Money Talk Podcast

Landaas & Company newsletter  May edition now available.

Advisors on This Week’s Show

Kyle Tetting

Steve Giles

Chris Evers

(with Max Hoelzl, Joel Dresang, engineered by Jason Scuglik)

Week in Review (May 2-6, 2022)

Significant Economic Indicators & Reports

Monday

The manufacturing sector continued expanding in May for the 23rd month in a row, though at the slowest rate since July 2020. The Institute for Supply Management continued to describe the business environment as "demand-driven, supply chain-constrained." The trade group’s surveys of purchasing managers showed supply and pricing issues as the industry’s biggest concerns. Survey respondents noted that recent progress on hiring had slowed. They also cited the instability of global energy since the Russian invasion of Ukraine.

The Commerce Department said construction spending grew to another record high in March, led by expenditures on housing. At a seasonally adjusted annual rate of $1.73 trillion, construction spending rose 0.1% from February and nearly 12% from March 2021. Housing, which accounted for more than half of the spending, was up 1% from the month before, while government outlays for construction and private non-residential spending both declined.

Tuesday

The tight hiring market was displayed in a Bureau of Labor Statistics report showing record numbers of both job openings and workers quitting their jobs in March. The monthly report showed 11.5 million openings with employers, with expanded listings particularly in retail trade and durable goods manufacturing. At the same time, 4.5 million workers voluntarily left their jobs, presumably with expectations of moving to better positions. Registering the most quits were workers in professional and business services, in construction and at bars and restaurants. Both job openings and quits hit the highest levels in 22 years of data.

Another sign of manufacturing’s expansion was a 2.2% rise in factory orders in March, the 22nd gain in 23 months. Orders were up 14.2% from the year-ago level with broad monthly gains and a rise in automotive demand offsetting a decline in aircraft orders. Excluding volatile numbers for transportation equipment, orders rose 13.4% from March 2021, the Commerce Department reported. A proxy for business investments rose 10.2% from its year-earlier level.

Wednesday

The U.S. trade deficit rose 22.3% in March to a record $109.8 billion. The value of exports rose 5.6% while imports rose 10.3%. The Bureau of Economic Analysis said the first-quarter deficit widened 41.5% from the year before as exports rose by 17.7% while imports rose 23.8%. The imbalance illustrates how the U.S. economy has been outpacing its trading partners since the pandemic, with U.S. consumers demanding more imported goods such as cars, computers and other consumer goods. U.S. exports were led by industrial supplies and materials, including oil products.

The service sector of the U.S. economy kept growing in April, although it decelerated for the fourth time in five months. The Institute for Supply Management said its index for the service sector rose for the 23rd month in a row after contracting for two months in 2020 for the first time in 11 years. A decline in new orders and a contraction in employment slowed the index in April, despite continued strong business activity. Purchasing managers surveyed by the trade group cited ongoing challenges from inflation, capacity constraints and logistics. They also noted rising costs of energy products and chemicals because of war in Ukraine.

Thursday

The four-week moving average for initial unemployment claims rose for the fourth week in a row after reaching a record 55-year low in March. The moving average was 49% below the all-time average, and the level of insured unemployment — another measure of employers’ reluctance to let workers go — dipped to its lowest point since 1970. The Labor Department said fewer than 1.5 million Americans claimed jobless benefits in the latest week, down 2% from the week before, and down from 16.2 million the year before.

The Bureau of Labor Statistics said worker productivity sank at an annual rate of 7.5% in the first quarter, the largest decline since 1947. The pace of productivity fell based on a decreased annual output rate of 2.4% and a 5.5% rise in the rate of hours worked. Compared to the first three months of 2021, productivity dropped 0.6% — the most since 1993 — as output rose 4.2% but was outgained by a 4.8% increase in hours worked. Since the first quarter of 2021, labor costs rose 7.2%.

