Consumer borrowing increased by $21.3 billion for March to $2.54 trillion, which represented the largest monthly increase since November 2001. In addition, the bank loan officer survey showed an increased willingness to lend. Apparently, the feared credit contraction from consumers buckling down and doing some ‘extreme’ saving hasn’t happened, at least on a permanent basis. Despite a lack of confidence and continued economic fears, this isn’t entirely surprising, as it can take a long time to change economic and cultural behavior—assuming a change is what people are after in the first place. Americans are spenders.
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The April ISM rose somewhat unexpectedly in April (from 53.4 to 54.8—strongest since June of last year), and the composition was not bad either, as new orders, production and employment were all higher. The inventory portion of the index was down, which was an indirect positive as well. This was arguably the most important release of the week.

On the negative side, construction spending rose less than expected for March (up +0.1% versus consensus +0.5%), and a few prior months were revised downward. As for details, the private construction spending side was up almost a percent, while government outlays dropped by a bit more—causing the net difference. Read more

Another mixed, but not bad week for economic news.

The first of several estimates for first quarter 2012 GDP came out at +2.2%, which was slightly weaker than the +2.5% growth rate expected by consensus.  The composition of the report was not especially robust, as inventory buildup contributed more to the growth number than expected, as compared to final sales, and business fixed investments and government expenditures (mostly defense spending) declined.  However, consumer spending as a component of the report was solid and was much better than first thought, and residential investment increased dramatically.  What does this mean?  Not a lot yet.  These numbers are early estimates, and subject to revision, but, at the same time, demonstrate that the economy is still in fragile footing but just plugging along fast enough to avoid the +2% ‘stall speed.’  The 2.0-3.0% is a wide but anticipated range for GDP for most of 2012 and we seem to be right within that band. Read more

It was a somewhat quiet ‘in-between’ week for economic news, as most of the focus was on markets and an upcoming earnings season.

The Small Business Optimism Index, while not always in the news, became a catalyst for market activity early in the week, as it fell from 94.3 to 92.5 for March.

Import prices were higher than expected in March at +1.3% (although February’s gain was revised down to a negative number)—mostly due to oil and raw materials being priced higher.  Other prices carried through and were higher as well, such as vehicles and vehicle parts and other finished consumer goods.  The year-over-year increase was +3.4%, which ties into broader inflation readings. Read more

The closely-watched ISM manufacturing index number came in slightly better than expected, at a one-point increase from 52.4 to 53.4 for March.  The production and employment components rose, while new orders fell back a bit.  Improvement here is tempered, but steady.

The ISM non-manufacturing index, which was released a few days later, declined a bit from 57.3 to 56.0, which was slightly larger than anticipated.  Components were mixed as new orders and general business activity were down, but employment improved and remains robust under this particular index’s measure. Read more

The ISM Non-Manufacturing index increased in February from 56.8 to 57.3, which was somewhat of a surprise as consensus estimates assumed a small to modest decline.  It reflected solid strength in service sector activity, as new orders and general business activity were both up at the highest levels since early 2011.

Factory orders fell -1.0% for the month, which was slightly less than expected, and some of the components were positive for the near-term.  Core durable goods orders were revised upward, as were core shipments.  Non-durable goods inventories were also up a bit. Read more