• Wednesday’s Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) report came in softer than expected increasing to 47.7, versus consensus of 48.0.1
  • (Levels higher than 50 signal expansion; levels below 50 signal contraction.)
    • Economic activity in the manufacturing sector contracted for the fourth consecutive month revealing factories are tailoring production in anticipation of an economic slowdown.
    • Major measures were mixed, new orders index rose, while the production, supplier deliveries, and employment indexes each fell. 1
    • The Texas-specific Dallas Fed Manufacturing index also showed factory activity declining in February. 1
      • “The production index, a key measure of state manufacturing conditions, edged down from 0.2 to -2.8, a reading suggestive of a modest contraction in output,” the Dallas Fed stated. 2
  • Fridays ISM Non-Manufacturing (Services) PMI report revealed the sector expanded more than expected. 1
    • Coming in at 55.1 for the month of February and beating the consensus expected 54.5.
    • Major measures were mixed here as well, the new orders index and employment index both rose, while business activity and supplier deliveries (an inverse index) declined. 1
  • Weekly applications for US unemployment benefits, also known as jobless claims edged lower last week. 1
    • Claims fell once again last week, staying below 200,000 for the seventh week in a row. 1
    • Applications fell to 190,000 versus a consensus estimate of 197,000. 1
  • Pending home sales posted a surprising number surging 8.1% in January, representing the largest increase since summer 2020. 1
    • Post-January mortgage rates have ticked back up, but the dip to start the year incentivized buyers to act, driving sales higher.

How do ISM Reports and Jobless Claims impact you?

  • The ISM reports are the first major economic indicators released each month and can be viewed as a window into the health of the economy.
    • In the manufacturing sector, panelists remain optimistic, with Timothy Fiore, Chair of ISM noting “companies continue to attempt to maintain head-count levels through the projected slow first half of the year in preparation for a stronger performance in the second half.3
    • In services, February’s report shows the sector is expanding more than consensus which can be construed as a

signal of the economy’s resilience in the face of inflation and higher interest rates. 3

  • Unemployment filings continue to remain near historic lows, serving as a barometer of the health of the labor market. 1
    • Should this number begin to show a compelling upward trend it would signal the economy is heading toward a recession.


  • This week’s upcoming economic indicators will have investors focusing in on the labor market.
    • Of notable significance, Job Openings (JOLTS) releases Wednesday, initial jobless claims on Thursday, and the Employment Situation Report (Unemployment) on Friday.
    • Private payroll information by way of the ADP Employment report also releases on Wednesday.
  • Fed Chairman Jay Powell will testify Tuesday and Wednesday before Congress as part of his semi-annual testimony on Monetary Policy.


Market Index Returns as of 3/3/23WTDQTDYTD1 YR3 YR5 YR
S&P 500 TR USD1.96%5.69%5.69%-4.95%10.72%10.42%
NASDAQ Composite TR USD2.61%11.87%11.87%-11.42%9.91%11.00%
DJ Industrial Average TR USD1.85%1.15%1.15%1.47%9.45%8.70%
Russell Mid Cap TR USD2.16%7.92%7.92%-1.38%10.47%8.87%
Russell 2000 TR USD2.05%9.70%9.70%-2.22%9.35%6.07%
MSCI EAFE NR USD1.81%6.77%6.77%4.58%6.18%3.29%
MSCI EM NR USD1.68%3.43%3.43%-11.18%0.73%-1.16%
Bloomberg US Agg Bond TR USD0.12%0.28%0.28%-9.98%-4.00%0.51%
Bloomberg US Corporate High Yield TR USD0.78%2.79%2.79%-4.83%0.97%3.03%
Bloomberg Global Aggregate TR USD0.02%-0.35%-0.35%-13.56%-5.53%-1.87%


  • U.S. stocks bounced back nicely last week with the tech-heavy NASDAQ +2.61% leading the way on raised hopes the Fed may tailor back its rates campaign.
    • Domestically, the DJ Industrial Average, +1.85% appreciated the least, though all major indices, domestic and international were positive
  • Bonds were slightly positive across the board, although domestic fixed income investors faired slightly better than global lenders with the Bloomberg US Agg Bond Index growing +0.12%vs. the Bloomberg Global Aggregate Index up +0.02%.
    • Credit investors, particularly at lower quality, experienced strong performance with Corporate High Yield climbing +0.78%.


  • Apartment Rents Fall as Crush of New Supply Hits Markets: Apartment rents fell in every major metropolitan area in the

U.S. over the past six months through January, a trend that is poised to continue as the biggest delivery of new apartments in nearly four decades is slated for this year. Renters with new leases in January paid a median rent that was 3.5% lower than they would have paid last August, according to estimates from listing website Apartment List. It was the first time in five years that rent fell every month over a six-month period, according to the same estimates. Four other market measures by housing-data companies also show that new-lease rents either fell or remained flat in January compared with the previous month, extending a streak of monthly rent declines that began at the end of the summer.5

  • Let them eat… turnips? Tomato shortage in UK has politicians looking for answers: It’s not easy to find a tomato in the

U.K. right now. And if you do, you’d better savor it. Supermarkets like Tesco and Aldi have placed strict limits on the number of tomatoes customers can buy, as well as other produce, like cucumbers and broccoli. The main issue, says Economist Tim Harford, is a bad harvest out of Spain and Morocco, where Europe and the U.K. get a lot of their winter produce. A late frost and flooding killed a lot of the crops. The second issue: energy prices. The war in Ukraine has caused energy prices in Europe to spike. So growing tomatoes in greenhouses, as they do in the U.K. and the Netherlands, has gotten so expensive, a lot of farmers haven’t done it this year, which has further cut back on supply. But a lot of people are also pointing to

Brexit as a culprit. Now that the U.K. isn’t part of the all-important market — the European Union — it doesn’t have as much muscle with suppliers when times are tight. It’s in the back of the tomato line. 6

  • Sky-High Car Prices Have Only One Direction to Go From Here: For much of the past three years, car prices knew one direction: upward. This was simple economics: There was far more demand for new vehicles than manufacturers could meet due to pandemic-related disruptions. As chips, wire harnesses and other components in short supply flow more freely again, a slow but inevitable march to normalization has begun. Tesla and Ford were among the manufacturers making noteworthy cuts the last couple months, with the latter predicting new-vehicle pricing will fall 5% in the US this year. 7

Reprinted with permission from BTN. Copyright © 2021 Michael A. Higley.