There wasn’t all that much going on this week between Monday and Friday, but boy did we get some big reports at the beginning and end. Let’s dive in headfirst.
ISM Manufacturing Index: This manufacturing number came in a touch low at 50.8 versus 51.5 expected in April, but it still points to growth. There was a 2.5 point gain in new orders to 55.8. New export orders are unchanged at 52.5. Production was down 0.9 points to 54.2, but it’s still showing growth. Backlog orders are at 50.5. Employment is still in contraction at 49.2. However, it’s up 1.1 points so the outlook is better. Prices paid by manufacturers are also at 7.5 points, due mostly to higher oil costs.
MBA Mortgage Applications: The average rate on a 30-year conforming mortgage went up only two basis points last week, but it was enough to drive refinance applications down 6.0%. Purchase applications were up 1.0%, but mortgage apps were down 3.4% overall.
International Trade: The nation’s trade gap fell by $6.6 billion to $40.4 billion in March. Unfortunately, this isn’t great news, because it mostly reflects a downturn in consumer demand. Imports were down 3.6%; exports were also down 0.9%. Taking a closer look, data imports and consumer goods were down by $5.1 billion, as were imports of core capital goods, which fell by $1.6 billion. Oil was up $0.20 per barrel to $27.68. On the export end of things, consumer goods there are also down $1.6 billion. There was also a decline in car exports, and industrial supplies fell. There was a $1.3 billion rise in exports of core capital goods, so that’s a plus.
Jobless Claims: Initial jobless claims came in 17,000 higher, making quite the jump to 274,000. That said, the four-week average was up only 2,000 to come in at 258,000. The good news is continuing claims are down 8,000 to 2.121 million. The four-week average of continuing claims was down 17,000, coming in at 2.140 million.
Employment Situation: In a sign of weakness, nonfarm payrolls ended up coming in 40,000 below expectations with only 160,000 jobs added to the economy in April. Private payrolls added 171,000 jobs, while the government cut 11,000 jobs last month. Retail also lost 3,000 jobs. The unemployment rate didn’t change at 5.0%, but the size of the labor force was down 0.2% to 62.8%. Earnings are up 0.3% in one positive and they’ve risen 2.5% on the year. Turning to individual industries, the mining force was down 7,000, continuing the long decline for that sector. Professional and business services added 65,000 new hires to the nation’s payrolls in April. Manufacturing also saw a gain of 4,000 jobs. The average workweek was also up by six minutes to 34.5 hours.
Mortgage rates were down across the board last week as the Fed’s decision to hold treasury rates where they were helped drive bond yields, and thus mortgage rates, down.
Thirty-year fixed-rate mortgages (FRMs) averaged 3.61% with an average 0.6 point for the week ending May 5, 2016, down from last week when they averaged 3.66%. A year ago at this time, 30-year FRMs averaged 3.80%.
Fifteen-year FRMs this week averaged 2.86% with an average 0.5 point, down from last week when they averaged 2.89%. A year ago at this time, 15-year FRMs averaged 3.02%.
Five-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 2.80% this week with an average 0.5 point, down from last week when they averaged 2.86%. A year ago, 5-year ARMs averaged 2.90%.
Despite the jobs report missing expectations, stocks were higher Friday following gains in oil prices. (Your pocketbook might be hurting, but your retirement fund is better.)
The Dow Jones Industrial Average was up 79.92 points Friday to close at 17,740.63. The index was still down 0.19% for the week. The S&P 500 is up 6.51 points, closing at 2,057.14, losing 0.40% for the week. Finally, the NASDAQ was up 19.06 points to finish at 4,736.16. This is a fall of 0.82% for the week.
The Week Ahead
Wednesday, May 11
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, May 12
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.
Friday, May 13
Producer Price Index (PPI) (8:30 a.m. ET) – The Producer Price Index measures the average change over time in prices received by domestic producers of goods and services.
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.
It’s a fairly uneventful economic calendar next week, but a couple of big reports come at the end. We’ll have this and plenty more home, money and life content headed your way if you subscribe to the Zing Blog below.
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