Economy

Economic Data Roundup (03/28/2016)

3/28/16 12:00 PM

iStock_000009946822_SmallThere were several important reports on the U.S. economy released this morning. First, data from the Federal Reserve Bank of Dallas showed that business activity in the southern region of the country rebounded this month. Specifically, the general activity index lifted from -31.8 to -13.6 in March, a significant improvement but still the 15th sub-zero (contractionary) print in a row. The production index, a key measure of state manufacturing conditions, rose to +3.3 in March, the first positive (expansionary) reading since December. Under the hood, measures of capacity utilization, new orders, shipments, capital expenditures, and employment conditions all firmed this month, and surveyed managers’ outlooks on future activity also improved. This was the 5th and final reading on regional manufacturing activity in America released this month and overall every report signaled a rebound in March. This bodes well for the many economists hoping to finally see an end to the “industrial recession” that started last summer. However, the Texas economy appears to be suffering a bit more than other regions of the country at the moment, likely due to the continued rout in global commodity prices. For example, one surveyed manager said that “The instability of the domestic oil and gas exploration and production activity continues to wreak havoc on demand for our products.” Another manager said that “It appears the oil and gas business won't be back for 12–18 months,” but added that “We are actively pursuing other industries, with varying degrees of success depending on the industry. We may very well survive.”

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Next, a report from the U.S. Department of Commerce showed that personal income for Americans increased by 0.2 percent ($23.7 billion) in February, more than expected, but private wages and salaries slid by $12.9 billion, a sharp turnaround from January’s $41.9 billion gain. Consumer outlays, which account for almost 70 percent of the U.S. economy, lifted by 0.1 percent last month, and personal saving as a percentage of disposable personal income, i.e. the personal savings rate, rose to 5.4 percent. Also in the report, the personal consumption expenditures (PCE) core price index, one of the Federal Reserve’s preferred measures of inflation in America, posted a year-over-year gain of 1.7 percent in February. This is unchanged from January but still one of the highest PCE inflation readings since 2012 and relatively close to the Fed’s 2.0 percent “target.”

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Elsewhere, the pending home sales index from the National Association of Realtors (NAR) jumped by 3.5 percent to 109.1 in February, much better than expected and the highest reading since last August. The January print was revised lower but sales still rose on a year-over-year basis in February, the 18th month in a row of annual grow. Sales expanded everywhere except in the Northeast region of the country where inclement weather likely dragged on buyer traffic. NAR chief economist Lawrence Yun added that sales growth in February was helped by “mortgage rates dipping to their lowest levels in nearly a year,” and going forward he stressed that “the key for sustained momentum and more sales than last spring is a continuous stream of new listings quickly replacing what's being scooped up by a growing pool of buyers ... without adequate supply, sales will likely plateau.”

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Sources: Econoday, Twitter, Bloomberg, ZH, BEA, FRBD, NAR, FRBSL

Post author: Charles Couch