• Weekly Market Report

Economic Week in Review

Last week’s U.S. economic reports mostly came in better than expected, including the Conference Board’s index of leading economic indicators, which rebounded 0.8% higher in January following a 0.3% decline in December.
According to Ataman Ozyildirim, Senior Director of Economic Research at the Conference Board, “The strong pickup in the January US LEI was driven by a sharp drop in initial unemployment insurance claims, increasing housing permits, consumers’ outlook on the economy and financial indicators… The LEI’s six-month growth rate has returned to positive territory, suggesting that the current economic expansion – at about 2 percent – will continue through early 2020. While weakness in manufacturing appears to show signs of softening, the COVID-19 outbreak may impact manufacturing supply chains in the U.S. in the coming months.”

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In other positive news, the Philly Fed’s Manufacturing Index jumped to 36.7 in February, easily beating the 11.0 consensus forecast and, along with a positive New York regional manufacturing report, is pointing to a rebound in the ISM’s manufacturing Purchasing Managers Index.

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Strong housing market numbers have also bolstered the outlook for the first half of 2020, with the Census Bureau and HUD reporting last week that housing permits were up 17.9% year-on-year in January to 1.55 million units SAAR while housing starts surged 21.4% higher Y-o-Y to nearly 1.63 million units SAAR last month. According to Briefing.com, “The key takeaway from the report is the recognition that the three-month moving average for starts (1.525 mln) is the highest since January 2007.”

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Of course, the lag in some of the U.S. economic data means that the coronavirus worries haven’t been baked in yet. An early indicator from China – Chinese car sales in the first half of February – points to the potential scale of the impact not just for China but for the global manufacturing supply chain:

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