U.S. Growth Rate Exceeds Expectations
- The U.S. economy grew at a 3.2 percent annualized rate in the first quarter of 2019, the government announced last Friday. The reading, which was higher than the consensus estimate of 2.3 percent, reflected positive contributions from personal consumption, private inventories, net exports, government spending, and business investment. In related news: the Federal Reserve Bank of Chicago’s National Activity Index, a key indicator of future growth, was -0.15 in March, up from -0.31 in February.
- In an advance reading, the U.S. Department of Commerce announced durable goods orders rose 2.7 percent from February 2019 to March 2019. That figure was more than three times what analysts had predicted. The decline in orders for February was revised from 1.6 percent to 1.1 percent. Orders were up three percent from the first quarter of 2018 to the first quarter of 2019. The Wall Street Journal (subscription required) provided a deeper analysis of the numbers, noting “a closely watched proxy for business investment, new orders for nondefense capital goods excluding aircraft, was up 1.3 percent in March after increasing 0.1 percent in February.”
- Manufacturing activity in two regions of the United States slowed slightly in April. The Federal Reserve Bank of Richmond’s manufacturing index for the Central Atlantic region fell from +10 in March to +3 in April due to slightly negative readings for shipments and new orders. (The employment reading rose, however.) Firms still expect conditions to improve in the next six months. The outlook in the Midwest was similar. The Federal Reserve Bank of Kansas City said its manufacturing survey declined from +10 in March to +5 in April due to diminished growth in factory production “of both durable and nondurable goods, particularly food, machinery, electronic, and chemical products.” Readings for production, shipments, order backlog, and employment all declined.
- According to the U.S. Labor Department, the number of individuals who filed for federal unemployment benefits rose to 230,000 for the week that ended April 20, up from 193,000 the week before. The four-week moving average of first-time claims also increased. The number of individuals who continued to file for benefits also rose, to 1.655 million for the week that ended April 13 from 1.654 million the week before. The four-week moving average of continuing claims fell, however.
- In other economic news: the University of Michigan’s consumer sentiment index for the United States fell to 97.2 in April from 98.4 in March; sales of new homes in the United States increased 4.5 percent between February 2019 and March 2019, but only three percent between March 2018 and March 2019; the number of existing homes sold in the United States fell 4.9 percent from February to March and was down 5.4 percent year-over-year.