Friday

U.S. employers added 428,000 jobs in April, putting them within 1.2 million or 0.8% of where they were before COVID-19 hit in February 2020. According to payroll data from the Bureau of Labor Statistics, about one in five of the new jobs was in the leisure and hospitality industry, which remained down from pre-pandemic levels by 1.4 million jobs or 8.5%. A separate survey of households showed many measures of unemployment near their February 2020 marks. The unemployment rate remained at 3.6% for the second month in a row. It was 3.5% just before the pandemic. It was 3.5% just before the pandemic. It reached a record 14.7% two years ago. The number of Americans wanting to work but not currently applying for jobs was 5.9 million, up from 5 million in February 2020. Nearly 600,000 of those sidelined workers said COVID was preventing them from looking for work, but that was down from almost 900,000 in March.

The Federal Reserve said consumer credit card debt rose by an annual rate of 35.3% in March. That put the measure of consumer demand and confidence within 0.3% of its all-time high, just before the pandemic. After the financial collapse in 2008, it took a decade for co-called revolving credit to recover.

MARKET CLOSINGS FOR THE WEEK

Nasdaq – 12145, down 190 points or 1.5%

Standard & Poor’s 500 – 4124, down 8 points or 0.2%

Dow Jones Industrial – 32901, down 76 points or 0.2%

10-year U.S. Treasury Note – 3.12%, up 0.23 point

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A discussion among Landaas & Company advisors reviewing the week's developments and possible consequences for long-term investors. In on the chat: Kyle Tetting, Art Rothschild and Mike Hoelzl. Show notes include a digest of reports with links. [...]

Landaas & Company newsletter  April edition now available.

Advisors on This Week’s Show

Brian Kilb

Steve Giles

Chris Evers

Paige Radke

(with Max Hoelzl, Joel Dresang, engineered by Jason Scuglik)

Week in Review (April 18-22, 2022)

SIGNIFICANT ECONOMIC INDICATORS & REPORTS

Monday

No major announcements

Tuesday

Amid inflated prices and historically low inventory, U.S. housing starts and building permits remained elevated in March. Seasonally adjusted annual rates slowed from February for single-family permits and starts, just as mortgage rates rose. Still, the overall pace stayed near 2006 highs. The level of housing under any stage of construction was close to the record set in 1973. Single-family houses under construction reached their highest level in more than 15 years.

Wednesday

At the same time the construction industry is building housing supply, the demand has begun to sink. The National Association of Realtors reported the second month in a row of declining existing home sales in March and forecast the number of transactions would recede by 10% in 2022. The trade group blamed rising mortgage rates and inflation concerns for weakening demand. And while inventory rose 12% from February, it remained historically tight, continuing to push year-to-year prices higher for the 121st month in a row. The median sales price rose 15% from March 2021 to a record $375,300.

Thursday

The four-week moving average for initial unemployment claims rose for the second week in a row after hitting an all-time low. The average reached 177,250, which was 52% below the 55-year average. That’s down from a record 5.3 million just two years ago. The Labor Department reported 1.6 million total claims for jobless benefits in the latest week, down 5% from the previous week 17.4 million the year before.

The Conference Board said its index of leading economic indicators rose 0.3% in March, despite volatile stock prices and lower expectations from consumers and businesses. The broad gain signaled continued growth in the U.S. economy, the business research group said, although the war in Ukraine presents a speed bump. The Conference Board lowered its forecast for 2022 GDP growth to 3% from its pre-war projection of 3.5%. The group also cited ongoing challenges from supply disruptions, inflation, rising interest rates and a tight labor market.

Friday

No major announcements

MARKET CLOSINGS FOR THE WEEK

Nasdaq – 12839, down 512 points or 3.8%

Standard & Poor’s 500 – 4272, down 121 points or 2.7%

Dow Jones Industrial – 33811, down 640 points or 1.9%

10-year U.S. Treasury Note – 2.90%, up 0.07 point

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Landaas & Company newsletter  April edition now available.

Advisors on This Week’s Show

Kyle Tetting

Brian Kilb

Dave Sandstrom

Chris Evers

(with Max Hoelzl and Joel Dresang, engineered by Jason Scuglik)

Week in Review (April 11-15, 2022)

Significant Economic Indicators & Reports

Monday

No major announcements

Tuesday

Overall inflation remained at the highest level in more than 40 years in March. The Consumer Price Index, the broadest measure of inflation, rose 8.5% from March 2021, the biggest increase since December 1981, according to the Bureau of Labor Statistics. Compared to February, the CPI rose 1.2%, more than half of it attributed to an 18.3% rise in the price of gasoline. Food prices and housing costs also pushed the index higher. Excluding prices for volatile food and energy products, the core CPI rose 0.3% from February, decelerating for the second month in a row and slowing to the smallest gain since September. Year to year, the core CPI rose 6.5%, the most since August 1982.

Wednesday

Inflation on the wholesale level also kept rising in March. with the Producer Price Index advancing 1.4% from the month before and 11.2% in the last year, both record highs in data going back to 2010. Energy prices accounted for more than half of a broad monthly increase of 2.3% in goods costs. Services prices rose 0.9%, led by increased margins for trade services, according to the Bureau of Labor Statistics. The core Producer Price Index, which excludes volatile prices for energy, food and trade, rose 0.9% from February and 7% from March 2021, the same 12-month rate as December and November.

Thursday

The four-week moving average for initial unemployment claims rose for the first time in five weeks after hitting a 55-year low the week before. Claims averaged 172,500 in the most recent reading from the Labor Department, down 54% from the average level dating back to 1967. Altogether, 1.7 million Americans claimed jobless benefits in the most recent week, down 1% from the week before and down from 17 million at the same time the year before.

Higher gas prices helped pump U.S. retail spending in March. Total retail sales rose 0.5% from February for the third consecutive monthly gain and the seventh in eight months. Gas stations led the way, with sales advancing nearly 9% - a reflection of higher prices. Excluding gas stations, retail sales declined by 0.3% from February. Compared to the year before, gas station sales were up 37%, vs. 6.9% for all retailers. Also noteworthy, bars and restaurants continued to recover from the COVID pandemic, with sales rising 1% for the month and 19% since March 2021.

A preliminary April reading of consumer sentiment suggested Americans are slightly more optimistic about the future because of favorable conditions for workers and a belief that inflation will slow. The survey-based index from the University of Michigan said respondents 45 and younger expect wages to rise 5.3% in the next year, the highest forecast in more than 30 years. Consumers also anticipate lower gas price increases than they predicted in recent months. An economist with the survey called the gains in sentiment small and tentative and "still too close to recession lows to be reassuring."

Friday

A report by the Federal Reserve showed industrial production rising to a record high in March, up 0.7% from February and more than 3% above its peak just before the pandemic. Manufacturing, mining and utilities all increased output in March, led by manufacturing, which benefited from a 7.8% rise in auto industry production. The capacity utilization rate for all industries rose to 78.3%, the highest since late 2018. That was still well below the 50-year average of 79.5%. Manufacturing capacity beat its long-term average for the first time since 2018 and reached its highest level since 2008.

MARKET CLOSINGS FOR THE WEEK

Nasdaq – 13351, down 360 points or 2.6%

Standard & Poor’s 500 – 4393, down 96 points or 2.1%

Dow Jones Industrial – 34451, down 270 points or 0.8%

10-year U.S. Treasury Note – 2.83%, up 0.12 point

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Landaas & Company newsletter  April edition now available.

Advisors on This Week’s Show

Kyle Tetting

Art Rothschild

Paige Radke

(with Max Hoelzl, Joel Dresang, engineered by Jason Scuglik)

Week in Review (April 4-8, 2022)

SIGNIFICANT ECONOMIC INDICATORS & REPORTS

Monday

The Commerce Department reported a 0.5% decline in manufacturing orders in February, the first setback in 10 months. Demand for big-ticket commercial aircraft led the declines; automotive orders also fell. Excluding the volatile transportation equipment category, factory orders rose 0.4% from January and have been up every month since the pandemic recession ended in April 2020. Compared to February 2021, total orders were up 14.3% and up 12.9% excluding transportation. Core capital goods orders, a proxy for business investments, fell 0.2% for the month and were up 10.8% from the year before.

Tuesday

The U.S. trade deficit declined a smidge from its record gap in January to $89.2 billion in February. The Bureau of Economic Analysis reported that imports grew at a slightly slower rate than exports in February. Imports rose by 1.3%, led by crude oil and other industrial chemicals, which offset a decline in automotive shipments. There also was a surge in payments for intellectual property associated with broadcast rights to the winter Olympics. U.S. exports rose 1.8%, led by industrial supplies, consumer goods and travel services. The deficit, which detracts from gross domestic product, results from the value of imports exceeding that of exports.

