1)March payrolls saw a net job gain of 431k, about 60k under the estimate but completely offset, and then some, by the 95k upward revision to the two previous months. The household survey saw a monthly job gain of 736k and with an increase in the labor force of 418, the unemployment rate fell by two tenths to 3.6%. That is now just one tenth off the February 2020 level of 3.5% before everything hit the fan. The more comprehensive U6 rate fell by 3 tenths m/o/m to just 6.9%. That is just one tenth away from matching the lowest level since 1994 when they started to calculate this component. The participation rate did tick up by one tenth as expected to 62.4% but still is 100 bps from its February 2020 level. The participation rate for 25-54 yr olds rose 3 tenths to 82.5% and that is just 50 bps from the 83% seen in February 2020 and vs 83.1% in January 2020. Hourly earnings rose .4% m/o/m as expected but a bit better in reality because February was revised up by one tenth. Negatively though, hours worked fell one tenth unexpectedly to 34.6 and combining the two put average weekly earnings up one tenth from February and higher by 4.6% y/o/y. This has ranged, give or take, 4-6% over the past 6 months.
2)While Initial jobless claims for the week ended March 26th totaled 202k, 6k more than expected and vs 188k last week, the 4 week average fell to just 209k from 212k last week. Continuing claims, for the week ended March 19th, declined again to 1.307mm, a 50+ year low.
3)There were 11.27mm job openings in February which is almost double the number of unemployed seem in today’s March employment report.
4)Private sector wages and salaries in February saw a .9% m/o/m increase and at a 10.4% annualized pace over the past 6 months. Combined with personal spending that was slightly above the estimate when including the revisions, the savings rate was 6.3% vs 6.1% in January and 8.4% in December.
5)There is some light in the Apartment List new National Report as supply is picking up. Apartment List said “our national vacancy index is continuing to slowly inch up, indicating a gradual easing of the tight market conditions…Our vacancy index hit 4.6% this month, continuing a 7 month streak of increases after bottoming out at 3.8% last August.” The pre pandemic norm was 6%.
6)The release of oil from the SPR has temporarily lowered oil prices.
7)The Conference Board’s March Consumer Confidence index was 107.2, as expected and vs 105.7 in February (revised from 110.5). The components were mixed as there was a 10 pt rise in the Present Situation but a 4.2 fall in Expectations. Of particular note, one year inflation expectations jumped another 8 tenths to 7.9%, the highest since the question was first asked in 1987. The labor market answers for the current situation were good but worries were reflected in the expectations component. Spending intentions were mixed.
8)Manufacturing PMI’s rose m/o/m in Japan, Australia and in the Philippines.
9)Vietnam, a growing global manufacturing presence, said March exports rose by 14.8% y/o/y, more than the forecast of up 10.8%. They increased their exports of electronics, fuel, certain foods, plastics, papers and textiles of note. Imports grew by 14.6% y/o/y, just below the estimate of up 16.4%.
1)The March ISM manufacturing index slipped by 1.5 pts m/o/m to 57.1. The estimate was for a slight uptick to 59 and that’s the lowest since September 2021. New orders in particular fell sharply, by 7.9 pts to 53.8, the weakest since May 2020. Prices paid jumped by 11.5 pts to 87.1, the highest level since June 2021 with all 18 industries paying higher prices. The number of industries seeing growth rose to 15 from 16 in February and vs 14 in January. The ISM said “The US manufacturing sector remains in a demand driven, supply chain constrained environment. In March, progress was made to solve the labor shortage problems at all tiers of the supply chain, which will result in improved factory throughput and supplier deliveries. As for the drop in new orders, ISM said this: “Price instability, softening lead times and panelists’ order books being full resulted in a pause in new order rates. Backlog and customer inventories remain at very encouraging levels, indicating that demand remains strong in spite of this month’s slowing in new order expansion.”
2)The February (thus really pre war data) PCE headline inflation figure rose .6% m/o/m and 6.4% y/o/y. The core rate was higher by .4% m/o/m and 5.4% y/o/y. Both in line.
3)Redfin released a report yesterday titled “Surging Mortgage Rates and Home Prices Sideline More Buyers.” This was noteworthy, “The market still feels hot, but a slowdown in online searches, home tours and mortgage applications suggests more buyers are getting priced out.”
