It is getting difficult to tell which direction the economy is heading.
- Housing continues to hum along at a relatively healthy pace.
- The labor market seems to be remaining strong as well.
- First time jobless claims are still low and the 4 week moving average also supports stability in the labor markets.
Interesting is the analysis of unemployment and the differing opinions.
- ADP reported on Wednesday that they expect the labor market to add only 156,000 jobs for the month of April.
- On the other end of the spectrum analysts estimate that the economy added 215,000 jobs added.
The manufacturing index is sending a mixed signal which reaffirms the confusion as to the strength of the economy.
- Although the ISM Manufacturing Index came in moderately below expectations, overall growth still remains strong.
- Additionally, export orders have jumped due the effect of the lower dollar compared to other currencies.
- For quite some time the dollar has been strengthening which increases costs for any country importing goods from the United States.
- Additional strength in the manufacturing sector is the increase in backlogged of orders.
In the lending arena there was no housing data released this week other than application volume measured by the Mortgage Bankers Association of America.
- For the last week of April, the MBA reported that purchase applications rose 1.0 percent. With the slight increase in mortgage rates, refinances declined 6.0 percent.
Overall interest rates remain near historic lows however since mortgage rates have been low for so long, there are fewer and fewer homeowners that can still take advantage of refinancing to lower their rate.
- There is an increase in the number of homeowners who can access equity in their home with the continued rise of home prices across the country.
Finally prices at the pump continue to remain low.
- Crude oil inventories rose 2.8 million barrels in the last week of April to 543.4 million barrels, which represents a new record high.
- Inventory of gasoline also increased by 500,000 barrels.
- Gasoline and oil production continues to increase which will likely keep oil prices very low.
It will be about two weeks before we see any real major economic data that might move the markets.
- There is always the possibility that foreign affairs may create disturbance in the U.S. markets but right now there does not seem to be anything making headlines that will have a significant impact.
Next week economic reports are:
- Tuesday May 10th – JOLTS Report
- Wednesday May 11th – EIA Petroleum Report & MBA Mortgage Applications
- Thursday May 12th – First Time Jobless Claims
- Friday May 13th – Retail Sales, Producer Price Index, and Consumer Sentiment