1)The March Markit manufacturing and services PMI for the US rose to 58.5 from 55.9 with most of the help from services as this component rose 2.4 pts m/o/m. Manufacturing lifted too, by 1.2 pts to 58.5. With services, “Greater activity was driven by a marked increase in new business that was the sharpest since June 2021, as demand conditions strengthened.” This led to “a record breaking rise in backlogs of work.” Employment rose to the highest since April 2021. This didn’t come for free though as “Inflationary pressures remained substantial, as the rate of cost inflation accelerated to the fastest for three months. Output charges rose at a similar pace to February’s record rate as firms sought to pass-through hikes in input prices to clients.” On the manufacturing side, “Stronger expansions in output, new orders, employment and stocks of purchases helped support the overall uptick. Delivery times slowed to the least since January 2021 as post holiday and covid pressures ease. Price pressures remained intense though “as manufacturers noted broad based increases in prices…Purchasing activity rose at the fastest pace since September 2021, amid efforts to stockpile and protect against future surges in costs.” With respect to what is being passed on, there was a “slightly softer increase in selling prices, despite soaring costs burdens.” Employment was higher in this sector too.
2)Initial jobless claims fell to 187k from 214k and that was 23k below the forecast. The 4 week average fell to 212k, down 11k w/o/w. Also of note, continuing claims fell by another 70k to just 1.35mm, the lowest since December 1969.
3)The March Richmond manufacturing index rose to 13 from 1 and well better than the estimate of 2. New orders, backlogs, employment and wages all rose. Capital spending was mixed. Delivery Times were little changed while prices paid fell but those receive was up.
4)The KC manufacturing index increased to 37 from 29 and better than the forecast of 26.
5)The Eurozone March manufacturing and services PMI fell 1 pt to 54.5 but a bit better than the feared drop to 53.8. Both components fell m/o/m. Markit said “The survey data underscore how the Russia-Ukraine war is having an immediate and material impact on the eurozone economy, and highlights the risk of the eurozone falling into decline in the second quarter.” They went on to say, “Had it not been for the easing of Covid containment measures to the lowest since the start of the pandemic, business activity would have weakened far more sharply in March…Businesses are themselves bracing for weaker economic growth, with expectations of future output collapsing in March as firms grow increasingly concerned about the impact of the war on an economy that is still struggling to find its feet from the pandemic.”
6)The UK PMI in March held in because of the lift in services to 61 from 60.5. Manufacturing though weakened by 2.5 pts. A further reopening helped services, “However, the outlook darkened as concerns over Russia’s invasion exacerbated existing worries over soaring prices, supply chains and slowing economic growth. Business expectations are now at their lowest for almost one and a half years, pointing to a marked slowing in the pace of economic growth in coming months.” On inflation, “price pressures have spiked higher due to increased energy and commodity prices resulting from the invasion. With March seeing by far the largest rise in selling prices for goods and services ever recorded by the survey.”
7)The UK CBI industrial orders index for March rose to 26 from 20 and better than the expected drop of 4 pts. CBI said “This survey highlights strong order books and output growth, but the cost pressures facing manufacturers have been amplified by the conflict in Ukraine.”
8)Japan’s composite PMI index rose to 49.3 from 45.8 mostly driven by a lift in services as more things opened up after the omicron cloud in February but the index is still below 50 (mfr’g is at 53.2) because services came in at 48.7. On pricing, “Firms across the Japanese private sector reported a further intensification of price pressures. Input prices rose at the fastest pace since August 2008 with businesses attributing the rise to surging raw material prices, notably energy, oil and semi’s amid deteriorating supplier performance.”
9)Australia’s PMI was up .5 pt to 57.1. The caveat though was this, “Supply constraints worsened, however, contributing to record price inflation for both private sector firms and their clients. Overall business confidence in the private sector fell to the lowest level in almost two years.”
10)Taiwan said its February exports were higher by 21.1% y/o/y, well better than the estimate of up 14%. Exports of Taiwan’s electronic products in particular jumped by 32% y/o/y.
11)South Korea, a key exporter of semi’s and auto’s, said exports rose 10.1% y/o/y in the 1st 20 days of March. That is a moderation from the 13.1% increase in February but still a good pace and shipments of semi’s in particular jumped by 31% y/o/y. Imports were higher by 19% y/o/y vs 12.9% in February but that is influenced by higher energy prices being paid.
1)Pending home sales in February fell 4.1% m/o/m, worse than the estimate of up 1% and follows a 5.8% decline in January, a 2.3% fall in December, a 2.9% drop in November and after a 6.3% rise in October. The index is at the lowest level since May 2020. There is no question that inventories are light but the NAR said, “house hunters are contending with a number of additional market issues, including escalating home prices and rising interest rates…Given the situation in the market – mortgages, home costs and inventory – it would not be surprising to see a retreat in housing demand.”
2)New home sales in February totaled 772k, 38k less than expected and January was revised down by 13k to 788k. The average 30 yr mortgage rate in February according to Bankrate was about 4.10% vs 4.5% today and which compares with 3.55% in January. Months’ supply did tick up to 6.3 from 6.1 and remains about the long term average in stark contrast to the anemic level of existing homes for sale. Some of this though are homes not yet built nor completed. The median home price, which jumps around a lot month to month because of the large influence of mix, was $400,600, up 10.7% y/o/y. That is down from $427,400 and to the mix point, there was a pick up in the sale of homes priced between $200-400k and a decline for those priced above. The average price is now above $500k for the 1st time.
3)For the week ended March 18th, the average 30 yr mortgage rate rose to 4.5% from 4.27% in the week before and vs 3.36% one year ago according to the MBA. In response, refi’s plunged by 14.4% w/o/w and are down 54% y/o/y. Purchases held in, down just 1.5% as those looking to buy are likely not messing around anymore in order to lock in rates before they head even higher. Purchases are lower by 12% y/o/y.
4)While the February Architecture Billings Index was 51.3 vs 51 in January, they said this “Despite the continued healthy demand for design services, activity is plateauing as firms face a myriad of external challenges, from staffing to supply chain disruptions to high inflation and rising interest rates. While the rebound from the pandemic has positively impacted firms in most regions, the prolonged lack of demand for design services in the Northeast is of growing concern.”
5)The final March UoM consumer confidence index was 59.4 vs the 1st March print seen a few weeks ago of 59.7 and down from 62.8 in February and 67.2 in January. That’s the lowest print since August 2011. One yr inflation expectations was 5.4%, up 5 tenths from February, the higheste since 1982 while the 5-10 yr outlook remained at 3%. Home buying intentions fell to a 40 yr low. The UoM said simply, “Inflation has been the primary cause of rising pessimism.” Positively, “The sole area of the economy about which consumers were still optimistic was the strong job market. Consumers anticipated in March that during the year ahead it was more likely that the unemployment rate would post further declines than increases (30% vs 24%).”
6)February durable goods orders non defense and ex aircraft, aka core orders, fell .3% m/o/m and that was 8 tenths weaker than expected only partly offset by a 3 tenths upward revision to January. These are nominal numbers. Core durable goods orders over the past 6 months is up 3.9%. Core goods prices are up 5%.
7)Germany said its February PPI rose 25.9% y/o/y and by 1.4% m/o/m, although both were .3% less than expected. That is also pre war data with energy prices up 68% y/o/y. Still, non energy goods were still up between 5-8%.
8)The March German IFO fell to 90.8 from 98.5 and almost all driven by a 13 pt drop in the Expectations component. The Current Assessment held in, falling just 1.6 pts m/o/m. The IFO said simply, “The mood in the German economy has plummeted…Companies in Germany are expecting hard times.” All four components, manufacturing, services, retail and construction saw sharp declines in expectations.
9)French business confidence in March fell to 107 from 113 with particular weakness in manufacturing. Services also softened as did retail (maybe inflation related) while construction was steady.
10)Economic sentiment, as to be expected, declined too in Italy to 105.4 from 107.9 with manufacturing, services and retail confidence weaker. Construction was the bright spot.
11)UK consumer confidence for March fell 5 pts to -31 as forecasted. That is the lowest level since November 2020. Just as seen in the US, blame it on inflation. GFK said “A wall of worry is confronting consumers this month and there is an unmistakable sense of crisis in our numbers. Consumers across the UK are experiencing the impact of soaring living costs with 30 yr high levels of inflation, record high fuel and food prices, a recent interest rate hike and the prospect of more increases to come, and higher taxation too – all against a background of stagnant pay rises that cannot compensate for the financial duress. This is the 4th month in a row that UK consumer confidence has dropped.”
12)UK February CPI rose 6.2% y/o/y and the core was higher by 5.2% y/o/y, both two tenths more than anticipated. The Retail Price Index which is used for inflation linkers, was up by 8.2% y/o/y. As for producer prices, both input and output charges were up sharply. For inputs, by 14.7% y/o/y and for output prices, up 10.1% y/o/y. As wage growth is not close to matching any of this, real wages are falling sharply in the UK.
13)The Swiss National Bank held their overnight rate at -.75% and gave no hint whatsoever when that will change.