In this week’s economic review, mortgage rates increased, consumer spending jumped in February, and booming job growth boosted the likelihood of Fed rate hike in March.
On Wednesday, the ADP Employment Report made projections for booming growth in private payrolls. Expecting an increase of 298,000, the report called for the biggest gain since October 2015, according to Bloomberg.
While it didn’t quite reach ADP’s projection level, the February employment report came in at the high end of expectations. Nonfarm payrolls increased by 235,000 for the month and a revision of plus 11,000 was tacked on to January’s report.
The unemployment rate fell 0.1 percent while the participation rate increased 0.1 percent. Average hourly earnings lagged in strength with a 0.2 percent increase for the month, but year-over-year, this component is up 2.8 percent.
Though consumer optimism has been trending high it had yet to be substantiated in consumer reports. In February, consumers’ self-reports of daily spending jumped to $101 to the highest daily average for the month since 2008, according to the Gallup US Consumer Spending Measure. Historically, February consumer spending mirrors the holiday drop-off of January, but this January-to-February comparison outpaces all previous records.
This week in the economy:
- The 30-year fixed-rate increased as of March 9 with the average at 4.21 percent with 0.5 points, according to Freddie Mac.
- Purchase applications rose a seasonally adjusted 2 percent in the week of March 3, according to MBA Mortgage Applications. Unadjusted, purchase applications were up 15 percent from the previous week and up 4 percent from the same week in 2016. The refinance index increased a seasonally adjusted 5 percent to the highest level since December.
- Initial jobless claims increased by 20,000 to 243,000 in the March 4 week, according to Bloomberg. The increase lifted the 4-week average to 236,500 but is still almost 10,000 lower than the month-ago comparison.
- The Bloomberg Consumer Comfort Index reached a new high for the economic cycle, up 0.8 points to a level of 50.6.
The economic calendar for the week of March 13, 2017:
- Monday – Labor Market Conditions Index
- Wednesday – MBA Mortgage Applications, Consumer Price Index, Retail Sales, Housing Market Index, FOMC Meeting Announcement
- Thursday – Jobless Claims, Bloomberg Consumer Comfort Index, Housing Starts, JOLTS
- Friday – Consumer Sentiment
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