The U.S. services sector continued expanding in March, accelerating for the first time in four months, according to the Institute for Supply Management. The trade group’s services index showed the 22nd consecutive month of growth and has expanded all but two of the latest 146 months. Despite health momentum, purchase managers surveyed for the index repeated ongoing concerns about supply chains, inflation and geopolitical uncertainty. They suggested hiring challenges have eased somewhat with fewer public health restrictions.

Wednesday

No major reports

Thursday

After the Labor Department updated calculation methods to better reflect seasonal fluctuations, the four-week moving average for initial unemployment claims fell to its lowest level in 55 years of data. Average claims reached 170,000 in the week ended April 2, down 54% from the all-time average and 11% below the low just before the pandemic. Low unemployment insurance claims reflect the reluctance of employers to part with workers.

The Federal Reserve reported that consumer credit card debt rose in February for the ninth month in a row. With consumer spending driving about 70% of U.S. economic activity, credit card debt can signal consumers’ ability and willingness to spend. Since peaking just before the pandemic, such debt is still down $34 billion or 3.1%, unadjusted for inflation. It took almost 10 years for credit card debt to recover from the Great Recession.

Friday

No major reports

MARKET CLOSINGS FOR THE WEEK

Nasdaq – 13711, down 551 points or 3.9%

Standard & Poor’s 500 – 4489, down 57 points or 1.3%

Dow Jones Industrial – 34723, down 95 points or 0.3%

10-year U.S. Treasury Note – 2.71%, up 0.34 point

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Landaas & Company newsletter  April edition now available.

Advisors on This Week’s Show

Kyle Tetting

Steve Giles

Chris Evers

(with Jason Scuglik, Joel Dresang)

Week in Review (March 28-April 1, 2022)

Significant Economic Indicators & Reports

Monday

No major releases

Tuesday

The annual gain in housing prices accelerated in January for the first time since hitting a record high in August. According to the S&P CoreLogic Case-Shiller home price index, prices rose 19.2% nationwide since January 2021. In August, the year-to-year increase reached 20%, the fastest pace in 33 years of data. An economist with the index said price increases accelerated broadly in January, with 16 of the top 20 cities experiencing higher growth. The economist said the pace could start slowing soon in response to higher mortgage rates.

The Conference Board said its consumer confidence index advanced in March for the first time in three months. The business research group said attitudes improved toward current conditions, but expectations for coming months declined. The group said consumer confidence was "holding up remarkably well," despite the war in Ukraine and anticipation of 7.9% inflation over the next year, an all-time high in Conference Board surveys.

Employer demand for workers remained elevated in February with 11.3 million job openings, the Bureau of Labor Services reported. The measure hit a record 11.4 million in December and is nearly twice the level of unemployed job seekers. The labor turnover report also showed that workers quit 4.4 million jobs in February, a sign that they are confident in finding other - presumably better - jobs.

Wednesday

The U.S. economy rose at an annual pace of 6.9% in the last quarter of 2021, according to a final estimate of the gross domestic product. The growth rate was down from 7% in the previous estimate by the Bureau of Economic Analysis, mostly because the annual rate of consumer spending grew by 2.5%, instead of the earlier estimate of 3.1%. Measured year to year, the economy rose 5.5% from the end of 2020. Adjusting for inflation, GDP was 3.1% higher than its pre-pandemic peak. The Federal Reserve’s favorite measure of inflation showed a 5.5% increase from the year before.

Thursday

The four-week moving average for initial unemployment claims fell for the third week in a row and the seventh time in eight weeks, leveling off to where it had been before the pandemic. The level was 45% below the all-time rolling average for new claims. The four-week average of insured unemployment reached its lowest level since 1970. The Labor Department said 1.8 million Americans were claiming unemployment compensation in the latest week, one-tenth of what it was the year before.

