Economic Update 02/10/14

WAS IT THE WEATHER, OR THE ECONOMY?  

For a second straight month, hiring was weak. Employers added 113,000 jobs in January, and while the unemployment rate ticked down to 6.6%, the Labor Department’s latest report came with some caution flags. Private-sector payrolls expanded by 142,000 new positions, but 29,000 federal workers were let go and there were actually job cuts in the booming health care sector. In 2013, the U.S. workforce expanded by an average of 194,000 jobs a month. The February jobs report will either reject or confirm suspicions of a weakening labor market.

ISM INDICES FLASH DIFFERENT SIGNALS

Wall Street did not expect the Institute for Supply Management’s January manufacturing PMI to drop to 51.3 from the (revised) December reading of 56.5. Economists surveyed by Briefing.com forecast a January reading of 56.0. ISM’s service sector PMI improved a full point to 54.0 in January.

FACTORY ORDERS SLIP; SO DO AUTO SALES

The Census Bureau recorded a 1.5% December retreat in factory orders, offsetting an equal December gain. Although Chrysler and Nissan reported January sales gains, other major automakers did not as fewer Americans purchased cars last month due to the miserable weather across much of the nation. In January, auto sales were down 3.0% year-over-year.

STOCKS REBOUND, ADVANCE FOR THE WEEK

Investors bought back into stocks Thursday and Friday, offsetting last Monday’s major plunge. That resulted in the following weekly performances: DJIA, +0.61% to 15,794.08; NASDAQ, +0.54% to 4,125.86; S&P 500, +0.81% to 1,797.02.

THIS WEEK: Nothing major is scheduled for Monday. On Tuesday, Federal Reserve chair Janet Yellen delivers the central bank’s semi-annual report on monetary policy to Congress, and the market considers earnings from TripAdvisor, CVS/Caremark, Sprint, PG& E, Western Union, Mosaic, and Dean Foods plus data on December wholesale inventories. Wednesday offers earnings from Cisco, CBS, Applied Materials, Whole Foods, NVIDIA, Deere, NetApp, MetLife and Fidelity. More earnings arrive Thursday – Avon, PepsiCo, Agilent, Nielsen, Kraft and Goodyear – plus reports on January retail sales and December business inventories. This month’s preliminary University of Michigan consumer sentiment index comes out Friday, as does the Fed’s report on January industrial output.