Comerica Bank’s California Index Declines in February

Comerica Bank’s California Economic Activity Index declined in February, down 1.1 percentage points to a level of 109.0. February’s reading is 36 points, or 50 percent, above the index cyclical low of 72.7. The index averaged 106 points for all of 2013, five points above the average for all of 2012. January’s index reading was unchanged at 110.1.

“Our California Economic Activity Index declined in February, reflecting the hangover from softer economic conditions this winter. Most components of the index were positive for February, indicating that the overall series will turn north again soon. Drought conditions are hurting the agricultural sector, and the state’s important defense industry is feeling the drag from federal spending cuts. However, most other sectors of the California economy are on a moderate improvement track supported by a strong high-tech sector and climbing house prices,” said Robert Dye, Chief Economist at Comerica Bank. “We continue to expect the California economy to improve through 2014.”

CA Index 0414For a PDF version of the California Economic Activity Index click here: CaliforniaIndex_0414.

Share 'Comerica Bank’s California Index Declines in February' on Delicious Share 'Comerica Bank’s California Index Declines in February' on Digg Share 'Comerica Bank’s California Index Declines in February' on Facebook Share 'Comerica Bank’s California Index Declines in February' on Google+ Share 'Comerica Bank’s California Index Declines in February' on LinkedIn Share 'Comerica Bank’s California Index Declines in February' on Pinterest Share 'Comerica Bank’s California Index Declines in February' on reddit Share 'Comerica Bank’s California Index Declines in February' on StumbleUpon Share 'Comerica Bank’s California Index Declines in February' on Twitter Share 'Comerica Bank’s California Index Declines in February' on Add to Bookmarks Share 'Comerica Bank’s California Index Declines in February' on Email Share 'Comerica Bank’s California Index Declines in February' on Print Friendly
Posted in California, Economic Activity, General, Indices | Tagged , | Comments Off

Comerica Bank’s Michigan Index Declines for the Fourth Consecutive Month

Comerica Bank’s Michigan Economic Activity Index dipped in February, falling 2.1 percentage points to a level of 123.4. February’s reading is 51 points, or 71 percent, above the index cyclical low of 72.1. The index averaged 126 for all of 2013, 12 points above the index average for 2012. January’s index reading was revised slightly down to 125.5.

“Our Michigan Index fell again in February, its fourth consecutive decline. Job growth in Michigan has essentially stalled out since last August. Some of that can be blamed on the very bad winter weather conditions that affected the state directly and also hurt national demand for the state’s manufactured goods, including cars,” said Robert Dye, Chief Economist at Comerica Bank. “Increased U.S. auto sales this spring will help the Michigan economy, but the auto sector’s potential for job creation is limited as the industry approaches the cyclical peak in auto sales, perhaps by the end of next year.”

MI Index 0414

For a PDF version of the Michigan Economic Activity Index click here: Michigan0414.

Share 'Comerica Bank’s Michigan Index Declines for the Fourth Consecutive Month' on Delicious Share 'Comerica Bank’s Michigan Index Declines for the Fourth Consecutive Month' on Digg Share 'Comerica Bank’s Michigan Index Declines for the Fourth Consecutive Month' on Facebook Share 'Comerica Bank’s Michigan Index Declines for the Fourth Consecutive Month' on Google+ Share 'Comerica Bank’s Michigan Index Declines for the Fourth Consecutive Month' on LinkedIn Share 'Comerica Bank’s Michigan Index Declines for the Fourth Consecutive Month' on Pinterest Share 'Comerica Bank’s Michigan Index Declines for the Fourth Consecutive Month' on reddit Share 'Comerica Bank’s Michigan Index Declines for the Fourth Consecutive Month' on StumbleUpon Share 'Comerica Bank’s Michigan Index Declines for the Fourth Consecutive Month' on Twitter Share 'Comerica Bank’s Michigan Index Declines for the Fourth Consecutive Month' on Add to Bookmarks Share 'Comerica Bank’s Michigan Index Declines for the Fourth Consecutive Month' on Email Share 'Comerica Bank’s Michigan Index Declines for the Fourth Consecutive Month' on Print Friendly
Posted in Economic Activity, General, Indices, Michigan | Tagged , | Comments Off

March New and Existing Home Sales

Spring Home Sales Off to a Slow Start 

  • New Home Sales for March fell sharply by 14.5 percent to an annual rate of just 384,000 units.
  • The Months’ Supply of New Homes on the market increased to 6.0 months’ worth in March.
  • Existing Home Sales for March eased by 0.2 percent to a 4.59 million unit annual rate.
  • The Months’ Supply of Existing Homes was increased to 5.2 months’ worth in March.

