Economy

Economic Data Roundup (03/24/2016)

3/24/16 12:00 PM

iStock_000009946822_SmallThere were several important reports on the U.S. economy released this morning. First, the services purchasing managers’ index (PMI) from Markit Economics lifted in March to 51.0, a welcome but small rebound from the multi-year low hit in February. The average reading for the first three months of 2016 is now 51.3, the weakest quarterly pace of activity expansion since 2012. Under the hood, measures of services sector employment continued to firm but the new business component grew at the slowest rate on record. Surveyed managers said that growth has been held back recently by “a less favorable economic backdrop and hesitancy among clients in terms of committing to new projects,” and optimism about future activity expansion has moderated. Chris Williamson, chief economist at Markit, added that “Combined with the lackluster performance seen in manufacturing, the subdued services survey points to the weakest quarterly expansion of the economy since the third quarter of 2012. The PMI surveys suggest the economy grew at a worryingly meager 0.7 percent annualized rate in the first quarter.”

3515h534h1ej

Elsewhere, data from the Census Bureau showed that new orders for U.S.-manufactured durable goods fell by $6.6 billion (2.8 percent) in February to $229.4 billion, the third month-over-month decrease in the past four months. Durable goods orders excluding the volatile transportation component slid by 1.0 percent last month, worse than the 0.2 percent decline economists had expected. Demand for nondefense capital goods excluding aircraft, i.e. core capital expenditures, an important gauge of business spending, also fell in February (-1.8 percent). Overall this was a very disappointing report which should cause analysts to lower their estimates of first quarter U.S. gross domestic product (GDP) growth. However, incoming reports on regional manufacturing activity for the month of March are a bit more encouraging. For example, the Federal Reserve Bank of Kansas City’s composite manufacturing index, also released this morning, lifted from -12.0 in February to -6.0 in March, the highest reading since November and the fourth regional activity gauge to improve this month. Under the hood, measures of new orders and employment both firmed but the outlook on future factory ouput deteriorated. One surveyed manager summed up current conditions by saying that “Overall activity is a mixed bag. We continue to see declining order activity for customers associated with the oil and gas business. However, we are seeing a lot of activity for potential new business opportunities. Companies are shopping around to find the lowest price suppliers to maximize their profit potential in this uncertain market.”

111010000 222222220202020
333333312 3456jh3546jh
y35615 Y356415

 


 

Sources: Econoday, Twitter, Bloomberg, ZH, Markit Economics, Census Bureau, FRBKC, FRBSL

Post author: Charles Couch