Friday, November 30, 2012

The impact of Sandy on PCE, Chicago PMI at 50.4

by Bill McBride on 11/30/2012 10:00:00 AM

I've receive several questions about the impact of Hurricane Sandy on PCE. Sandy hit New York city on October 29th.

We have an example of a hurricane hitting at the end of a month. Katrina hit on August 29, 2005, so we can look back at the real PCE numbers then.

July, 2005: $8,886.8 (Billions of chained (2005) dollars; seasonally adjusted at annual rates)

Aug, 2005: $8,854.9 (Katrina hit on Aug 29th, decline of $32 billion)

Sept, 2005: $8,817.0 (decline of $37 billion)

Then PCE increased in October and November to $8,833.8 and $8,878.4, respectively.

This time for real PCE:

Sept, 2012: $9,641.9

Oct, 2012: $9,612.4 (Sandy hit on Oct 29th, decline of $29 billion)

So Sandy will probably impact November PCE, and any impact on PCE from the storm will be mostly over in December.

From Joe Joe Weisenthal at Business Insider: CHICAGO PMI RISES TO 50.4 — But Huge Drop In New Orders

ChicagoPMI rose back ... 50.4 was a hair shy of estimates.

The new orders index fell to 45.3 from 50.6.

On the other hand, employment rose to 55.2 from 50.3.
Above 50 is expansion and this follows two months of contraction. Last month the Chicago PMI was at 49.9.

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