By far the biggest driver of the U.S. economy, consumer spending rose 0.2% in February, compared to a 0.5% gain in personal income. The Bureau of Economic Analysis reported that adjusted for inflation, personal consumption declined for the third time in four months, although it was still 4.6% above where it was just before the pandemic began two years earlier. The Fed’s favorite inflation gauge jumped 6.4% from the year before, the biggest one-year increase since 1982. Month-to-month, core inflation - excluding energy and food prices - rose at the slowest pace since September.

Friday

Employers added 431,000 jobs in March, down from a 562,000 average for the previous 15 months, but it edged U.S. payroll employment within 1.6 million jobs of where it left off before the pandemic. The leisure and hospitality industry added 26% of the jobs in March but was still 1.5 million or 8.7% short of its level two years ago. Meanwhile, the unemployment rate dipped to 3.6%, near its February 2020 rate of 3.5%. Some 5.7 million Americans were not in the labor force in March but wanted a job, according to household surveys, including 874,000 who said Covid prevented them from seeking work.

Residential expenditures kept construction spending at an all-time high in February. The Commerce Department said housing accounted for half of all construction expenditures, rising 1.1% from January and 16.5% from February 2021. Single-family residences accounted for the bulk of the increases. Overall, construction spending rose 0.5% from January and 11.2% from February 2021.

The Institute for Supply Management reported that its manufacturing index signaled expansion in March for the 22nd month in a row, though at the slowest pace since September 2020. Based on surveys of purchasing managers, the trade group cited signs of easing supply-chain congestion. It said its index correlated to a 2.9% annual growth rate for GDP.

MARKET CLOSINGS FOR THE WEEK

Nasdaq – 14262, up 92 points or 0.7%

Standard & Poor’s 500 – 4546, up 3 points or 0.1%

Dow Jones Industrial – 34818, down 43 points or 0.1%

10-year U.S. Treasury Note – 2.38%, down 0.12 point

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Landaas & Company newsletter  March edition now available. Advisors on This Week’s Show Kyle Tetting Dave Sandstrom Chris Evers Kendall Bauer (with Max Hoelzl, engineered by Jason Scuglik) Week in Review (March 21-25, 2022) SIGNIFICANT ECONOMIC INDICATORS & REPORTS Monday No major announcements Tuesday No major announcements Wednesday New home sales for the month of February were […]

Landaas & Company newsletter  March edition now available.

Advisors on This Week’s Show

Kyle Tetting

Brian Kilb

Paige Radke

(with Max Hoelzl, Joel Dresang, engineered by Jason Scuglik)

Week in Review (March 14-18, 2022)

SIGNIFICANT ECONOMIC INDICATORS & REPORTS

Monday

No major announcements

Tuesday

Signs of moderation appeared in wholesale inflation numbers for February. The Bureau of Labor Statistics said its Producer Price Index rose 0.8% from January, but that was down from 1.2% the month before. Goods prices accounted for all of the February increase fueled by a 15% spurt in gasoline prices. Excluding food, energy and trade services, the core PPI rose just 0.2% from January, the smallest gain since Feb. 2020. Year to year, the headline PPI rose 10% in February, unchanged from January; the core index was up 6.6% following a 6.8% gain in January and 7% in December and November.

Wednesday

U.S. consumer spending slowed in February, as retail sales rose 0.3%, according to the Commerce Department. That was down from a 4.9% burst in January. Sales rose in seven of 13 retail categories, led by gains of 5% at gas stations and 2.5% at bars and restaurants. Excluding gas station sales, which include rising prices, retail sales declined 0.2% from January. Total sales were up nearly 18% from the year before, including gains of 36% for gas stations, 33% for bars and restaurants and 31% for clothing stores. Retail spending accounts for about two-thirds of consumer spending which drives about two-thirds of the gross domestic product.

Thursday

The pace of housing starts rose 6.8% in February, reaching its fastest growth rate since June 2006, the Commerce Department reported. At the same time, building permits declined 1.9% from a 16-year high in January. The annual rate of houses under construction rose to the highest level since 1973. Outside of the housing bubble in 2005-2006, single-family housing construction also was at elevations last seen nearly 50 years ago.

