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Week In Review – April 6, 2018

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Week In Review

Volume 24, Number 13

Reginald J. Smith, Community Development Manager – Bank of Kansas CityReginald J. Smith

Economic Highlights for Week Ending April 6, 2018

 

MONDAY, April 2nd

Returning from a three-day holiday weekend to start a new quarter, investors sold off equities at an elevated pace as trade concerns and tariff worries returned.  Big names in the tech sector also tumbled on an unfounded Trump tweet accusing Amazon of unfair practices.  The Dow fell 1.9% on the day to 23,644 while the NASDAQ plunged 2,7% to 6870.

Construction spending was soft in February, rising just 0.1% after posting no change in January but there are signs of strength in the details.  Spending on new single-family homes rose 0.9% for a second straight month in February to bring the year-over-year increase to 9.5%.  Multi-family homes, where spending has been weak, rebounded 1.2% in February.  The weakness in February’s overall report comes from home improvements, which fell 1.5% on the month and public construction expenditures which were down a sharp 2.1%.  All told, U.S. construction spending is 3% higher than it was in February 2017.

 

TUESDAY, April 3rd

The CoreLogic Home Price Index rose 6.7% year over year in February and 1% over the previous month.  The 6.7% jump is the fastest annual growth rate since spring 2014.

Motor vehicle sales increased to an annual pace of 17.5 million units in March from a rate of 17.1 million in February.  Light-truck sales led most of the increase, representing nearly 68% of total vehicle sales, its highest share ever.  Both pickup trucks and crossovers have been driving recent sales.  Incentive spending was also strong, and as a result, individual unit sales led the increase last month while fleet sales declined modestly.  Better-than-expected vehicle sales may help prop up flagging retail sales results for March.

 

WEDNESDAY, April 4th

The MBA mortgage applications index dropped 3.3% for the week ending March 30.  The refinance index declined 4.9% on the week while the purchase index decreased 2.1% despite unchanged contract mortgage interest rates.  The 30-year fixed rate mortgage for conforming mortgages remained at 4.69%.  Despite the weekly decline, purchase applications continue to show solid year-on-year gains and point to housing market strength.

The ISM non-manufacturing survey softened in March but remained consistent with above-trend GDP growth.  The composite index fell from 59.5 in February to 58.8 in March, in line with expectations.  The level of the index suggests that activity in the service sectors of the economy continues to expand at a robust pace.  The decline last month does not alter estimates for first quarter GDP growth, currently tracking 2.2% at an annualized rate.

UFSC Week In Review

THURSDAY, April 5th

Jobless claims jumped 24k to 242k for the week ending March 31.  The Good Friday holiday could have added a degree of volatility to initial claims last week. The four-week moving average rose 3k to 228,250, which is still low.  Despite the rise for initial claims, unemployment claims remain solidly consistent with strong demand for labor.

The trade deficit widened for a sixth consecutive month in February and is at a nine-year high.  The trade deficit totaled $57.6 billion in February after registering a $56.6 billion gap in January.  The larger trade deficit was a result of both an increase in the goods deficit and a decline in the services surplus. The increasing drag from net exports on GDP is the main concern going forward especially given all the questions over rising trade friction centered between the U.S. and China.

 

FRIDAY, April 6th

Employers added just 103k new payrolls to the rosters in March following an upwardly revised gain of 326k new jobs in February.  Still, averaging out job creation over the three months ending in March, at 202k a month it tops the critical 200k level.  Weather was probably a factor in March as weather sensitive industries such as construction and retail trade saw the largest reversals.  Details in the data showed a slight decline in the labor participation rate from 63.0% to 62.9%, no change in the average workweek of 34.5 hours and an increase in average hourly earnings to 0.3% on the month to a 2.7% gain over the past year.  The labor market remains strong however, March results indicate it is not overheating which will pace the Fed and the rate at which they continue tightening, monetarily and quantitatively.

Stock Market Close for the Week


Index

Latest

A Week Ago

Change



DJIA
23,932.78
24,103.11
-170.33 or -0.71%


NASDAQ
6,915.11
7,063.45
-148.34 or -2.10%


WEEK IN ADVANCE

After a week of mostly housing market related data, reports in the coming week wrap up the sector for the month. Watch for new home sales and pending home sales, both on next week’s calendar.


Key Interest Rates

Latest

6 Mos Ago

1 Yr Ago



Prime Rate
4.75%
4.25%
4.00%


Fed Discount
2.25%
1.75%
1.50%


Fed Funds
1.68%
1.12%
0.87%


11th District COF
0.816%
0.732%
0.591%


10-Year Note
2.77%
2.34%
2.35%


30-Year Treasury Bond
3.02%
2.88%
2.99%


30 -Yr Fixed (FHLMC)
4.40%
3.85%
4.10%


15 -Yr Fixed (FHLMC)
3.87%
3.15%
3.36%

6-Mo Libor (FNMA)
2.45240%
1.50600%
1.42322%

Sources: IBC’ s Money Fund Report; Bank Rate Monitor; Federal Home Loan Bank of San Francisco

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