4/5- Weekly Economic Highlights

The last week of March was a shortened business week with an early closure on Thursday and full closure on Friday. Yet, the week still posed several relevant economic data releases, and taken together with data from this week, leading indicators continue to reaffirm our view at Chandler for a gradually slowing economy through 2024.

Inflation continued to slow as the PCE Deflator data for February was in-line with consensus estimates showing a marginal increase of 0.3% month-over-month and 2.5% year-over-year. Core PCE data was also in-line increasing 0.3% month-over-month and 2.8% year-over-year. Digging a little deeper, the Services component of PCE continues to account for a predominant share of inflation in the economy. Within Core PCE, the Fed’s preferred gauge, 2.74% of the 2.8% increase year-over-year in February was attributed to services.

Housing data continues to remain strong. New Home Sales for February came in at 662,000, which was slightly above the 20-year average. Existing home prices also remained resilient, as the S&P Case-Shiller US National Home Price Index increased again in January to 6.59% year-over-year from a previous increase of 6.15% year-over-year in December.

The surprising strength in the economy in the second half of 2023 was punctuated last week as the final release of 4^th Quarter GDP came in at 3.4%, an upward revision of 0.2% from the prior estimate. Near-term growth could perhaps continue the trend. On Wednesday, the Institute of Supply Management (ISM) Services Index came in at 51.4 for March for a slight decrease from 52.6 in February. Meanwhile, on April 1^st, the ISM Manufacturing Index surged to 50.3 for March from 47.8 in February. The March data marked the first time both ISM diffusion indexes printed above 50—in expanding territory—since October 2022. The Chicago Fed National Activity Index (CFNAI) also managed to print slightly positive at 0.05% for February for the first data point greater than zero since September 2022. A CFNAI zero value would indicate the national economy is expanding at the average historical trend.

The latest Non-Farm Payrolls report surprised, again, to the upside revealing 303,000 jobs created in the economy in March emphatically surpassing the consensus estimate of 214,000. The highest categories, Healthcare and Government sectors, each added more than 70,000 jobs, both exceeding historical averages. Consistent with Friday’s stronger than expected employment report, the Job Openings and Labor Turnover Survey (JOLTS) indicated 8,756,000 available jobs on Tuesday. The JOLTS figure continues to represent about 1.4 available jobs for each job seeker, however, it was also the third consecutive month of gradual decline. The Unemployment Rate also ticked down 0.1% to 3.8%. Job availability appears abundant, however average hourly earnings data continued to trend lower increasing on a month-over-month basis of 0.3% and 4.1% year-over-year, the lowest wage growth rate since the summer of 2021.

NY Fed 1-Yr Inflation Expectations, NFIB Small Business Optimism, MBA Mortgage Applications, Consumer Price Index (CPI), Real Avg Hourly/Weekly Earnings, Wholesale Trade Sales MoM, Wholesale Inventories MoM, FOMC Meeting Minutes, Monthly Budget Statement, Producer Price Index (PPI), Import/Export Price Index, University of Michigan Sentiment/Inflation Expectations

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