Keeping pace; must finish month strong

On indicator-to-indicator basis, the good-news index (GNI) for April is keeping pace with March, on net (2-1/2 points up and 2-1/2 points down). We’ll still need to have a strong finish to the month to keep the growing recovery up to speed. The two wild cards are new home sales, the only indicator with (plenty) of room to make better news in April, and the employment cost index, which makes its quarterly appearance in the GNI.

Consumer credit decreased at an annual rate of 5-1/2 percent in February 2010. Bad.

February 2010 sales of merchant wholesalers were up 0.8 percent from January. Good.

Total February exports of $143.2 billion and imports of $182.9 billion resulted in a goods and services deficit of $39.7 billion, up from $37.0 billion in January. Bad, albeit for all the best reasons.

The Import Price Index rose 0.7 percent in March. The increase was attributable to higher prices for both fuel and nonfuel imports and followed a 0.2 percent decline in February. Export prices also rose 0.7 percent in March. Neutral, at best.

On a seasonally adjusted basis, the CPI-U rose 0.1 percent in March; the index for all items less food and energy was unchanged. Good.

Real average weekly earnings rose 0.1 percent over the month, as a result of a 0.3 percent increase in the average work week offsetting a decrease in real average hourly earnings. Over the past 9 months, real average weekly earnings have changed little. Neutral.

Total business sales for February 2010 were up 0.3% from March. Good.
Retail and food service sales for March increased 1.6 percent from the previous month. Good.

Industrial production edged up 0.1 percent in March and increased at an annual rate of 7.8 percent in the first quarter. Good.

Privately-owned housing starts in March 2010 were at a seasonally adjusted annual rate 1.6 percent above the revised February 2010 estimate.

Gathering strength

March ended well, or at least profitably, and the employment situation report gave April a swift kick off. The Good news Index (GNI), the proportion of selected principal Federal economic indicator reports that headline good news, was 73.8 in March, and is now fully recovered from a mild dip in January.

The employment situation was pretty darn good on the topside and our own index of labor market conditions drawn from deeper in the report was up for the third time in the past six months. In addition, the March increase in the labor market index brought it up above its 6-month moving average. If we were securities market technical analysts, we would be talking about the index testing its downtrend by crossing over the average. And we would be calling that good news as well.

Nonfarm payroll employment increased by 162,000 in March, and the unemployment rate held at 9.7 percent. Good (tallied in April).

After-tax profits for large retailers averaged 3.0 cents per dollar of sales for the fourth quarter 2009, up 0.7 cents from third quarter 2009. Good (tallied in March).

Manufacturers' after-tax profits averaged 7.9 cents per dollar of sales for the fourth quarter of 2009, up 0.9 cents from the third quarter of 2009. Good tallied in March).

Personal income increased less than 0.1 percent, and disposable personal income or less than 0.1 percent, in February. Personal consumption expenditures inceased 0.3 percent. Neutral (tallied in April).

New orders for manufactured goods increased 0.6 percent in February. Good (tallied in April).

Total construction activity for February 2010 was 1.3 percent below January. Bad (tallied in April).