It’s been a
busy day on the data front. Here’s the scoop on today’s batch of news …
* Q1 GDP managed to come in positive – +0.6%
vs. expectations for +0.5% and a Q4 reading of 0.6%. Personal consumption was a bit stronger than expected, at 1% vs. a
Bloomberg forecast of 0.7%. But that was still the
smallest rise since Q2 2001 and down sharply from 2.3% a quarter earlier.
Also, inventory
building added 0.8% to growth … not necessarily an indicator of strength. If inventories rise, but
spending cools, it leaves businesses with unwanted stockpiles, leading to future cutbacks in production and
employment.
Residential
construction activity plunged at an
annual rate of 27%, the worst decline since 1981. Also noteworthy: Investment in nonresidential structures fell 6.2%,
down sharply from 12.4% a quarter earlier and the worst reading since Q3 2005. This could be evidence the credit crunch and real estate downturn has spread to the commercial market, as I’ve been expecting
for some time.
Lastly, a key price index embedded in the GDP report came in at 2.6%, up from 2.4% in Q4, but below forecasts. A
separate reading on core inflation was up 2.2%, down from 2.5% a quarter earlier.
* The Chicago-area PMI index inched up to 48.3 in April
from 48.2 in March. That topped expectations for a 47.5 reading. A subindex measuring production rose to 53 from 50.4, while an index measuring new orders
dipped slightly to 53 from 53.9 and an index measuring employment fell sharply to 35.3 from 44.6.
Speaking of jobs, the ADP report (PDF link) says the private sector added
10,000 jobs in the month of April, up slightly from 3,000 in March.
* Mortgage application activity is slumping, a troubling
trend I
discussed recently. The refinance index tanked 16.7% after falling 20.2% a week earlier, while the purchase index fell
4.8% (after declining 6.4% in the prior week). The purchase index, at 340.1, is now the lowest it has been since all
the way back in February 2003.
