Personal Income and Outlays – Incomes rose 0.3% in January as consumer spending decreased 0.2%. Although sales of both durable and nondurable goods fell, part of the spending decrease is, no doubt, due to falling gasoline prices which dragged personal consumption expenditures 0.5% lower for the month. Overall, incomes have risen 4.6% while consumer spending is up 3.6% year over year. Over the same period, prices have only risen 0.2%.
ISM Manufacturing Index – The composite index fell to 52.9 for February, six-tenths off the January pace and the slowest rate of growth since January of last year when a similar big chill was dragging down manufacturing across the country. New orders were down four-tenths to 52.5 in their slowest rate of growth since May 2013. Production was down 2.8 points to 53.7. Meanwhile, employment dropped 2.7 points, coming in at 51.4.
MBA Purchase Applications – While purchases were down 0.2% on the week, a 1.0% gain in the number of refinances pushed the index up 0.1% overall. The 30-year fixed rate dropped to 3.96% from 3.99%.
Jobless Claims – Initial claims rose 7,000 to 320,000 this week, reaching a much higher-than-expected level. This moved the four-week average of initial claims up by 10,250 to 304,750. Continuing claims were also up this week, shifting 17,000 higher at 2.421 million. The four-week average of continuing claims is 4,000 higher at 2.404 million.
Employment Situation – The monthly jobs report was apparently unaffected by this week’s dud in the jobless claims department. Nonfarm payrolls were up 295,000 jobs for the month. The unemployment rate moved one-tenth lower to 5.5%. Private-sector payrolls increased by 288,000 jobs. The labor-force participation rate was down slightly from 62.9% in December to 62.8%. Hourly wages were up 0.1% for the month.
International Trade – The U.S. international trade deficit decreased from $45.6 billion in December to $41.8 billion in January. While exports were down by $5.6 billion to $189.4 billion, imports fell further, down $9.4 billion to $231.2 billion. The goods deficits decreased by $3.4 billion to $61.6 billion. Meanwhile, the services surplus increased by $0.5 billion to $19.9 billion.
Mortgage rates were down or flat last week.
30-year fixed rate mortgages (FRMs) averaged 3.75% with an average of six-tenths point for the week ending March 5, 2015, down from last week when they averaged 3.80%. A year ago at this time, 30-year FRMs averaged 4.28%.
15-year FRMs this week averaged 3.03% with an average six-tenths point, down from last week when they averaged 3.07%. A year ago at this time, 15-year FRMs averaged 3.32%.
5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 2.96% this week with an average one-half point, down from last week when they averaged 2.99%. A year ago, 5-year ARMs averaged 3.03%.
1-year Treasury-indexed ARMs averaged 2.44% this week with an average four-tenths point, unchanged from last week. At this time last year, the 1-year ARM averaged 2.52%.
The markets closed down more than 1% on Friday. In this case, it was too much of a good thing, as investors feared that rising numbers of available jobs and lower unemployment meant interest rates would rise sooner rather than later.
The Dow Jones Industrial Average fell 278.94 points Friday to close at 17,856.78, down 1.5% for the week. The S&P 500 fell 29.78 points Friday to 2,071.26, declining 1.6% on the week. The NASDAQ lost 55.44 points Friday to close at 4,927.37, dropping a weekly 0.7%.
The Week Ahead
Wednesday, March 11
MBA Purchase Applications (7:00 a.m. ET) – The purchase applications index measures applications at mortgage lenders. This is a leading indicator for single-family home sales and housing construction.
Thursday, March 12
Retail Sales (8:30 a.m. ET) – Retail sales measure the total receipts at stores that sell merchandise and related services to final consumers. Sales are measured by retail and food services stores. Data is collected from the Monthly Retail Trade Survey conducted by the U.S. Census Bureau.
Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to show the number of individuals who filed for unemployment insurance for the first time. An increasing trend suggests a deteriorating labor market. The four-week moving average of new claims helps smooth out weekly volatility.
Friday, March 13
Producer Price Index (PPI) (8:30 a.m. ET) – The Producer Price Index measures the average change over time in the prices received by domestic producers of goods and services.
Consumer Sentiment (9:55 a.m. ET) – The University of Michigan’s Consumer Survey Center questions 500 households each month on their financial conditions and attitudes about the economy. Consumer sentiment is directly related to the strength of consumer spending.
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