Published by Alex Manessis and Russ Schreier of Samuel Scott Financial Group
“April showers bring May flowers.” Next week May, hopefully bringing with it some economic sunshine after a down couple of weeks in the market. This past week the United Kingdom announced it was now in recession as
it had GDP decline in both 4Q 2011 and 1Q 2012. Spanish 10 year bonds hit the dangerous level of 6% yield briefly last week and Italy’s are similarly high at 5.84%. The European crisis, although alleviated somewhat is far from over, and we will need to continue to watch how this plays out.
Domestically, we learned that GDP from Q1 increased 2.2%, short of the 2.5% growth that was projected by many analysts. A large portion of this growth was from auto sales, whose operations have recovered from the
Japanese tsunami disaster last year, suggesting that sustainable growth was actually less than that 2.2% figure. This is backed by the 1.1% growth in GDP when the automobile industry was excluded from calculations.
Coming up this week are several announcements that will give us a broad measure of the overall strength of the nations economy.
Monday (April 30th) the Chicago Purchasing Managers Index will be released. The Chicago PMI measures how goods and services have been consumed in the prior month in the Chicago region (which has been a good indicator of national trends). A score above 50.0 indicates that the there has been a pickup in the purchasing of goods and services, so be on the lookout Monday for an announcement.
Two gauges of jobs and unemployment are also being announced this week. The smaller announcement comes on Thursday May 4th in the form of Initial Jobless claims, a count of newly unemployed workers who are
filing for jobless benefits. The second, Nonfarm Payrolls, is due Friday from the Department of Labor. Nonfarm Payrolls measures the net number of jobs either gained or lost during the previous month excluding farming related
employment. March’s data revealed an increase of +121,000 jobs, down 50% from the prior 3 months average of +246,000 jobs. This data will reveal the rate at jobs are being created and lost, so a strong showing would help bolster an economy whose growth has slowed over the past month.