Much of the U.S. economic data stream has improved after the winter freeze. Home sales have not. Because of the lead time between offers, contracts and sales we remain optimistic that the upward trend in new home sales, visible since early 2011, reasserts itself soon. Likewise we remain optimistic that the recent downward trend in existing home sales, that began last August, reverses itself soon. One support for our optimistic outlook is that mortgage applications for purchases (as opposed to refinance) were up in late March through early April. Also, mortgage rates have eased through April. One final supportive point, the overall economy is improving. Job growth in February and March was solid, most other U.S. economic indicators are positive. Still, if home sales do not lift soon, that would be a fundamental challenge to our cautiously optimistic outlook for the U.S. economy.

New home sales for March fell sharply, down 14.5 percent to a 384,000 unit annual rate. That was the worst sales rate since last July.  Sales in the Northeast actually increased for the month, up 12.5 percent.  However, new home sales in the weather-plagued Midwest fell by 21.5 percent in March. Sales were down significantly in both the South and the West regions as well. The months’ supply of new homes increased to 6.0 months’ worth in March. That could come down quickly if April and May sales rebound as expected. According to the Census Bureau, the median sales price of a new house was up 12.6 percent in March from a year ago. Existing home sales were essentially unchanged in March, yet officially down 0.2 percent to a 4,590,000 unit annual rate. The months’ supply of existing homes on the market ticked up to 5.2 months’ worth in March. According to the National Association of Realtors, the median sales price of an existing home was up 7.9 percent in March from a year earlier.

Market Reaction: U.S. equity markets are down. Treasury yields are down at the long end of the yield curve. NYMEX crude oil is down to $101.63/barrel. Natural gas futures are up to $4.80/mmbtu.

Economic Alert 042314

For a PDF version of this Comerica Economic Alert click here: New_Home Sales 04-23-14.

Share 'March New and Existing Home Sales' on Delicious Share 'March New and Existing Home Sales' on Digg Share 'March New and Existing Home Sales' on Facebook Share 'March New and Existing Home Sales' on Google+ Share 'March New and Existing Home Sales' on LinkedIn Share 'March New and Existing Home Sales' on Pinterest Share 'March New and Existing Home Sales' on reddit Share 'March New and Existing Home Sales' on StumbleUpon Share 'March New and Existing Home Sales' on Twitter Share 'March New and Existing Home Sales' on Add to Bookmarks Share 'March New and Existing Home Sales' on Email Share 'March New and Existing Home Sales' on Print Friendly
Posted in Daily, General, United States | Tagged , , , | Comments Off

Comerica Bank’s Texas Index Dipped Again in February

Comerica Bank’s Texas Economic Activity Index declined 0.4 percentage points in February to a level of 109.7. February’s reading is 38 points, or 53 percent, above the index cyclical low of 71.6. The index averaged 105 points for all of 2013, three points above the average for full-year 2012. January’s index reading was revised slightly down to 110.1.

“Our Texas Index dipped again in February, and just like it was in January, the culprit was volatility in residential buildings permits. Permits from November through February eased after spiking last October. Given the strong population and income growth of key Texas metropolitan areas, and overall solid economic performance of the state, I expect home builders to be very active this spring and summer,” said Robert Dye, Chief Economist at Comerica Bank. “And just like last month, most other components of our Texas index were positive, including payroll job growth and the drilling rig count. We continue to see signs that the broader U.S. economy is thawing out after a winter freeze and this will benefit Texas as well.”

TX Index 0414

For a PDF version of the Texas Economic Activity Index, click here: TexasIndex_0414.

