I’m traveling today so this will be my note of the day.
Succinct Summation of the Week’s Events:
Positives,
1)The April CPI rose .4% both headline and core just as anticipated. The y/o/y gains are 4.9% and 5.5% respectively vs 5% and 5.6% in the month prior. Energy prices were up .6% m/o/m though down 5.1% y/o/y. Food/beverage prices were up .1% m/o/m and higher by 7.5% y/o/y. Services inflation ex energy was higher by .4% m/o/m and 6.8% y/o/y. Rents are still overstated as we know. Core goods prices are accelerating again, up by .6% m/o/m and 2% y/o/y, but mostly driven by a 4.4% monthly jump in used car prices.
2)The sticky Atlanta Fed’s April CPI rose 4.7%, the same seen in March but down from 6.8% in February and 6.3% in January. Sticky core rose 4.7% y/o/y vs 4.5% in March and 6.9% in February.
3)PPI for April was about as forecasted when we include the revisions to March. Versus last year headline PPI has slowed to 2.3% from 2.7% and that is the slowest pace of gain since January 2021. The core rate was up 3.2% y/o/y vs 3.4% in March.
4)Mortgage apps bounced by 6.3% w/o/w with little change in the average 30 yr mortgage rate of 6.48%. Purchases were up 4.8% w/o/w after falling by 2% last week. They remain down 32% y/o/y. Refi’s (now could be cash out refi’s) jumped 10% w/o/w though are lower by 32% y/o/y.
5)With inflation still printing 10%, the BoE had no choice but to hike another 25 bps to 4.5%.
6)CPI was higher by one tenth y/o/y, two tenths less than expected and a good thing that the Chinese consumer is seeing only a small rise in their cost of living.
7)Taiwan said its April exports fell 13.3% y/o/y, better than the expected drop of 19.4%. It is though the 8th straight month of y/o/y declines. Shipments to China and Hong Kong were down by 22% but that wasn’t as bad as the nearly 29% fall in March. Exports to the US fell 10.3% y/o/y. Product wise, the exports of electronic products were down by 8.6% y/o/y vs a drop of 14.6% in March. Imports were lower by 20.2%, a bit better than forecasted.
Negatives,
1)From ZipRecruiter, “Both SMBs (small and medium sized businesses) and enterprises are spending less to make hires in spite of heading into what is historically the hiring season. This means we are no longer following the standard seasonal job market pattern ZipRecruiter has tracked over the company’s 13 yr history, excluding the Covid pandemic period… there has been an acceleration of the deceleration in the demand for recruiting services.”
2)Initial jobless claims jumped to 264k from 242k. That’s the biggest one week print since October 2021. The 4 week average rose to 245k from 239k. Continuing claims were up by 12k after falling in the two prior weeks. They are now above 1.8mm for the 8th straight week.
3)The NFIB April small business optimism survey fell to the weakest level since January 2013 at 89, down 1.1 pts m/o/m. The NFIB said “Optimism is not improving on Main Street as more owners struggle with finding qualified workers with their open positions. Inflation remains a top concern for small businesses but is showing signs of easing.”
4)From the Senior Loan Officer Survey: “Regarding loans to businesses, survey respondents reported, on balance, tighter standards and weaker demand for C&I loans to large and medium market firms as well as small firms over the first quarter. Meanwhile, banks reported tighter standards and weaker demand for all commercial real estate loan categories…“For loans to households, banks reported that lending standards tightened across all categories of residential real estate (RRE) loans other than GSE eligible and government residential mortgages, which remained basically unchanged. Meanwhile, demand weakened for all RRE loan categories. In addition, banks reported tighter standards and weaker demand for home equity lines of credit (HELOCs). Standards tightened for all consumer loan categories; demand weakened for auto and other consumer loans, while it remained basically unchanged for credit cards.”
5)While wholesale inventories in March were unchanged m/o/m, about as expected, sales plunged by 2.1%, well worse than the estimate of up .4% and it sent to the inventory to sales ratio to 1.40, the highest since January 2009 not including Covid.
6)Aggregate financing in China totaled 1.22T yuan in April, well under the estimate of 2T. Bank loans were half the estimate at 719b yuan.
7)China’s PPI fell 3.6% y/o/y, a bit more than the estimate of down 3.3%.
8)China’s exports in April rose 8.5% y/o/y above as forecasted but a slowdown from the March gain of 14.8% which benefited from the reopening in the sense that backlogs were fulfilled. Imports missed estimates by dropping by 7.9%, well worse than the estimate of no change.
9)Base pay in March in Japan only rose .5% y/o/y in March. There was a jump in bonus pay of 4.6% and maybe this is the way Japanese employers are trying to improve overall compensation.
10)Investor confidence in the Eurozone weakened in May as measured by the Sentix index. The index fell to -13.1 from -8.7 and that is the lowest since January. The May survey results were titled “Significant spring tiredness” and in it was said “There is not much left of the laborious economic recovery of 2023.”
11)German March IP fell 3.4% m/o/m, more than double the forecast of down 1.5%.
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