Majority of Economic Data found at www.haver.com
Friday, April 7th
NON-FARM PAYROLLS (approximately 80% of the U.S. workforce) rose by 98,000 during March, far below the consensus
estimate of 180,000. Payroll gains for the prior two months were revised to 219,000 and 216,000 from 235,000 and 238,000 for a net
revised loss of 38,000 jobs during February and January, respectively. The March numbers along with the revisions the prior two
months resulted in a three month average of 178,000. PRIVATE SECTOR companies created 89,000 jobs as the PUBLIC
SECTOR added 9,000. Payrolls for the month ending May, 2014 showed total nonfarm payrolls set an all-time high, eclipsing the
prior peak setback in January 2008. That 76 month stretch was the longest since the Great Depression. Payroll data was influenced
by the manufacturing (11,000), construction (6,000), and the private service producing sectors (61,000). The retail industry continued to shed jobs (Table B), losing 29,700 in March on top of the loss of 30,900 during February. Meanwhile, the UNEMPLOYMENT
RATE ticked down to 4.5% during March as compared to 4.7% during February, its lowest since May 2007. According to the
household survey, employment rose 472,000 during March (1.1% y/y) while the labor force rose by 145,000 (0.6% y/y). This
combination help keep the LABOR FORCE PARTICIPATION RATE at 63.0% during March as compared to February. The
average for this ratio was 67.1% from 1997 to 2000. The UNDEREMPLOYMENT RATE, which includes the unemployed as well
as those who were either marginally attached to the labor force or were involuntarily working part-time (Table A-15) fell to 8.9% in
March as compared to 9.2% during February and versus a seasonally adjusted 9.9% one year prior. AVERAGE HOURLY
EARNINGS (Table B) rose 0.19% or $0.05 to $26.14 from $26.09 during March and have risen by $0.68 or 2.67% from $25.46 one
year ago. This helped push AVERAGE WEEKLY EARNINGS up 0.19% to $896.60 during March from $894.89 in February.
Average Weekly Earnings over the past year have risen by $20.78 or 2.37% to $896.60 from $875.82. AVERAGE HOURS
WORKED remained at 34.3 hours in March when compared to February and versus 34.4 hours one year ago. Also of note was the
fact that the manufacturing week (Table B-7) fell to 41.8 hours during March as compared to 42.0 hours in February and versus 41.7
hours one year ago. The number of the long-term unemployed (twenty-seven weeks or longer) fell to (Table A) 1.687 million from
1.801 million or 23.29% as the number of unemployed fell to 7.245 million from 7.562 million. The AVERAGE DURATION OF
UNEMPLOYMENT (Table A-12) rose to 25.3 weeks during March as compared to 25.1 weeks one month prior while the MEDIAN
DURATION OF UNEMPLOYMENT rose to 10.3 weeks during March as compared to 10.0 weeks one month prior.
The Commerce Department reported that WHOLESALE INVENTORIES rose 0.4% during February and by 3.3% y/y.
WHOLESALE SALES rose 0.6% during February and by 5.3% y/y. This relationship between wholesale inventories as compared
to sales helped keep the INVENTORY-TO-SALES RATIO at 1.28 months during February as compared to January and versus
1.36 months one year ago.
The Federal Reserve reported that CONSUMER CREDIT grew by $15.2 billion during February, this after rising $10.9 billion in
January. Over the past year Consumer Credit has risen 6.3%. The calendar year 2016 increase of 6.4% follows gains of 6.9%
during 2015, 7.0% during 2014 as well as gains of 7.2% and 6.1% during 2013 and 2012, respectively. According to Haver
Analytics, “annualized, credit growth averaged 8% during the fifteen years ended 2007. Over an even longer time period that increase
does not loom particularly large. However, against an average of 5% growth in disposable income during those years, it precipitated a
rise in the ratio to disposable income to 24% from a longer term norm of 17%.” Non-revolving Credit (automobiles, consumer
durables and student loans), which accounts for nearly two-thirds of total consumer credit, rose by $12.3 billion during February and
by 6.4% y/y while revolving credit (credit cards) rose $2.9 billion during February and by 6.2% y/y.
