INDICATOR:  March Philadelphia Fed Survey, February Leading Indicators and Weekly Jobless Claims

KEY DATA:  Philadelphia Fed: -0.2 point; Orders: -1.5 points/ Leading Indicators: +0.2%/ Jobless Claims: +1,000

IN A NUTSHELL:  "The labor market remains strong and future growth looks solid, even if manufacturing activity is easing a touch."

WHAT IT MEANS:   If you know what Janet Yellen was trying to tell us yesterday, tell me and we both will have a handle on when the Fed will start the rate hike process.  One thing is clear, she is focusing on the data, whatever that means.  In any event, the latest numbers don't really tell us anything that we don't already know about the economy.  Jobless claims remained at a level that gives us every reason to believe that the March jobs report will be solid.  It may not match February's, but it should indicate further tightening in the labor market.  Looking ahead, there is no reason to think that the job reports will weaken.  The Conference Board's Index of Leading Indicators rose again in February, but while it is not signaling robust growth ahead, given the brutal winter, even moderate growth would be an indication that the underlying economy is strong.  About the only real worry is the manufacturing sector.  The March Philadelphia Fed manufacturing index remained essentially the same as in February, but the level is not pointing to strong growth.  Order growth has eased and backlogs are declining.  Hiring continues, but also at a modest pace.  Interestingly, optimism rose a bit and hiring expectations surged.  Maybe conditions are just temporarily soft.

MARKETS AND FED POLICY IMPLICATIONS: Whether a further tightening in the labor market matters to the Fed members is a mystery.  It seems that an unemployment rate that is just about at full employment is not something that anyone is willing to talk about.  I guess the monetary policy gurus think that the labor market consists only of the demand side and that as long as firms don't want to pay higher wages, they will be able to get away with not paying higher wages.  Fascinating.  Saying that the economy slowed in between meetings was a "duh, no kidding" comment given that the winter crushed activity.  However, failing to mention the possibility that the slowdown was due to temporary factors did provide grist for those who believe the Fed will or should start raising rates in September or later.  I guess I just don't understand the logic.  The first paragraph in the statement simply reviews the condition of the economy since the previous meeting.  Indeed, it always starts with "Information received since the Federal Open Market Committee met in …".  In other words, seeing a slowdown that may have been caused by the winter weather is nothing that should surprise anyone.  It does not mean the Committee is less comfortable with the prospects for future activity than they were at the end of January.  But that is how many are reading yesterday's statement and testimony.  My warning is to wait a few weeks.  Another solid jobs report and a turnaround in some of the weaker numbers, such as housing starts, will likely create a growing belief that a June rate hike cannot be ruled out.

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