Gary`s Blog in South Jersey

Happy 2011

We thank you for continued referals and the earned repeat business.  WIthout you, our loyal clients, we would not be where we are with 34 years in the business.  From my family to yours, we wish you a happy and healthy New Year in 2011.  May 2011 bring you fulfilled dreams and memories that last!

Happy New Year!

Committed to Your Success, Gary D Simmens  Broker/Associate Balsley/Losco Real Estate

Economic Highlights for the Week Ending February 5, 2010

Volume 16, Number 4 Economic Highlights for the Week Ending February 5, 2010

MONDAY, February 1st Manufacturing activity expanded for the sixth straight month in January. The ISM index increased to 5.84% from 54.9% in December. The gain last month was led by production increases related to inventory investment. Severe declines in factory activity appear to be over and a moderate recovery from very low levels is underway. Personal income rose 0.4% in December, the fastest pace of growth recorded since stimulus checks were issued last May. Consumer spending rose a modest 0.2% on the month as the savings rate increased to 4.8%. Income growth, although improved, remains modest and consumers remain cautious about spending.

TUESDAY, February 2nd The pending home sales index increased to 96.6% in December from a level of 95.6% in November. The index plunged in November in conjunction with the original expiration of the homebuyer tax credit and has not yet rebounded significantly. Now that the tax credit has been extended and expanded, the pending home sales index and thus existing home sales are expected to increase over the next several months. Motor vehicle sales declined 4.2% in January to an annual rate of 10.8 million. Total vehicle sales are off to a weak start this year, constrained by a weak labor market, still tight credit and at this time the suspension of sales by Toyota. Although very weak, vehicle sales are expected to continue trending mildly higher throughout this year.

WEDNESDAY, February 3rd The MBA mortgage applications index surged 21.0% to 620.7% for the week ending January 29. The purchase index increased 10.3% on the week as the refinance index rose 26.3%. Refinancing activity accounted for slightly less than 70% of new mortgage application activity. Despite this week’s gains, the level of mortgage activity remains quite low indicating stagnation in the housing recovery. The ISM service sector survey increased to 50.5% in January from 49.8% in December. An index level over the key 50% level indicates expansion in the sector. Like many other sectors of the economy, the recovery in service sector activity remains quite subdued.

THURSDAY, February 4th Productivity grew at an annualized pace of 6.2% in Q409 as unit labor costs fell a more-than-expected 4.4%. There was a large increase in output but a smaller increase in the hours worked leading to the growth in productivity. Firms are producing more to meet demand without hiring new workers. Also, the weak labor market combined with productivity increase led to another steep decline in unit labor costs. Jobless claims increased 8k to 480k for the week ending January 30. It may be that some of the holiday induced volatility has yet to work its way through the data, accounting for the elevated weekly reading. Expectations are for claims to decline from here and retake their pre-holiday improved level. If not then, it would indicate a stalled labor market recovery. Chain store sales rose 3.1% in January from January one year ago. Most major retail categories posted gains from last year except for drug store sales which declined 1.4%. Wholesale clubs in particular received a boost from higher gas prices. Because chain store sales were at such a low level last year, the comparisons this year will remain favorable. Sales will continue to increase, modestly, from very low levels going forward.

FRIDAY, February 5th Payroll employment fell another 20k in January compared to expectation for a 10k increase. Employment has declined 3.0% over the past year for a total of 4.02 million jobs. Since the onset of the recession in December 2007, the economy has shed 8.42 million jobs. Jobs have now been lost in 24 of the past 25 months. On a more positive note however, the unemployment rate fell to 9.7% from 10.0% previously even as the workforce increased moderately.

Stock Market Close for the Week

Index Latest A Week Ago Change DJIA 10012.23 10067.33 -55.10 or -0.55% NASDAQ 2141.12 2147.35 -6.23 or -0.29%

WEEK IN ADVANCE

Light data flows in the week ahead provide mostly second-tier indicators with the exception of retail sales for January, due out on Thursday. With consumer spending accounting for two-thirds of all economic activity, retail sales are always on the radar. Other than that, the markets will have a chance to absorb the chronically sluggish employment data while the Treasury auctions another $81 billion in short and long term notes and bonds.

Key Interest Rates Latest 6 Mos Ago 1 Yr Ago Prime Rate 3.25 3.25 3.25 Fed Discount 0.50 0.50 0.50 Fed Funds 0.15 0.18 0.23 11th District COF 1.828 1.599 2.757 10-Year Note 3.56 3.77 2.92 30-Year Treasury Bond 4.52 4.52 3.62 30-Yr Fixed (FHLMC) 5.01 5.22 5.25 15-Yr Fixed (FHLMC) 4.40 4.63 4.92 1-Yr Adj (FHLMC) 4.22 4.78 4.92 6-Mo Libor (FNMA) 0.38438 0.92500 1.6600 Sources: IBC' s Money Fund Report; Bank Rate Monitor; Federal Home Loan Bank of San Francisco