Thursday, April 6th
INITIAL CLAIMS FOR UNEMPLOYMENT BENEFITS for the week ended April 1st fell 25,000 to 234,000 from a revised
259,000 one week prior. Initial claims for unemployment benefits have remained below 300,000 for one-hundred-nine consecutive
weeks, the longest streak since 1970. Meanwhile, the four-week rolling average fell 4,500 to 250,000 from 254,500 one week prior.
Continuing claims for the week ending March 25th fell 24,000 to 2,028,000 from 2,052,000 while the continuing claims four-week
average fell 7,750 to 2,023,000 from 2,030,750.
Wednesday, April 5th
The Institute for Supply Management’s composite index of non-manufacturing (service) sector activity fell to 55.2% in March
as compared to 57.6% during February. The level recorded during February is far above the 37.2 recorded during Q4-2008 in a sector
that employs 80% of the U.S. workforce. Of note were New Orders (58.9% v. 61.2%), Employment (51.6% v. 55.2%), Business
Activity (58.9% v. 63.6%), and Backlog of Orders (53.0% v. 54.0%). The Prices Paid Component fell to 53.5% from 57.7%.
Tuesday, April 4th
The U.S. TRADE DEFICIT narrowed to $43.6 billion during February from $48.2 billion during January. The value of EXPORTS
rose 0.42% to $192.9 billion from $192.1 billion while the value of IMPORTS fell 1.75% to $236.4 billion during February from
$240.6 billion in January. According to Haver Analytics, “a 3.3% increase (71.2% y/y) in the value of petroleum imports reflected a 7.4% y/y rise in the quantity of energy-related petroleum product imports. Crude petroleum prices rose 64.7% y/y to an average of $45.25 per barrel.” Our trade deficit with China narrowed to $23.0 billion during February from $28.1 billion one year ago.
U.S. FACTORY ORDERS rose 1.0% during the month of February, this after rising 1.5% in January. Meanwhile, SHIPMENTS
rose 0.3% during February. The fact that shipments rose slower than orders resulted in a 0.2% rise in INVENTORIES (backlog)
and a 0.0% increase in UNFILLED ORDERS.
Monday, April 3rd
U.S. CONSTRUCTION SPENDING rose 0.8% during February, this after falling 0.4% during January. Over the past year
Construction Spending has risen 3.0%. Private Construction Spending rose 0.8% in February (6.9% y/y), this after rising 0.0%
during January. Private Residential Construction Spending rose 1.8% in February (6.4% y/y). Nonresidential Construction
Spending fell 0.3% (7.5% y/y) while Public Construction Spending edged up 0.6% in February (-8.0% y/y).
The Institute for Supply Management’s composite index of manufacturing sector activity slipped to 57.2% during March from
57.7% in February. Generally speaking, “a reading above 50% indicates that the manufacturing economy is expanding; below50%
indicates that it is generally contracting.” Of note were the changes in New Orders (64.5% v. 65.1%), Production (57.6% v. 62.9%),
Supplier Deliveries (inverse, indicates faster delivery times) (55.9% v. 54.8%), Inventories (49.0% v. 51.5%) and Employment
(58.9% v. 54.2%). The Prices Paid Component rose to 70.5% during March as compared to 68.0% in February.
Friday, March 31st
The Bureau of Economic Analysis reported that PERSONAL INCOME rose 0.4% during February (4.6% y/y), this after rising 0.5%
during January. DISPOSABLE PERSONAL INCOME (personal income less taxes) rose 0.3% (4.4% y/y), this after rising 0.4%
during February. The WAGE & SALARY COMPONENT rose 0.5% in February (5.5% y/y). PERSONAL CONSUMPTION
which represents approximately 70% of economic activity rose 0.1% in February, by 0.2% in January and by 4.8% y/y. PERSONAL
SAVINGS (Disposable Personal Income Less Outlays) rose at an annualized rate of 5.6% during February, by 5.4% during January
and as compared to 6.0% one year ago. The PCE CHAIN PRICE INDEX one of the Fed’s favorite measures of inflation rose 0.1%
in February (2.1% y/y), while the core PCE Chain Price Index rose 0.2% during February, by 0.3% in January and by 1.8% y/y.
The University of Michigan reported that the FINAL MARCH READING OF CONSUMER SENTIMENT slipped to 96.9 from
a preliminary 97.6 but rose slightly from a final February 96.3. The final March expectations component fell to 86.5 from a
preliminary March 86.7 while matching the final February level. Lastly, the final March current conditions component fell to a
level of 113.2 from a preliminary March 114.5 but rose from a final February 111.5.
Thursday, March 30th
AS PART OF ITS SECOND REVISION TO FOURTH QUARTER GROSS DOMESTIC PRODUCT, as reported by the
Commerce Department, a tally of the output of all goods and services in the United States, rose at a revised annualized rate of 2.1%,
up from an initially revised 1.9% and as compared to a year-over-year growth rate of 2.0%. FINAL SALES rose at a revised
annualized pace of 1.1%, slightly higher than the 1.0% that was part of the first revision, down from a Q3 pace of 3.0% and as
compared to a growth rate of 2.0% y/y. GOVERNMENT SPENDING rose at a revised annualized rate of 0.2%, slightly lower than
the 0.3% first revision, down from 0.8% during Q3 and compared to 0.2% y/y. Meanwhile, the INVENTORY EFFECT added an
unrevised 1.0% to Q4 GDP, above 0.5% during Q3 and versus 0.0% over the trailing twelve months. PERSONAL
CONSUMPTION rose at a revised annualized rate of 3.5% during Q4, up from 3.0% that was part of the first revision, up from 3.0%
during Q3 as well as from a growth rate of 3.1% y/y. BUSINESS FIXED INVESTMENT, a key contributor to recent economic
growth, rose at a downwardly revised 0.9% during Q4, down from a previously revised pace of 1.3%, down from 1.4% last quarter
and as compared to a growth rate of -0.1% y/y. The impact from FOREIGN TRADE subtracted 1.7% from Q4-GDP, unrevised from
the initial report as well as the subsequent report, but a steep decline from the 0.9% it added to Q3-GDP and below the 0.2% drop y/y.
RESIDENTIAL INVESTMENT rose at an unrevised annualized rate of 9.6% during Q4 as compared to the first revision, but down
from the 10.2% that was initially reported but a large increase compared to the 4.1% decline recorded during Q3, and a gain of 1.1%
y/y. Finally, during Q4 the PCE Chained GDP Price Index rose at a revised annualized rate of 2.1% during Q4, a slight upward
revision from the first revision of 2.0%, equal to the initially reported 2.1%, above from the Q3 rate of 1.4% as well as above the
increase of 1.6% y/y.
Tuesday, March 28th
The CONFERENCE BOARD’S CONSUMER CONFIDENCE INDEX rose to 125.6 during March (30.7% y/y) as compared to
116.1 in February, the highest level since December 2000. The present situation index surged to 143.1 in March from 134.4 in
February. and by 24.5% y/y while the expectations component edged up to 113.8 during March from 102.4 in February and by
36.1% y/y. Those surveyed saying that jobs are “hard to get” fell to 19.9% of respondents during March as compared to 19.9%
during February while those claiming that jobs are “plentiful” rose to 31.7% of respondents during March versus 26.9% in February.
Friday, March 24th
ORDERS FOR DURABLE GOODS (those expected to last at least three years) rose 1.7% during February, this after easing 2.3%
during January. Smoothing out the m/m volatility, over the past year Orders for Durable Goods have risen 5.0%. Transportation
Orders rose 4.3% (5.9% y/y) while Orders for NonDefense Capital Goods, Excluding Aircraft fell 0.1% (2.7% y/y) in February.
