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:
March Payrolls Disappoint…
On Friday, the Labor Department reported that only 98,000 payroll jobs were created in March. This was well below economists’ expectations of 175,000 jobs. To add insult to injury, January and February payrolls were revised down by a cumulative 38,000. These downward revisions are usually caused by the double counting of temporary jobs.
Meanwhile, the unemployment rate declined from 4.7% to 4.5%. That’s because the pool of people looking for work declined by 326,000 to 7.2 million. Average hourly earnings rose $0.05 to $26.14 per hour; over the past twelve months, earnings have risen 2.7%. Overall, this was a pretty disappointing report. The Federal Reserve watches the payroll report closely, so these downward revisions may cause the Fed to think twice before raising rates again.
…Or Did They?
For the fifth month in a row, ADP reported more job growth than the Labor Department. On Wednesday, ADP announced that 263,000 private payroll jobs were created in March. This was substantially higher than economists’ consensus estimate of 180,000 jobs, and it was also the second strongest reading in more than two years. Meanwhile, ADP revised its February private payroll report down to 245,000 (from an initial estimate of 298,000). Despite this downward revision, ADP continues to post much more robust job growth than the Labor Department.
ISM’s Manufacturing and Service Sector Indices
On Monday, the Institute of Supply Management (ISM) reported that its manufacturing index declined to 57.2 in March, down from a robust 57.7 in February. Since any reading over 50 signals an expansion, this was still an impressive ISM manufacturing report. In fact, for the second straight month, 17 of 18 industries tracked by ISM reported expansion. So the resurgence in U.S. manufacturing appears to be real.
On Wednesday, ISM announced that its service sector index slipped to 55.2 in March, down from 57.6 in February. This was a bit of a surprise, since economists were estimating a service sector reading of 57 in March. Nonetheless, this was still a positive ISM service sector report, especially since 15 of the 18 industries tracked reported an expansion in March. Overall, the service sector remains the primary engine of U.S. GDP growth.
February Trade Deficit Shrinks
The Commerce Department reported that the trade deficit declined almost 10% in February to $43.6 billion. Notably, U.S. exports rose 0.2% to $192.9 billion. This was the third straight monthly rise in U.S. exports, which are now almost 7% higher than they were a year ago. Interestingly, imports declined 1.8% in February to $236.4 billion as cellphone imports declined, as well as vehicles and auto parts.
That’s all I have for you this week; I’ll be in touch again next week with the latest ratings updates out of Portfolio Grader.
Have a great weekend,