The industrial sector was continuing to hold its own as we reached the second quarter, with recent data affirming that manufacturing output was up 0.5% in February for a second month in a row. In all, this was the sixth-consecutive monthly gain for industrial production.
It is still thumbs up on the jobs front, with the nation’s employment rolls increasing by a better-than-expected 235,000 in February. That put the average monthly gain at 209,000 for the past quarter and at 196,000 for the latest 12 months.
It is all coming together on the economic front, following an underwhelming 2016. True, the economy did strengthen in the second half of last year. But much of that pickup stemmed from a surge in exports in the third quarter, which was to be reversed in the final period. Now, the upturn is more uniform and likely sustainable.
The nation’s economy is clearly holding its own as we move through the early weeks of 2017. In fact, in certain respects, things look better now than they did three months ago. To be sure, gross domestic product growth did slow from the third to the fourth quarter, with respective increases of 3.5% and 1.9%.
Wow! The Dow Industrials made a "Tom Brady" move late yesterday. What looked like an all but certain loss turned into a gain in the last minute of play, sending the Dow to its first 11 consecutive-day gain in 30 years. This rally occurred on one of the warmest Fridays that ever hit the East Coast, sending many outside to work and away from their desks.
What a difference a year makes. For example, 12 months ago, the economy was under pressure from softening oil and commodity markets and consequent declines in business capital investment. Now, as the first quarter winds down, we see manufacturing, non-manufacturing, employment, and consumer spending all holding up well.
A couple of weeks ago, a March 15 Fed rate hike was "dead in the water." But 2 strong inflation reports, plus a strong equity market, has put a March increase back on the table. Although the doves still have the upper hand now, the hawks are making a run.
Homebuilding continues to give a reasonably good account of itself, with housing starts at their highest level in nine years, after advancing at their fastest pace in six quarters in last year’s final period. Even so, building activity is only about half of what it was at the peak of the last housing up cycle.
In contrast to Dow 10k, which was breached almost 18 years ago, when the Dow broke through the 20,000 barrier on Wednesday, it stayed above that level – at least for now. But threats are ever present. The news media had reported that Trump has warmed up to the idea of a border tax, after appearing to have rejected the concept several weeks ago.
The consumer picture is mixed. On point, retail demand continues to strengthen for Internet related purchases, and auto and building materials dealers are seeing business turn brisk. But activity is lagging badly at brick-and-mortar department stores.