The Institute for Supply Management Manufacturing Index fell slightly in April. At 57.3 the index stays comfortably in the expansion mode (anything above 50) but shows a slight dip from 59.3 in March. Economists surveyed by Briefing.com had projected an index reading of 58.5.
U.S. GDP grew at an annualized rate of 2.3% in the first quarter, the Bureau of Economic Analysis announced this morning. Economists had expected growth of 2.1%. In the fourth quarter of 2017, the U.S. economy had grown at an annualized rate of 2.9%. But the rate of growth for the U.S. economy was overshadowed by other data in this morning’s report showing a significant increase in wages and inflation.
Next week we get just enough economic news to keep the state of the economy bubbling on the back burners of trader and investor attention, while first quarter earnings season picks up momentum. It’s not a lengthy list of economic reports scheduled for this week, but they are important ones. On Monday, for example, we get retail sales for March with economists expecting a big bounce back from a disappointing February
The week’s economic news reaches a crescendo with Friday’s report on March jobs. That Friday report will set the tone for the market’s take on the speed with which the Federal Reserve will raise interest rates at its next two meetings. Right now the Fed Funds futures market is showing almost no chance of an increase from the current 1.5% to 1.75% range at the May 2 meeting. The odds, however, soar to an 80.5% chance of an increase in interest rates at the Fed’s June 13 meeting
The U.S. stock market decided that today’s economic reports showed a glass half full. Interpretations pointing in the other direction, however, were easy enough to make so the end result wasn’t so much a wave of optimism lifting markets strongly higher as a sigh of relief. For the day the Standard & Poor’s 500 stock index was up 0.17%
Initial claims for unemployment for the week ended March 10 fell by by 4,000 to 226,000. That was in-line with projections from economists surveyed by Briefing.com. This is the 158th consecutive week that new claims for unemployment have been below 300,000. The less volatile 4-week moving average slipped by 750 to 221,500.
U.S. retail sales fell for a third straight month in February–down 0.1%. The Commerce Department revised January sales higher than the initially reported 0.3% decline. But that still left January sales down 0.1%. That means that February marks a third consecutive decline in retail sales–the first time that’s happened since April 2012. Economists surveyed by Reuters had forecast retail sales had climbed 0.3% in February.
In his testimony this morning before the Senate Finance committee new Federal Reserve chair Jerome Powell said, There’s “no evidence of the economy overheating.” Today’s economic data have raised doubts in the market about Powell’s conclusion.Â
The first read on growth in the U.S. economy during the fourth quarter was a tad disappointing. GDP increased by 2.6% year over year in the fourth quarter. Economists surveyed by Briefing.com were looking for growth of 2.9%. In the third quarter of 2017 GDP grew at a year over year rate of 3.2% after all the revisions were in.
The International Monetary Fund (IMF) raised its forecast for world economic growth in 2018 to 3.9%. That’s a 0.2 percentage point increase from its October projection and the fastest growth rate since 2011. About half of the improvement in the forecast is a result of the U.S. Tax Cuts and Jobs act passed in December. The IMF raised its forecast for U.S. growth in 2018 by 0.4 percentage points to 2.7%. That’s the fastest forecast growth among developed economies.
The U.S. economy added 148,000 net new jobs in December. Economists surveyed by Bloomberg had expected growth of 190,000 jobs. The Bureau of Labor Statistics also revised the November job growth to 252,000 from an initial 228,000. The official unemployment rate remained at 4.1%, the lowest rate since December 2000. The economy has now added an average of 204,000 jobs over the last three months of 2017
The global economy just keeps on running in high gear. For the United States, today the ISM Manufacturing Index climbed to 59.7 for December, well above the 58.2 in November. (Economists surveyed by Bloomberg had expected a reading of 58.2 as well. In this index anything above 50 indicates that a sector is expanding.) This puts the index at the highest level in three months.