Share 'Comerica Bank’s Texas Index Dipped Again in February' on Delicious Share 'Comerica Bank’s Texas Index Dipped Again in February' on Digg Share 'Comerica Bank’s Texas Index Dipped Again in February' on Facebook Share 'Comerica Bank’s Texas Index Dipped Again in February' on Google+ Share 'Comerica Bank’s Texas Index Dipped Again in February' on LinkedIn Share 'Comerica Bank’s Texas Index Dipped Again in February' on Pinterest Share 'Comerica Bank’s Texas Index Dipped Again in February' on reddit Share 'Comerica Bank’s Texas Index Dipped Again in February' on StumbleUpon Share 'Comerica Bank’s Texas Index Dipped Again in February' on Twitter Share 'Comerica Bank’s Texas Index Dipped Again in February' on Add to Bookmarks Share 'Comerica Bank’s Texas Index Dipped Again in February' on Email Share 'Comerica Bank’s Texas Index Dipped Again in February' on Print Friendly
Posted in Economic Activity, General, Indices, Texas | Tagged , | Comments Off

Comerica Economic Weekly

U.S. economic data continues to show evidence of a spring thaw. Retail sales for March were up a strong 1.1 percent, driven by a snap back in auto sales. Retail sales of autos and parts were up 3.1 percent in March.  Non-auto retail sales gained a solid 0.7 percent for the month. The strong retail sales growth seen in March will not be sustained in the months ahead as this winter’s pent-up demand is spent out. It is, nonetheless, a sign that consumer spending is resilient.

The Consumer Price Index for March increased by 0.2 percent, up from the previous two months of 0.1 percent gains. A key factor in the small uptick in consumer inflation was the cost of housing. As house prices go up, so too will the owners’ equivalent rent index which feeds into the shelter component of the CPI. Owners’ equivalent rent accounts for about 24 percent of headline CPI. Also, we can expect ongoing upward pressure from traditional rents, which account for about 7 percent of headline CPI. So we can say that about a third of CPI will feel more pressure from housing markets for the remainder of the year.

Residential construction activity is also showing an improving trend after a tough winter. Housing starts were up by 2.8 percent in March, to a 946,000 unit pace, propelled by a rebound in single-family starts. Building permits for residential construction fell by 2.4 percent in March to a 990,000 unit pace, after a strong February. The level of permits remains above the levels for starts for the month. So the dip in permits in March should not be interpreted as a sign of weakness in residential construction.

Industrial production was up a solid 0.7 percent in March, and February production was revised up to show a strong 1.2 percent gain. This is the strongest two-month percentage gain since April-May 2010. This has positive implications for GDP growth for the recently- completed first quarter, implying upside risk for our forecast of a very weak 0.5 percent growth rate for real GDP. Overall capacity utilization for March increased to 79.2 percent. Most industries remain well shy of their 1994-95 highs for capacity utilization. But as we cross from average to above-average capacity utilization, pricing power increases…something to watch for going forward.

The New York Fed’s Empire State Manufacturing Survey for April shows that business activity was flat for New York-area manufacturers. The Philadelphia Fed’s Business Outlook Survey for April showed improving conditions for manufacturing in Pennsylvania and New Jersey.

Initial claims for unemployment insurance for the week ending April 12 increased slightly by 2,000 to a level of 304,000. This is still well within the “healthy” range. Continuing claims for the week ending April 5 declined by 11,000 to hit 2,739,000.

For a PDF version of the Comerica Economic Weekly, including forecast tables and the variables calendar, click here: CMAEconWeekly 04-18-14.

Share 'Comerica Economic Weekly' on Delicious Share 'Comerica Economic Weekly' on Digg Share 'Comerica Economic Weekly' on Facebook Share 'Comerica Economic Weekly' on Google+ Share 'Comerica Economic Weekly' on LinkedIn Share 'Comerica Economic Weekly' on Pinterest Share 'Comerica Economic Weekly' on reddit Share 'Comerica Economic Weekly' on StumbleUpon Share 'Comerica Economic Weekly' on Twitter Share 'Comerica Economic Weekly' on Add to Bookmarks Share 'Comerica Economic Weekly' on Email Share 'Comerica Economic Weekly' on Print Friendly
Posted in General, United States, Weekly | Tagged , | Comments Off

March Residential Construction, Industrial Production

Starts Up, Production Up and Positive for GDP

  • March Housing Starts were up by 2.8 percent to a 946,000 unit annual rate.
  • Permits for new residential construction decreased in March by 2.4 percent to a 990,000 unit pace.
  • Industrial Production for March increased by 0.7 percent, with a strong upward revision to February.

