1)The initial April UoM consumer confidence index rose to 65.7 from 59.4 which was the lowest since 2011. The estimate was for a slight decline to 59. Almost all of the increase came from the Expectations component which rose by almost 10 pts m/o/m. Current Conditions were up slightly to 68.1 from 67.2. One yr inflation expectations held at 5.4%, the highest since 1981. The 5-10 yr inflation expectation was unchanged m/o/m at 3%. The hope of course on the longer term view is that what we’re seeing now on inflation is not sustainable. Lower gasoline prices over the past month kept a lid on inflation expectations. Expectations for employment improved and there was a rise in the percentage of those expecting family income to beat inflation over the next 5 years to 39.2% from 34.6%. The UoM said “When asked about expected income gains, a 2.7% increase was expected by all households, the last time a higher increase was expected was in 2006.” They also said this, “A strong labor market bolstered wage expectations among consumers under age 45 to 5.3%, the largest expected gain in more than 3 decades, since April 1990.” Spending intentions were mixed. Those that said it’s a good time to buy a vehicle and a major appliance both slipped after a March rise. With respect to buying a home, those that said it’s a good time rose 2 pts but after dropping by 10 pts last month.
2)Headline CPI in March rose 1.2% m/o/m as expected. The core rate was up just .3% m/o/m (if only), 2 tenths less than expected and ‘if only’ because the BLS said owner’s equivalent rent in March rose just .4% m/o/m and 4.5% y/o/y. Rent of Primary Residence also showed a 4 tenths m/o/m increase and by 4.4% y/o/y. In reality if we combine new lease increases and rent rollover leases, rents are rising at around 10%. Energy prices jumped 11% m/o/m and 32% y/o/y. Food prices jumped 1% m/o/m and 8.8% y/o/y. Services inflation overall ex energy rose .6% m/o/m and 4.7% y/o/y from 4.4% in February. On the core goods side, prices FELL .4% m/o/m and that is because of a 3.8% drop in used car/truck prices as we’ve likely seen the peak in this category though they are still up 35% y/o/y.
3)The German April ZEW investor expectations index on the Germany economy fell to -41 from -39.3 but that was better than a feared -48.5 print. Current conditions softened too but not as much as expected. The ZEW said “The experts are pessimistic about the current economy situation and assume that it will continue to deteriorate. The decline in inflation expectations, which cuts the previous month’s considerable increase by about half, gives some cause for hope. However, the prospect of stagflation over the next 6 months remains.”
4)The Reserve Bank of New Zealand and the Bank of Canada each hiked rates by 50 bps. The Bank of Korea did so by 25 bps and the Monetary Authority of Singapore raised the mid point of its FX band and the rate of appreciation.
5)China reported loan data for March and after the distortion of the January/February Lunar New Yr noise, aggregate financing totaled 4.65T yuan, 1.1T above expectations with bank loans making up 3.13T of this. Money supply growth accelerated with this by 9.7% y/o/y vs the estimate of up 9.2% as officials are doing their best to cushion the slowdown, much of which is self-inflicted.
1)Initial jobless, after plunging last week, rose to 185k from a very low 167k. The estimate was 170k. Smoothing out the week to week noise has the 4 week average at 172k vs 170k last week and vs 178k in the week prior. Continuing claims, delayed by a week in its reporting, fell another 48k to a fresh 50+ yr low at just 1.475mm.
2)Understanding that these are nominal numbers, core retail sales in March fell .1% m/o/m after declining by .9% in February. While 2 tenths less than expected, that was offset by the 3 tenths upward revision that resulted in that February figure. Versus last year, sales are up 4.4% at the core level and the headline figure by 6.9% which compares with the 14.2% y/o/y increase in goods prices seen Tuesday in the March CPI.
3)The March PPI rose 1.4% m/o/m, 3 tenths more than expected and the core rate was up 1%, double the estimate and that is even after a 2 tenths upward revision to February. Versus last year, the headline print was up 11.2% and the core rate by 9.2%. Energy certainly drove a lot of the headline increase but food and other commodities did as well. Goods prices headline rose 2.3% in the month alone and ex this, up by 1.1%. On a y/o/y basis, goods prices are up 15.7% and by 10% ex food and energy. Service prices rose .9% m/o/m and 8.7% y/o/y. Higher transportation and warehousing prices drove the service side, along with airline and ‘traveler accommodation services.’ The price of ‘truck transportation of freight’ jumped 6.6% m/o/m in March and by 24% y/o/y. There is really little respite with respect to inflation in the pipeline. At the ‘processed’ stage, prices fell 1.4% from February but only after spiking by 13% in February. They are up 22% y/o/y. For unprocessed goods, prices jumped 9.5% m/o/m and 41% y/o/y.
