Tags: economy | slowing | jobs | factory

Moody’s: 'Evidence Is Mounting That the Economy Lost Momentum'

Thursday, 18 Apr 2013 11:45 AM

 

  Comment  |
   Contact  |
  Print   |
    A   A  
  Copy Shortlink
The number of Americans filing new claims for unemployment benefits rose last week and factory activity in the nation's Mid-Atlantic region cooled in April, further signs of a moderation in economic growth.

Underscoring the softening growth outlook, another report on Thursday showed a gauge of future economic activity fell in March for the first time in seven months. They were the latest data to indicate a step-back in the economy after a brisk start to the year as tighter fiscal policy began to weigh.

"The evidence is mounting that the economy lost momentum in March and that has carried to April," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania.

Editor's Note: Save, shop and invest like an insider! Our experts lead the way each month in The Franklin Prosperity Report. Click here to learn more.

Economic data for January and February have suggested growth accelerated in the first quarter after activity almost stalled in the final three months of 2012.

But in a replay of the prior two years, the economy appears to have hit a speed bump at the end of the quarter, with data ranging from employment to retail sales and manufacturing weakening significantly in March.

Initial claims for state unemployment benefits rose 4,000 to a seasonally adjusted 352,000 the Labor Department said. The four-week moving average for new claims, a better measure of labor market trends, rose 2,750 to 361,250.

While claims rose last week, they were still at levels economists normally associate with average monthly job gains of more than 150,000. That helped ease concerns of a deterioration in labor market conditions after nonfarm payrolls posted their smallest increase in nine months in March.

"Labor market conditions still appear to be grinding forward, but pushing against the weight of a slowing economy and subdued confidence," said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan.

DOWNBEAT OUTLOOK

In separate report, the Philadelphia Federal Reserve Bank said its business activity index fell to 1.3 in April from a reading of 2.0 in March. A reading above zero indicates expansion in the region's manufacturing.

Details of the survey which covers factories in eastern Pennsylvania, southern New Jersey and Delaware, were weak. Measures of factory employment and new orders contracted.

Inventories fell sharply after being flat in March, an indication that stock accumulation will not contribute to growth in the second quarter. Inventories are expected to have significantly boosted output in the first three months of 2013.

"This report has to raise some concerns that the nation's manufacturing sector may be starting to feel the impact of the higher taxes on households and the cutbacks in government spending," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

A third report supported views the economy was again headed for a soft patch this spring. The Conference Board said its Leading Economic Index slipped 0.1 percent to 94.7 last month, the first drop since August.

The data provides ammunition for the Federal Reserve to maintain its aggressive policy easing, despite a rift among policymakers on continuing asset purchases.

"Growth is continuing but a spring slowdown looks to be in place. The numbers support the view of many at the Fed that the end of the liquidity surge is nowhere in sight," said Naroff.

On Thursday, Minneapolis Fed President Narayana Kocherlakota said the purchases of government bonds and mortgage backed securities were necessary to boost employment, but acknowledged they would cause financial market instability for years.

Stocks on Wall Street fell on the data, while Treasury debt prices eked out modest gains. The dollar weakened against a basket of currencies.

Last week's claims data covered the survey period for April nonfarm payrolls. Claims increased 11,000 between the March and April survey periods.

Given recent volatility because of the early Easter and school spring breaks this year, claims are probably not useful in trying to gauge April payrolls.

Employers added 88,000 workers to their payrolls last month after a solid 268,000 increase in February. While job growth has slowed in line with the overall economy, economists said March's meager gains overstated the labor market's weakness.

"We see nothing in the jobless claims data to either suggest that job growth has deteriorated further since March or even to support the view that March's payroll gain represents a new trend," said John Ryding, chief economist at RDQ Economics in New York.

Editor's Note: Save, shop and invest like an insider! Our experts lead the way each month in The Franklin Prosperity Report. Click here to learn more.

© 2014 Thomson/Reuters. All rights reserved.

  Comment  |
   Contact  |
  Print   |
  Copy Shortlink
Around the Web

Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 

You May Also Like
Around the Web

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved