- The ISM Manufacturing Index fell to 49.1 in March, signaling contraction
- Nonfarm payroll employment fell by 701,000 in March
- U.S. sales of existing homes rose to a 13-year high in February
Top Three Market Headlines
Manufacturing Sector Contracts in March: Reflecting the impact that COVID-19 is beginning to have on corporate America, the Institute for Supply Management (ISM) Manufacturing Index dropped from 50.1 in February to 49.1 in March, thereby signaling contraction of business activity in the sector. A sub-50 reading for the index, which is based on a monthly survey of business executives, indicates contraction, while a level above 50 represents expansion. Three key components of the index—new orders, production, and employment—on average fell 4.4 points from the prior month.
Jobs Fall in March: The Labor Department reported last Friday that nonfarm payrolls fell by 701,000 in March, the first monthly decline since 2010. Not surprisingly, given the widespread adoption of COVID-19 containment measures in recent weeks, leisure and hospitality employment fell by 459,000. Other sectors seeing notable declines included health care and social assistance, professional and business services, retail trade, and construction. Meanwhile, the unemployment rate increased to 4.4% from 3.5%, the largest month-over-month increase since January 1975. The poor jobs report followed news the prior day that filings for unemployment benefits skyrocketed to 6.6 million for the week ending March 28, the highest weekly total in the history of the series.
Housing Market Started the Year Strong: Data released last week indicated that the U.S. housing market was off to solid start in 2019 before COVID-19 began roiling the U.S. economy. Home prices across 20 key metropolitan areas increased in January at a 3.1% annual rate, according to the S&P CoreLogic Case-Shiller National Home Price Index. Additionally, U.S. sales of existing homes rose to a 13-year high in February. Yet to be seen is the impact COVID-19 will have on the housing market in upcoming months. Home sales are expected to decline as consumers come under pressure, but the Federal Reserve’s recent moves to lower interest rates will keep a lid on mortgage rates, thereby helping support the market.