Residential construction activity is showing an improving trend after a tough winter. Housing starts were up by 2.8 percent in March, to a 946,000 unit pace, propelled by a rebound in single-family starts. Single-family starts increased 6.0 percent in March. Multifamily starts eased in March by 6.1 percent. Very tight housing markets in many major markets are providing ample incentive for further gains in both single-family and multifamily construction. Building permits for residential construction fell by 2.4 percent in March to a 990,000 unit pace. The March dip in permits comes after a strong February. Also, the level of permits remains above starts for the month, so the dip in permits in March should not be interpreted as a sign of weakness in residential construction. New residential completions were essentially unchanged in March after a strong February.

Industrial production was up by a solid 0.7 percent in March, and February production was revised up to show a strong 1.2 percent gain. This is the strongest two-month percentage gain since April-May 2010. The March increase in industrial production was supported by a 1.0 percent increase in utility output following a small dip in February. Still, manufacturing output was up 1.4 percent in February and another 0.5 percent in March for a strong back-to-back showing. The February gain in manufacturing output was driven by the auto sector. In March gains were more broad-based. This has positive implications for GDP growth for the recently completed first quarter, implying upside risk for our forecast of a very weak 0.5 percent growth rate for real GDP. Today’s IP report also shows good momentum heading into the second quarter. We expect to see a pickup in real GDP growth in the current second quarter to about 2.9 percent. Overall capacity utilization for March increased to 79.2 percent. Capacity utilization for many industries is close to its long-run average. Most industries remain well shy of their 1994-95 highs for capacity utilization. But as we cross from average to above-average capacity utilization, pricing power increases…something to watch for going forward.

Market Reaction: Equity markets opened with gains. The yield on 10-Year Treasury bonds is up to 2.65 percent. NYMEX crude oil is up to $104.53/barrel. Natural gas futures are down to $4.61/mmbtu.

Economic Alert 041614

For a PDF version of this Comerica Economic Alert click here: Housing Starts 04-16-14.

Share 'March Residential Construction, Industrial Production' on Delicious Share 'March Residential Construction, Industrial Production' on Digg Share 'March Residential Construction, Industrial Production' on Facebook Share 'March Residential Construction, Industrial Production' on Google+ Share 'March Residential Construction, Industrial Production' on LinkedIn Share 'March Residential Construction, Industrial Production' on Pinterest Share 'March Residential Construction, Industrial Production' on reddit Share 'March Residential Construction, Industrial Production' on StumbleUpon Share 'March Residential Construction, Industrial Production' on Twitter Share 'March Residential Construction, Industrial Production' on Add to Bookmarks Share 'March Residential Construction, Industrial Production' on Email Share 'March Residential Construction, Industrial Production' on Print Friendly
Posted in Daily, General, United States | Tagged , , , , | Comments Off

March Consumer Prices, Retail Sales

Housing and Food Push Consumer Prices Up, Retail Sales Strong 

  • The March Consumer Price Index increased by 0.2 percent, as rents moved up.
  • The March Core CPI also increased by 0.2 percent, and was up 1.7 percent over the past 12 months.
  • Retail Sales for March were up a strong 1.1 percent as auto sales snapped back.  
  • Retail Sales Ex-Autos were also strong in March, up 0.7 percent, with gains in building materials.

