Stock prices fell this week on weak economic data and company earnings. Job growth slowed dramatically in January but still managed to lower the unemployment rate. Furthermore, wages rose 0.5% in January. Between the lower unemployment rate and rising wages market participants became concerned of a FED rate increase sooner than previously thought. Treasury yields fell while prices rose. The U.S. dollar also fell causing gold prices to rise. Crude oil ended a volatile week lower as did most other commodities. Foreign stocks declined less than U.S. stocks.
- The Commerce Department reported:
- Personal spending was unchanged in December after rising 0.5% in November.
- Personal income rose 0.3% in December. For calendar year 2015 personal income rose 4.5%.
- The Institute for Supply Management reported:
- Manufacturing activity in January rose to 48.2 from 48.0 in December. Keep in mind that anything below 50 represents contraction, albeit at a slower pace.
- Services activity increased in January but at a slower pace than in December. The ISM measure of non-manufacturing activity fell to 53.5 from 55.8 in December.
- The Energy Information Administration reported that U.S. crude oil inventories rose 7.8 million barrels in the prior week.
- The Labor department reported
- First time claims for unemployment rose 8,000 to a seasonally adjusted 285,000 in the prior week, worse than expected. The four week moving average of claims rose 2,000 to 284,750.
- 151,000 jobs were created in January, less than expected but still enough to have the unemployment rate drop to 4.9%. Revisions were made to both November and December’s jobs numbers with November revised up sharply to 280,000 and December was revised down sharply to 262,000. For the last three months jobs gains averaged 231,000 versus 228,000 for all of 2015.
- Average hourly earnings rose 0.5% or 12 cents in January and are up 2.5% from a year ago.
- The productivity of nonfarm workers decreased at a 3% seasonally adjusted rate in the 4th Declines in productivity can be due to training of new workers and also due to a slowdown in demand. From a year ago however unit labor costs rose only 2.0%.
- The European Union statistics agency reported that retail sales rose 0.3% in December and 1.4% from a year earlier.
- Markit’s purchasing managers index for Europe fell to 53.6 in January from 54.3 in December indicating continued expansion but at a slower rate of acceleration.
Please call us if you have any questions.
Loren C. Rex, CFP®, AIF® Erik Smith
Generations Financial Planning & Wealth Management 269-441-4143
77 E. Michigan Ave, Suite 140
Battle Creek, MI 49017
Carrie Fuce, Assistant 269-441-4091
Toll Free: 800-513-8180
Visit our Website: www.genfinplan.com
Registered Representative of and securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Generations Financial Planning & Wealth Management are separate companies and are not affiliated.
These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice.