Personal income as reported up .4 with spending only up .1 = increased savings. However, while that counts most of the income gained by those who gained from the oil price decline, I suspect it does not include quite a bit of the income lost by those who got hurt by the decline in oil prices, as that lost ‘income’ is often outside the definition of ‘income’ included in this report. And much of that lost income that is included is likely estimated, as much of it goes unreported on a monthly or even quarterly basis. If so, both income and savings are being over reported by what I’m thinking is about .2 on the income side, which pushes the savings down below ‘normal’ and is also consistent with declining personal consumption expenditures.

Personal Income and Outlays

Highlights
In February, personal income growth remained healthy but spending and inflation were soft. Personal income advanced 0.4 percent after posting an equal gain of 0.4 percent in January. February topped expectations for a 0.3 percent gain. The wages & salaries component increased 0.3 percent, but followed a robust 0.6 percent the prior month.

Personal spending made a partial rebound of 0.1 percent after declining 0.2 percent in January. Analysts forecast a 0.2 percent rise. Durables fell 1.0 percent, following a 0.4 percent rise in January. Nondurables made a 0.4 percent comeback after plunging 2.5 percent in January. Services advanced 0.2 percent after a 0.4 percent boost in January.

Prices at the headline level rebounded a moderate 0.2 percent, following three declines including 0.4 percent for January. Market expectations were for 0.2 percent. The core PCE price index rose 0.1 percent, matching the pace in January and expectations.

Income growth was moderately strong in February. But spending has been softening in recent months due to adverse weather and lower energy prices. But the consumer sector has fuel for spending. Inflation continues to be low and well below the Fed’s target of 2 percent year-ago inflation, meaning the Fed likely will stick with no rate hike before mid-year.

Better than expected but it remains at depressed levels with easy comparisons with last year’s extra cold winter compared with this year’s colder than average winter, which some how resulted in a 35,000 home jump- a 157% increase- in new home sales in the northeast to cause that report to spike some.

Pending Home Sales Index

Highlights
Pending home sales picked up steam in February, up a much stronger-than-expected 3.1 percent on top of a 1.2 percent revised gain in January. This is the first back-to-back gain since April and May last year. Today’s report is a second shot in the arm for the ever-lagging housing sector, following last week’s big surge in new homes sales.

By region, the Midwest shows a strong February gain for pending sales as does the West, a region where sales of existing homes have been flat. The South, by far the largest housing region, and the Northeast, by far the smallest, show small monthly declines.

Year-on-year, pending home sales, which are defined as contract signings for existing homes, are up a robust-looking 12.0 percent which is a 6th straight increase. But this is misleading as many deals fall through. Final sales of existing homes, in data posted last week, are up only 4.7 percent year-on-year.

Unambiguous big fat whopping negative, therefore largely unreported:

Dallas Fed Mfg Survey

Highlights
Texas factory activity declined in March. The production index, a key measure of state manufacturing conditions, fell to minus 5.2, posting its first negative reading in nearly two years.

Other measures of current manufacturing activity also reflected contraction in March. The new orders index pushed further into negative territory, coming in at minus 16.1, and the growth rate of orders index remained negative for a fifth consecutive month but edged up to minus 15.3 in March. The shipments and capacity utilization indexes slipped to more negative readings, minus 8.7 and minus 6.4, respectively.

Perceptions of broader business conditions were rather pessimistic for a third month in a row. The general business activity index declined 6 points to minus 17.4 in March, while the company outlook index was largely unchanged at minus 4.

Labor market indicators reflected slight employment declines and shorter workweeks. The March employment index dipped to minus 1.8, its first negative reading since May 2013. Thirteen percent of firms reported net hiring, compared with 14 percent reporting net layoffs. The hours worked index has been gradually declining for six months and came in at minus 5.3 in March, down from minus 1.6 in February.

Prices declined in March, and upward pressure on wages continued to ease slightly. The raw materials prices index fell to minus 9.4, its lowest reading since May 2009. The finished goods prices index pushed further negative to -9.8, also reaching a low not seen since 2009. The wages and benefits index came in at 15.6, down from 16.8 in February.

Expectations regarding future business conditions remained fairly weak in March. The index of future general business activity edged down to 3, while the index of future company outlook inched up to 12.8. Both indexes remain well below the levels seen throughout 2014. Indexes for future manufacturing activity, however, improved markedly in March. The indexes of future production, capacity utilization and growth rate of orders posted double-digit gains from their February readings.