Even as the Federal Open Market Committee became increasingly concerned with low inflation, as seen in the minutes of their March 18/19 meeting, consumer price inflation was picking up. The Consumer Price Index for March increased by 0.2 percent, up from the previous two months of 0.1 percent gains. A key factor in the small uptick in consumer inflation was the cost of housing. House prices were up 11.4 percent in the fourth quarter of 2013 over the previous year, according to the Case-Shiller National U.S. House Price Index. Many large cities are well above the national average for house price appreciation. The Case-Shiller and other house price indexes do not factor directly into the CPI, but they are related. The Bureau of Labor Statistics calculates an index called owners’ equivalent rent. That index shows how much the average homeowner would have to pay to rent a house that is equivalent to the one they own. Obviously, house prices are a key factor in that index. As house prices go up, so too will the owners’ equivalent rent index which feeds into the shelter component of the CPI. Owners’ equivalent rent accounts for about 24 percent of headline CPI. Ongoing house price gains will keep upward pressure on the CPI. Also, rental vacancy rates are falling. We can expect ongoing upward pressure from traditional rents, which account for about 7 percent of headline CPI. So we can say that about a third of CPI will feel more pressure from housing markets for the remainder of the year. Energy prices were down slightly in March. Food prices were up 0.4 percent for the second straight month. The drought in California is showing up at the neighborhood grocery store. For those of us who do not eat, inflation was a non-issue in March. For everyone else, we see year-over-year growth in the CPI bottoming out and beginning to tick up this year.

Retail sales for March were up a strong 1.1 percent, driven by a snap back in unit auto sales to a 16.4 million unit annual rate. Retail sales of autos and parts were up 3.1 percent in March.  Non-auto retail sales gained a solid 0.7 percent for the month. General merchandise store sales were up 1.9 percent in March and building material sales were up 1.8 percent. So in autos and building materials we see a weather-related bounce back. The strong retail sales growth seen in March will not be sustained in the months ahead, but it is nonetheless a sign that consumer spending is resilient.

Market Reaction: Equity markets are turning south after opening gains. Treasury yields are down. NYMEX crude oil is down to $103.91/barrel. Natural gas futures are up to $4.67/mmbtu.

Economic Alert 04152014

For a PDF version of this Comerica Economic Alert click here: CPI 04-15-14.

Share 'March Consumer Prices, Retail Sales' on Delicious Share 'March Consumer Prices, Retail Sales' on Digg Share 'March Consumer Prices, Retail Sales' on Facebook Share 'March Consumer Prices, Retail Sales' on Google+ Share 'March Consumer Prices, Retail Sales' on LinkedIn Share 'March Consumer Prices, Retail Sales' on Pinterest Share 'March Consumer Prices, Retail Sales' on reddit Share 'March Consumer Prices, Retail Sales' on StumbleUpon Share 'March Consumer Prices, Retail Sales' on Twitter Share 'March Consumer Prices, Retail Sales' on Add to Bookmarks Share 'March Consumer Prices, Retail Sales' on Email Share 'March Consumer Prices, Retail Sales' on Print Friendly
Posted in Daily, General, United States | Tagged , , , , | Comments Off

Comerica Economic Weekly

U.S. economic data at the start of the second quarter are consistent with an improving economy. Conditions in Europe also appear to be improving, evidenced by the strong demand for the first post-crisis issuance of Greek sovereign debt. However, China spooked global financial markets late this week after a poorly-subscribed bond sale raised concerns about slowing economic growth there.

Labor market indicators for the U.S. appear to be back on track after a weak December and January. The Job Opening and Labor Turnover Survey (JOLTS) for February showed an increase in the job openings rate for the month, consistent with the solid payroll job gain of 197,000 for that month.

Initial claims for unemployment insurance for the week ending April 5 decreased by 32,000 to hit an even 300,000. This is the lowest level of initial claims reported since May 2007 and it is on par with the lows seen in the previous expansion cycle when the unemployment rate was below 5 percent. Long story short, initial claims say that labor markets are normalizing.

Business confidence is improving. The National Federation of Independent Business’s Small Business Optimism Index increased in March, reversing the February decline. The improvement in small business optimism coincides with a strong 26 percent increase in commercial and industrial loans for all banks in February, as reported by the Federal Reserve.

Consumer sentiment is also improving. The University of Michigan’s Consumer Sentiment Index increased in early April to 82.6. Other measures of consumer confidence are also improving.

