- CONSTRUCTION SPENDING -0.1 PCT (CONSENSUS +1.0 PCT)
- FIRST DECLINE SINCE JULY
- PRIVATE CONSTRUCTION SPENDING UNCHANGED
- PUBLIC SPENDING -0.2 PCT

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during January 2012 was estimated at a seasonally adjusted annual rate of $827.0 billion, 0.1 percent (±1.1%)* below the revised December estimate of $827.6 billion. The January figure is 7.1 percent (±1.8%) above the January 2011 estimate of $772.0 billion.

Spending on private construction was at a seasonally adjusted annual rate of $538.7 billion, nearly the same as (±1.1%)* the revised December estimate of $538.7 billion. Residential construction was at a seasonally adjusted annual rate of $253.6 billion in January, 1.8 percent (±1.3%) above the revised December estimate of $249.2 billion. Nonresidential construction was at a seasonally adjusted annual rate of $285.0 billion in January, 1.5 percent (±1.1%) below the revised December estimate of $289.5 billion.

In January, the estimated seasonally adjusted annual rate of public construction spending was $288.3 billion, 0.2 percent (±1.8%)* below the revised December estimate of $289.0 billion. Educational construction was at a seasonally adjusted annual rate of $71.6 billion, 0.9 percent (±3.4%)* below the revised December estimate of $72.2 billion. Highway construction was at a seasonally adjusted annual rate of $83.7 billion, 0.2 percent (±3.8%)* below the revised December estimate of $83.9 billion.

- ISM MANUFACTURING 52.4 (CONSENSUS 54.5) VS 54.1 IN JAN
- NEW ORDERS INDEX 54.9 IN FEBRUARY VS 57.6 IN JAN
- EMPLOYMENT INDEX 53.2 IN FEBRUARY VS 54.3 IN JAN
- PRICES PAID INDEX 61.5 IN FEBRUARY (CONSENSUS 58.0) VS 55.5 IN JANUARY

Economic activity in the manufacturing sector expanded in February for the 31st consecutive month, and the overall economy grew for the 33rd consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

"The PMI registered 52.4 percent, a decrease of 1.7 percentage points from January's reading of 54.1 percent, indicating expansion in the manufacturing sector for the 31st consecutive month. The New Orders Index registered 54.9 percent, a decrease of 2.7 percentage points from January's reading of 57.6 percent, reflecting the 34th consecutive month of growth in new orders.

Prices of raw materials increased for the second consecutive month, with the Prices Index registering 61.5 percent. As was the case in January, new orders, production and employment all grew in February — although at somewhat slower rates than in January. Comments from the panel continue to reflect a generally positive outlook for the next few months."

-30-year fixed-rate mortgage (FRM) averaged 3.90 percent with an average 0.8 point for the week ending March 1, 2012, down from last week when it also averaged 3.95 percent. Last year at this time, the 30-year FRM averaged 4.87 percent.

-15-year FRM this week averaged 3.17 percent with an average 0.8 point, down from last week when it also averaged 3.19 percent. A year ago at this time, the 15-year FRM averaged 4.15 percent.

-5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.83 percent this week, with an average 0.7 point, up from last week when it averaged 2.80 percent. A year ago, the 5-year ARM averaged 3.72 percent.

-1-year Treasury-indexed ARM averaged 2.72 percent this week with an average 0.6 point, down from last week when it averaged 2.73 percent. At this time last year, the 1-year ARM averaged 3.23 percent.

Hard not to miss the significantly lower MBS prices so far this morning. Fannie 3.5's dipped into the high 102's on several occasions but are now looking like they favor modal support at 103-00 ("modal" like from "mean, median, mode" in high school math class... you know, "the most frequently recurring." We're somewhat fond of identifying and inferring a certain measure of technical significance from modal support and resistance as opposed to absolute highs and lows, at least when it seems more appropriate as it probably does if you're looking at Fannie 3.5's.)

10yr yields are also seeing support between 2.04 and 2.05 which, remember, is the 50% retracement between the "new era" highs and lows occurring since August 2011.

Not that we'd expect much of a direct connection from the stock lever these days, but the fact that there's no connection at all and that stocks are utterly flat on the morning clues us in to the possibility that bond markets aren't selling-off on economic fundamentals as much as we're just seeing a fairly tame continuation of liquidative selling that began yesterday. In that sense, the mid 2.04's is a natural choice to pause for reflection, with 2.07-2.08 being the next, although current support has a chance of holding into 10AM data and Fed-Speak.

The assumption then, would be that lackluster data would preserve current support. But wait! What about that "liquidative selling" vs economic fundamentals comment? Yes... The former would be what got us here while the latter can certainly still help us determine the minor course corrections or help decide on a final supportive ceiling. Think lead actor/supporting actor.

- Jobless Claims Fell To 351,000 Feb 25 Week (Consensus 351,000)
- Last Week Revised Higher To 353k
- Jobless Claims 4-Wk Avg Fell To 354,000 from 359,000
- Continued Claims Fell To 3.402 mln (con. 3.400 mln)
- Insured Unemployment Rate Unchanged At 2.7
- Jobless Claims 4-Wk Average Lowest Since March 2008;
- Continued Claims Lowest Since August 2008

In the week ending February 25, the advance figure for seasonally adjusted initial claims was 351,000, a decrease of 2,000 from the previous week's revised figure of 353,000. The 4-week moving average was 354,000, a decrease of 5,500 from the previous week's revised average of 359,500.

The advance seasonally adjusted insured unemployment rate was 2.7 percent for the week ending February 18, unchanged from the prior week's unrevised rate.

The advance number for seasonally adjusted insured unemployment during the week ending February 18, was 3,402,000, a decrease of 2,000 from the preceding week's revised level of 3,404,000. The 4-week moving average was 3,444,000, a decrease of 12,250 from the preceding week's revised average of 3,456,250.

- Spending +0.2 Pct (Consensus +0.4 Pct) Vs Dec 0.0 Pct (Prev 0.0 Pct)
- Income +0.3 Pct (Cons +0.4 Pct) Vs Dec +0.5 Pct (Prev +0.5 Pct)
- Core PCE Price Index +0.2 Pct (Cons +0.2 Pct) Vs Dec +0.1 Pct (Prev +0.2 Pct)
- PCE Price Index +0.2 Pct (Cons +0.2 Pct) Vs Dec +0.1 Pct (Prev +0.1 Pct)
- Yoy PCE Price Index +2.4 Pct Vs Dec +2.5 Pct (Prev +2.4 Pct)
- YoY Core PCE Index +1.9 Pct Vs Dec +1.9 Pct (Prev +1.8 Pct)
- Real Consumer Spending Unchanged (Cons +0.3 Pct) For Third Straight Month
- Personal Saving Rate 4.6 Pct Vs Dec 4.7 Pct


Personal income increased $37.4 billion, or 0.3 percent, and disposable personal income (DPI) increased $14.1 billion, or 0.1 percent, in January, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $23.2 billion, or 0.2 percent. In December, personal income increased $60.2 billion, or 0.5 percent, DPI increased $48.3 billion, or 0.4 percent, and PCE increased $3.2 billion, or less than 0.1 percent, based on revised estimates.

Real disposable income decreased 0.1 percent in January, in contrast to an increase of 0.3 percent in December. Real PCE increased less than 0.1 percent, in contrast to a decrease of less than 0.1 percent.