Preview: Nonmanuf ISM uptrend? ADP, mortgage apps, Beige Book due $SPY

(1) The nonmanufacturing ISM index probably rose slightly in February (UBSe & cons 51.0 after
50.5). The ISM indicators take on especial importance this month as they tend to be relatively
insensitive to winter storms. Still, the nonmanufacturing ISM index lagged improvement in the
overall economy in H209. (2) The initial ADP estimate of private payrolls has been a good signal
of the initial BLS estimate in the last two months. However, we view the estimate with
skepticism because it appears to be more reliable when the trend is steady and less reliable
when the trend is changing. (3) The mortgage applications purchase index tends to weaken in
February, even on a seasonally adjusted basis, suggesting flawed seasonal factors. It has again
followed that pattern this year. (4) Challenger layoff data will be reported. (5) We expect further
improvement in the tone of the Beige Book. The last report stated: “…conditions have improved
m.odestly further, and those improvements are broader geographically....” Review: Vehicle sales slip
to an estimated 10.3M unit pace from 10.8M

(1) Auto sales slipped in Feb to an estimated 10.3 million unit annual rate (cons 10.4M, UBSe
10.2M, after 10.8M). Although the pace was exceptionally weak (2009 totalled 10.3M), it
probably does not imply faltering underlying demand, considering that the headwinds from the
winter storms and the Toyota turmoil. (2) Weekly store sales measures slowed slightly in the
last week of the Feb reporting period, weakened by the East Coast storm. (3) Kansas City Fed



Preview: Nonmanuf ISM uptrend? ADP, mortgage apps, Beige Book due