After a powerful week in the equity markets, the S&P 500 Index took a breather and closed basically unchanged after 10 straight up closes. The Euro had a solid rally today against the dollar, along with the Canadian dollar and the pound.
Retail sales rose last month by 0.3%, according to the Commerce Department. With the Super Bowl early in the month, electronic store sales soared. Economists surveyed had forecast a 0.3% decrease. January retail sales were adjusted downward, to a 0.1% increase from a previously reported 0.5% gain. Excluding the car sector, all other retail sales rose 0.8%. Economists had forecast a 0.1% increase. Ex-auto sales in January rose 0.5%, revised from a previously estimated 0.6% gain. Retail sales data are an important indicator of consumer spending. Consumer spending represents some 70% of demand in the U.S. economy.
Unfortunately, Business inventories were on the soft side. Not only was the January reading flat, but the December series was revised to -0.3% from -0.2%. January wholesale and factory inventories had previously been released so the new information Friday was largely the 0.1% decline in retail inventories. Inventories added mightily to Q4 09 5.9% annualized GDP and some analysts dismiss the growth because of this phenomenon. However, a large part of the contraction was also due to inventories. The inventory cycle is still unfolding. The large swing in Q4 still is about the pace of inventory liquidation. It is a gradual process that can be stretched out for the next couple of quarters at least. As sales are increasing, the inventory to sales ratio is tightening.
Canada’s unemployment rate edged down 0.1 percent to 8.2 percent in February as 21,000 people started new jobs, Statistics Canada reported on Friday. The agency said there were 60,000 new full-time jobs filled in February, but 39,000 part-time jobs were lost. Analyst had expected an increase of 15,000 jobs and an unchanged unemployment rate at 8.3 percent. The Canadian dollar is breaking through support and now could make a run at par.