Orders for nondefense capital goods rose 4.1% during February (6.7% y/y).
Thursday, March 23rd
The Commerce Department reported that SALES OF NEW HOMES rose 34,000 to 592,000 during February from 558,000 during
January (12.8% y/y). Sales of New Homes have fallen by 53.71% from the peak in July 2005 of 1,279,000 units. According to
Haver Analytics, “the month’s supply of homes at the current sales rate was eased last month to 5.4 from its high of 5.6 in January.
The median number of months a new home was on the market nudged higher to 3.4 (NSA) from 3.2, remaining below the most recent
high of 4.1 months in April.” The median price of a new home fell $12,000 or 3.88% during February to $296,200 from $308,200
in January. Over the past year the median price of a new home has risen 12.8%.
Wednesday, March 22nd
SALES OF EXISTING HOMES fell 210,000 during the month of February to 5.480 million from 5.690 million one month prior.
Over the past year Sales of Existing Homes have risen 5.4%. During calendar year 2016 there were 5.452 million sales of existing
homes, the highest level since 2006. According to Haver Analytics, “the number of homes on the market declined 6.4% y/y to
1.750 million. The months’ sales supply of homes improved slightly to 3.8, but remained below the lowest level since January 2004.”
The median existing-home sales price rose by 0.48% (7.7% y/y) or $1,100 to $228,400 in February from $227,300 during January.
Friday, March 17th
The Conference Board reported that its INDEX OF LEADING ECONOMIC INDICATORS rose 0.6% during February (3.1%
y/y), this after rising 0.6% in January. Nine of the ten components that comprise the LEI increased including, in order of impact were
the ISM New Orders Index, the interest rate spread, average weekly initial claims for unemployment insurance (inverted), stock
prices, average consumer expectations for business conditions, average weekly manufacturing hours, the Leading Credit Index
(inverted), manufacturers’ new orders for consumer goods and manufacturers’ new orders for nondefense capital goods excluding
aircraft. The negative contributor was building permits. According to Ataman Ozyildirim, Director of Business Cycles and Growth
Research at the Conference Board, “after six consecutive monthly gains, the U.S. LEI is at its highest level in over a decade. Widespread gains over a majority of the leading indicators points to an improving economic outlook for 2017, although GDP growth is
likely to remain moderate.”
INDUSTRIAL PRODUCTION, a measure of strength of the manufacturing, factory and utility sectors, rose 0.0% during February,
this after falling 0.1% during January, respectively (0.3% y/y). CAPACITY UTILIZATION edged down to 75.4% during
February from 75.5% in January and as compared to 75.6% y/y. Finally, MANUFACTURING CAPACITY rose to 75.6% during
February from 75.3% in January and vs.75.4% one year ago and as compared to a recession low 65.4%. On a side note, the nation’s
mines, factories and utilities operated at an average of 80.4% of capacity from 1972 to 2009.
Thursday, March 16th
HOUSING STARTS rose 2.96% or 37,000 to 1,288,000 during February, as compared to 1,251,000 in January. Over the past year
Housing Starts have risen 3.6%. Calendar year 2016 starts rose by 1,116,000, the highest since August 2007 and more than double
- Of note is the fact that there must be approximately 100,000 housing starts per year just to replace those lost to natural causes,
man-induced causes or by the growing U.S. population. During February, Single-family housing starts rose 6.47% or 53,000 to
872,000 from 819,000. Multi-family housing starts fell 16,000 or 3.70% to 416,000 in February from 432,000 during January.
BUILDING PERMITS, a preview of future housing starts fell 6.19% to 1,213,000 during February from 1,293,000 one month prior.
Our take – the housing market has most likely turned the corner and will be a modest tailwind to economic growth.
