The insanity of March basketball kicks off in earnest starting tomorrow. Did your team grade out well enough to make the tournament? If they did, enjoy the ride. If not, there’s always next year, and my alma mater is right there with you.
It wasn’t just basketball teams that were anxious to make the grade last week. The economy had the always important employment situation report that came out. This goes over how many jobs were added to the economy in the previous month, and it’s a big deal. Let’s jump into the data.
MBA Mortgage Applications
Mortgage applications were up 0.3% overall as a 2.0% increase in applications to refinance made up for a 1.0% downturn in those looking to purchase.
The average rate on a 30-year-fixed conforming mortgage continued to rise, up one basis point on the week to 4.65%. This is the highest it’s been since January 2014.
The U.S. trade deficit increased by $3.5 billion to $56.6 billion in January. This is being seen by analysts as a negative sign for our trade balance in the first quarter.
Imports were unchanged at $257.5 billion. Imports of consumer goods were down $900 million to $54.6 billion. Helping offset this was a $2 billion rise in industrial supply imports to $47.3 billion as well as a $2.2 billion increase in petroleum imports to $13.2 billion.
On the export side, these were down 1.3% to $200.9 billion overall. Exports of goods were down 2.2% to $134.2 billion as industrial supplies fell $1.3 billion to $41.5 billion. Capital goods exports were also down $2.6 billion to $44.9 billion, which can be blamed in part on lower civilian aircraft exports.
Initial jobless claims were up 21,000 last week to 231,000. The four-week average of initial claims was up 2,000 to 220,500. It’s noted in this report that the claim collection process in Puerto Rico and the Virgin Islands still isn’t running at full steam, so those numbers may be slightly higher as well.
On the continuing claims side, these were down 64,000 to 1.870 million last week. This pushed the four-week moving average down 14,250 to come in at about 1.907 million.
There were 313,000 jobs added to nonfarm payrolls in February, easily beating consensus expectations of analysts for a 205,000 job opening increase. The unemployment rate remained steady at 4.1%.
There were 287,000 jobs added to private payrolls including 31,000 jobs added in the manufacturing sector. Both retail and professional and business services sectors added 50,000 jobs. Retail especially has been up and down. The government added 26,000 jobs as well. There are signs that more people are entering the labor market again, up to 63.0% from January’s 62.7%.
One area that was a bit weak was average hourly earnings, which was up 0.1% despite projections for a 0.3% rise. These are up 2.6% on the year. Americans did spend more time at work last month, with the average workweek coming in at 34 hours, 30 minutes, up 12 minutes from January.
Mortgage rates went up again last week, continuing a recent upward climb. While no one can predict where they go from day to day, let alone week to week, it’s worth noting that the trend lately is toward higher rates. If you’re in the market to buy or refinance, it’s not a bad idea to lock rates you like right now.
The average rate on a 30-year-fixed mortgage with 0.5 points in fees was up three basis points to 4.46% last week. Last year at this time, the rate was 4.21%.
Taking a look at shorter terms, for 0.5 points, a 15-year-fixed mortgage averaged 3.94% in the Freddie Mac survey. This was up four basis points on the week and had risen from 3.42% last year.
Finally, the average rate on a 5-year treasury-indexed hybrid adjustable rate mortgage (ARM) was up a single basis point to 3.63% with 0.4 points. This was up from 3.23% a year ago.
The market reacted very positively to February’s jobs report easily outpacing expectations. After a couple of weeks of less than stellar market performance, the Nasdaq closed at a record.
The Dow Jones industrial average closed at 25,335.74, up 440.53 points Friday and rising 3.25% on the week. Meanwhile, the S&P 500 was up 3.54% last week after rising 47.60 points to close at 2,786.57. Finally, the NASDAQ was up 132.86 points on the day, closing at 7,560.81, up a weekly 4.17%.
The Week Ahead
Tuesday, March 13
Consumer Price Index (CPI) (8:30 a.m. ET) – The consumer price index measures changes based on the price of a fixed basket of goods and services purchased by consumers.
Quicken Loans Home Price Perception Index (HPPI) (10:00 a.m. ET) – Quicken Loans, the nation’s second-largest retail mortgage lender, releases data every month comparing what people think their homes are worth to appraisals. Similar opinions of value often make for smoother purchase and refinance transactions.
Quicken Loans Home Value Index (HVI) (10:00 a.m. ET) – Quicken Loans also releases data on home values, on both the national and regional levels. Homeowners can gain a perception of whether values are increasing or decreasing and get a better idea of where they stand in terms of equity.
Wednesday, March 14
MBA Mortgage Applications (7:00 a.m. ET) – The mortgage applications index measures applications to mortgage lenders. This is a leading indicator for single-family home sales and housing construction.
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 for the sale of goods and services.
Retail Sales (8:30 a.m. ET) – Retail sales measure total receipts from stores selling merchandise and related services to final consumers. Sales are measured by retail and food service stores. Data is collected from the Monthly Retail Trade Survey conducted by the U.S. Census Bureau.
Thursday, March 15
Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to report the number of individuals filing 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.
Housing Market Index (10:00 a.m. ET) – The National Association of Home Builders produces a housing market index based on a survey where respondents from the organization are asked to rate the general economy and housing market conditions. The index is a weighted average of separate diffusion indexes, including present sales of new homes, sales of new homes expected in the next six months and traffic of prospective buyers in new homes.
Friday, March 16
Housing Starts (8:30 a.m. ET) – A housing start is registered when the construction of a new residential building begins. The start of construction is defined as the beginning of excavation of the foundation for the building.
Industrial Production (9:15 a.m. ET) – The Federal Reserve’s monthly index of industrial production – and the related capacity indexes and capacity utilization rates – covers manufacturing, mining, and electric and gas utilities.
Consumer Sentiment (10:00 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.
Jobs report aside, it was a pretty light week in terms of economic data last week. That’s definitely not the case this week. We’ll have it all covered for you in next week’s Market Update.
If all of this dry data has made you painfully aware of the hour of sleep most of us lost this weekend, I don’t blame you. Thankfully, we write plenty of home, money and lifestyle content to spice things up. This being the week of St. Patrick’s Day, I thought it would be awesome to share a dessert with an Irish twist. Enjoy and good luck to your teams this weekend. Since mine’s not in it, I’ll have to root for my brother’s school. Hail to the victors! Have a great week!
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