The four-week moving average for initial unemployment claims fell for the fifth time in six weeks, reaching 40% below the 55-year average. Data from the Labor Department continued to show a tight job market in which employers are reluctant to let workers go. Some 1.4 million unemployed individuals were receiving jobless benefits in the latest week, the lowest level since 1970, compared to a record 23 million in May 2020.

U.S. industrial output expanded in February, rising 0.5% from January to reach its highest level since the end of 2018. The gain was powered by a 1.2% increase in manufacturing production, which was broadly distributed except in the automotive sector, still besieged by a shortage of computer chips, according to the Federal Reserve. Capacity utilization—considered a leading indicator of inflation—rose to its highest level since April 2019 but remained well below its 50-year average.

Friday

The Conference Board’s index of leading economic indicators rose 0.3% in February, following a decline of 0.5% in January and a gain of 0.8% in December. The business research group noted that indicators did not yet reflect the Russian invasion of Ukraine, which could add supply-chain costs and higher prices for energy, food and metals to a U.S. economy already facing high inflation, rising interest rates and tight labor markets. The group lowered its forecast for GDP growth in 2022 to 3%, down from 3.5% a month ago, still ahead of pre-pandemic rates of 2%.

Existing home sales slowed in February, down 7.2% from January and 2.4% behind their year-ago pace, the National Association of Realtors reported. As sales eased, the supply of houses on the market grew slightly to 1.7 months’ worth, which was still historically low. The median sales price rose 15% from the year before to $357,300, the 120th consecutive year-t0-year gain. The Realtors said high prices and rising mortgage rates were making home-buying less affordable for more Americans.

MARKET CLOSINGS FOR THE WEEK

Nasdaq – 13984, up 1050 points or 8.2%

Standard & Poor’s 500 – 4463, up 259 points or 6.2%

Dow Jones Industrial – 34750, up 1805 points or 5.5%

10-year U.S. Treasury Note – 2.15%, up 0.14 point

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Landaas & Company newsletter  March edition now available.

Advisors on This Week’s Show

Kyle Tetting

Steve Giles

Chris Evers

(with Max Hoelzl, Joel Dresang, engineered by Jason Scuglik)

Week in Review (March 7-11, 2022)

SIGNIFICANT ECONOMIC INDICATORS & REPORTS

Monday

The Federal Reserve reported a 1.9% annual rate of rising consumer debt outstanding in January, including a 0.3% drop in credit card debt. That marked the first decrease in so-called revolving credit since April 2021, as consumer confidence in using credit cards has been recovering from a collapse at the onset of the COVID pandemic. Since February 2020, credit card debt was down $55 billion through January, about 5% below where it started the pandemic. It took credit card levels nearly a decade to recover from the Great Recession.

Tuesday

The U.S. trade deficit widened by 9.4% to a record $89.7 billion in January, the Bureau of Economic Analysis reported. During the month, exports declined by 1.7%, led by pharmaceutical preparations and travel services. Meanwhile, imports rose 1.2% to a record $314 billion, driven by automotive goods and oil. Compared to the first month of 2021, the trade gap expanded by 37.7% as exports rose 15.4% and imports grew 21%.

Wednesday

U.S. employers posted 11.3 million job openings in January, down slightly from a record 11.4 million in December. Demand for workers continued to outstrip supply as the number of unemployed workers seeking jobs in January reached only 6.5 million, according to earlier reports from the Bureau of Labor Statistics. The biggest decline in job postings in January was in hotels and restaurants. The government report showed 4.3 million jobs were vacated by workers who quit, down from a record 4.5 million in December.

Thursday

The broadest measure of inflation rose 0.8% in February, about a third of it fueled by a 6.6% increase in gasoline prices. The Bureau of Labor Statistics said its Consumer Price Index grew at a 12-month rate of 7.9%, the highest year-to-year increase since 8.4% inflation in January 1982. In the previous year, gas prices rose 38%; prices for used vehicles accelerated 41%. Excluding volatile prices for food and energy, the core CPI rose 0.5% in February, down from 0.6% in December and January. Compared to the year before, core inflation rose 6.4%, the highest since August 1982.

