Sunday, May 16, 2010

A Lot Of Good Economic News Too

Much of the financial news has been centered on the EU and its dealings with the Greece sovereign debt issue. Rightfully so the debt issue is one that could have consequences beyond Greece itself. On the other hand, quite a bit of good economic news has been reported recently as well.

Industrial Production

  • Industrial production jumped up at an annualized rate of 10.0 percent in April, following an upwardly revised 2.5 percent gain in March.
  • Over the past 12 months, industrial production is up 5.2 percent, its highest growth rate since June 2000.
Consumer Sentiment

  • The University of Michigan Index of Consumer Sentiment edged up in early May, increasing from an index value of 72.2 to 73.3.
  • Both the current conditions and consumer expectations components posted modest increases, contributing to the overall increase.
Retail Sales

  • Total retail sales rose 0.4 percent (nonannualized) in April, following an upwardly revised 2.1 percent jump in March.
  • Over the past 12 months, retail sales have risen 8.8 percent (their highest growth rate since July 2005).
Factory Orders

  • New orders for manufactured goods increased 1.3 percent (nonannualized) in March, following an upwardly revised 1.3 percent jump in February.
  • New orders excluding transportation rose 3.1 percent in March and are now up 15.6 percent over the past year.
  • The I/S ratio for manufactured goods continues to decline from its peak reading of 1.47 months in January 2009 to 1.27 months.
ISM Index

  • The ISM’s Manufacturing Purchasing Managers Index (PMI) continued improve in April, increasing 0.8 index point to 60.4 (its highest level since June 2004), following a 3.1 point jump in March.
  • The new orders index jumped up from 61.5 to 65.7 in April, continuing its rebound from an all-time low of 22.9 in December 2008.
  • The production index rose 5.8 points to 66.9 during the month, marking its eleventh month above the diffusion index growth threshold of 50.
  • The employment index surged to 58.5 its highest level since January 2005.
Nonfarm Payroll Employment

  • Nonfarm payroll employment grew by 290,000 in April, topping expectations for roughly a 200,000 gain. Census hiring inflated April’s figure by 66,000, but private payrolls still increased 231,000 when discounting the government’s boost.
  • Revisions to February and March figures were solid as well, tacking on an additional 121,000 jobs and leaving those months’ respective gains at 39,000 and 230,000.
  • Jobs in goods-producing industries expanded by 65,000, and services expanded 166,000, its largest increase in over three years.
From a stock market perspective, the S&P seems to have held support at its 200 day moving average at around 1,100. The 50 day moving average is now serving as resistance for the index at the 1,174 level. With the index closing at 1,135 on Friday, if it reaches the 1,174 resistance level, that would be a pretty decent return. Additionally, the selling volume seems to be subsiding as it is in a downtrend at this point. A number of investors likely got stopped out during the 1,000 point decline that occurred on May 6 and are trying to reenter the market.

Economic Data Source: Federal Reserve Bank of Cleveland

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