The Economy By the Numbers

It’s Friday and that means it’s time to review the latest economic data and identify which pockets of the economy are heating up and which are slowing down. Don’t worry about catching every headline and every report throughout the week—I recap all of the most important news impacting your wealth right here every Friday. Let’s take a look at this week’s big headlines:

Building Activity Heats Up

In February, spending on construction projects rose 0.1% to a seasonally adjusted annual rate of $945.7 billion. This was stronger than expected, as economists had expected spending to remain unchanged. Breaking it down, the gains were led by a 1.2% increase in nonresidential projects, especially in construction of hotels and motels. Meanwhile, residential construction spending fell 0.8%, the largest such setback since July. Spending on government projects climbed 0.1%. While this month’s gain was modest, these increases add up. Over the past 12 months construction spending has jumped 8.7%. While the drop-off in residential projects was notable, economists expect that this is temporary and that this metric will rebound during the spring building season.

Factory Orders Break 5-Month Record

In February, factory goods orders advanced 1.6%, the highest such gain in five months. Economists had anticipated a 1.1% gain so this was a stronger than expected turnout. Demand for commercial aircraft, which tends to be quite volatile, surged 13.4% while orders for motor vehicles and parts rose 3%. Meanwhile, orders for machinery, construction equipment and oilfield equipment all retreated. Core capital goods, which are considered a measure of business investment plans, retreated 1.4%. After falling for two months, it’s encouraging to see factory orders bounce back. The consensus is that the cold winter months put a damper on business activity so I look forward to seeing core capital goods rebound this spring.

The Silver Lining to Rising Jobless Claims

Last week, jobless claims rose 16,000 to an annual rate of 326,000. This was a slightly higher than expected jump as economists had expected a 320,000 annual rate. Meanwhile, the four-week moving average ticked up to 319,500. Despite the weekly rise in unemployment claims, the general trend with layoff activity remains positive. This, bolstered by the positive unemployment rate report, provides a stronger outlook for the jobs market.

Severe Weather Curtails Exports

In February the trade deficit widened to $42.3 billion, up from $39.3 billion in January. The consensus estimate was that the gap would widen, but just to $40.5 billion. Specifically, exports declined 1.1% while imports rose 0.4%.The severe winter weather apparently curtailed exports. The silver lining in the February trade balance report was that imports of crude oil declined to the lowest level in three and a half years. However, the wider trade gap will likely translate to slower economic growth in the first quarter. Economists were expecting annual first-quarter GDP growth of 1.5% to 2%, but due to a larger-than-expected February trade deficit, economists are now revising their first-quarter GDP estimates to only 1.2% to 1.5% annual GDP growth.

March Hiring Trends Higher

In March, 192,000 payroll jobs were created, slightly less than economists’ consensus estimates of 200,000. A positive development was that the payrolls for the previous two months were revised higher by 37,000 jobs. Meanwhile, the unemployment rate remained at 6.7%. Somewhat encouraging is that the labor force participation rate rose to 63.2% in March, up from 63% in February as 503,000 new workers entered the workforce. The average workweek also rose to 34.5 hours, which actually represents a post-recession high. Overall, the payroll data continues to steadily, but slowly improve.

Have a nice weekend,

Louis Navellier

Louis Navellier

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