Lots of data this week…not much next week. Unemployment insurance claims and chain‐store sales, both due out Thursday, will be the most watched economic numbers for the week ahead.
The April jobs report came in stronger than feared as the economy added a moderate 165,000 jobs and the unemployment rate fell to 7.5 percent. The report laid to rest fears of a weak jobs number, stirred up by other soft data released earlier this week. In addition to being good in April, by not being terrible, the jobs report showed strong positive revisions to February and March. The unemployment rate came down a tenth in April, for the right reasons, to 7.5 percent.
The ISM Non‐Manufacturing Index dipped in April to 53.1, from March’s 54.4. The U.S. international trade gap narrowed unexpectedly in March to $38.8 billion. What makes this noteworthy is that the advanced estimate of first quarter real GDP growth, at 2.5 percent, will be revised up, to about 2.8 percent if other components of GDP remain unchanged. Imports were soft in March, down $6.4 billion as oil prices eased. Exports
were down $1.7 billion for the month.
The ISM Manufacturing Index dipped to a still-positive 50.7 for April. Construction spending for March declined by 1.7 percent as total publicly funded construction declined by 4.1 percent. Consumer confidence increased sharply in April. House prices continue to firm up. The Case‐Shiller 20‐City composite index increased by 1.2 percent from January to February. The index is now up 9.3 percent from a year ago. The Dallas Fed’s Texas Manufacturing Index fell from a positive 9.9 to a near‐neutral ‐0.5 in April. The Chicago Purchasing Managers Index fell to 49.0 for April, indicating deteriorating regional manufacturing conditions.
Income and spending data for March show modest gains. But for the first quarter as a whole, real disposable personal income (after inflation and taxes) showed the biggest quarterly drop since the Great Recession. Real disposable personal income contracted at
a 5.3 percent annualized rate in Q1 due primarily to the drag from the payroll tax increase that took effect in early January. Despite the drag on spendable dollars,
real consumer spending for the first quarter increased at a solid 3.2 percent annual rate. The personal saving rate has taken a step down as households try to maintain consumption while paying higher taxes. The saving rate for February and March was 2.7 percent, well below the near 3.5 percent saving rate we saw for much of last year. Auto sales fell in April to a 14.9 million unit rate.
For a PDF version of this Comerica Economic Weekly with tables and charts, click here CMAEconWeekly050313 .