Economic Week in Review: March 5-9, 2001
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Economic Week in Review: March 5-9, 2001
Economic reports released during the week provided mixed signals on the
economy, which seems sluggish but still a long way from a recession.
In the financial markets, more bellwether technology companies raised
warnings about future earnings and the tech-heavy Nasdaq Composite (r)
Index posted its lowest close since late 1998. (The Nasdaq has fallen
almost 60% from its peak a year ago.) Broader market indexes fell with
it, posting new 12-month lows. The S&P 500 Index closed at 1,233, down
0.1% for the week, and the yield of the 10-year U.S. Treasury note rose
1 basis point to 4.94% (as of 4:30 p.m. Friday).
Nonfarm employment rose more than expected in February. About 135,000
new jobs were added to payrolls during the month, according to the
Labor Department. Gains in services and other industries more than
offset the loss of 94,000 manufacturing jobs. (This follows
manufacturing’s loss of 96,000 jobs in January.) Meanwhile, the overall
unemployment rate held steady at 4.2%. The average workweek shortened
slightly, and average hourly earnings rose by 7 cents to $14.10.
Productivity growth for the fourth quarter of 2000 was revised slightly
downward to a 2.2% annualized rate, according to the Labor Department.
Though still strong, the growth in productivity--a gauge of the amount
of goods and services that workers produce per hour--was below the rate
of the previous two quarters. Nevertheless, for all of 2000,
productivity rose 4.3%, the biggest annual gain since 1983. Gains in
productivity are crucial to raising living standards over time.
Meanwhile, unit labor costs--a gauge of wage inflation--increased at an
annual rate of 4.3% for October through December, the highest rate in
six quarters.
Factory orders fell 3.8% in January from the previous month--much of
the decrease was due to a drop in new orders in the transportation
sector, namely for aircraft. Overall, new orders were 2.2% below
January 2000 levels, according to the Commerce Department.
The slowing economy apparently did not cut down borrowing. Consumer
credit rose in January by a higher-than-expected $16.1 billion--a 12.6%
annual rate and more than double the revised 5.6% rate recorded in
December. Revolving debt (mostly credit cards) and nonrevolving debt
(loans for cars, education, and home improvement) rose at roughly the
same rate.
The Beige Book--the Federal Reserve Board’s overview of regional
economic conditions--reported generally “sluggish to modest economic
growth in February.” Consumer spending rose slightly during the first
two months of the year, primarily because of post-holiday discounts.
The report included both positive and negative news: Auto sales were
steady but below last year’s levels. Manufacturing activity continued
to decline, and bank financing was modest except for mortgage
refinancing. The labor market remained tight, though it eased in some
areas. And, aside from rising energy prices, notable increases in
inflationary pressures seemed nonexistent.
The monthly Producer Price Index report, a gauge of wholesale
inflation, is due for release on Friday, March 16. Other reports
scheduled for the week are releases on retail sales (Tuesday), business
inventories (Wednesday), and housing starts and industrial production
(both on Friday).
Summary of Major Economic Reports: March 5-9, 2001
-----------------------------------------------------------------------
|Date Report Actual Expected 10-Year S&P 500 |
| Value Value Note Yield Index |
|---------------------------------------------------------------------|
|March 5 +4 bp +0.7% |
|---------------------------------------------------------------------|
|March 6 Factory -3.8% -3.2% |
| Orders |
| (January) |
|---------------------------------------------------------------------|
| Nonfarm +2.2% +2.0% |
| Productivity |
| (4Q) |
|---------------------------------------------------------------------|
| Unit Labor +4.3% +4.1% No change +1.0% |
| Costs (4Q) |
|---------------------------------------------------------------------|
|March 7 Consumer +$16.1 +$6.5 |
| Credit billion billion |
| (January) |
|---------------------------------------------------------------------|
| Federal -- -- -6 bp +0.7% |
| Reserve’s |
| Beige Book |
|---------------------------------------------------------------------|
|March 8 Initial 370,000 360,000 -2 bp +0.2% |
| Jobless |
| Claims (3/3) |
| -------------------------------------------------------------------|
|March 9 Nonfarm +135,000 +75,000 |
| Payrolls |
| (February) |
|---------------------------------------------------------------------|
| Unemployment 4.2% 4.2% +5 bp -2.5% |
| Rate |
| (February) |
|---------------------------------------------------------------------|
| Weekly +1 bp +0.1% |
| Change |
-----------------------------------------------------------------------
bp = basis points.
Note: The economic statistics presented in this report are subject to
revision by the agencies that issue them. |
