March 12, 2012

U.S. ECONOMIC TRENDS: Recap Mar 3-9, Preview Mar 12-16

March 12, 2012

U.S. ECONOMIC TRENDS: Recap Mar 3-9, Preview Mar 12-16

Rundown of trends in U.S. economic data.

Next up is WeeklyBasis, rate market outlook in plain English.


Positive Outlook For Services Industries: In addition to measuring manufacturing, the Institute for Supply Management also has a survey that measures services industry (rather than manufacturing) activity in areas like Real Estate, Transportation, Hotel/Restaurant, Construction, Entertainment, Utilities, etc. It’s also on a long up-trend: February’s index reading of 57.3 was the 26th increasing month—50 is dividing link between expansion and contraction.

Better ADP Jobs Report: ADP is a private payroll provider that processes payrolls for about 23 million employees throughout the U.S. Their February jobs report showed +216,000 new private jobs. January came in at +173,000 and December was a blowout +325,000.

Better February BLS Jobs Report: BLS report showed the U.S. economy added 227k non-farm payrolls in February, topping most expectations of around 210k. Also January was revised from 243k to 284k new jobs created and December was revised from 203k to 223k. In total, this shows 61k more jobs created than previously reported. Over the last two years, non-farm payrolls have added 3.5m jobs. Of the 8.8m net jobs lost between the official recession start date of January 2008 and February 2010, 40% have been recovered. Unemployment held at 8.3%, the lowest since February 2009.

Jobless Claims Rise a Third Straight Week: BLS and ADP count jobs added, but for the week ended March 3, claims for unemployment insurance rose 8k to 362k. This has brought down the 4-week moving average to 355,000. This was the third straight weekly rise, but as WSJ said: “the weekly figures are still well below 400,000, the benchmark economists use to gauge whether hiring is picking up.” Jobless claims are an early sign of jobs lost.


Next week’s economic calendar is busy. Highlights below with rate impacts.

Nothing Exiting From Retail Sales: Estimates for February retail sales on Tuesday vary from 1% to 1.8%. In January Retail were short of estimates: January retail sales grew 0.4% after just 0.1% in December. Excluding auto sales, retail sales grew 0.7% versus December’s -0.2% ex-autos figure and the highest since March. This report has minimal rate impact, unless it was a massive miss, in which case rates would drop.

Latest Rate Policy From Fed: The second Fed rate policy decision of 2012 is Tuesday and, as they’ve telegraphed, the overnight bank-to-bank Fed Funds Rate target will stay the same at 0% to .25%. Investors looking for hints of QE3—a third round of money printing buy buy bonds and lower rates—will also be disappointed. But the Fed will likely reiterate its policy of using payoffs from existing mortgage bond holdings to buy new mortgage bonds, which also helps keeps rates low.

Will Philly/NY Manufacturing Streak Continue?: Thursday we’ll get the outlook for two key U.S. regional manufacturing reports, and both have 0 as dividing line between expansion/contraction. In February, the Empire State Manufacturing index (New York) was 19.53, following January’s 13.48, which was the highest since June 2011 and third straight monthly gain. The Philadelphia Fed index (Eastern Pennsylvania, Southern New Jersey, Delaware) was 10.2, following January’s 7.3. This was the fifth straight monthly gain and the highest since October 2011. Both are expected around 15 this month. Rates neutral unless these numbers blowout expectations.

Consumer/Producer Inflation Likely Remain Flat: February’s producer (PPI) and consumer (CPI) inflation reports are due Thursday and Friday. January figures were tame, which helps keep rates low. Monthly PPI was 0.1% total and 0.4% ex-Food/Energy. Monthly CPI was 0.2% total and 0.2% ex-Food/Energy. January’s annual PPI was 4.1% total and 3.0% excluding food and energy. Annual CPI was 2.9% total and 2.3% excluding food and energy. All January annual (and monthly) figures were basically flat vs. December.

Jobless Claims: The increasing jobless claims trend (see last week’s recap above) will be closely watched this Thursday. Slight upward rate risk, but since this report doesn’t count jobs added, it’s not as influential on rate markets short-term.


Don’t miss WeeklyBasis, short and sweet outlook on next week’s rate and stock markets.

And catch up on top on the web’s best mortgage/housing stories last week.