March came in like a lion with much of the nation still in the grip of a colder and snowier-than-normal winter. Economic data this week still reflects the big chill. However, there are green shoots beneath the snow.
Payroll jobs for February increased by 175,000, better than expectations. The household survey of employment did show some weather effects for the month, and posted a weak overall gain of 42,000 jobs. The weak gain in the volatile household employment series, combined with a strong gain in the labor force, drove the unemployment rate back up to 6.7 percent. This should not be taken as a sign of weakness in the labor market. Both the household employment series and the labor force series have been quirky lately, enough to render one-month changes in the unemployment rate meaningless.
The U.S. international trade gap widened slightly in January to $39.1 billion. Imports increased by $1.3 billion in January while exports increase by $1.2 billion.
U.S. personal income increased by 0.3 percent in January, driven by offsetting special factors originating from the federal government. The wage and salary component of personal income increased in January by a tame 0.2 percent, after declining by 0.1 percent in December. Real overall consumer spending gained a moderate 0.3 percent in January. The PCE price index increased by a tame 0.1 percent in January, as did the core PCE index (excluding food and energy).
Construction spending reportedly increased slightly in January, up by 0.1 percent. Public construction spending was down by 0.8 percent, consistent with the unwind of fiscal stimulus and the budget sequester.
The ISM Manufacturing Index increased in February, up to a solid 53.2 percent. New orders firmed up, as did inventories and supplier deliveries. Anecdotal comments say that weather has been a negative factor this winter, but business optimism appears to be improving. The ISM Non-Manufacturing Index for February decreased to a still-positive 51.6 percent. Anecdotal comments cited weather as a negative factor.
Auto sales for February increased to a 15.4 million unit rate, better than the 15.2 for January, but not as good as expected earlier in the month. Auto sales tend to be concentrated toward the end of the month, and that is when the weather got bad again in the Midwest and along the East Coast.
Adding to the sense of economic uncertainty is the Ukraine situation. There appears to be little prospect for a direct negative impact to the economy of the U.S. from the conflict in the Ukraine as long as global financial markets look past a regional crisis. European economic indicators are generally improving. So far, the Ukraine crisis does not appear to be dampening the prospects of a European economic recovery. About 20 percent of U.S. merchandise exports flow to Europe. Ukraine accounted for 1.4 percent of exports from the EU in 2012 and 0.8 percent of imports.
For a PDF version of the Comerica Economic Weekly, including forecast tables and the variables calendar, click here: CMAEconWeekly030714.