Wednesday, March 15th
The CONSUMER PRICE INDEX rose 0.1% during February (2.7% y/y), this follows a gain of 0.6% in January. A key
component of the CPI, energy prices fell 1.0% (15.2% y/y) during February, this after rising 4.0% during January. Food and
beverage prices rose 0.2% in February (-0.0% y/y). Excluding food and energy, the core CPI rose 0.2% in February, by 0.3%
during January and by 2.3% y/y.
RETAIL SALES rose 0.1% during February, this after rising 0.6% during January (5.7% y/y). Spending on MOTOR VEHICLE
& PARTS fell 0.2% (5.6% y/y) while RETAIL SALES EXCLUDING AUTOS rose 0.2% (5.7% y/y). NON-AUTOS LESS
GASOLINE, Retail Sales rose 0.2% during February (4.2% y/y). Two key components of this report, RETAIL SALES AT
GASOLINE STATIONS fell 0.6% during February (19.6%y/y) while FOOD SERVICE AND DRINKING PLACE SALES fell
0.1% during February (3.4% y/y).
The Commerce Department reported that BUSINESS INVENTORIES rose 0.3% during January (2.3% y/y), this after rising 0.4%
during December, while BUSINESS SALES rose 0.2% in January (6.4% y/y). This relationship between business inventories as
compared to sales keep the INVENTORY-TO-SALES RATIO at 1.35 months during January, unchanged versus December and as
compared to 1.41 months one year ago. The manufacturing inventory-to-sales ratio remained at 1.31 months in January, unchanged
from December and as compared to 1.37 months one year ago.
Tuesday, March 14th
The PRODUCER PRICE INDEX rose 0.3% during February, this after rising 0.6% during January. Over the past year the PPI
has risen 2.2%. Energy prices rose 0.6% in February (19.2% y/y), this after rising 4.7% in January. Finished food prices rose 0.3%
during February (-1.8% y/y). Excluding food and energy, the so-called core PPI rose 0.3% in February (1.5% y/y). Prices for
INTERMEDIATE GOODS rose 0.4% (5.0% y/y) during February.
Thursday, March 9th
U.S. Import Prices rose 0.2% during February, this after rising 0.6% in January. Over the past year U.S. Import Prices have
risen 4.6%. Petroleum prices fell 0.7% during February (73.3% y/y). Export prices rose 0.3% during February (3.1%y/y).
Agricultural export prices rose 1.4% during February (1.6% y/y), this after rising 0.1% in January. Non-Agricultural Export
Prices rose 0.3% in February and by 3.3% y/y.
Wednesday, March 8th
FOURTH QUARTER PRODUCTIVITY rose at an unrevised annualized rate of 1.3%, plunging from 3.3% during Q3 and as
compared to 1.0% increase over the past twelvemonths. Meanwhile, HOURLY COMPENSATION rose at an unrevised annualized
rate of 3.0% as compared to 4.1% during Q3 and 3.0% y/y. UNIT LABOR COSTS (defined as output per hour of work and can be
determined by dividing total labor costs by output) rose at a revised annualized pace of 2.4% during Q-4 as compared to the 1.7% that
was initially reported and versus 4.1% during Q3 and by 2.1% y/y.
Wednesday, February 1st
According to the Department of Labor, the EMPLOYMENT COST INDEX, a “measure of quarterly changes in compensation costs,
which include wages, salaries, and employer costs for employee benefits for civilian workers (non-farm private and state and local
government)” rose by 0.5% during the fourth quarter, this following an 0.6% increase during Q3-2016. The ECI has risen by 2.2%
y/y. The wages & salaries component (70% of ECI) rose by 0.5% during Q4 vs. 0.5% during Q3-2016 and as compared to 2.4%
y/y. The cost of benefits rose by 0.4% over the past quarter, this after rising 0.7% during Q3-2016 and by 2.0% y/y.
