Money Talk Podcast, Friday March 6, 2015
Landaas & Company newsletter March edition now available.
Advisors on This Week’s ShowMax Hoelzl)
Week in Review (March 2-6, 2015)
Significant economic indicators & reports
Both personal income and personal spending disappointed analysts in January. The Bureau of Economic Analysis reported a second monthly 0.3% rise in income, although adjustments for taxes and inflation suggested the biggest gain in three years. Spending, which accounts for the bulk of economic growth, declined for the second month in a row. Lower gas prices explained much of the dip. Personal savings rose to 5.5% of disposable income, the highest in nearly three years, and the Fed’s favorite measure of inflation barely budged from January 2014.
The Institute for Supply Management said manufacturing growth slowed in February to its lowest level since last April. Most components show slowing growth, with exports contracting for the second month in a row. Purchase managers cited concerns for the since-settled West Coast dock workers slowdown.
The Commerce Department reported lower-than-expected construction spending in January, dropping 1.1% from the December pace. Residential and manufacturing were the only categories showing monthly spending gains, although housing was down 3.2% from the year-earlier rate. Construction spending by government fell 2.5% from December.
The annual rate of motor vehicle sales fell in February for the third month in a row, according to Autodata Corp. Only imported trucks sold more in February. Inclement shopping weather, especially in northeastern states, got some of the blame for lower auto sales.
The ISM said non-manufacturing activity quickened its pace in February for the 61st consecutive month of expansion for the sector. The trade organization said only new orders and production were growing at a slower rate than January. Backlogs and imports were expanding again after contracting in January.
The Commerce Department said factory orders fell in January for the sixth month in a row. Even aside from the volatile transportation orders, demand dropped 1.8%, suggesting a further slowdown in manufacturing activity, which has been expected with weakened global economic growth.
Revised data from the Bureau of Labor Statistics showed labor productivity declined more than previously estimated, although not as much as analysts had expected at the end of 2014. Output advanced at an annual rate of 2.6% while the hours of work rose 4.9%. Although a volatile indicator, the productivity suggests the Federal Reserve can afford to stay patient with raising interest rates.
The moving four-week average for initial unemployment claims rose for the second week in a row but remained above the 48-year average. Data from the Labor Department showed average claims staying at a level that suggests employers are relatively reluctant to let workers go.
Employers surprised analysts by adding more jobs than expected in February. The net gain of 295,000 jobs surpassed the three- and 12-month averages and underscored the labor comeback. The Bureau of Labor Statistics said the unemployment rate fell to 5.5%, its lowest mark since May 2008. Still, wages appeared to be lagging, with average hourly pay up 2% in the last 12-month, down from a 2.7% raise in January.
The U.S. trade gap narrowed by more than 8% in February, according to the Bureau of Economic Analysis. Exports, beleaguered by a strong dollar and weak global economy, sank 2.9%. Imports fell by 3.9%, in large part because of lower oil prices.
Where the Markets Closed for the Week
- Nasdaq – 4,927, down 36 points or 0.7%
- Standard & Poor’s 500 – 2,071, down 33 points or 1.6%
- 10-year U.S. Treasury Note – 2.24%, up 0.24 point
- Dow Jones Industrial – 17,857, down 276 points or 1.5%