Data out of the factory sector was largely positive. The ISM Manufacturing Index slipped from February’s 14-year high but remains very strong. Strength in orders points to a good chance that the index could return to its February highs. Factory Orders benefitted from a large jump in aircraft, but more importantly, core capital goods orders and shipments were also up strongly—the latter a direct GDP input—which will help first quarter business investment.

Similarly, data outside of the factory sector indicated strength. Employment was a key contributor to the ISM Non-Manufacturing Index which, despite a slight pullback from last month’s outsized gain, remains elevated. Y/Y Construction Spending is subdued, though gains in single-family homes are a solid positive for the housing market, and should help to bolster expectations for a rise in housing supply.

The nation’s International Trade deficit deepened once again in February, the fourth straight month of an over $50B deficit. Though strong overseas demand is positive, net exports are becoming an increasing drag on GDP.

Nonfarm payroll growth for March of 103K was well below the 175K consensus expectations, but overall the Employment Situation report was contiguous with a strong labor market. Average hourly earnings rose tangibly, up 0.3% in the month, which lifted the Y/Y growth rate to 2.7%. Unemployment held steady at its very low 4.1%. Initial Jobless Claims popped higher in the month, however, with no special factors in the report, it is not expected to change the trajectory of labor market growth.

Consumer spending was soft in February, partially due to consumer reluctance toward credit card spending. Consumer Credit was ~$5B lower than last month, and below even low expectations, largely the result of weakness in revolving credit. These trends point to a more cautious consumer and may hint at a smaller contribution to GDP by the consumer for the first quarter.