Clarksville Weekly Market Snapshot from Frazier Allen for the week of February 8th, 2017

Clarksville, TN – The Federal Open Market Committee left short-term interest rates unchanged, as expected, and tweaked the wording of the policy statement slightly. There were no solid clues as to the timing of the next increase in short-term interest rates, but officials noted the improvement in consumer and business sentiment and seemed a little more confident that inflation “will” increase to the 2% goal.

While January numbers are often suspect due to the magnitude of the seasonal adjustment, the economic data continued to paint a picture of the economy that is in good shape.

Nonfarm payrolls rose by 227,000, more than expected, but November and December were revised down by a net 39,000 (making it about a wash relative to expectations). Prior to seasonal adjustment, payroll fell by nearly 3 million (similar to last year).

The unemployment rate edged up to 4.8%, as labor force participation increased (don’t read too much into that). Average hourly earnings rose 0.1%, up just 2.7% y/y – however, there may have been some issues in finance (which was reported down 1.0% m/m).

Personal income and spending showed relatively good momentum in December, but unit auto sales fell sharply in January. Hence, the growth of consumer spending (69% of GDP) appears likely to be at a more moderate pace in 1Q17. New orders and shipments of capital goods were strong through December, suggesting that business fixed investment will make a positive contribution to 1Q17 GDP growth. 

Next week, the economic calendar is thin. We already had an initial look at December trade in the report on Advance Economic Indicators (strong exports of capital goods, further increases in imports). Import prices are never a market-mover, but the report may suggest a fading impact of a strong dollar. The following week will be more eventful (with Yellen’s semi-annual monetary policy testimony to Congress).

 

Economic Calendar

Important Disclosures

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Material prepared by Raymond James for use by its financial advisors.

The information contained herein has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Data source: Bloomberg, as of close of business February 2nd, 2017.

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