THE BASIS POINT

U.S. ECONOMIC TRENDS: Recap Mar 26-30, Preview Apr 2-6

 

Rundown of trends in U.S. economic data.

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

RECAP MARCH 26-30 STATS/TRENDS

Pending Home Sales Near 2yr High Amidst Uncertainty: February’s Pending Home Sales index from NAR were at expectations of +0.5%, down from January’s +2%. The index is now at 96.5. Last month’s read of 97 was the highest since April 2010. A level of 100 is considered healthy. Pending Home Sales measures new contracts on existing homes expected to close within 60 days, then actual closed sales are measured by NAR’s existing home sales which were down in February.

National Home Prices Hit Bottom Again. But Local Prices Are What Matter: January’s Case Shiller Home Price report showed home prices across 20 “cities” were down 0.8% in January, down 3.8% year-over-year through January, and down 34.4% from 2006 peak levels. But this data isn’t relevant for local decisions. HERE’S HOW TO PRICE A HOUSE.

Final 4Q GDP: The third of three 4Q2011 GDP readings was 3%. The second reading last month was revised from 2.8% to 3%. But two-thirds of new figure was wholesale inventory growth that will be given back if consumer spending doesn’t keep pace. Here’s GDP 2008-2011.

Fed’s Preferred Consumer Inflation Gauge Remains Flat: The Personal Consumption Expenditures Index (PCE) is how the Fed prefers to view inflation, and February’s numbers showed monthly PCE was 0.3% total and 0.1% ex-Food/Energy. Annual PCE was 2.3% total and 1.9% ex-Food/Energy. The Fed especially focuses on those monthly/annual figures that exclude food and energy because they think these items have too much short-term volatility. Those “Core” figures dropped for the month.

Consumer Spending Up February’s personal income was 0.2% month/month, same as January and down from December’s 0.4%. Consumer spending was 0.5% month/month, up from 0.2% in January and 0.1% in December. Higher Consumer Spending is a positive for the economy

Jobless Claims Continue To Stay Low: Claims for unemployment insurance were 359,000 for week ended March 24 (seasonally adjusted), down 5,000 from previous week’s 364,000. The 4-week moving average was 365,000, down 3,500 from previous week. This shows steady albeit slow job market improvement.

PREVIEW APRIL 2-6 STATS/TRENDS

Next week’s economic calendar is jobs-focused. Highlights below with rate impacts.

U.S. Manufacturing Streak Holds:: The Institute for Supply Management index of manufacturing activity was 53.4 for March, up 1 from February, and 50 is dividing line between expansion and contraction. This is the 32nd month of (albeit modest) expansion and there was a nice jump in the employment reading (TABLE). And here’s a roundup of non-U.S. manufacturing figures from this weekend which showed particular weakness in Europe. This Europe news is overpowering U.S. ISM this morning and U.S. rates are better.

Will Positive Services Industry Outlook Continue?: 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. Wednesday’s reading for March is expected to fall a bit to 56. But this report doesn’t have a huge rate impact unless it’s down significantly.

ADP Jobs Report: ADP is a private payroll provider that processes payrolls for about 23 million employees throughout the U.S. Their March jobs report is Wednesday and is expected to show 213k to 220k new private payrolls in the U.S. February showed +216,000 new private jobs, January +173,000 and December was a blowout +325,000. Rates could rise if this is at or above expectations.

The Week’s Main Event: BLS Jobs Report The March BLS jobs report Friday is expected to show 200k-230k new nonfarm jobs and a steady unemployment rate of 8.3%. As for February, the report showed the U.S. economy added 227k non-farm payrolls, 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. This is the week’s main event, and anything above expectations would cause rates to rise.

RATE OUTLOOK

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.

 

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