Comerica Economic Weekly

U.S. economic data released in early April was mixed after a solid run through the first quarter. Payroll employment for March gained 120,000, below consensus expectations of about 205,000 and breaking the string of three consecutive +200K months. There may be some weather effects in play boosting job gains earlier in the year. Temporary hiring increased by 36,400 in January and 54,900 in February, but reversed course and fell by 7,500 in March. Retail trade lost 33,800 jobs in March despite solid performance from retailers and improved consumer spending. If we take a “core jobs” approach, excluding temporary and retail jobs, the payroll report remains consistent with ongoing moderate gains in economic activity. The good news in the report is that the unemployment rate fell to 8.2 percent. However, it fell for not good reasons. The labor force declined by 164,000, while the household employment survey fell by 31,000 jobs. All told, it was a disappointing jobs report, but one that feels more quirky than ominous. U.S. manufacturing conditions continue to improve with expanding activity in the auto sector. The ISM’s U.S. manufacturing index increased in March to 53.4, comfortably above the 50.0 threshold for an expanding manufacturing sector. The ISM non-manufacturing survey for March ticked down to a still-positive 56.0 percent. It would be unrealistic to expect the ISM surveys to monotonically increase even in the best of times, so a one-month dip into still-positive territory is not worrisome. Auto sales for March relaxed to a 14.3 million unit sales rate after strong gains in February. Mortgage applications for the last week of March improved for both refinance and purchase.

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