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Week In Review – March 9, 2018

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Week In Review

Volume 24, Number 9

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

Economic Highlights for Week Ending March 9, 2018

 

MONDAY, March 5th

The ISM non-manufacturing survey slipped to 59.5 in February from 59.9 in January suggesting continued robust expansion in the service sectors of the economy.  Index strength was led by increases in new orders and business activity while employment dropped unexpectedly.  Overall though, this report does in fact point to rising strength and robust growth in the service industries and the broader economy as well.

 

TUESDAY, March 6th

The CoreLogic Home Price Index rose 6.6% year over year in January and 0.5% over the previous month. For the first time in 13 years, the index began 2018 at a record high.

The U.S. trade deficit widened more than expected in January which does not bode well for first quarter GDP growth.  Recent trade policy announcements by Trump administration have not impacted this report but could in the coming months.  The trade deficit widened to $56.6 billion from a revised $53.9 billion in December (previously $53.1 billion).  Exports fell 1.3% while imports were little changed.  Exports are going to have to pick up in February and March so as not to result in negative net exports this quarter.

UFSC Week In Review

WEDNESDAY, March 7th

The MBA mortgage applications index rose 0.3% for the week ending March 2.  The refinance index was up 1.5% on the week as the purchase index decreased 0.5%.  The average interest rate on 30-year fixed rate conforming mortgages ($453,100 or less) rose 1 bps to 4.65 percent, the highest level since January 2014.

The Federal Reserve’s Beige Book, covering economic activity from January to mid-February, indicates that economic activity grew at a modest to moderate pace in all 12 districts.  Consumer spending was mixed across districts, with soft auto sales weighing on spending gains.  Tourism was a boon to growth.  Home sales and construction expanded modestly, with supply constraining the latter.  Nonresidential construction improved moderately as well.  Factory production increased across sectors and nearly all districts. Inflation was described as moderate with the report citing modest compensation increases in a few districts due to this year’s tax act.  The outlook remains positive for continued growth ahead.

 

THURSDAY, March 8th

The labor market shows no signs of slowing down. Initial claims for unemployment insurance benefits rose 21,000 from the previous week’s level to 231k in the week ended March 3.  The increase is not cause for concern as the previous week’s level was the lowest since late 1969 and new filings remain low historically.  The four-week moving average rose 2,000 from the previous week’s unrevised average to 222,500.

Consumers put their credit cards away in January.  Consumer credit balances rose by $13.9 billion in January, well below expectations and the previous months gain of $19.2 billion.  In January non-revolving credit like student debt and car loans accounted for nearly all the gain increasing by $13.2 billion as revolving credit advanced by only about $700 million.

 

FRIDAY, March 9th

The economy added 313k new payrolls to the roster in February following an upwardly revised gain of 239k in January.  Gains were broad-based in many sectors from construction to retail trade to financial services to government.  Despite the strength in job growth, wage growth was anemic with average hourly earnings up 0.1% on the month and just 2.6% on the year compared to a 2.9% annual rate in the previous month.  The average workweek increased a tenth to 34.5 hours in a further sign of strength.  The unemployment rate was unchanged at 4.1% as new hiring kept pace with the surge of labor market entrants.  The labor force participation rate increased measurably to 63%.

Stock Market Close for the Week


Index

Latest

A Week Ago

Change



DJIA
25,335.74
24,538.06
+797.68 or +3.25%


NASDAQ
7,560.81
7,257.87
+302.94 or +4.17%


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
4.50%
4.25%
3.75%


Fed Discount
2.00%
1.75%
1.25%


Fed Funds
1.41%
1.15%
0.66%


11th District COF
0.777%
0.707%
0.616%


10-Year Note
2.89%
2.07%
2.55%


30-Year Treasury Bond
3.16%
2.69%
3.14%


30 -Yr Fixed (FHLMC)
4.46%
3.78%
4.21%


15 -Yr Fixed (FHLMC)
3.94%
3.08%
3.42%

6-Mo Libor (FNMA)
2.22375%
1.45389%
1.37489%

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

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