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Weekly Economic Update for May 19, 2014

WeeklyMarketUpdate.jpgIS THE PRODUCER PRICE INDEX SENDING A MESSAGE?

Wholesale prices climbed 0.6% in April according to Labor Department data. That tripled the increase projected by economists polled by MarketWatch, and it took the annual advance in the PPI to 2.1%, a two-year peak. The PPI also pushed north 0.5% in March, so higher consumer prices could be directly ahead. In April, consumer prices rose 0.3%; that gain matched the MarketWatch consensus forecast.1,2

  

RETAIL SALES BARELY RISE

Warmer weather didn’t prompt shoppers to boost their spending. The 0.1% April advance was a letdown following March’s 1.5% improvement. Minus auto buying, retail sales were flat last month.1

     

HOUSEHOLD SENTIMENT GAUGE DECLINES

With a reading of 81.8, the University of Michigan’s initial May consumer sentiment index slipped 2.3 points from its final April mark. Analysts polled by MarketWatch  had predicted a slight rise in the index to 85.0.1,3

Weekly Economic Update for May 12, 2014

WeeklyMarketUpdate.jpgISM: SERVICE SECTOR VERY HEALTHY

At 55.2, the Institute for Supply Management’s April non-manufacturing PMI climbed 2.1 points above the March reading. The nation’s service sector expanded for a 51st straight month, and the survey saw big monthly leaps in its new orders index (up 4.8 points to 58.2) and its business activity index (which rose 7.5 points to 60.9).1

  

THE S&P EARNINGS SCORECARD (SO FAR)

As last week ended on Wall Street, 451 members of the S&P 500 had announced results in the Q1 earnings season. According to Bloomberg’s tally, 76% of those firms exceeded profit projections and 53% beat revenue forecasts. Analysts surveyed by Bloomberg estimate that earnings for S&P constituents improved 5.5% in Q1 while sales rose 3.0%.2

     

GAS AT $3.66 A GALLON, OIL JUST UNDER $100

The Memorial Day weekend arrives May 24-26; will prices fall slightly by then? The national average for regular unleaded on May 9 was $0.11 higher than a year ago, according to AAA’s Daily Fuel Gauge Report. NYMEX crude rose 0.2% across five days to settle at $99.99 as the week ended; gold pulled back 1.2% last week, finishing at $1,287.60 on the COMEX Friday.3,4

Weekly Economic Update for May 5, 2014

WeeklyMarketUpdate.jpgHIRING & MANUFACTURING PICK UP

America’s economy created 288,000 new jobs in April, the most in any month since January 2012. Labor Department data showed the jobless rate falling dramatically to 6.3%, largely due to more people abandoning the job hunt. Still, the U-6 rate (unemployment + underemployment) was at 12.3% in April, a 4½-year low. The Institute for Supply Management factory PMI rose to 54.9 in April, marking the eleventh straight month of expansion in manufacturing.1,2

  

ROBUST CONSUMER SPENDING, YET WEAK Q1 GDP

Personal spending rose 0.9% in March, nearly double the 0.5% advance that the Commerce Department saw in February. Even so, the Bureau Of Economic Analysis said the economy grew by just 0.1% in the first quarter in its initial estimate.3

   

CONSUMER CONFIDENCE DOWN SLIGHTLY

The Conference Board’s respected index was at 82.3 in April, down from 83.9 in March. Analysts polled by the Wall Street Journal had forecast a dip to 83.0.4

Weekly Economic Update for April 28, 2014

WeeklyMarketUpdate.jpgCONSUMER OPTIMISM INCREASES

At a final April mark of 84.1, the University of Michigan’s consumer sentiment index hit a 9-month high. It climbed 4.1 points above the final March reading. The survey’s sub-index of current economic conditions came in at a 7-year high of 98.7.1

   

HOME SALES TAIL OFF

While the National Association of Realtors announced only a 0.2% retreat in existing home sales for March, the Census Bureau noted a 14.5% plunge in new home sales on the month. Shrinking inventory, rising mortgage rates and less groundbreaking have helped cool the housing market. Existing home sales have increased in only one month out of the last eight.2

   

