Personal Income and Outlays: Incomes rose 0.4% in February, matching January’s gains. Wages and salaries rose 0.3%. Incomes have grown 4.5% since this time last year. Personal spending was up 0.1% following January’s 0.2% decline. Spending has increased 3.3% year on year. Durables were down 1.0%, while nondurables and services had 0.4% and 0.2% increases, respectively. Prices were up 0.2% and are up 0.3% since this time last year.
Pending Home Sales Index: The pending home sales index rose 3.1% in February to 106.9. There were strong gains in sales in the Midwest and West. Meanwhile, there were small monthly declines in the South and the Northeast. Pending sales are up 12.0% year on year. However, because many deals fall through, final sales of existing homes are up only 4.7%. In a good sign, first-time home buyers made up 29% of pending sales, up from 28%.
S&P Case-Shiller HPI: Home prices across the 20-city index were flat in January, but they were up 0.9% month to month on a seasonally adjusted basis. Notable gains were seen in Chicago, Boston, Minneapolis and Charlotte. Prices are up 4.6% across the country year over year.
Consumer Confidence: Consumer confidence leaped 2.5 points in March, up to 101.3. Much of this strength comes from a six-point gain to 96.0 in the expectations component. Consumers expect rising incomes and a better outlook for jobs. There has been a slight uptick in the number of consumers who think jobs are hard to get. As high as expectations are, feelings about the present economy fell three points to 109.1. The other negative is a downturn in the number of people planning to buy a house over the next six months; however, the number of people planning to buy a car over the same period is up. Inflation expectations rose two-tenths to 5.2% on higher gas prices.
MBA Mortgage Applications: Purchase applications are up 6.0% on the week. Meanwhile, refinances are up 4.0% as the average rate on a 30-year fixed-rate mortgage dropped one basis point to 3.89%. Applications were up 4.6% overall.
ISM Manufacturing Index: Manufacturing slowed considerably this month, as the index fell 1.4 points to 51.5. While a number above 50 means the manufacturing sector is still growing, this is the lowest level the survey of manufacturers has seen since May 2013. New orders fell 0.7 points to 51.8, reaching bottoms not seen since April 2013. New export orders have actually decreased for the third straight month, down a full point to 47.5 in their lowest reading since November 2012. Prices for manufactured goods saw a fifth consecutive month of declines, coming in at 39.0. Hiring was flat for the month, coming in right at 50.
International Trade: The U.S. trade deficit narrowed to $35.4 billion from $42.7 billion in February. This was a much greater drop than the $41.5 billion consensus level and could be the result of the strengthening U.S. dollar, lower oil prices or decreased demand for imports. Exports were down 1.6% even as imports fell 4.4%. The petroleum deficit was down to $8.1 billion from $10.7 billion. Excluding petroleum, the goods deficit was down to $46.0 billion from $50.8 billion in January. The services surplus did come down to $19.7 billion from $19.9 billion.
Jobless Claims: Initial jobless claims were down 20,000 to 268,000 this week. This is the lowest reading since January 24 and the second lowest reading since April 2000. This dragged the four-week average down 14,750 to 285,000. Continuing claims for the week of March 21 fell 88,000 to a recovery low of 2.325 million. The four-week average is down 20,000 to 2.388 million. Insured workers saw their unemployment rate drop to 1.7%, also a recovery low. It’s important to note that some of these lows may be tied to the Easter holiday.
Employment Situation: Growth in the job market slowed in March as only 126,000 new jobs were added to nonfarm payrolls. Market expectations had been for an increase of 247,000. The unemployment rate remained steady at 5.5%. Participation in the labor force was down to 62.7%, a tenth lower than February. Private payrolls were up 129,000. Average hourly earnings increased 0.3% month to month.
Fixed rates were up very slightly, while adjustable rates were unchanged this week.
30-year fixed-rate mortgages (FRMs) averaged 3.70% with an average 0.6 point for the week ending April 2, 2015, up from last week when they averaged 3.69%. A year ago at this time, 30-year FRMs averaged 4.41%.
15-year FRMs this week averaged 2.98% with an average 0.6 point, up from last week when they averaged 2.97%. A year ago at this time, 15-year FRMs averaged 3.47%.
5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 2.92% this week with an average 0.5 point, unchanged from last week. A year ago, 5-year ARMs averaged 3.12%.
1-year Treasury-indexed ARMs averaged 2.46% this week with an average 0.4 point, unchanged from last week. At this time last year, 1-year ARMs averaged 2.45%.
In a week of roller coaster trading shortened by the Good Friday holiday, the markets ended up, changing very little for the week. The Dow Jones Industrial Average rose almost 0.3% this week, rising 65.06 points Thursday to close at 17,763.24. The S&P 500 closed at 2,066.96, gaining 7.27 points Thursday to finish up about 0.3%. The NASDAQ finished at 4,886.94, up 6.71 points for the day and down 0.08% for the week.
The Week Ahead
Wednesday, April 8
MBA Mortgage Applications (7:00 a.m. ET) – The mortgage applications index measures applications at mortgage lenders. This is a leading indicator for single-family home sales and housing construction.
Thursday, April 9
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 smooths out weekly volatility.
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