1)Initial jobless claims totaled 232k, 3k less than expected and down from 249k last week and vs 225k in the week prior. The 4 week average fell to 236k from 244k. Continuing claims, delayed by a week in its reporting, fell by more than 100k w/o/w to a new post covid low of 1.476mm and that was last seen in 1970. The estimate was 1.58mm.
2)The Markit February US manufacturing and services PMI bounced to 56 from 52.5 with both components rising. Most of that increase was with services as we move past omicron as this index rose to 56.7 from 51.2. Manufacturing was up 2 pts m/o/m to 57.5. With services, the increase in new work saw more hiring and “international demand for US services also strengthened in February” said Markit. With inflation, “there were sharper increases in both input costs and output prices. Notably, the rate of charge inflation hit a series peak.” With manufacturing, positively on prices paid but still rising for those received, “input cost inflation among manufacturers eased to a 9 month low midway through the quarter. That said, the rate of inflation remained elevated and outpaced that seen for services. Additional cost burdens continued to be transferred to clients, as evidenced by another increase in factory gate charges. The rate of output price inflation was sharp and the fastest in 3 months.”
3)Within the personal income data for January, private sector wages/salaries rose .5% m/o/m and are up 9.8% over the past 6 months annualized.
4)Core durable goods orders in January rose .9% m/o/m, above the estimate of up .3% and December was revised up by one tenth. Core shipments were better than expected. Also of note, the inventory to shipments ratio fell to 1.76, the lowest since January 2021.
5)New home sales in January totaled 801k, in line with expectations but down from a revised 839k last week (from initial print of 811k) and vs 749k in November. Months’ supply was 6.1 vs 5.6 in December and vs 6.3 in November. The median y/o/y home price increase was 13.4% but is volatile month to month because of the mix.
6)The KC February manufacturing index rose 5 pts m/o/m to 29. Supplier deliveries eased modestly but down for a 3rd month as the holiday stress is over and we’re past the Chinese new year. Expectations for both prices paid and received are up sharply over the past few months.
7)Moving past covid was the Eurozone and that is why its services PMI for February rose to 55.8 from 51.1 while manufacturing slipped a touch to a still high 58.4. Of note, “while an easing of supply delays helped to reduce raw material input cost inflation, persistent cost pressures caused by rising wages and energy bills led to the sharpest rise in average prices charged for goods and services in the PMI survey’s history.”
8)The UK also saw a sharp jump in its PMI because of the end of covid as its February services component rose to 60.8 from 54.1 while manufacturing was unchanged m/o/m.
9)With the caveat that this was taken before the Russian invasion, the February Eurozone Economic Confidence Index rose to 114 from 112.7. The forecast was 113.1. The flaming out of omicron was the main catalyst as the improvement was led by the services component which was up 4 pts. Retail too helped out. Manufacturing was little changed and inflation hurt consumer confidence.
10)The French business confidence February index rose 5 pts m/o/m to 112 and well better than the estimate of 108. The coming end of covid as we’ve known it was the main reason as the services component led the way. Retail confidence got back what it lost in January while manufacturing slipped by 1 pt.
11)Germany said its February IFO business confidence index did rebound to 98.9 from 95.7 and that was above the estimate of 96.5. Both components were up. IFO said “The German economy is betting on an end to the coronavirus crisis. However, the escalation of the crisis engulfing Ukraine remains a risk factor.”
12)The Reserve Bank of New Zealand raised rates by 25 bps to 1.00% as expected. They also foresee this rate getting to 3.25% by the end of next year. That is above the estimate they gave of 2.5% back in November. They also said QT will begin as they will no longer reinvest maturing bonds they hold.
13)Australia’s benefited from the full reopening with its February service PMI jumping to 56.4 from 46.6. The manufacturing side was up 2.5 pts m/o/m to 57.6.
1)Putin the Pariah. While he’s a killer anyway, if his mentality has been further distorted by being isolated for 2 years because of covid, it reminds me of Jack Nicholson’s character from the Shining who went mad from isolation. //www.youtube.com/watch?v=d-ABIIZV3vA
2)The Atlanta Fed’s GDPNow Q1 forecast was revised to just .6% from the previous estimate of 1.3%.
