1)Initial jobless claims fell to 684k from 770k and that was 46k less than expected and the lowest since the spike last March. Those collecting PUA fell to 242k from 284k. Delayed by a week, continuing claims also continued its shrink to 3.87mm from 4.13mm and below the estimate of 4mm.
2)The March US manufacturing and services PMI from Markit fell to 59.1 from 59.5 even though both components rose m/o/m. Manufacturing rose to 59 from 58.6 and services was slightly higher at 60 from 59.8. Markit said “The vaccine roll-out, the reopening of the economy and an additional $1.9 Trillion of stimulus all helped lift demand to an extent not seen for over six years, buoying growth of orders for both goods and services to multi-year highs.” And what is now a common global theme, “Producers were increasingly unable to keep pace with demand, however, due mainly to supply chain disruptions and delays. Higher prices have ensued, with rates of both input cost and selling price inflation running far above anything previously seen in the survey’s history.”
3)The February headline PCE inflation figure rose .2% m/o/m and .1% core, about as expected. The headline rate is up 1.6% y/o/y vs 1.4% in January. The core rate is up by 1.4% vs 1.5% last month. Food prices rose by 3.3% y/o/y and energy by 1.2% (finally turning positive). Goods prices rose .8% y/o/y vs .4% in January, -.2% in December and -.4% in November. Services prices rose 1.9% y/o/y for the 3rd straight month.
4)After a 10.1% jump in January following the December passage of $600 checks, the February m/o/m income figure was down 7.1% but as expected. Spending fell 1% m/o/m, close to the forecast of down .8% but January was revised up by 100 bps to 3.4% right after the $600. Taking the two together has the savings rate at 13.6%, back to its December level after the 19.8% post $900b spending bill level.
5)Notwithstanding another rise in mortgage rates and maybe because of it, more people locked in a mortgage to buy a home, by 2.6% w/o/w and 26% y/o/y on easy comps.
6)The Richmond manufacturing March index rose 3 pts m/o/m to 17. The estimate was 16. The internals are volatile but new orders were unchanged while backlogs fell but only after jumping last month. Inventories fell further below zero. Capital spending plans improved. Vendor lead times spiked by 15 pts and with this prices paid and received continued higher. Prices paid have tripled over the past 3 months while those received have almost doubled. Employment was unchanged while the workweek fell. Wages dropped 6 pts but after rising by 9 last month. Optimism for the coming 6 months rose along with price pressures.
7)The KC March manufacturing index rose 2 pts m/o/m as expected to 26.
8)The final March UoM consumer confidence index was revised to 84.9 from 83 initially and that was above the estimate of 83.6. Both components added to the gain. One year inflation expectations were 3.1%, the same as the 1st March print but down from 3.3% in February. Further out, expectations for 5-10 yr inflation rose to 2.8%, matching the highest since August 2014. Employment and income expectations improved. Most of the increase in spending intentions came in vehicles and major appliances. As stated before, the political divide in consumer confidence was a main influence in the answers to the questions.
9)Japan said consumer prices in March in Tokyo rose .3% y/o/y ex food and fuel. That was up from .2% in February and one tenth more than expected but still of course benign and actual price stability.
10)Japan’s manufacturing and services PMI rose a bit to 48.3 from 48.2 with both components up and with manufacturing again well outperforming services. The press release said this: “Despite disruption to short term activity caused by an ongoing 3rd wave of covid infections, Japanese private sector companies were optimistic that business conditions would improve in the year ahead, albeit to a lesser extent than in February. Positive sentiment stemmed from the expectation that the lifting of state of emergency measures and broader restrictions as vaccinations roll out would trigger a recovery in demand in both domestic and external markets.”
11)Australia’s composite index for March rose to 56.2 from 53.7 with most of the m/o/m gain in services with manufacturing still remaining elevated. Price pressures again come along with this though. “Inflation remains an area of concern, with March data showing the strongest rise in input costs in the survey history. While companies opted to pass on to their clients only part of their additional cost burdens, future upward adjustments to charges could restrict demand.” As seen in the US and everywhere, “Supply chain disruption was cited by panelists as the main driver of inflation, a factor that also restricted business optimism towards growth prospects.”
12)South Korea said its exports for the 1st 20 days of March rose 12.5% y/o/y after increasing by 16.7% in February. Semi’s and auto’s led the way.
13)Distorted by the Chinese new year, Hong Kong said its February exports rose by 30.4% y/o/y vs the estimate of up 28.4%. Exports to China did rise 32% y/o/y and to the US by 35%. If we take January and February together to smooth out the noise, exports were up by 38% y/o/y “reflecting a further pick up in growth momentum alongside the revival of global trading and production activities” and easy comps. Imports grew by 17.6% y/o/y compared with the forecast of up 22.2%.
14)The March German IFO business confidence index rose 3.9 pts m/o/m to 96.6 and which was 3.4 pts better than expected. The Expectations component rose 5.4 pts and the Current Assessment was up by 2.4 pts. The IFO said succinctly “Despite the rising rate of infections, the German economy is entering the spring with confidence.”
15)Business confidence in France in March saw a nice increase to 97 from 90 and that was well better than the estimate of 91. The vaccine optimism was obvious here as the increase was led by services, retail trade and employment. Manufacturing was unchanged m/o/m but holding at the highest level in a year.
