Ford Slows, ISM says Manufacturing Surges, but Markets Stagnant

Bourbon & Bayonets / Monday, March 3rd, 2014

Markets were headed lower on Monday after consumer spending data came in on a positive note. The Commerce Department announced that U.S. consumer spending was up 0.4% in January. They also upwardly revised December’s data by 0.1%. January’s data surpassed the 0.1% economists were expecting. Spending was boosted by a large gain in services. There was a 0.9% increase for the month, which has been the largest gain for the sector since October of 2001. Some say the jump was largely attributed to a rise in demand for utilities as harsh weather hit the United States. When taking food and energy out of the equation, there was a slight gain of 0.1% in January. Over the past 12 months, consumer prices have risen a total of 1.2%. Brian Jones, a senior U.S. economist at Societe Generale, said, “Consumer spending had OK momentum. We expect to see better job growth in the spring. More people with jobs means more money to spend.”

There was also good news out of the manufacturing sector. The Institute for Supply Management (ISM) announced that U.S. manufacturing growth was up from an eight-month low in January. ISM’s February data came in at 53.2, up from January’s 51.3 reading; Any readings that come in above 50 mean the sector is expanding. The two previous months showed that there was a slowing for U.S. manufacturing, according to ISM. There was positive movement in 14 of the 18 industries that are followed by the report, up from 11 in January. Some of the industries in the positive area last month were machinery, plastics, transportation equipment and paper products. The areas that have been reporting less-than-stellar numbers were placing a lot of the blame on the bad weather conditions. Joseph LaVorgna, an economist at Deutsche Bank, said of the ISM data, “We expect a substantial rebound… when weather patterns eventually normalize.”

Shares of Ford (F) were trading lower as they reported sales that were down last month. As with many others, they are placing the blame on the sweeping cold weather that has been hitting the U.S. and a drop in fleet sales. The company posted results that were down a surprising 6.1% in February. Car sales were down 14% and utility sales were down 4%. Their pickup trucks, however, posted positive gains. Sales of there popular F-Series pickup truck were up 3% to a total of 55,882, which was their best posting in February in eight years. In total, the company sold 184,944 vehicles in last month. Sales were down 7.2% when compared to this time last year. Ford’s fleet sales were down a staggering 10% which was said to have been caused by a delay in the delivery of vehicles due to the weather. John Felice, vice president of sales and marketing said, “Sales surged in the final week (of February), providing us momentum after a slow start to the month.”

That’s all for the day.

All the best,

Jack Aubrey
Oakshire Financial

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