Initial Jobless Claims starting to rise, S&P in for a correction

This week's initial jobless claims were rising again as reported by Zero Hedge and based on the obvious correlation between the S&P and initial jobless claims here, I expect that the S&P will come down eventually.

On top of that, the capacity utilization for the previous month was edging down (blue chart going up), which confirms that the unemployment rate will start going upwards (red chart going up).

 While deflation sets in with a lower CPI (red chart going down).

Read More

Capacity Utilization up in December 2012

The good news keeps coming. Capacity utilization was up in December 2012 for the total industry and hit a 6 month high of 78.8%.

Mining was very interesting as it kept climbing to an all time high of 91.9%, above its historical average of 85%.

The data is what it is and it indicates higher metal prices in the coming months.

Chart 1: Capacity utilization

As an extra we found out that China's GDP grew to 8%. This is all in line with the positive PMI numbers we got last month. And we all know that China's GDP consists mainly of production (60%) and consumption of commodities as I pointed out here. So, I expect a higher commodities market and with that a higher stock market, mainly in Asia.

Read More

Correlation: Capacity Utilization Vs. Unemployment Rate

It's fascinating how many correlations there exist in the economic world. Today I found this one: Capacity Utilization Vs. Unemployment are inversely correlated. And the best part is: the capacity utilization rate is a leading indicator for unemployment, meaning the trend in the capacity utilization rate can predict the trend in the unemployment rate.

For the U.S. the chart looks like this:

Chart 1: U.S. Unemployment Vs. Capacity Utilization

For the country I live in, Belgium, the correlation works too (one chart goes up, other chart goes down):

Chart 2: Capacity Utilization Belgium

Chart 3: Unemployment Rate Belgium

For Canada it works too:

Chart 4: Capacity Utilization Canada

Chart 5: Unemployment Rate Canada

It even works for the Euro Area:

Chart 6: Capacity Utilization Euro Area

Chart 7: Unemployment Rate Euro Area

And Japan:

Chart 8: Capacity Utilization Japan

Chart 9: Unemployment Rate Japan

Do you know what this means? If we just look at the capacity utilization (which is a leading indicator), we can predict the unemployment rate. And if we can predict the unemployment rate, we can predict the retail sales, GDP growth, current account deficit/surplus, currency ratio, etc... I could never believe capacity utilization rate could be so important and significant.

Cherish this correlation!

Read More

Capacity Utilization Flat for the Month of October 2012: Mining Industry has Bright Future

The capacity utilization rate was basically flat at 77.8% for the month of October 2012. Due to hurricane "Sandy", it is estimated that total output dropped 1%, resulting in a lower capacity utilization compared to the capacity utilization rate of 78.2% the previous month.

There is one positive area though and that's the mining sector. The capacity utilization rate in the mining industry increased to a 4 year high of 90.4. This is 3.1% above its historical average.

To see what this means go here.

In an interview with David Morgan this week we noticed that the silver mining supply wouldn't be able to keep up with the demand in the coming years. He forecasts that we will come into a silver deficit starting from the year 2014.

Read More

Capacity Utilization Rate at 78.3% in September 2012

For all those who are concerned that precious metals will go down for the rest of this year, there is some light  at the end of the tunnel.

Capacity utilization rate for the total industry was up to 78.3% in September 2012 from 78% in August 2012. In particular, the mining industry recovered well, from 88.4% in August to 89.1% in September.

While looking at these numbers, I don't see precious metals crashing just yet.

Table 1: Capacity Utilization Rate

Chart 1: Capacity Utilization Rate

This statement can be confirmed if we look at the resource producing countries of Canada, Russia and Brazil. All of them are in a rising trend.

Chart 2: Brazil Capacity Utilization

Chart 3: Russia Capacity Utilization

Chart 4: Canada Capacity Utilization

The only country that isn't doing as well is Australia, where the capacity utilization rate declined over the entire year.

Chart 5: Australia Capacity Utilization

The probable reason for Australia's declining capacity utilization rate is a slowdown in China, which can also be seen in their capacity utilization rate, which is at a record low of 60% according to the IMF.

Chart 6: China Capacity Utilization Rate

Read More

Capacity Utilization Rate May 2012 Flatlined at 79%

The newest number on capacity utilization is 79 % for the total industry in May 2012. This is basically the same as the previous month.

Interestingly, the capacity utilization for the mining industry is much higher at 89.2 %, up from 88.5 % the previous month. This is positive for the mining shares. 

Utilities inched up to 76.5 % from 76 % the previous month.

Chart 1: Capacity Utilization Rate

Read More

Capacity Utilization for March: 78.6%

Capacity Utilization in March was 78.6% for the total industry, which is 0.1% lower than the previous month (Chart 1). I expected a bigger decline, but was surprised that it fell so little. Maybe there is hope that it will go up in the future, which is good for gold. To see my analysis on gold, go to my article: Capacity Utilization for March 2012.

Read More