Archive for consumer confidence

Monthly Market Brief-July 2017

Each month, our Heritage Investment team publishes a market brief to provide an overview of the major factors influencing the US economy, including a summary of key sectors and the current positives & challenges.

Click Market Brief July 2017 for updates.

Here are some key highlights:

POSITIVES:

  • Non-farm payrolls beat consensus expectations, adding 222,000 jobs in June
  • The ISM Manufacturing Index surged nearly 3 percentage points in June to 57.8, driven by strong new orders, production, and backlog
  • Consumer confidence came in at a strong 118.9, the highest posting in 16 years

CHALLENGES:

  • Consumer inflation remains weak which does not support the Federal Reserve’s plan to increase interest rates and reduce their bond buying
  • Consumer spending will likely remain relatively weak if income continues to slip
  • Housing remains soft as indicated by relatively weak pending home sales and building permits

Monthly Market Brief- November

Each month, our Heritage Investment team publishes a market brief to provide an overview of the major factors influencing the US economy, including a summary of key sectors and the current positives & challenges.

Click Market Brief November 2016 for the November 2016 update.

Here are some key highlights:

POSITIVES

o Consumers continue to remain healthy and rounded out the 3rd quarter in September with personal income increasing by 0.3% and consumer spending increasing by 0.5%
o The October ISM Manufacturing Index reading of 51.9 signifies the U.S. economy and manufacturing sector remain in growth territory despite declining new orders and a continued contraction in backlog orders
o Average hourly earnings increased 0.4% in October to bring the year-over-year rate to a recovery peak of 2.8%
o October vehicle sales came in at a very strong annualized 18.3 million to further highlight the strength of the consumer
o October non-farm payrolls added a respectable 161,000 jobs, bringing the year-to-date average to 181,000

CHALLENGES

o While 3rd quarter annualized GDP growth came in at a solid 2.9%, 1.2 points came from exports which were largely driven by a surge in soybean exports
o Construction related spending declined 0.4% in September for a year-over decline of 0.2%

 

Monthly Market Brief- October 2016

Each month, our Heritage Investment team publishes a market brief to provide an overview of the major factors influencing the US economy, including a summary of key sectors and the current positives & challenges.

Click Market Brief October 2016 for the October 2016 update.

Here are some key highlights:

POSITIVES
Americans continue to clean up household balance sheets by significantly lowering average mortgage payments to 11.7% of income, down from approximately 19.5% at the peak of the Great Recession and average over the last 40 years
oVehicle sales rose to an annualized 17.8 million units in September, up a surprising 4.7% from August
oWhile non-farm payroll growth was relatively soft compared to the last three months, 156,000 jobs were added in September
oBoth the ISM manufacturing and non-manufacturing indices rebounded in September, suggesting that the significant decline both experienced in August was an anomaly

CHALLENGES
oThe labor force participation rate remains at a low of 62.8% since the peak of the Great Recession, and while a good portion can be explained by those choosing to retire, the aging effect and cyclicality do not tell the whole story
oAs of September 30, 2016, the real yield on a 10-year treasury was -0.70%; thus, savers are not being compensated adequately for inflation and are in essence paying to save
oSoft consumer spending and capital goods shipments will likely weigh on third quarter GDP growth; thus, market expectations for a November interest rate hike have cooled

Monthly Market Brief- September

Each month, our Heritage Investment team publishes a market brief to provide an overview of the major factors influencing the US economy, including a summary of key sectors and the current positives & challenges.

Click Market Brief September 2016 for the September 2016 update.

Here are some key highlights:

POSITIVES
o While non-farm payrolls added a softer 151,000 jobs to the market in August, the 3-
month average of 232,000 job additions remains above the recovery average of 200,000
o Consumer confidence remains high which should bode well for near-term U.S.
economic growth
o According to Baker-Hughes, the North American rig count is down 50 rigs compared to last year
CHALLENGES
o With S&P 500 companies posting negative earnings growth for six consecutive
quarters, corporations are beginning to reduce share back buybacks and slow dividend
growth
o The economy-weighted manufacturing plus non-manufacturing composite index fell
from 55.1 to 51.2 in August, the lowest reading since January 2010
o While a 12% year-over-year decline in farm prices may bode well for consumers, costs
likely outweigh the benefits as already tight producer margins become tighter and
impact agricultural related companies through lower producer spending
o A labor shortage of nearly 200,000 unfilled construction positions is resulting in higher
builder costs and leaving entry-level homes in tight supply as builders are building more
expensive homes to try and maintain margins

 

Heritage Market Brief – May 2016

Each month, our Heritage Investment team publishes a market brief to provide an overview of the major factors influencing the US economy, including a summary of key sectors and the current positives & challenges.

Click here for the May 2016 update.

Here are some key highlights:

POSITIVES

o With a recent increase in fuel consumption, a series of supply disruptions, and production outages, global supply has somewhat rebalanced and driven crude oil prices to new 2016 highs

o The nation’s trade deficit narrowed more than expected to $37.4 billion and should positively impact second quarter 2016 GDP

o While consumer confidence remains somewhat mixed, future income expectations ticked up along with an increase in consumers expecting to buy a car or home within the next 6 months

o Labor markets continue to show strength as highlighted by a 7,500 decline in the four- week moving average of jobless claims to 269,500

CHALLENGES

o The World Bank once again lowered its global growth estimate by 0.5% to 2.4% citing a weaker outlook for commodity exporters and a challenging external environment with soft investment amid weaker growth prospects and elevated policy uncertainty

o The service sector, which is driven by the strength of the domestic consumer, is turning noticeably lower as indicated by a decline of 2.8 points in the ISM non-manufacturing index to 52.9 as well as a decline of 1.5 points in the services PMI to 51.3

o As wages continue to lag, inflation remains flat with the PCE Core Index struggling to meet the Fed’s 2% target

o The nation’s oil patch still remains in extended contractionary territory despite WTI surging 60% since February; as long as oil prices remain stable to increasing, these territories should start to benefit