Consumer spending just barely ticked up in February, rising .1% after slipping .2% in January. Consumers used the windfall from lower gas prices to increase savings to the highest level in two years: the savings rate rose to 5.8%, with savings jumping to $768.6 billion – the highest since December 2012.
On the downside, the manufacturing sector hit the brakes once again in March, as the ISM manufacturing index slipped to 51.5%, marking the slowest pace in almost two years, and the fifth straight monthly decline. Gauges of new orders and employment both fell.
Also on the downside, after falling 1.7% in January, construction spending slipped .1% to an annual rate of $967.2 billion in February, likely constrained by winter weather. Spending was pulled down by a 1.4% drop in outlays for single-family home construction. At the same time, spending on apartment construction rose 4.1%.
Private sector payrolls grew at a slower pace in March, as ADP reported that employers added 189,000 jobs, marking the lowest increase since January 2014. Most of the gain came from small businesses, which added 108,000 jobs; midsize companies added 62,000 and large companies added 19,000.
After two months of job cut announcements exceeding 50,000, the pace of cuts slowed in March, as employers planned to trim payrolls by 36,594. With that, employers announced a total 140,214 job cuts in the first quarter. And of that number, 47,610 were directly attributed to falling oil prices, and employers in the energy sector announced 37,811 job cuts in the first three months of this year.
On the upside, pending homes sales rose 3.1% in February to the highest level since June 2013, with gains driven by driven by “a steadily-improving labor market, mortgage rates hovering around 4 percent and the likelihood of more renters looking to hedge against increasing rents,” according to the National Association of Realtors, “however, the underlying obstacle – especially for first-time buyers – continues to be the depressed level of homes available for sale.” While the percent-share of first-time buyers increased slightly to 29%, there are reports of “severe shortages of move-in ready and available properties in lower price ranges. The return of first-time buyers this year will depend on how quickly inventory shows up in the market”.
The US trade deficit dropped 17% in February to $35.4 billion, the lowest level since 2009, largely due to cheaper oil. Exports fell 1.6% to $186.2 billion – the lowest in two-and-a-half years. Imports fell a sharp 4.4% to $221.7 billion – the lowest level in almost three years.
Source: Census Bureau