Economic Update

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					Economic Update

  April 10, 2007
This Economic Update is brought to
you by…
 The Institute for Supply Management

 The Health Care Sector

 The Plunge Phase
Economic Question of the Week
Q: For the ISM manufacturing index,
  what level is considered the
  breakpoint between an expanding
  and a contracting manufacturing

A: 50%
The Economy
 ISM manufacturing index fell to 50.9% in March
   52.3% in February.
   Fluctuated between 49.3% and 52.7% for the past 7
   The 50% level is approximately the breakpoint
     between an expanding and a contracting
     manufacturing sector.
   orders for non-defense capital goods (excluding
     aircraft) have also been declining in recent months
 ISM non-manufacturing index (the services index) fell
  to 52.4 in March
   54.3 in February
   Lowest level since April 2003
The Economy
   Labor Department reported that 180,000 jobs were added
    to non-farm payrolls in March.
   Unemployment matched the lowest level in 6 years.
   Job additions occurred primarily in the following areas:
       non-residential construction sector
       general merchandise stores
       health care
       food services
   Average hourly earnings were up 0.3% in March and are up
    4% for the past 12 months.
       Wage growth is closely correlated to consumer spending
    Lower unemployment numbers = the Fed is unlikely to cut
    short-term interest rates in the near future.
The Markets
   The broad stock indexes were up for the week
       Health Care sector rose 2.74%
       Oil & Gas sector was up 2.30%
           Oil prices fell to $64.28 during the week on news that the
            British sailors were released by Iran.
           energy analysts have decided that demand for oil will remain
            strong in 2007 and 2008.
       M&A activity continued to drive up stock prices:
           Daimler Chrysler (DCX)
           First Data (FDC)
           Tribune (TRB)
           the Four Seasons Hotels (FS).
   The yield on 10-year securities rose from 4.65% to 4.75%
       Lower unemployment and the belief that the Fed will not cut
        short-term interest rates in the near future.

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