Producer prices for final demand jumped in March according to the Bureau of Labor Statistics. The new headline PPI series increased by 0.5 percent for the month. This unexpected gain reflects methodology changes by the BLS that have added more volatile components to their headline PPI measure. At this point, the surge in PPI for final demand does not appear to represent a clear inflationary threat. We will keep monitoring this series to see if it settles down.

The minutes for the Federal Open Market Committee meeting of March 18/19 show a repeated concern about weak inflation. The minutes have a “dovish” quality that suggests that the FOMC may keep the eventual increases in the fed funds rate at a lower trajectory than some might expect. There was broad agreement within the FOMC that the forward guidance linking the fed funds rate to an unemployment rate threshold of 6.5 percent needed to be revised. The minutes also suggest that the FOMC will continue to taper their asset purchase program in “measured steps” unless conditions change significantly.

For a PDF version of the Comerica Economic Weekly, including forecast tables and the variables calendar, click here: CMAEconWeekly 04-11-14.

Share 'Comerica Economic Weekly' on Delicious Share 'Comerica Economic Weekly' on Digg Share 'Comerica Economic Weekly' on Facebook Share 'Comerica Economic Weekly' on Google+ Share 'Comerica Economic Weekly' on LinkedIn Share 'Comerica Economic Weekly' on Pinterest Share 'Comerica Economic Weekly' on reddit Share 'Comerica Economic Weekly' on StumbleUpon Share 'Comerica Economic Weekly' on Twitter Share 'Comerica Economic Weekly' on Add to Bookmarks Share 'Comerica Economic Weekly' on Email Share 'Comerica Economic Weekly' on Print Friendly
Posted in General, United States, Weekly | Tagged , | Comments Off

April 2014, Comerica U.S. Economic Update

It’s a Spring Thaw for the U.S. Economy

Recent data for the U.S. economy show a spring thaw in progress after one of the worst winters on record for parts of the upper Midwest. Consumer spending is picking up, companies are producing more and hiring more workers and houses are being built. Credit is flowing and confidence indexes are improving. We still expect to see a very weak 2014Q1 GDP report at the end of this month. Not only was the bad weather a drag through Q1, but  federal discretionary spending was still contracting and we expect to see a renormalization in inventories after last fall’s surge in both farm and nonfarm inventories. If Q1 comes in as weak as we expect, there is a danger that improving confidence will be throttled back, dragging on Q2 economic activity. Hopefully, consumers and businesses will respond to the clearing skies and calming seas in front of them, rather than to the stormy passage behind them.  With more confirmation of improving fundamentals, we expect to upgrade our Economic Outlook rating soon. We have not yet been above a C+ rating in its brief history, since September 2011.

In a benign economic environment the Federal Reserve will try to unwind extraordinary policy steadily and predictably, but without explicit forward guidance to box them in. We expect the Yellen Fed to be a little more boring than the Bernanke Fed simply because the times are different. Bernanke’s job was to surprise a very bad economy in a good direction. Yellen’s goal will be to avoid bad surprises in an improving economy. At their upcoming April 29/30 meeting, we expect the FOMC to announce another $10 billion reduction in its asset purchase program. We continue to expect to see the first increase in the near-zero fed funds rate around mid-year 2015, as early as the end of April, as late as mid-September.

Job growth got back on track in February and March after a weak December and January. In February 197,000 jobs were added. March saw 192,000 net new payroll jobs. Recently stronger labor force growth may be a developing trend. If it is, that could bring the unemployment rate down more slowly than previously thought. We have increased our estimate of labor force growth this year in our April forecast. Consequently, the unemployment rate declines more slowly for the remainder of this year than previously estimated. That does not imply a net worsening of the outlook. The unemployment rate is simply not a well-calibrated measure of economic activity. Vehicle sales stepped up in March to a 16.4 million unit rate. The bounce-back in sales was likely propelled by demand pent up over the winter. Light truck sales in particular were stronger than expected, which is a positive indicator for construction. We look for slightly weaker vehicle sales in April consistent with an overall improving trend.

For a PDF version of the complete Comerica U.S. Monthly with additional commentary, tables, and charts, click here: USEconomicUpdate0414.

