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Week In Review – May 4, 2018

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Week In Review

Volume 24, Number 17

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

Economic Highlights for Week Ending May 4, 2018

 

MONDAY, April 30th

The pending home sales index crept 0.4% higher in March to a level of 107.6.  The gain followed a slight downward revision in the previous month and leaves the overall index down about 3.0% on the year.  The index, which tracks signed sales contracts points to continued gains, however muted in existing home sales over the next few months.  Potential sales in March were mixed across the census regions with the South and Midwest gaining, while the Northeast and West declined.

Personal income grew at a 0.3% rate in March from February, while consumer spending increased 0.4%. Income and spending growth are solid but remain subdued.  A closely watch inflation gauge contained in this data series, the core PCE price deflator rose 0.2% on the month to bring the annual rate to 1.9% in March, up from a rate of 1.6% in February and very close to the Fed’s 2.0% target for inflation.

 

TUESDAY, May 1st

The CoreLogic Home Price Index rose 7% year over year in March and 1.4% over the previous month.  After revisions, the 7% jump is the fastest annual growth rate since spring 2014, and the 1.4% surge was the biggest month-over-month rise since spring 2013.

Motor vehicle sales slipped to an annual pace of 17.2 million units in April from a rate of 17.5 million units in March.  Light-truck sales continued to lead the way, having surpassed two-thirds of total new-vehicle sales for the second consecutive month.  Fleet sales are also robust, as they are so far outpacing last year’s volume.UFSC Week In Review

 

WEDNESDAY, May 2nd

Slow and steady remains the Federal Open Market Committee’s strategy.  It kept the target range for the fed funds rate unchanged at 1.5% to 1.75% today.  There were some changes to the statement but nothing that alters expectations that the Fed will raise rates three more times this year, in June, September and December.  The statement noted that inflation is expected to run near the FOMC’s symmetric 2% objective over the medium-term.  Use of “symmetric” is key, as the central bank will not panic if inflation modestly overshoots its 2% objective temporarily. The description of the risks didn’t change in May; they were described as roughly balanced.

 

THURSDAY, May 3rd

Jobless claims rose 2k to 211k for the week ending April 28. This is the second straight week initial claims for unemployment insurance have been extremely low.  The level of claims remains near a 49-year low and will likely be unsustainable in the long run.  For now, the level of claims is consistent with strong demand for labor and a very slow pace of layoffs.

The international trade deficit for goods and services narrowed by $8.8 billion in March to $49.0 billion.  The decline was in line with expectations and will reduce some of trade’s drag on first quarter GDP growth.  A $7.5 billion drop in the goods deficit was responsible for the bulk of the improvement, while a $1.3 billion increase in the services surplus also contributed.

 

FRIDAY, May 4th

The economy added 164k new payrolls to the rosters in April a bit below expectations however, upward revisions in the previous two months resulted in a net gain of 30k more new jobs which helped offset the weakness.  Jobs were created in manufacturing, up by a solid 24k, construction up 17k, mining up 8k, with a sizable 54k gain in professional business services.  Average hourly earnings rose just 0.1% on the month while the average workweek remained unchanged at 34.5 hours.  There may not be pressure to raise wages just yet but given the solid pace of job growth and the dwindling labor force, wages may start rising soon.  The number of unemployed continued to fall which lowered the unemployment rate to 3.9% from 4.1% previously.

Stock Market Close for the Week


Index

Latest

A Week Ago

Change



DJIA
24,262.51
24,311.19
-48.68 or -0.20%


NASDAQ
7,209.62
7,119.80
+89.82 or +1.26%


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%
1.15%
0.88%


11th District COF
0.814%
0.729%
0.583%


10-Year Note
2.95%
2.36%
2.33%


30-Year Treasury Bond
3.12%
2.85%
2.99%


30 -Yr Fixed (FHLMC)
4.55%
3.94%
4.02%


15 -Yr Fixed (FHLMC)
4.03%
3.27%
3.27%

6-Mo Libor (FNMA)
2.51175%
1.57511%
1.42628%

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