6/16/09
U.S. housing starts spiked in May for an annual rate of 532,000 starts, up from the 454,000 pace in April. Building permits also rose showing signs off hope for the construction and other supply industries. To assure home sale activity follows, the federal reserve is purchasing U.S. Treasury bonds to keep borrowing rates as affordable as possible. Home sales will be a solid indicator of the availability of credit going into the second half of 2009.
6/15/09
The International Monetary Fund raised its outlook for the U.S. economy predicting the economy will only contract at 2.5% in 2009 as opposed to the 2.8% projection made back in April. Furthermore, the fund predicts the economy will expand by 0.75% in 2010 but not without concern of hyperinflation and rising public debt.
6/12/09
Import prices rose 1.3 percent on the import-price index in the month of may. Rising import prices are a direct result of higher commodity prices and eroding corporate profits. With the economy in its current state, companies are having a difficult time passing on higher expenses to customers.
A Reuters/ University of Michigan Survey of consumers reported June confidence levels are up to 69.0 on the index which is up from 68.7 in May but still below September ’08’s levels of 70.3. The increases in confidence give signs the economy is working towards a growth stage; however, the Fed is shifting concerns to inflation. Pumping record amounts of money into U.S. financial systems could lead to hyperinflation down the road.
6/11/09
U.S. retail sales rose .5% in May for the fist time in three months after falling .2% in April. The temporary increase in sales can be attributed to falling home and car prices as well as tax break incentives issued by the Obama administration. Despite the increase, don’t expect sustained consumer spending until unemployment falls and income starts to rise.
Although the unemployment rate stands at 9.4 percent, the highest in 26 years, the number of new unemployment claims was down by 24,000 from the previous week. This signals that the worst of the recession may be over. Companies are laying fewer people off because they are more confident that the economy will improve, which will lead to more mergers and acquisitions.
6/10/09
The U.S. trade deficit widened to $29.2 billion in April as foreign demand for U.S. goods dropped 2.3% from March. U.S. manufacturers still wait for other major world economies to improve before exports increase.
significant downturn. The fact that some banks are able to re-pay their bailout money shows that the economy is improving. As banks stabilize, lending and access to capital will increase, which will result in more mergers and acquisitions.
Inventories at U.S. wholesalers fell 1.4% in April for the eighth straight month. Wholesalers are liquidating excess supply which leads many to believe that spending will not pick up any time soon.
6/8/09
The Obama administration has 10 projects aimed to create or save roughly 600,000 jobs. The new projects include services at health cents, work on national parks, airport improvements, work on highways, and funding to schools to hire more teachers. Industries involved in any of the projects should see significant production boosts in the new few weeks.
The overall consensus from most analysts is that U.S. corporate earnings will decline for at least two more quarters, the longest streak since the Great Depression. There are fears that despite employment improving, and the dollar gradually improving versus the euro, inflation will plague the growth of the economy in the long run. Merger and acquisition activity should remain slow until corporate earnings improve.
6/5/09
The average work week for an American worker slipped to 33.1 hours in the month of May. Overtime was held at 2.7 hours for production workers for the second month in a row. Hours worked per a week is a key indicator of what the national employment level will look like. If the current employees begin working more weekly hours, look for firms to start hiring as signs there is a demand for production of goods and services.
6/4/09
U.S. worker productivity, a measure of each worker’s output per an hour, climbed at a 1.6% annual rate in the first quarter. In an effort to to become more cost efficient, employees remaining in their jobs were expected to produce more with less co-worker support. As a result of increased labor efforts, labor costs rose 3% in the first quarter.
Today, analysts recommended buying bank shares and predicted that oil prices would continue to rise. This should spark mergers and acquisitions activity across the board, particularly in the energy- producing sector. US equities have risen more than 38 percent since March 9, a sign that the end of the recession may be near.
6/3/09
Companies in the U.S. cut an estimated 532,000 payroll employees in the month of May, according to the ADP Employer Services gauge. While this is down to 545,000 workers cut in April, the sustained high unemployment rates will restrain consumer spending and slow any chances of substantial recovery in the economy.
The institute for Supply Management’s index of non-manufacturing business, which makes up about 90 percent of the economy, rose from 43.7 in April to 44 in May, which is the highest level in seven months. However, the index beat analyst estimates and the shows that the service industry is contracting at a slower rate which signals that the economy is improving. As consumer spending continues to improve, companies will feel a need to expand, which will increase mergers and acquisitions activity.