Economic Update 01/05/15

LATEST ISM FACTORY PMI IS A LETDOWN

The 3.2-point December descent of the Institute for Supply Management’s manufacturing index may not be as troubling as it first appeared to Wall Street. Purchasing managers surveyed by ISM noted that labor disputes at west coast ports held up raw material and hard goods shipments last month. At 55.5, the index still pointed to a growing factory sector even though it missed expectations (it came in 1.5 points beneath the forecast of economists polled by MarketWatch). The ISM factory PMI averaged 55.8 in 2014 for its best year since 2010.

CONFIDENCE UP AS 2014 ENDS

In December, the Conference Board’s consumer confidence index reached 92.6, approaching a seven-year high that the CB recorded in October. In addition, the CB’s index measuring the outlook on current economic conditions hit a high unseen since February 2008. November’s reading was revised up to 91.0 from the prior 88.7.

AN UPTURN FOR PENDING HOME SALES

According to the National Association of Realtors, they rose 0.8% in November – much better than October’s 1.1% retreat. October’s S&P/Case-Shiller home price index showed a 4.5% annual gain in its 20-city version, the smallest in two years; the nationwide gain was 4.6%, down from 4.8% in the September edition.

STOCKS PULL BACK AS NEW YEAR BEGINS

Another abbreviated trading week brought losses for the Dow, S&P 500 and Nasdaq Composite. The NASDAQ slipped 0.98% for the week to end up at 4,726.81 Friday; respective 1.09% and 1.46% retreats for the DJIA and S&P left those benchmarks at 17,832.99 and 2,058.20 settlements.

THIS WEEK: No major releases are scheduled on Monday. Tuesday brings not only ISM’s December services index, but also key December PMIs from China, Japan and the eurozone. Wednesday, ADP’s December employment change report accompanies the minutes from the December 16-17 Federal Reserve policy meeting and earnings from Monsanto and Family Dollar. The December Challenger job-cut report arrives Thursday, plus a new round of initial claims figures and earnings from Bed Bath & Beyond, PriceSmart, Ruby Tuesday, Barracuda Networks, The Container Store and Constellation Brands. The Labor Department puts out its December jobs report Friday.