Market Matters
President Biden revised his goal of 100 million Covid-19 vaccine shots administered in his first 100 days to 200 million shots administered. That is reflective of how the vaccine rollout has gone in the U.S., where other parts of the world are lagging currently. Parts of Europe have gone back to lockdowns due to the pandemic, which is something to keep an eye on, as well as an uptick in cases in the U.S., although overall new cases is still rather small. Heading into month and quarter end, look for some rebalancing from investors, as well as the path of the pandemic. With the Jobs Report coming next week, it is best to stay defensive ahead of that report.
Initial Jobless Claims
Initial Jobless Claims came in at 684k for the week ending March 19, coming in lower than market expectations of 730k, and is down from last week’s revised level of 781k. This is the largest one week drop in four weeks and the second largest drop in over six months. The four-week average of initial claims is now at 736.0k, down from a revised 749.10k. The four-week average has now fallen for seven consecutive weeks. Continuing claims fell 264k to 3.870 million, which came in much lower than the market expectations of 4 million, which is the largest one week fall in fourteen weeks. This is some more good news for the economy, especially as states are opening their economies and the labor market is picking up.
Durable Goods Orders
Durable Goods Orders on headline fell -1.1% in February, while orders ex-transportation fell -.9%. January was revised upwardly, as total growth went from +3.4% to now +3.5%, with ex-transportation revised from +1.3% to +1.6%. Within the report for February, we saw an -8.7% decline in orders for motor vehicles and parts, which led the drop on headline. Looking at business investment in equipment, core capital goods orders fell -.8%, while shipments fell by -1.0%. This is now the first month out of the last ten where orders and shipments both declined.
New Home Sales
New Home Sales in February dropped by -18.2% to a seasonally adjusted annual rate of 775k vs. the upwardly revised print in January of 948k (orig. 923k). Looking YoY, sales are still up +8.2% from February 2020. Within the report, the number of homes available at the end of February rose by +2.6% to 312k, which is the most since last April, bringing the month’s supply up from 3.8 to now 4.8. The median sales price fell from $353.2 to $349.4, with the average price up to $416k from a prior $410.4k. By region, the Northeast was down -11.6% on the month, and down -11.6% YoY. The Midwest was down -37.5% MoM, and up +4.9% YoY. The South dropped -14.7% on the MoM look but is up +20.2% annually. The West fell -16.4% on the month and is down -8.1% YoY. Overall, the recent weather conditions in parts of the country, combined with some rising mortgage rates could explain the weaker sales number last month.
Personal Income
Personal Income fell by -7.1% in February, while consumption was down by -1.0%. As January saw a rush of spending after the stimulus was released to consumers and adding in some ill weather effects at the end of the month, February’s numbers today were right on with market expectations. As we look ahead to March and April’s numbers, we should start to see results possibly rebound as we get another round of relief. Income is still up +4.3% YoY in February, even though employee compensation has only risen a mere +.2% annually. In the month data here, compensation was unchanged as wage and payroll gains were negated by less hours worked. Looking at personal consumption, the monthly drop of -1.0% put the YoY rate back negative at -.6%. Consumption of durables fell -4.7%, while nondurables fell -2.0%, and services rose +.1%. These three combined were the largest decreased since last April. The personal savings rate fell from 19.8% to 13.6% last month, coming back into line with December’s print of 13.5%. Finally, the core PCE price index rose +.1% with January’s number revised down to +.2% from +.3%. Looking YoY, the index fell to +1.4% from +1.5%, previously.
