Last Week’s Economic News in Review

Factory orders declined, as did consumers’ feelings about the economy. Meanwhile, layoffs plummeted. 

Factory Orders

Orders for manufactured goods placed in February fell 0.5 percent to $497.5 billion, which was in line with economists’ expectations, the Census Bureau reported last week. This followed a January decrease. All told, manufactured goods orders were down four of the five months leading up to February. 

While orders were down, shipments grew 0.4 percent to $505.5 billion in February, which turned around a 0.3 percent decline in January. Unfilled orders, down four of the five months leading up to February, declined 0.3 percent to $1.17 trillion. This put the unfilled orders‐to‐shipments ratio at 6.54, which was down from 6.57 in January. 

Inventories, up 27 of the last 28 months, grew 0.3 percent over January to $687.8 billion in February. This put the inventories-to-shipments ratio at 1.36, which was the same as in January. 

Factory orders are important to track as they are an indicator of overall consumer demand (and consumer spending represents 70 percent of economic activity). 

Consumer Sentiment

Consumers’ economic outlook ticked down as the Index of Consumer Sentiment for April fell 1.5 percent from March to 96.9, the University of Michigan Surveys of Consumers reported last week. When compared to last year, April’s score was 1.9 percent below April 2018’s reading of 98.8. 

The Current Economic Conditions index, which describes how consumers feel the economy is currently faring, rose 0.8 percent from March to hit 114.2 in April. The Index of Consumer Expectations, which describes how consumers feel the economy will perform in the near future dropped 3.4 percent from March to 85.8 in April. 

Given that it is tax season, comments from the Surveys of Consumers Chief Economist Richard Curtin noted now that the nation is at the tail end of tax season, the shine might be off the diamond when it comes to recent tax reforms. 

“Interestingly, the impact of the tax reform legislation on consumer confidence has all but disappeared,” he said in a public statement. “Spontaneous references to the tax reform program were on balance favorable in January 2018 (22 percent favorable minus 6 percent unfavorable). Since then, however, unaided references declined sharply so that by early April the net balance was zero (4 percent favorable minus 4 percent unfavorable).” 

Initial Jobless Claims

Looking at layoffs, first-time claims for unemployment benefits filed by recently unemployed Americans during the week ending April 6 dipped to 196,000, a decline of 8,000 claims from the preceding week’s total of 204,000, the Employment and Training Administration reported last week. 

Not only did this beat economists’ projections of an increase to 210,000, but it marked the lowest level for first-time unemployment claims since October 4, 1969’s total of 193,000. 

The four-week moving average – regarded as a more reliable measure of initial jobless claims- fell to 207,000, a drop of 7,000 claims from the prior week’s average of 220,500. This marked the 214th week in which initial claims were below the 300,000-claim level – which economists consider an indicator of a growing job market – and what is the lowest level for the average since December 6, 1969’s average of 204,500. 

This week, we can expect: 

• Tuesday – Industrial production and capacity utilization for March from the Federal Reserve.
• Wednesday – Wholesale inventories and trade deficit for February from the Census Bureau.
• Thursday – Initial jobless claims for last week from the Employment and Training Administration; retail sales for March and business inventories for February from the Census Bureau; leading economic indicators for March from The Conference Board.
• Friday – Housing starts and building permits for March from the Census Bureau and Department of Housing and Urban Development.