RISING DEMAND FOR BIG-TICKET ITEMS

Hard goods orders were up 2.6% in March, the Census Bureau announced; this was on the heels of a 2.1% rise in February. Minus transportation orders, the gain was still 2.0%. Analysts polled by Briefing.com had forecast merely a 2.0% improvement in the headline number.3

 

Weekly Economic Update for April 21, 2014

WeeklyMarketUpdate.jpgCONSUMER PRICES ADVANCE 0.2%

In reviewing March’s mild increase in household inflation, two statistics stand out. The Consumer Price Index measured a 2.7% year-over-year rise in shelter costs (the largest annual gain in six years). Americans also paid 0.4% for food last month. Annualized consumer inflation reached 1.5% in March, up from 1.1% for February.1

  

MARCH PUTS HOUSEHOLDS IN A BUYING MOOD

Retail sales rose 1.1% last month, bettering the (revised) 0.7% advance in February. Census Bureau data showed core retail sales (minus auto buying) up 0.7% for March; they increased 0.3% a month earlier.2

  

FACTORIES & BUILDERS GROW BUSIER 

According to Federal Reserve data, March was another solid month for industrial output – production rose 0.7%, and the Fed revised the February advance to 1.2%. Groundbreaking by builders increased 2.8% in March, though the Census Bureau also measured a 2.4% decline in building permits.2,3

 

Weekly Economic Update for April 14, 2014

WeeklyMarketUpdate.jpgHOUSEHOLD SENTIMENT REACHES 9-MONTH PEAK

The University of Michigan’s index of consumer sentiment rose 2.6 points in its preliminary April reading, bouncing back from a 4-month low of 80.0 at the end of March to a high unseen since last July. From 2003-07, the index averaged a reading of 89.0; during the 2007-09 recession, its average mark was just 64.2.1

  

PRODUCER PRICES ROSE 0.5% IN MARCH

You have to go back to last June (when wholesale inflation spiked 0.8%) to find such a sizable monthly advance in the Producer Price Index. The PPI had retreated 0.1% in February. A 1.1% monthly increase in wholesale food costs was a big factor. Annualized wholesale inflation rose to 1.4% in March, up from 0.9% for February.1,2

  

OIL, GAS, GOLD LOG NOTABLE GAINS 

NYMEX crude was worth $103.74 per barrel at Friday’s close thanks to a 2.6% advance during the week. On April 10, AAA’s weekly survey found a gallon of unleaded averaging $3.62 nationally, which was an 8-month peak. An ounce of gold was worth $1,319.00 as the COMEX trading week ended, with futures up 1.2% in five days; an ounce of palladium was worth $806.80, a high unseen since 2011.1,3

 

NASDAQ SETTLES BELOW 4,000

A 3.10% plunge across five trading days took the Nasdaq Composite to a Friday close of 3,999.73. The Dow and S&P 500 also went red on the week – the blue chips retreated 2.35% to 16,026.75 and the S&P fell 2.64% to 1,815.69.4,5

Weekly Economic Update for April 7, 2014

WeeklyMarketUpdate.jpgPAYROLLS EXPAND BY 192,000 IN MARCH

This gain almost met Wall Street’s expectations. Economists surveyed by Bloomberg had forecast 200,000 new jobs. March’s hiring didn’t move the Labor Department’s unemployment indicators much: the jobless rate remained at 6.7%, the labor force participation rate rose just slightly to 63.2, and the population of long-term unemployed still hovered at around 3.7 million. Revisions improved January and February hiring figures, however: the Labor Department now says 144,000 Americans found jobs in January, and that 197,000 new jobs were created in February.1,2

  

FACTORIES PICK UP THEIR PACE

March saw the manufacturing sector expand for a ninth consecutive month. The Institute for Supply Management’s factory PMI rose half a point in March to a reading of 53.7. (A day later, the Commerce Department announced that factory orders had risen 1.6% for February.) The Institute’s non-manufacturing PMI came in at 53.1 for March, rising 1.5 points. Still, both readings were beneath Investing.com consensus forecasts, which predicted a manufacturing reading of 54.0 and a service sector reading of 53.5.3

  

GOLD REGAINS THE $1,300 LEVEL 

With a gain of 0.7% across five days, the precious metal settled at $1,303.50 on the COMEX Friday. Silver rose 0.8% across the week to finish at $19.95. In contrast, NYMEX crude slipped 0.5% from Monday to Friday, ending the week at $101.14.2

