Money Talk Podcast, Friday May 2, 2014
Advisors on This Week’s ShowJoel Dresang, introduction by Max Hoelzl)
Week in Review (April 28-May 2, 2014)
Significant economic indicators & reports
Contracts for home sales rose in March for the first time in nine months, advancing 7.9% from the year before, according to the National Association of Realtors. Warmer weather, growing inventory and improved labor markets contributed to the increase in pending home sales, the trade group said. Realtors are expecting to top 4.9 million sales this year, down from 5.1 million in 2013.
Another sign that the U.S. housing recovery may already have peaked is the gradual slowing in home sale prices. The S&P Case-Shiller index showed the third month in a row of narrowing year-to-year price increases in February. The 12.9% gain for the 20-city composite was down from 13.2% in January and a peak of 13.7% in November. An S&P economist cited higher mortgage rates, strict lending and middling consumer confidence as factors behind a weakness in most other housing statistics.
A leading indicator of consumer spending, consumer confidence dipped in April from its post-recession high in March. The Conference Board said consumers’ assessment of current conditions fell slightly in March, but expectations rose a smidgen. Overall confidence was at its second-highest level of the recovery, and an economist with the business research group said consumers don’t see the economy or the job market losing steam.
Economic growth slowed to a 0.1% annual rate in the first quarter, according to an advance estimate of the Gross Domestic Product. The Commerce Department showed that weaker exports, overbuilt inventories, lack of business investments and less home construction led to the drop from a 2.6% growth rate in the last three months of 2013. Consumer spending grew at a 3% rate, down from 3.3% in the previous quarter, with greater spending on health care and less on durable goods.
The Commerce Department said construction spending rose slightly in March, offsetting a dip in February. Residential building led the March increase, especially construction of multi-family houses. Public construction spending fell for the month as well as the year.
The ISM Manufacturing Index suggested the industry continued expanding for the 11th month in a row in April. The growth was broadly based with factory hiring at a higher pace and supply managers expressing optimism for continued demand.
Employers remained reluctant to let workers go, according to the moving four-week average for initial unemployment claims. Labor Department data showed jobless applications up for the second week in a row but still below the 47-year average level.
The driver of 70% of U.S. economic activity, consumer spending rose in March for the third month in a row and the most since August of 2009. The Bureau of Economic Analysis said personal income also improved, more than analysts expected. The same report showed a key inflation measure – the core Personal Consumption Expenditure index, rising at a 1.2% annual rate. That’s the highest rate in a year but below the 2% level preferred by monetary policy makers at the Federal Reserve.
The annual rate of motor vehicle sales dipped in April from the seven-year peak in March. Figures from Autodata Corp. show a 5.6% increase in rate from the same time last year, and many analysts still consider automotive production and sales as continuing bright spots for the economic expansion that began nearly five years ago.
The April employment report signaled more jobs created than expected along with 36,000 more jobs in February and March than was initially estimated. The Bureau of Labor Statistics said employers added 288,000 jobs in April, more than double the average since the recession ended. Hiring was broad-based, but earnings data showed no improvement. The unemployment rate fell to 6.3%, the lowest since September 2008.
Echoing other reports suggesting a pickup in manufacturing demand, the Commerce Department said factory orders increased in March, the second month in a row. The report is considered a volatile economic indicator but showed broad gains, rising unfilled orders and flat inventories.
Where the Markets Closed for the Week
- Nasdaq – 4,124, up 48 points or 1.2%
- Standard & Poor’s 500 – 1,881, up 17 points or 0.9%
- 10-year U.S. Treasury Note – 2.59%, down 0.07 point
- Dow Jones Industrial – 16,513, up 152 points or 0.9%