Succinct Summation of Week’s Events 4.29.16

Succinct Summation of Week’s Events for the week ending April 29, 2016:


1) Initial jobless claims totaled 257k, 2k less than expected and off last week’s 248k which was the lowest since 1973. The 4 week average moves down by 5k to 256k while continuing claims fell by another 5k. 

2) The market had its temper tantrum but the BoJ saw what happened after the late January move to negative interest rates, and decided to fight off the massive peer pressure to ease again, for now.

3) US personal income in March rose .4% m/o/m, one tenth above the estimate but given back by a one tenth downward revision in February. The y/o/y gain of 4.2% was positively driven by private sector wages and salaries which rose at a 5.1% y/o/y pace, the best since August ’15. 

4) Personal spending was a hair better if we take the one tenth miss in March with the one tenth upward revision to February and January. The m/o/m gain though was just .1% after .2% gains in the two prior months. These are nominal numbers.

5) As measured by the PCE, headline inflation rose .1% m/o/m and a benign .8% y/o/y while the core rate clocked in at .1% m/o/m also but 1.6% y/o/y. Both were in line with expectations. The spread between core CPI and core PCE remains a wide 6 tenths due to the different weights on housing and healthcare. 

6) Contract signings of existing homes in March rose 1.4% m/o/m, above the estimate of a gain of .5% and follows a 3.4% rise in February (revised down by one tenth). The headline index is back to where it was last May. The NAR though had this caveat with the sales decline out West:  “the median home price has risen an astonishing 38% in the past three years… driving up prices beyond what a growing share of households can comfortably afford.” 

7) Markit services PMI for April was 52.1, up from 51.3 in March, 49.7 in February and vs 53.2 in January. The six month average is now 52.8 vs the 12 month average of 54.1. Notwithstanding the survey bounce in April, “Survey respondents suggested that subdued client demand and less favorable underlying economic conditions had weighed on business activity at their units in April. Reflecting this, latest data signaled only a marginal rebound in new business growth from the survey record low recorded in March.”

8) April Richmond manufacturing survey fell 8 pts to +14 but that was 2 pts better than expected and the 2 nd best print since October ’14.

9) New home sales in March totaled 511k, 9k less than expected but February was revised up by 7k to 519k and January was revised higher by 19k to 521k. Months’ supply rose to 5.8 from 5.6 and that is the most since September ’15 and is essentially back to the 30 year average. Home prices fell 1.8% y/o/y to $288,000.




1) Following the FOMC meeting, the Fed has made it even more confusing as to what data they are most dependent on in developing policy.

2) The US economy grew by just .5% q/o/q annualized in Q1, two tenths less than expected, down from 1.4% in Q4 and vs the average in 2015 of about 2%. As the price deflator rose .7%, two tenths more than expected, nominal GDP growth was actually in line at an anemic 1.2%. The y/o/y real growth rate was 2% off an easy comparison.

3) March durable goods orders ex transports fell .2% m/o/m vs the estimate of a gain of .5%. The core rate of spend was flat m/o/m, six tenths weaker than expected and February was revised down by two tenths. Core shipments were up just .3% rather than the forecasted .9%. The absolute level of core capital spending in March was $66.9B vs $68b in December 2011. This level was also seen in 2000 and in 2006.

4) The April Chicago manufacturing index fell to 50.4 from 53.6 in March. That is below the estimate of 52.6 and compares with the 3 month average of 50.5 and 6 month average of 49.6. MNI said the m/o/m drop was “led by a fall in New Orders and a sharp drop in Order Backlogs. It marks a slow start to the 2 nd quarter, with most measures down from levels seen a year earlier.” The employment component fell back below 50.

5) Final print on UoM April consumer confidence fell to 89 from the first read of 89.7 and down from 91 in March. It’s the weakest figure since September ’15 and is below the estimate of 90. The components however were mixed as Current Conditions rose 1.3 pts from March while Expectations fell a sharper 3.9 pts. Also of note, inflation expectations ticked up by one tenth to 2.8%, the most since September ’15.

6) April Conference Board consumer confidence index fell two pts to 94.2 and that was below the estimate of 95.8 and brings the six month average to 95.2 and the 12 month average to 96.6. The two main components were mixed as the Present Situation rose by 1.5 pts while Expectations fell to the lowest level since February ’14. The answers to the labor market questions were very mixed.

7) In the all important Spring selling season, the MBA said mortgage applications to buy a home fell 2.4% w/o/w and the y/o/y gain slowed to 14.5% vs 17% last week and 24% in the week prior. Applications to refi fell 5% w/o/w but after three weeks of good gains. The y/o/y rise is 12%.   

8) The US Q1 Employment Cost Index was up by .6% q/o/q, in line with expectations while the prior quarter was revised down by one tenth to a rise of .5%. Looking specifically at private sector wages and salaries saw a .7% q/o/q increase, matching the biggest gain since June ’14 but the y/o/y gain was just 2%, the slowest since June ’15. On a cost per hour basis, wage growth remained modest in Q1.

9) The German IFO business confidence index for April was essentially unchanged at 106.6 vs 106.7 last month. That was .5 pt below the estimate and compares with the six month average of 107.4 and the 12 month average of 107.8. The Current Assessment component was down slightly while Expectations were up a touch. IFO was sanguine on the data by saying “The mood in the German economy remains positive…The moderate upturn in the German economy continues.”


Thanks, Pete!

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