4)Import prices in March rose 2.6% m/o/m and 12.5% y/o/y, 3 tenths and 6 tenths above expectations respectively. Ex petro, prices grew by 1.1% m/o/m and 8.1% and ex both food and fuel, import prices rose 1.2% m/o/m and 7.1% y/o/y. Outside of food and energy, higher import prices for industrial supplied led the way. And geographically, especially from Canada, in part because of our energy imports from them. We’re also exporting inflation as export prices jumped 4.5% m/o/m and by 18.8% y/o/y, also with the help of energy exports, particularly LNG.
5)In the March NFIB small business optimism index that fell to 93.2 from 95.7, the weakest since April 2020, the Higher Selling Prices component rose another 4 pts to 72%. That is the highest on record dating back to 1980 where it peaked in that cycle 40 yrs ago at 47. It’s 42 year average is just 9.5. On price hikes to come, 50% plan to do so vs 46% in February. With respect to the economic outlook, those that Expect a Better Economy plunged by another 14 pts to -49%. This component goes back to the beginning of this survey in 1973 and it has never been lower. The NFIB said “With inflation, an ongoing staffing shortage, and supply chain disruptions, small business owners remain pessimistic about their future business conditions.”
6)Cass freight said March volumes slowed to being up just .6% y/o/y vs a 3.6% increase in February. While shipments were up 2.7% m/o/m, that is 100 bps below the seasonal pattern according to Cass. They said for Q1, “while a few points of softness were due to omicron related absenteeism, freight was slowing even before the war in Ukraine began.” They also said, “The threat of freight recession has risen recently as services reopen, inflation presses up interest rates, and – though war related effects are likely to be modest in the near term – higher energy prices have an increasingly negative effect over time. We’re certainly seeing a freight slowdown and spot market correction, but in our view, it is too early to call it a freight recession.” Their implied freight rate calculation for March saw a 32% y/o/y increase but which is some moderation from 37% in February. Versus February, the inferred rate was up 1.1% m/o/m to a new record high pace but “the slowest m/o/m increase in the past 7 months.” They did cite omicron related effects that limited capacity and pushed up rates “even as downward pressure now emanating from the truckload spot market will have an increasing slowing effect over the course of the year.” They are however “seeing tangible signs of improvement in driver availability, which is disinflationary.”
7)For the week ended April 8th, the MBA said the average 30 yr mortgage rate rose to 5.13% from 4.90% in the week prior and vs 4.27% one month ago. Refi’s fell another 5% after last week’s 10% drop and the 14%+ declines in the two weeks before that. They are lower by 62% y/o/y. Purchases rose 1.4% w/o/w after last week’s 3.4% drop as buyers are likely trying to lock in before rates go even higher but are lower by 6.4% y/o/y.
8)While beginning to remove excessive easing, Christine Lagarde and the ECB have been paralyzed by the war in responding to higher inflation, now exacerbated by a weakening euro and continue to slow walk monetary tightening.
9)CPI in the UK in March hit 7% y/o/y, 3 tenths more than expected and up from 6.2% in February. The core rate accelerated to 5.7% from 5.2% and that was 4 tenths above the estimate. The retail price index, which is what the inflation linkers trade off, was up 9% y/o/y. Prices in the pipeline picked up further with input prices spiking by 19.2% y/o/y, well more than the forecast of up 15.1%. Output charges were up 11.9% y/o/y, also above the consensus of up 11.1%.
10)Reflecting likely a rush of demand for Chinese imports right after the invasion in order to avoid delays, China said its exports grew by 14.7% y/o/y, above the estimate of up 12.8%. But, in a likely sign of the slowdown to come, imports were flat instead of rising by 8.4% as forecasted.
11)Japan reported that PPI rose 9.5% y/o/y in March, 3 tenths more than expected.
12)Australia said their unemployment rate held at just 4%, matching the lowest level since at least 1978 that I have data on but 3.9% was the estimate. About 18k jobs in March were added but the forecast was 30k.