Glossary of Frequently Used Economic Terms
Strength of Dollar
A Weak Dollar increases exports while a Strong Dollar decreases exports. The reasoning is that a Weak dollar makes goods
and services cheaper abroad while a strong dollar makes exports more expensive abroad. A strong dollar also helps keep
inflation at bay by making imports cheaper, thereby helping keep wage and other inflationary pressures below the boiling
point. It also provides foreign Treasury buyers two ways to profit – through bond price and dollar appreciation.
A weak dollar can be inflationary since it makes imports more expensive. This, in turn, gives domestic companies
room to increase prices. Conversely, a strengthening dollar makes imports more competitive on a price basis.
“Let’s imagine the dollar quickly dropped by a further 25% against each major world currency, roughly parallel to housing’s unprecedented 30% decline. That would mean it would take $2 to buy a single euro. On the good side, U.S. manufacturers would find it easier to compete globally, and foreign tourism would boom in the U.S. On the bad side, inflation in the U.S. would zoom because of the rising cost of imported products. Americans would have even more trouble getting a loan as foreign buyers pull out of the debt market. Abroad, the cheap dollar would make it harder for other nations to export to the U.S., hurting their growth. China could face social unrest. Trade wars could break out.” (Business Week, What Happens If The Dollar Crashes; October 26, 2009)
An expanding trade deficit (imports exceeding exports) hurt the dollar because more dollars are held by foreigners. Some
fear that foreigners will tire of holding declining dollars and sell them for other currencies putting added pressure on the
greenback. In addition, foreign investors with U.S. assets are seeing those holdings decline as the dollar falls. As these investors sell these holdings and move to investments in other countries, it adds to selling pressure of the dollar.
Employment Cost Index
Compiled by the Bureau of Labor Statistics, is considered the most accurate measure of wages, salaries and benefits,
measuring compensation per hour, including wages, salaries and the cost of benefits – from health insurance to Social Security
contributions. Wages and salaries account for approximately seventy percent of the employment cost index with benefits
(health insurance and pension benefits) accounting for the rest.
The put-to-call ratio measures the sentiment of options traders. When the number of puts compared to calls is high, that
means that many traders think the market will go down. When call volume outnumbers puts, many think the market is going
to rise. Many use this as a contrarian indicator meaning that if options traders are too bullish, the market may actually fall.
Put option buyers bet that stocks will fall while call buyers bet that stocks will rise. Conversely put option sellers bet that
stocks will rise while call sellers bet that stocks will fall. Options buyers and sellers are subject to expiration dates. Buyers
of call options bet that a stock will be worth more than the price set by the option (the strike price), plus the price they pay for
the option itself. Buyers of put options bet that the stock’s price will drop below the price set by the option. When the
number of puts compared to calls is high, that means that many traders think the market will go down. When call volume
outnumbers puts, many think the market is going to rise. Many use this as a contrarian indicator meaning that
if options traders are too bullish, the market may actually fall.
Volatility Indices (^vix and ^vxn)
According to the Chicago Board of Options Exchange, the Volatility Index, “known by its ticker symbol “vix,” was
introduced by CBOE in 1993, and measures the volatility of the U.S. equity market. It provides investors with up-to-the-minute market estimates of expected volatility by using real-time OEX index option bid/ask quotes.”
The CBOE NASDAQ Volatility Index, known by its ticker symbol “vxn,” is the “benchmark of “tech stock” volatility based
on the implied volatility of the NASDAQ 100 Index options. Calculated using the same methodology as the CBOE Market
Volatility Index, the VXN is constructed so that, at any given time, it represents the implied volatility of a hypothetical at-the-money NDX option with thirty calendar days to expiration.”
Arms Index (^sti.n)
A contrarian index that indicates the bullishness or bearishness of investors. A reading below one indicates more action in
rising stocks and a figure above one indicates more action in declining stocks. As a contrarian indicator, a reading above one
is bullish for investors while a reading below one indicates bearishness.
Advancing Stocks / Declining Stocks + Advancing Volume / Declining Volume = The result is the Arms Index