The Labor Department reported the four-week moving average for initial unemployment claims rose for the first time in five weeks, though it still remained 38% below its average since 1967. Total claims for the latest week declined 3% from the week before to 1.9 million. The year before, claims totaled 20.8 million.

Friday

A preliminary look at consumer sentiment in March found the lowest expectations for personal finance in nearly 70 years of surveys and the highest forecasts for inflation since 1981. The longstanding University of Michigan index dipped to a reading of 59.7, down from 62.8 in February and the year before. According to the preliminary survey, consumers were less optimistic about prospects for the economy - except for the labor market.

MARKET CLOSINGS FOR THE WEEK

Nasdaq – 12844, down 470 points or 3.5%

Standard & Poor’s 500 – 4204, down 125 points or 2.9%

Dow Jones Industrial – 32943, down 671 points or 2.0%

10-year U.S. Treasury Note – 2.00%, up 0.28 point

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Landaas & Company newsletter  March edition now available.

Advisors on This Week’s Show

Bob Landaas

Kyle Tetting

Dave Sandstrom

Mike Hoelzl

(with Max Hoelzl, Joel Dresang, engineered by Jason Scuglik)

Week in Review (Feb. 28-March 4, 2022)

Significant Economic Indicators & Reports

Monday

No major announcements

Tuesday

The manufacturing sector expanded at a faster pace in February following a 12-month low in January, according to the Institute for Supply Management. The trade group’s manufacturing index showed rising demand based on new orders and customer backlogs. And though purchasing managers cited continued challenges around staffing and supply deliveries, they were “strongly optimistic” about business prospects in March and April. According to the ISM, the manufacturing sector has been expanding for 21 months in a row.

Housing led a 1.3% increase in the pace of construction spending in January, reaching a record annual rate of nearly $1.7 trillion. The Commerce Department reported residential spending rose 1.3% from the December pace and was up 13.2% from January 2021. Construction spending for manufacturing was up 8.4% for the month and 31.4% from January 2021.

Wednesday

No major announcements

Thursday

The service sector of the U.S. economy expanded in February for the 21st month in a row but the pace of growth slowed for the third time in as many months. The Institute for Supply Management said its services index registered the slowest pace in at least 12 months. Purchasing managers surveyed for the index reported continued challenges from supply chains, labor supply and inflation. The index showed supplier deliveries taking longer and employment contracting.

The Commerce Department said factory orders rose 1.4% in January, the 20th increase in the last 26 months and 15% ahead of the same time last year. Demand for commercial aircraft and motor vehicles boosted activity. Excluding transportation, orders rose 1% for the month and 12.7% from the year before. Core capital goods orders, a proxy for business investments, rose 1% from December and 10.4% from January 2021.

The four-week moving average for initial unemployment claims declined for the fourth week in a row, reaching 38% below the 55-year average. A Labor Department report showed total claims down 3% in the latest week, dropping below 2 million. The year before, claims exceeded 18.5 million.

The Bureau of Labor Statistics said worker productivity rose at an annual pace of 6.6% in the fourth quarter. That resulted from the number of hours worked rising at a 2.4% pace while output grew at 9.1%. The full-year productivity growth for 2021 was 1.9%, down from 2.4% in 2020 and just below the average rate of 2.1% since 1948. Since the pandemic started in the first quarter of 2020, output has grown 4.1% while the number of hours worked declined 0.4%.

Friday

U.S. employers added 678,000 jobs in February, still down 2.1 million or 1.4% from the level two years ago, just before the pandemic. According to payroll data from the Bureau of Labor Statistics, the leisure and hospitality field accounted for 26% of the employment gains in February. Leisure and hospitality employers remain 9% below their pre-pandemic payroll levels and account for 71% of the missing jobs. The bureau’s household survey showed the unemployment rate declining to 3.8%, the lowest since hitting a 50-year low of 3.5% in February 2020. The rate reached a record high of 14.7% in April 2020.

MARKET CLOSINGS FOR THE WEEK

Nasdaq – 13313, down 381 points or 2.8%

Standard & Poor’s 500 – 4329, down 56 points or 1.3%

Dow Jones Industrial – 33615, down 444 points or 1.3%

10-year U.S. Treasury Note – 1.74%, down 0.25 point

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