According to the Dallas Fed report, both manufacturing and prices are soft-leaving the Fed in a likely dovish mode. Texas has the second largest manufacturing sector, following California. So far, regional manufacturing surveys point to sluggish manufacturing activity in March.

Still no sign of a surge in spending here, as apps remain below even last years winter depressed numbers:

MBA Purchase Applications

Highlights
A dip in mortgage rates failed to give much lift to the purchase index which slipped 0.2 percent in the February 27 week for a year-on-year rate that is also at minus 0.2 percent. The refinance index did rise but not by much, up 1.0 percent. The average rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.96 percent from 3.99 percent.

The lonely dove:

Fed’s Evans, citing low inflation, wants no rate hikes until 2016

March 4 (Reuters) — The Federal Reserve should wait until the first half of 2016 before raising interest rates, a top U.S. central banker said on Wednesday, or risk undermining the very recovery it has helped engineer.

“Given uncomfortably low inflation and an uncertain global environment, there are few benefits and significant risks to increasing interest rates prematurely,” Chicago Federal Reserve Bank President Charles Evans said in remarks prepared for delivery to the Lake Forest-Lake Bluff Rotary Club. “I think we should be patient in raising interest rates.”

Even if the Fed keeps rates at their near-zero level until next year, he said, inflation probably won’t reach the Fed’s 2-percent goal until the end of 2018. And if his forecast proves wrong and the economy begins to run too hot too fast, he said, the Fed would have “ample time” to raise rates moderately to head off excessively high inflation.

Evans, a voting member this year on the Fed’s policy-setting panel, stands nearly alone at the central bank in calling for rates to stay near zero for another year or so. Many of his colleagues have said they are open to, if not eager for, rate hikes to begin as soon as June.

For his part, Evans expects the U.S. economy to grow at a 3-percent pace over the next couple of years, generating job gains of over 200,000 a month for some time.

But that is not enough to justify raising rates, he said. Unemployment, at 5.7 percent, is still above the 5 percent he now believes is sustainable for the economy in the longer run.

More importantly, the Fed’s core gauge of inflation is at just 1.3 percent, and inflation expectations based on prices in Treasury markets have fallen dramatically.

Before raising rates, he said, he would like to see not only a rise in core inflation and in market-based inflation expectations, but also a rise in wages, now averaging around 2 percent a year, to between 3 and 4 percent.

Anyone mention that, like car sales, this is the 3rd consecutive monthly decline?

ADP Employment Report

Highlights
ADP sees slowing for Friday’s February payrolls, estimating that private payrolls rose 212,000 which is 8,000 below consensus for the ADP report. But ADP’s data also includes a big upward revision for January, to 250,000 vs an initially reported 213,000. The results aren’t likely to shift expectations for Friday’s government data where the corresponding Econoday consensus is 225,000 vs January’s 267,000.

Breaking down ADP’s estimate, service-providing industries are up 181,000 in February vs 206,000 in January with goods-producing industries up 31,000 vs 45,000. Further detail shows professional services up 34,000 vs January’s 49,000 with construction up 31,000 vs 45,000. Growth in trade & transport is 31,000, down from 50,0000. Financial activities are up 20,000 vs 15,000 with manufacturing up only 3,000 vs a gain of 15,000 in January.

This survey remains firm:

ISM Non-Mfg Index

Highlights
Growth remains very solid in ISM’s non-manufacturing sample where the composite index is up 2 tenths to 56.9 in the February report. Employment is a stand-out positive, jumping nearly 5 points to a 4-month high of 56.4.

Not so strong are new orders where growth is down nearly 3 points to 56.7 for the lowest reading since March last year. Nevertheless, this is still a very healthy and sustainable rate of growth.

Supplier deliveries slowed further in February which added to the composite for the month. But the slowing is likely tied, not to demand factors, but to the port slowdown on the West Coast, a slowdown which has since been resolved. The slowing in deliveries is the likely reason behind a rise in inventories and a build in backlog orders. Cost pressures, as they are in most reports, are flat, the result of course of low fuel costs.

A big plus in today’s report is wide breadth of strength with 14 of 18 industries reporting growth in the month led once again by accommodation & food services which are likely getting a boost from discretionary consumer spending, itself the result of the strong jobs market and low gasoline prices. In the contraction column are both construction and mining, two sectors that remain weak.

Interesting what’s up and what’s down: