Positives
1). The BLS said 916k jobs were added in March, well above the estimate of 660k and the two prior months were revised up by a total of 156k. A big pick up in government hiring, education related as schools reopened, was a key reason. The private sector contributed 780k of the jobs vs the estimate of 643k. The household survey saw a job add of 609k and when combined with the increase in the size of the labor force of 347k, the unemployment rate fell another 2 tenths to 6%. The all in U6 rate fell by 4 tenths to 10.7%. The goods producing side was a source of the upside as construction hired a net 110k after shedding 56k in February (likely weather related). Manufacturing hired a net 53k, 20k more than expected. The services side added 597k vs 602k last month with leisure/hospitality in particular contributing the most, 280k vs 384k in February. Temp help saw no job gain after 150k in the two prior months. Retail, and trade/transport also helped. The participation rate only ticked up one tenth to 61.5% and I unfortunately think this is going to lag. Hours worked rebounded to 34.9 vs 34.6 in February and vs 35 in January. While average hourly earnings saw a one tenth m/o/m decline (likely mix as leisure/hospitality workers are leading the job adds), average weekly earnings rose .7% m/o/m and 6.7% y/o/y. A negative was the average duration of unemployment rose again and extended and enhanced unemployment benefits doesn’t help this. Bottom line, after losing 22.3mm jobs (both public and private), we’ve since added back 14mm. That gap will further close rapidly in the quarters to come but a key, as stated will be participation from many that have left the labor force. The 10 yr yield is back to 1.70% in response while the Fed is looking more and more offsides with what is unfolding with growth and inflation.
2) The March ISM manufacturing index rose to 64.7 from 60.8 and that was above the estimate of 61.5 and the highest since 1983. New orders and backlogs were strong while customer inventories shrunk further. Supplier Deliveries reflecting this rose 4.6 pts m/o/m to 76.6, the highest since in 47 years, 1974. Prices paid were little changed though at 85.6 from 86 but 86 was the highest in 13 years. Of 18 industries asked, all 18 for the 4th straight month said they are paying higher prices. Export orders moderated by 2.7 pts to 54.4. Lastly, the employment component was up by 5.2 pts to 59.6, the highest since February 2018. Of the 18 industries surveyed, 17 saw growth vs 16 in February. None reported a contraction with one saying no change.
3) Those filing for Pandemic Unemployment Assistance (PUA) fell by 4k to 237k. Delayed by a week, those still receiving claims were down by 46k to 3.79mm. Delayed by two weeks, those continuing to receive PUA fell by 495k to 7.35mm after last week’s 228k increase. Continuing emergency claims fell by 705k to 5.5mm after rising by 945k in the week prior.
4)Three million shots a day and the ever widening path out of Covid, further reopenings, the warmer weather and another round of government checks saw the Conference Board’s Consumer Confidence index jump by almost 20 pts m/o/m to 109.7 from 90.4. Both components were up solidly. For perspective, the 109.7 print is about the exact middle of the February 2020 high in confidence and the April low. One year inflation expectations rose another 2 tenths to 6.7%, matching the highest since October 2008. The answers to the labor market questions improved notably. Along with the confidence boost, spending intentions were higher too.
5) China said its March manufacturing and services composite index rose to 55.3 from 51.6 with most of the contribution coming from services which came in at 56.3 from 51.4 vs the estimate of 52. Manufacturing was 51.9 vs 50.6 and .7 pts above the forecast.
6) Some March manufacturing PMI’s: Japan 52.7 vs 51.4, South Korea 55.3 vs 55.3, Taiwan 60.8 vs 60.4, Vietnam 53.6 vs 51.6, Malaysia 49.9 vs 47.7, Indonesia 53.2 vs 50.9, Australia 56.8 vs 56.9 and Thailand 48.8 vs 47.2.
7) South Korea’s exports in March rose 16.6% y/o/y as expected with semi’s and auto’s leading the way but almost every single category was higher.
8) Japan reported its quarterly Tankan data and there was definite improvement q/o/q and mostly better than expected for both large and small companies and with manufacturers and service providers. Capital spending plans went positive at 3% vs the estimate of -1.4%.
9) The March Eurozone manufacturing PMI was left little changed at 62.5 from its 1st print of 62.4 and up from 57.9 in February.
10) The UK manufacturing index was revised up by 1 pt to 58.9 vs 55.1 last month.
11) The March Eurozone CPI rose 1.3% y/o/y after a .9% increase in February but that was one tenth less than expected. The core rate moderated to a .9% y/o/y gain vs 1.1% in the month prior and 2 tenths less than expected. The reason for the core miss was a smaller rise in non-energy industrial goods prices while service prices were up by 1.3% vs 1.2% in February and 1.4% in January.
12) The March Economic Confidence index for the Eurozone rose to 101 from 93.4 and that was well better than the estimate of 96. The manufacturing component went back to positive and services, consumer, retail and construction were all less negative.
13) Consumer confidence in France in March was up by 3 pts to 94. The estimate was for no change. It follows last week’s improvement seen in Germany.
Negatives
1). Initial jobless claims totaled 719k, 44k more than expected but partially mitigated by the downward revision of 26k last week to 658k. The 4 week average fell by 10k to 719k.
2) The average 30 yr mortgage rate fell back by 3 bps to 3.33% following the recent increase but mortgage apps still fell. Purchases were down by 1.5% w/o/w but with the help of easy comps are still up 39% y/o/y. Refi’s declined by 2.5% w/o/w and that is down for a 4th straight week and down by 32% y/o/y on tough comps.
3) Pending home sales in February fell 10.6% m/o/m which was well more than an expected drop of 3%. It follows a drop of 2.4% in January. Regionally, sales were down across the board. The NAR said “The demand for a home purchase is widespread, multiple offers are prevalent, and days-on-market are swift but contracts are not clicking due to record low inventory. Only the upper end market is experiencing more activity because of reasonable supply.” With respect to higher mortgage rates, “Demand, interestingly, does not yet appear to be impacted by recent modest rise in mortgage rates.” This could also be because people are rushing to lock in rates while they can.
4) S&P CoreLogic’s US January home price index rose 11.2% y/o/y vs 10.4% in December, 9.5% in November, 8.4% in October, 7% in September, 5.8% in August and 4.8% last July. Great for home owners building equity but not for 1st time buyers trying to save up for a down payment. Double digit increases are just not sustainable.
5) China’s Caixin private sector weighted manufacturing index fell to 50.6 in March vs 50.9.
6) In March exports from Vietnam rose 19.2% y/o/y but that was below the estimate of up 24%. Imports jumped by 28% and that was well better than the forecast of up 20%. Vietnam’s economy grew by 4.5% y/o/y in Q1 but the estimate was up 5.7%. With some restrictions on and then off throughout the quarter there was some unevenness to business activity.