 

Weekly Economic Update for March 31, 2014

WeeklyMarketUpdate.jpgA SENSE OF OPTIMISM ON MAIN STREET

The Conference Board’s consumer confidence index reached a six-year peak this month, climbing 4.0 points to 82.3. Analysts polled by Reuters had forecast a gain of 0.3 points to 78.6. Additionally, new Commerce Department data showed household spending rising 0.3% in February with household incomes up by the same amount. The only weak consumer signal came from the University of Michigan’s March index of consumer sentiment; it retreated 1.6 points from February to a mark of 80.0.1,2

   

HOME PRICES RISE, BUT SALES INDICATORS SLIP

January’s edition of the S&P/Case-Shiller Home Price Index (surveying real estate values in 20 cities) advanced 0.8%, replicating its December gain. Annually, prices were up 13.2%. Mirroring the decline in residential resales in February, the Census Bureau reported a 3.3% drop in new home sales last month, and a 1.1% decrease over 12 months. Pending home sales fell 0.8% in February to a 28-month low, the National Association of Realtors announced. NAR’s pending home sales index was down 10.5% from a year ago.1,3

   

2.6% GROWTH FOR THE FOURTH QUARTER  

Last week brought the final Q4 growth assessment from the Commerce Department; the reading was 0.2% better than the preceding estimate. Consumer spending for Q4 was revised 0.7% north to 3.3%. Another positive sign: hard goods orders increased by 2.2% in February, though the gain was only 0.2% with transportation orders removed.3,4

 

Weekly Economic Update for March 24, 2014

WeeklyMarketUpdate.jpgFED TAPERS, CHANGES CRITERIA FOR A RATE HIKE

Last week, the Federal Reserve disclosed another $10 billion cut for QE3 in April, and a view that declining unemployment would not necessarily prompt interest rate increases. Rather than peg rate hikes on the jobless rate dipping below 6.5%, the Fed will give greater weight to inflation and other economic factors; it sees the federal funds rate at 1% by the end of 2015 and 2% by the end of 2016. Wall Street was startled Thursday by Fed chair Janet Yellen’s verbal guesstimate that the central bank might raise rates about 6 months after the presumed late-2014 end of QE3 (about 6 months earlier than many analysts presume). IHS Global Insight economist Paul Edelstein echoed the prevalent opinion, saying “this could have been a rookie gaffe on Yellen’s part.”1

  

DID COLD WEATHER COOL HOME SALES?

The National Association of Realtors said existing home sales fell 0.4% in February, leading to the slowest annualized sales pace since June 2012. The median sale price was $189,000, up 9.1% year-over-year. Census Bureau data showed a 7.7% rise in building permits in February, but groundbreaking decreased 0.2% last month.2,3

  

A MINIMAL UPTICK IN CONSUMER PRICES

February saw the Consumer Price Index rise just 0.1% for the second straight month. The core CPI (minus food and energy prices) advanced 0.1% for the third consecutive month. In the past year, the headline CPI is up only 1.1% and the core CPI only 1.6%.3

 

Weekly Economic Update for March 17, 2014

WeeklyMarketUpdate.jpgRETAIL SALES UP 0.3% IN FEBRUARY

Weather didn’t stop Americans from shopping last month. February’s headline gain in retail sales was the first in three months and represented a nice turnaround from the (revised) 0.6% drop measured by the Commerce Department for January. Minus car and truck buying, the February increase was still 0.3%. Sales at clothing and furniture retailers led the way, both improving 0.4% on the month.1

  

SENTIMENT COOLS AS WEATHER WARMS

The preliminary March reading for the University of Michigan’s monthly consumer sentiment index was just 79.9, a 4-month low. February’s final mark was 81.6, and analysts polled by MarketWatch forecast an initial March reading of 80.8.2,3

  

PRODUCER PRICES RETREAT, AGAINST EXPECTATIONS

After rising 0.2% for January, the Producer Price Index ticked down 0.1% in February; in a Bloomberg survey, economists projected a 0.2% increase. The core PPI (minus food and energy prices) dropped 0.2% last month. Over the past year, the headline PPI has risen just 0.9%.2,3

 

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