countries using their own currencies.

Mr Osborne will say that the new rules must enshrine the "integrity of the European single market" and ensure that it is not distorted by eurozone countries rigging the rules in their favour.

The treaty changes would include "the recognition that the EU has more than one currency and we should not discriminate against any business on the basis of the currency [area] in which they reside".

That clause is specifically aimed at protecting British financial groups from protectionist measures by the eurozone, and to ensure that London will retain its position as the principal centre for European finance.

Mr Osborne will add: "We must never let taxpayers in countries that are not in the euro bear the cost for supporting countries in the eurozone."
The UK wants to keep the British Pound, not bear any Euro country bailout costs, protect London from financial transaction taxes, and enshrine in law measures to protect non-euro countries, effectively creating a two-tier Europe.

If Merkel and Hollande will not go along, would prime minister David Cameron then urge UK citizens to vote in favor of the UK leaving the EU?

Mike "Mish" Shedlock

Rising Trucker's Pay, Falling Desire for Trucking Jobs Provide Reasons Self-Driving Trucks Will Reshape Industry

Posted: 02 Nov 2015 09:21 AM PST

Fewer and fewer people willing to live the trucker's life. This has created a shortage in drivers and in turn Rising Pay is Reshaping the Trucking Industry.
The shortage of truck drivers in the U.S. is driving salaries higher, with gains up to 12 percent over the past year.

Average pay for long-haul truckers jumped 17 percent since the end of 2013 to a record average of $57,000 in 2015, according to the National Transportation Institute. The surge comes as U.S. employment costs overall are up just 2 percent and average weekly earnings are rising only 2.2 percent.

The shortage of truck drivers has grown to nearly 48,000 and could expand further due to a combination of industry growth and a retiring workforce, according to the American Trucking Associations' Truck Driver Shortage Analysis for 2015.

The ATA believes that trucking will need to hire an average of 89,000 drivers per year over the next decade.

"The ability to find enough qualified drivers is one of our industry's biggest challenges," said ATA President and CEO Bill Graves.
Trucking Costs

Reader Tim Wallace writes ...
Hi Mish

I asked FreightIndex.com if I could use publish their data again, and they granted permission.

Overall Trucking costs are lower per mile now then in 2007. However, that is not the whole story.

Fuel costs are down, but most other costs have gone up considerably, led by a 40% increase in wages.

Tim
Trucking Costs Per Mile



Trucking Costs Per Mile Less Fuel



Truck Fuel Costs Per Mile



Thanks Tim!

The ATA believes that trucking will need to hire an average of 89,000 drivers per year over the next decade.

I propose long-haul trucking jobs will vanish with self-driving trucks.

Mike "Mish" Shedlock

Manufacturing ISM Flirts With Contraction Third Month, Employment Shifts to Contraction

Posted: 02 Nov 2015 08:31 AM PST

Economists who looked at last month's barely above contraction report and predicted the same results this month were nearly spot on.

Last month the Manufacturing ISM was 50.2, this month the Bloomberg Consensus was 50.0, and the report came in at 50.1.
For a third straight month, the ISM is skirting near contraction, at 50.1 in October vs 50.2 and 51.1 in the prior two months.

New orders are showing some life, up nearly 2 points to a 52.9 reading that is safely above breakeven 50. Production is also at 52.9. But other readings are not as a favorable. Backlog orders remain in deep contraction at 42.5 while employment, for the first time in six months, is also in contraction, down nearly 3 points to 47.6. Exports have been the difference this year for the factory sector and new export orders in this report, at 47.5, remain below 50 for the fifth straight month. Prices, at 39.0, extended their long run of contraction.
ISM October 2012-Present



That was the lowest reading since May of 2013. Let's investigate all the details of today's report straight from the Institute for Supply Management Manufacturing ISM® Report On Business® released this morning.

IndexOctSepPP ChangeDirectionRate of ChangeTrend in Months
PMI®50.150.2-0.1GrowingSlower34
New Orders52.950.1+2.8GrowingFaster35
Production52.951.8+1.1GrowingFaster38
Employment47.650.5-2.9ContractingFrom Growing1
Supplier Deliveries50.450.2+0.2SlowingFaster3
Inventories46.548.5-2.0ContractingFaster4
Customers' Inventories51.054.5-3.5Too HighSlower3
Prices39.038.0+1.0DecreasingSlower12
Backlog of Orders42.541.5+1.0ContractingSlower5
Exports47.546.5+1.0ContractingSlower5
Imports47.050.5-3.5ContractingFrom Growing1

Key Points

  • Backlog of orders are in contraction
  • Growth in new orders barely positive
  • Exports contracting for the fifth month
  • Prices have plunged 

There's nothing in the ISM report to make the Fed want to hike, but the Fed will do what they want.

For an interesting alternative to today's ISM numbers please see Gardner Business Index Shows Small to Medium Sized Businesses Struggling Most.

Mike "Mish" Shedlock

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