Economic data had little impact t on the capital markets today as all eyes continue to focus in on the geopolitical news out of Europe. The republic of Crimea has voted to break off from Ukraine and join Russia. President Obama has stated that Crimea’s vote “would never be recognized” by the U.S. and warned of further military action toward other parts of Ukraine.
The New York Federal Reserve reported that its Empire Manufacturing Index rose to 5.6 in March, above the 4.5 recorded in February and nearly inline with estimates. Within the report it showed that both the new orders index and the employment component both saw positive gains. Readings over 0.0 indicates improving conditions, below indicates worsening.
Over in housing news, the National Association of Home Builders (NAHB) March Housing Market Index rose to 47 in March from the 46 recorded in February and below the 50 that was expected. The NAHB said that poor weather and difficulties in finding lots and labor weighed on the index. A number below 50 indicates that more builders view conditions as poor than good.
Americans filing for first time unemployment benefits fell to lows not seen since late November, signaling an uptick in the labor market. The Labor Department reported that Weekly Initial Jobless Claims fell by 9,000 in the latest week to 315,000, which was below the 329,000 that was expected. As the country moves out of the unbearable cold weather and massive snowstorms, the sector could be on its way to greener pastures.
In the foreclosure arena, RealtyTrac reported that foreclosure activity across the nation fell to its lowest level in more than seven years, due in part to the rise in home equity. February foreclosure starts fell by 9% from January to February and are down a whopping 27% from one year earlier. However, 14 states saw an increase in foreclosure starts last month, with New Jersey seeing an increase of 126% from a year ago.
The Commerce Department reported on Thursday that after falling for 2 months, Retail Sales rose by 0.3%, above the 0.2% expected in February, as consumers purchased a variety of goods, despite the harsh winter weather last month. When stripping out autos, sales also rose by 0.3%, above the 0.2% expected. Retail Sales make up about 1/3 of consumer spending, the main driver behind economic growth. If consumer spending can continue to expand, economic growth will continue to increase.
As the spring and summer driving seasons near, one thing is for certain – higher gas prices at the pump. The national average price for a regular gallon of gasoline is $3.48, up from $3.28 a month ago as prices have increased 28 straight days. AAA predicts that prices will rise an additional 10 to 20 cents this spring and could rise more if the tensions in the Ukraine ramps up. Russia is the third largest oil producing country behind Saudi Arabia and the U.S. and any disruptions could cause oil prices to increase.
The Bureau of Labor Statistics reported this morning that its JOLTS report, Job Openings and Labor Turnover Survey, revealed that job openings rose by 1.5% from December to January. The report may not have as much impact as the monthly Jobs Report, but it does give insight into the labor market on hires, quits, layoffs and job openings. The report is also closely watch by newly appointed Fed Chair, Janet Yellen.
Fast food chain McDonald’s reported a larger than expected decline in comparable global sales in February, once again hurt by slowing sales in the U.S. Reports from restaurants said worldwide sales for stores open at least 13 months fell by 0.3%, below the -0.1% expected. McDonald’s said that sluggish economic growth, internal missteps, rising record beef prices, along with higher labor costs, are the hurdles that are hurting sales.
The closely watched S&P 500 closed at another record high on Friday of 1,878.04, which is a long way from the close of 676.53 hit five years ago at the height of the Great Recession. The S&P has gained 177% since that day, which is the best 5-year performance since the June 1996 to June 2000 rise during the dot-com bubble.
Shares of Dow component Boeing are lower this morning after its 777-20 plane with 239 passengers and crew disappeared during a Malaysia Airlines flight to Beijing on March 8. There are no signs of debris or any traces of the plane. Flight MH370 took off on Saturday morning from Kuala Lumpur International Airport en route to Beijing and vanished into thin air.
Popular pizza chain Sbarro has filed for Chapter 11 bankruptcy protection, which is the second time in bankruptcy since 2011. Sbarro closed 155 stores in February , though it still has 800 locations in more than 40 countries. The chain opened in 1956 as an Italian grocery store, and serves more than 71 million pizzas every year.
The Labor Department reported this morning that employers added just 113,000 jobs in January, which was below the 175,000 expected, but up from the paltry 75,000 created in December. A freeze in hiring in the health care sector is one of the factors to the lower numbers. The Unemployment Rate fell to 6.6%, the lowest level since October 2008, but that can be due in part to people falling out of the work force than finding jobs.
Filling up at the pumps will begin to be more expensive as spring nears due to more drivers being on the road along with refineries shutting down for winter maintenance, which reduces supplies. The national average price for a regular gallon of gasoline is at $3.26. For 2014, AAA predicts that the nationwide average price will peak between $3.55 and $3.75 per gallon with the average price around $3.49.
The Census Bureau reports that the share of Americans who own their own homes was 65.2% in the fourth quarter of 2013, down from 65.4% in the previous quarter. Higher borrowing costs coupled with tight credit were the two factors behind the decline. The rate peaked at 69.2% in June of 2004.
Pending home sales improved further in December, marking the fifth gain in the past six months, according to the National Association of Realtors®
The Pending Home Sales Index,* a forward-looking indicator, increased 2.0 percent to 93.7 based on contracts signed in December from a downwardly revised 91.9 in November. The index is 4.2 percent below the 97.8 mark in December 2009. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, credits good affordability conditions and economic improvement. “Modest gains in the labor market and the improving economy are creating a more favorable backdrop for buyers, allowing them to take advantage of excellent housing affordability conditions. Mortgage rates should rise only modestly in the months ahead, so we’ll continue to see a favorable environment for buyers with good credit,” he said.
“In the past two years, home buyers have been very successful, with super-low loan default rates, partly because of stable home prices during that time. That trend is likely to continue in 2011 as long as there is sufficient demand to absorb inventory,” Yun said. “The latest pending sales gain suggests activity is very close to a sustainable, healthy volume of a mid-5 million total annual home sales. However, sales above 6 million, as occurred during the bubble years, is highly unlikely this year.”
The PHSI in the Northeast increased 1.8 percent to 73.9 in December but is 5.3 percent below December 2009. In the Midwest the index rose 8.0 percent in December to 84.6 but is 5.1 percent below a year ago. Pending home sales in the South jumped 11.5 percent to an index of 101.9 and are 1.7 percent above December 2009. In the West the index fell 13.2 percent to 105.8 and is 10.7 percent below a year ago.