Table 1

Table 1 is a snapshot of the market situation on 12/31/2016. Indicators updated since we last published two weeks ago are shaded beige. In most cases this is not December data but data that was released in December for previous months, the actual month to which the data relates is shown in the second column. Of the 27 indicators under consideration, the present situation of 7 are positive by historical standards, 11 are negative and 9 are neutral. There was a net increase of one neutral and a decrease of one negative since our last update on December 15th. Our intent in using the word neutral is to say that this indicator is considered to be in the mid-range of historical data. The change that occurred in the last two weeks was that we re-classified the Chicago Fed National Activity Index to neutral from negative when its value improved to better than -0.20. There were no other changes to our perception of the present situation.

In our trends analysis, most of the values reported are three month moving averages to avoid the knee jerk reactions that are characteristic of most economic reports in the press. Please note that there is nothing subjective about this trends analysis. The numbers presented here are the facts available as of December 31st 2016. The number of indicators trending positive in this latest analysis was 15 with 12 trending negative. This was an increase of five positives since the end of October and an increase of two positive since December 15th. The changes that occurred in the last two weeks were that the CFNAI reversed course as mentioned above and the producer price index of commodities had positive growth in the November data largely as a result of rising oil prices. We regard strong commodity prices as a positive driver of industrial construction. There were no trend changes in any of the other sectors that we summarize here.

We have separated the leading indicators from the main table for a closer look; these are shown in Table 2. Of the twelve leading indicators, eight are trending positive, and four negative. This was the best result since October and was an increase of three positives since December 15th.

In summary the present situation has improved to about its six year average. Trends have improved strongly since the end of October when only 33.3% of indicators were heading in the right direction. In this latest data through the end of 2016, 55.6% were trending positive.

(Explanation of Indicators).