4)The now 4.80% average 30 yr mortgage rate led to another double digit decline in the pace of refi’s as the MBA said they declined by 14.9% w/o/w after falling by 14.4% last week. They are lower by 60% y/o/y. Purchases again though held in as they were up .6% w/o/w as fence sitters get off the fence. They are still down 10.1% y/o/y. What buyers are also doing is shifting to ARM’s and their lower rates as ARMS as a % of total number of loans did tick up to 6.6% from 6.4% last week and vs 5.6% in the week prior.
5)The release of oil from the SPR will only further discourage more supply and keep demand elevated which will eventually mean ever higher prices.
6)The Apartment List March National Rent Report showed that rents rose .8% m/o/m. They said “So far this year, rents are growing more slowly than they did in 2021, but faster than the growth we observed in the years immediately preceding the pandemic. Year over year rent growth currently stands at a staggering 17.1%, but most of that growth took place last spring and summer. Over the first three months of 2022, rents have increased by a total of 1.8%, but we’re just beginning to enter the busy season for the rental market, when the bulk of annual rent growth typically occurs.”
7)S&P CoreLogic said its January home price index rose 19.2% y/o/y. Phoenix, Miami and Dallas led the gains with Phoenix prices in particular up 32.6% y/o/y. DC, Minneapolis and Chicago saw the slowest pace of gains between 11-13%.
8)Manufacturing PMI’s in Asia: China’s Caixin 48.1 vs 50.4, South Korea 51.2 vs 53.8, Taiwan 54.1 vs 54.3, Vietnam 51.7 vs 54.3, Thailand 51.8 vs 52.5, and Malaysia 49.6 vs 50.9.
9)China’s state sector focused March composite PMI fell to 48.8 from 51.2. Both components are now showing contraction with manufacturing dipping to 49.5 from 50.2 and services at 48.4 from 51.6 with of course the latter more impacted by the strict covid policy as factories mostly stay open.
10)Both the Eurozone and in the UK saw downward revisions to their manufacturing PMI’s for March. The war of course is disrupting a lot of things and Markit captured it with their Eurozone report: “While the boost to demand from the further relaxation of Covid containment measures helped ensure a sustained expansion of manufacturing order books and output in March, rates of growth have cooled markedly amid sanctions, soaring energy costs and new supply constraints linked to the war. Heightened risk aversion among both manufacturers and their customers due to the uncertainty caused by the invasion, combined with an intensifying cost of living crisis, meanwhile threatens to pull growth even lower in the coming months, as reflected in the slumping of manufacturers’ growth expectations for the coming year.”
11)The Eurozone saw an accelerating CPI for March that rose 7.5% y/o/y, well above the estimate of up 6.7% and up from 5.9% in February. The core rate was higher by 3% vs 2.7% last month but one tenth less than expected.
12)The March Economic Confidence index fell to 108.5 from 113.9 but about as expected and certainly not surprising. Consumer confidence plunged to -18.7 from -8.8 and retail and manufacturing also softened. Thanks to the ‘let’s live with it’ approach to covid did help the services component which rose 1.5 pts m/o/m while construction was little changed.
13)Germany said the number of unemployed in March fell by 18k, a bit less than the estimate of down 20k. The unemployment held at 5%, the level at which it stood in March 2020. The post reunification low was 4.9% in April 2019.
14)German consumer confidence fell to -15.5 from -8.5 and that was 1 pt worse than expected. We can of course blame much on the war and the subsequent spike in energy costs. GFK said “While the propensity to buy recorded moderate losses compared with the previous month, the economic and income expectations slumped, in part registering new record lows following the 2009 financial crisis.” How are consumers responding to the jump in their cost of living and what it means for consumer sentiment? “A sharp increase in the propensity to save in March further reinforces the downward trend” in confidence. The ‘income expectations’ component lost 25 pts to the lowest since January 2009. “Consumers are seeing their purchasing power melt away as a result of the sharp increase in prices when it comes to gas, heating oil and gasoline.”
15)Not surprisingly French consumer confidence for March was also softer, down 6 pts m/o/m to 91, 3 pts less than expected. The ‘Personal Financial Situation’ component declined by 16 pts to the lowest since 2014. The ‘Standard of Living’ component dropped by 21 pts to the weakest since November 2020.
16)Many of us wanted to play the drums just like Taylor Hawkins, one of the best ever whose talent will be very missed. //www.youtube.com/watch?v=JozAmXo2bDE