Well, after 3 weeks, the field in the big college basketball tournament has been whittled from 68 down to two in tonight’s final. Many of us around the office are disappointed that Michigan State isn’t in it, but it was a good run.
Meanwhile, no one expected the Detroit Tigers to be doing anything but rebuilding this year and they’ve started the season with a record of 7-3. I’m not predicting a World Series just yet, but we can enjoy the ride, right?
That’s the way life is: ups and downs. It sort of reminds me of the February retail sales report. Yeah, I’m aware that’s a hard-right turn. Let’s jump in, though.
Retail sales in February were a little bit abysmal. The consensus had been for a 0.3% uptick. Instead, sales actually fell 0.2%.
But let’s not forget about those ups and downs. In January, retail sales had been reported to be up 0.2%. Now that number has been revised up to a 0.7% gain, so things were actually much better in January than previously thought. It’s worth noting that both January and February are slow months for retailers because you’re coming off the big holiday season and people aren’t spending as much money overall, so it’s difficult to get a real read on the data.
Let’s get back to the February data. Car sales were actually up 0.7% in February, which made for a deeper decline when these were taken out. Without cars, sales were down 0.4%. Gas prices were up 1%, so the dip was even more pronounced when gas was further taken out, down 0.6%. A control group matched the overall loss of 0.2%.
E-commerce retailers were up 0.9% and restaurants were up 0.1%, but outside of that, there weren’t any other gains of significance to report.
ISM Manufacturing Index
This report at least showed some growth in the manufacturing sector in March as confidence among manufacturers was up 1.1 points to 55.3.
Breaking that number down a bit, new orders were up quite a bit at 57.4, while this report showed employment up quite a bit at 57.5. Here, some data may need to be reconciled, but more on that later in the employment situation report. Another highlight was production, which got a little bit better at 55.8.
On the downside, new export orders fell 1.1 points to 51.7, while backlog orders only rose very slightly at 50.4. Prices paid were up for the first time in a while at 54.2, which shows some price pressure in the sector.
Durable Goods Orders
Continuing our theme of ups and downs, new orders for durable goods were down 1.6% in February. Much of the reason for the loss was the volatile transportation reading. When this was removed, orders were up 0.1%. However, orders of core capital goods fell 0.1%, which missed expectations.
Looking deeper at the numbers, shipments of core capital goods were flat, while unfilled orders in the core category were down 0.3%. Taken together, this doesn’t point to good things for business investment.
Overall unfilled orders were also down 0.3%. There’s some speculation in this report that a downturn in backlog orders could slow manufacturing hiring in time. Finally, there was a 0.2% uptick in the number of products being shipped.
MBA Mortgage Applications
Riding a wave of lower interest rates, overall mortgage applications were up 18.6% last week as refinance applications rose an astonishing 39%. There’s good reason for this. The average interest rate was down 11 points to 4.36% for a 30-year fixed conforming mortgage.
Purchase applications were up 3%, but given the recent drop in rates, much of the new application volume in the mortgage space is coming from people looking to refinance into a better financial position.
The number of initial jobless claims was down 10,000 to 202,000 last week, coming in much lower than expected. Meanwhile, the 4-week average of initial claims was down 4,000 at 213,500.
On the continuing claims end, these were down 38,000 last week to 1.717 million, while the 4-week average fell 8,000 to about 1.743 million.
After adding just 33,000 in February, a number that was revised up from initial reports of 20,000 jobs added, the March employment report blew all expectations out of the water. There were 196,000 jobs added in March. The unemployment rate remained at 3.8%.
Digging a little deeper, there were 182,000 jobs added in the private sector and 14,000 added within the government. However, not everything was cupcakes and brownies. In contrast to the ISM Manufacturing report from earlier in the week, this data showed manufacturing payrolls cut 6,000 positions. The labor force participation rate was also down 0.2% to come in at an even 63%.
Turning to individual sectors, professional and business services were up 37,000. Meanwhile, retail jobs were down 12,000 in a continuing trend. Things slow down a bit after the holiday season.
Let’s turn to wages and hours. Average hourly earnings were up 0.1% in March and have now risen 3.2% on the year. Meanwhile, the average employee worked 34.5 hours, an increase of 6 minutes from February.
After dropping to the lowest level in 10 years in last week’s report, this week some mortgage rates remain fairly unchanged. Whether you’re in the market to purchase or refinance your home, it remains an excellent time to take advantage and lock your rate.
The 30-year fixed mortgage was up a couple basis points last week to 4.08% with 0.5 points paid in fees. This is down from 4.4% a year ago at this time.
Looking at shorter terms, the average rate on a 15-year fixed mortgage fell a single basis point to 3.56% with 0.4 points. Last year, the average rate was 3.87%.
Finally, the average rate for a 5-year treasury-indexed, hybrid adjustable rate mortgage (ARM) fell 9 basis points to 3.66% with 0.4 points. This is a slight rise from 3.62% last year.
The stock market reacted very positively to the strong jobs report for March. Traders also continue to keep an eye on progress in turn talks between the U.S. and China.
The Dow Jones Industrial Average finished Friday at 26,424.99, up 1.91% on the week and rising 40.36 points on the day. Meanwhile, the S&P 500 was up 2.06% on the week to finish at 2,892.74, up 13.35 points on Friday. Finally, the Nasdaq rose 46.91 points on the day to finish at 7,938, a 2.71% weekly upswing.
The Week Ahead
Tuesday, April 9
Quicken Loans Home Price Perception Index (HPPI) (10:00 a.m. ET) – Quicken Loans 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 at 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, April 10
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.
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.
Thursday, April 11
Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to show the number of individuals filing for unemployment insurance for the first time. An increasing trend suggests a deteriorating labor market. The 4-week moving average of new claims smooths out weekly volatility.
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.
Friday, April 12
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.
Some of our own home price data is out tomorrow, and then later in the week we get some updated reads on inflation. We’ll have it all in next week’s Market Update!
While this info is important, I realize much of it reads like an economic textbook. If that’s not what you want to read on a Monday morning, I get it. We have plenty of home, money and lifestyle content to share with you if you subscribe to the Zing Blog below. This week, let’s take a look at an article on semi-retirement budgeting for those of you who are looking to cut back, but still want to be in the workforce. Have a great week!
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