Share 'April 2014, Comerica U.S. Economic Update' on Delicious Share 'April 2014, Comerica U.S. Economic Update' on Digg Share 'April 2014, Comerica U.S. Economic Update' on Facebook Share 'April 2014, Comerica U.S. Economic Update' on Google+ Share 'April 2014, Comerica U.S. Economic Update' on LinkedIn Share 'April 2014, Comerica U.S. Economic Update' on Pinterest Share 'April 2014, Comerica U.S. Economic Update' on reddit Share 'April 2014, Comerica U.S. Economic Update' on StumbleUpon Share 'April 2014, Comerica U.S. Economic Update' on Twitter Share 'April 2014, Comerica U.S. Economic Update' on Add to Bookmarks Share 'April 2014, Comerica U.S. Economic Update' on Email Share 'April 2014, Comerica U.S. Economic Update' on Print Friendly
Posted in General, Monthly, United States | Tagged , | Comments Off

Comerica Economic Weekly

True to form, March came in like a lion and went out like a lamb, at least in terms of economic data. Now we get to see whether or not April is in fact the cruelest month. So far, it looks like April will be a kind month for economic data as the U.S economy thaws out from one of the worst winters on record in many areas.

Labor data is now added to the growing list of improving indicators that point to a spring thaw. U.S. payroll employment increased by 192,000 jobs in March. January payroll gains were revised up to 144,000, and February was revised up to 197,000. The unemployment rate did its usual confounding thing in March and remained unchanged at 6.7 percent. The household employment series, which feeds into the unemployment rate, was strong in March, gaining 476,000 jobs. However, the civilian labor force increased by 503,000 workers, keeping the unemployment rate unchanged. Over the last year, average hourly earnings are up a tame 2.1 percent, exerting little inflationary pressure. The average workweek increased by 0.2 hours in March. Combined with a solid payroll gains, the increase in the workweek implies solid production numbers for the month.

The U.S. international trade gap widened more than expected to -$42.3 billion in February. It now looks like trade will be a small-to-moderate drag on real GDP growth for the recently completed first quarter. Added to an expected drag from inventories, weak federal government spending and weather-suppressed consumer spending, the first quarter is shaping up to be a clunker.

The ISM Manufacturing Index for March moved up to 53.7, indicating solid overall manufacturing conditions. The customers’ inventories sub-index was weak, slipping to 42.0. This is consistent with the expected correction from the large run-up in inventories that we saw in the second half of 2013. The March ISM Non-Manufacturing Index increased to 53.1, up from February’s 51.6. Also notable was the contraction in the inventories sub-index for non-manufacturing, down to 48.0.

March auto sales were a nice surprise, rebounding strongly from a 15.4 million unit rate in February, to a 16.4 million unit rate in March. The light truck component was strong for the month, with positive implications for residential construction going forward.

Overall construction spending for February was still under the weather, gaining just 0.1 percent for the month. Total public construction projects, including transportation infrastructure, gained 0.1 percent in February. Private nonresidential was up 1.2 percent and private residential construction spending declined by 0.8 percent. There is quite a wide statistical confidence interval around construction spending estimates, so one-month movements are not the most reliable of indicators. We expect to see gains in both private residential and private nonresidential construction spending over the course of this year.

Initial claims for unemployment insurance increased by 16,000 for the week ending March 29, to hit 326,000. Continuing claims notched up 22,000 to hit 2,836,000 for the week ending March 22.

For a PDF version of the Comerica Economic Weekly, including forecast tables and the variables calendar, click here: CMAEconWeekly 04-04-14.

Share 'Comerica Economic Weekly' on Delicious Share 'Comerica Economic Weekly' on Digg Share 'Comerica Economic Weekly' on Facebook Share 'Comerica Economic Weekly' on Google+ Share 'Comerica Economic Weekly' on LinkedIn Share 'Comerica Economic Weekly' on Pinterest Share 'Comerica Economic Weekly' on reddit Share 'Comerica Economic Weekly' on StumbleUpon Share 'Comerica Economic Weekly' on Twitter Share 'Comerica Economic Weekly' on Add to Bookmarks Share 'Comerica Economic Weekly' on Email Share 'Comerica Economic Weekly' on Print Friendly
Posted in General, United States, Weekly | Tagged , , , , | Comments Off