Investors received moderately good news about employment last week, although it wasn’t a cause to be overjoyed. Payroll processor ADP reported that 217,000 new jobs were created in February, which was closely matched by the official government nonfarm payrolls report on Friday that showed a net gain of 192,000 jobs (222,000 when considering only the private sector, which would be almost dead even with ADP’s estimate). Also encouraging was that initial jobless claims dropped to 368,000, a level not seen since May 2008. However, investors were perhaps expecting more of a blockbuster report, and the markets sank on Friday.
For the week, the S&P 500 was flat. Gold and oil futures, however, continued their upward march, with gold finishing the week at $1,428.60 an ounce and light sweet crude on the New York Mercantile Exchange settling at $104.42 a barrel.
Good news during the week came in the form of higher retail sales in February and a very strong showing for manufacturing in February, with the Institute for Supply Management’s manufacturing index rising to 61.4 (the ISM services index rose to 59.7, also a healthy rate of expansion). The Fed’s Beige Book, meanwhile, an anecdotal summary of the economic standing of each of the Fed’s 12 districts, showed that all 12 experienced moderate growth. And Fed Chairman Ben Bernanke said in his semiannual testimony to Congress that U.S. gross domestic product will expand by 3.5% to 4% in 2011, half of a percentage point higher than estimates in November.
This week is a bit quieter, although Friday has some economic releases of note. The University of Michigan’s consumer sentiment index rose more than expected in February to 77.5. With higher gas prices recently, it should be interesting to see if the index can maintain that level or if consumers start to worry about emptying their wallets at the pump. Also on Friday are the retail sales figures for February, released by the Department of Commerce. Dismal weather was a drag on January’s retail sales, which came in only 0.3% higher. We’ve had indications that personal income has risen, but also that consumer spending has been lackluster, so retail sales this Friday might be proof one way or the other of what consumers are really up to.
We’re well outside the busiest time of earnings season, but notable earning reports this week include The Boston Beer Co. and Dick’s Sporting Goods on Tuesday and The Bon-Ton Stores Inc. and H&R Block Inc. on Wednesday.