16)Business confidence in Italy in March rose .6 pts m/o/m to the highest in a year with the strength in manufacturing and construction while services and retail fell due to the lockdowns.
17)UK retail sales did rebound in February by 2.4% m/o/m but only after an 8.7% drop in January.
18)Consumer confidence in Germany rose to -6.2 from -12.7 and well better than the estimate of -12.1.
19)The March Eurozone manufacturing and services PMI rose to 52.5 from 48.8 and above the estimate of 49.1 with manufacturing strengthening further to 62.4 from 57.9 while services remained below 50 but still went to 48.8 from 45.7. On inflation, and similar to the wording stated with Australia on prices, “The surge in demand for manufactured goods is meanwhile stretching supply chains to an unprecedented extent, in turn pushing costs up at the fastest rate for a decade. These costs pressures will likely feed through to higher consumer price inflation in coming months.”
20)The UK composite PMI jumped to 56.6, up 7 pts from February with most of the contribution coming from services which rose to 56.8 from 49.5. Manufacturing too was higher to 57.9 from 55.1. A key factor here for services was “children returned to schools, businesses prepared for the reopening of the economy.” The caveat: “Worries persist though, especially in relation to near record supply chain delays, a continued fall in exports and sharply rising prices, all of which are making life difficult for many companies…Private sector companies continued to pass on greater operating expenses to clients, as signaled by an acceleration in the rate of output charge inflation to its highest for over 3 years in March.”
21)The UK February CPI missed expectations mostly because of sharp declines in clothing and footwear. Headline CPI rose .7% y/o/y vs the estimate of up 1%. The core rate was higher by .4% y/o/y, half the estimate. Clothing prices fell at the fastest pace since 2009 as many stores were shut down in February and prices fell at restaurants and hotels for the same obvious reason. The ONS also said children’s toys prices, a volatile component, fell as did used cars.
22)Still distorted by the selective shutdowns and thus old news especially how effective the UK has been in rolling out the vaccine, employment fell by 147k in the three months ended January, about 20k better than feared but still an increase from the 114k lost in the three months prior. The unemployment rate though did fall by one tenth to 5%, remaining low thanks to the furlough subsidization program. Weekly earnings ex bonus’ rose 4.2% from 4.1% before and helped by mix.
1)The Fed’s balance sheet creeps ever closer to $8 Trillion, rising by $26.1b to $7.72 Trillion. While the US economy is far from last year’s emergency needs, the Fed is intent on continuing its emergency policy of zero rates and $1.4 Trillion of annual QE.
2)Chicago Fed President Charles Evens, an uber dove, needs to spend more time in the real world after he said this yesterday: “We should be comfortable with a sustainable 2.5% inflation rate for a year.” Tell that to someone without a job or one living paycheck to paycheck.
3)Delayed by two weeks, those continuing to receive PUA rose by 112k to 7.7mm while those continuing to get the emergency kind increased by 735k to 5.5mm.
4)Durable goods orders in February disappointed with an .8% m/o/m core figure, below the estimate of up .5% and after a .6% increase in January (revised up by 2 tenths). Much of the weakness is in the auto sector which is being overwhelmed with production delays because of the lack of semiconductor chips. Orders for vehicles/parts fell 8.7% m/o/m and by 4.6% y/o/y. Orders also fell with computers/electronics (likely also impacted by semi issue), machinery and mining m/o/m but all are up smartly y/o/y. Core shipment declines fell 1% m/o/m but that is as expected and comes after a 1.9% rise in January. No GDP estimates should thus change here. As inventories rose, the inventory to shipments ratio did rise back to 1.70 from 1.63 in January, 1.66 in December and vs 1.70 in November.
5)With another 8 bps increase in the average 30 yr mortgage rate to 3.36% from 3.08% one month ago, refi’s fell for the 3rd straight week by 5.1% and are lower by 12.7% y/o/y.
6)New home sales in February were about 100k less than expected at 775k and down from 948k in January (revised up by 25k). That’s the lowest count since May. The 3 month average is 881k vs the 6 month average of 905k and the 12 month average of 842k. Months’ supply did rise to 4.8 from 3.8 and the median price was up by 5.3% y/o/y (highly influenced by mix and why it’s so volatile each month). The average price rose to a record high, also due to mix.
7)Existing home sales in February, a somewhat dated figure because it reflects contract signings most of which likely occurred in the October thru December time frame (and seasonally adjusted for the holidays), totaled 6.22mm annualized, 270k less than expected and down from 6.66mm in January. Supply remains the big problem as months’ supply is only 2.0 vs 1.9 in the two prior months. The median home price is up 15.8% y/o/y (assume actual prices are rising around 10%). And these aggressive price gains explains why 1st time buyers made up just 31% of purchases vs 33% in January and 31% in December and back to the low end of the multi year range. Pushing aside too the 1st time buyer are the all cash buyers and investors. The NAR continues to acknowledge the issue of price as they said “Home affordability is weakening. Various stimulus packages are expected and they will indeed help, but an increase in inventory is the best way to address surging home costs.”
8)The US goods trade deficit in February rose to another record high at $86.7b vs $84.6b in January.
9)UK February jobless claims did jump by 86.6k but hopefully that comes back down again in coming months.
10)President Erdogan fires the head of the Turkish central bank, again. The Lira plummets by 10%, the Turkish stock market falls by 9.5% and the local currency 10 yr yield jumps to 18% from 13.6%.