3)The January PCE both headline and core were as expected, up by .6% m/o/m and .5% m/o/m respectively. Versus last year, headline prices are higher by 6.1% and the core by 5.2%. Good prices were up by 8.8% y/o/y with durables specifically up by 11.6%. Service prices were higher by 4.6% y/o/y.
4)Personal income was unchanged m/o/m in January and combine that with the 2.1% increase in spending has the savings rate down to 6.4%, the lowest since December 2013. A drop in government transfer payments kept a lid on income. Adjusting spending for inflation since October (to capture the holidays and the follow thru in January), REAL spending is up just .1%.
5)Mortgage applications buckled under the weight of higher mortgage rates. The average 30 yr rate rose another 1 bp to 4.06% vs 3.72% four weeks ago and vs 3.08% one year ago. Purchase applications fell 10.1% w/o/w and are down by 5.6% y/o/y. Refi’s tanked by 15.6% w/o/w and are lower by 56% y/o/y.
6)Pending home sales in January fell 5.7% m/o/m, well worse than the estimate of up .2% and only partly offset by a 150 bps upward revision to December to a 2.3% drop. This is also the 3rd straight month of declines with a notable 12.1% fall in the Northeast. The overall index is at the lowest since April 2021. “Given the situation in the market – mortgages, home costs and inventory – it would not be surprising to see a retreat in housing demand” said the NAR.
7)According to S&P CoreLogic, home prices in December rose 18.8% y/o/y, boosted by historically low interest rates and little inventory. Phoenix led the way with a 32% y/o/y increase followed by Tampa at 29% and Miami up by 27%. DC, Minneapolis and Chicago saw the slowest rates of increase of between 10-12%.
8)The Conference Board’s consumer confidence index for February was little changed at 110.5 vs 111.1 in January and that was about as expected. The Present Situation was up slightly while Expectations dropped a touch. One yr inflation expectations rose 2 tenths m/o/m to 7%. For perspective, it’s averaged 5.2% over the past 20 years. Their bottom line, “confidence and consumer spending will continue to face headwinds from rising prices in the coming months.”
9)The Richmond manufacturing index for February fell to 1 from 8. The estimate was 10.
10)France said its February CPI jumped .8% m/o/m, which was above the estimate of up .5%. It was also up 4.1% y/o/y after a 3.3% print in January. There has not been an inflation read this high since this calculation began in 1997. Energy prices spiked by 21% y/o/y but for manufactured goods and services prices were still up 2.2% and should continue higher. This all by the way follows a 22% increase in PPI y/o/y in January.
11)Germany January PPI rose 2.2% m/o/m, well more than the 1.5% estimate and is now up 25% y/o/y.
12)UK consumer confidence fell to -26 from -19 and that was 8 pts worse than expected. That’s the weakest since 2021 and GFK said “There’s clear anxiety in these findings as many consumers worry about balancing the household books at the end of the month without going further into debt.”
13)Germany’s consumer confidence index unexpectedly softened by 2.4 pts to -8.1. The estimate was -6.3. The higher cost of living was the main culprit. GFK said “Above all, expectations of a significant easing in price trends at the beginning of the year have been shattered for the time being, as inflation rates continue to hover at a high level.”
14)The February UK CBI industrial orders number did fall by 4 pts m/o/m to 20. The estimate of 25. It was this line from the press release that stuck out, “the balance of manufacturing expecting price rises in the next three months was at its highest since December 1976.”
15)Headline CPI in Tokyo in February did reach 1%, double the pace of January and higher than the estimate of up .7%. We can blame higher food and energy prices for the upside. Taking out both saw prices fall by .6% y/o/y and again, mostly because of the 50%ish fall in cell phone fees which will cycle out in coming months.
16)In Japan, due to “record case numbers and renewed restrictions” its services PMI fell to 42.7 from 47.6 while manufacturing softened by 2.5 pts to 52.9. Price pressures though remain tough. “Firms continued to report that rising input prices and material shortages, notably in fuel and metals continued to dampen private sector activity. In fact, February saw the strongest rise in average cost burdens since August 2008.”