Economic Update

TOM MONTALBANO & VICKY MAGGINAS

Jobs and the State of Employment

Nonfarm payrolls grew by 192,000 in March
Slightly under expectations of 206,000 but still seen favorably by the street First frost free report Although average work week hours increased to 34.5 from 34.4 the lack of full-time jobs is still a serious issue While all private sector jobs have been recovered since before the recession, the same is not true for public sector (smallest since 2005) Hourly wages remained flat in March after a .4% uptick in February Yearly average growth stands at 2.1% Janet Yellen pointed to a 4% average annual growth as key to a healthy economy

ISM Manufacturing Index

Manufacturing index increased from 53.2 to 53.7 (slightly under expectations of 54) but still positive
Index took a hard hit from winter weather in January and February but is trending back to pre-winter levels

The Case for increased Capital Spending

OVER THE PAST FEW YEARS
Corporate Capex has not recovered significantly since the financial crisis

GOING FORWARD
Americas plants and machinery have hit record ages Manufacturing facility average age is at 63 year high CEO confidence is rising Harder to stretch out margins Philadelphia Fed survey of companies shows plans to spend more on Capex than the past 3 year Bank lending to large and small corporations has increased by 75 billion (6%)

Since 2011 Corporate investment has increased 5.2% (100billion)

However companies have brought in 400 billion and the earnings have gone to buybacks, dividends, and idle cash Meanwhile management is stretching the productivity of workers and it seems to have stalled

Affordable Care Act Hits Target Number

Administration surpasses initial sign up target of 7 million to 7.1 million after late March rush
Does not include Medicaid expansion numbers

Numbers for young population sign-ups have yet to be released

Key metric for ACA to be economically feasible

Global
Europe
Prices have continued their 4-month slide down to .5% from .7% High Euro is putting downward pressure on prices Kept interest rates unchanged this Thursday Head of the ECB, Mario Draghi, who has been opposed to QE has stated that if prices dont recover by May, the ECB will consider QE and the possibility of negative interest rates

China
In our last report we spoke about a slowdown in Chinese growth and that we have not seen the government step in with stimulus as it typically does Just as the economy is losing steam, China announced an economic stimulus package that has
increased railway spending, upgraded housing for low-income households, tax relief for struggling small businesses