Positives
1)Initial jobless claims fell to 576k from 769k (revised from 744k) and that was well below the estimate 700k. The 4 week average fell to 683k from 730k. Pandemic unemployment assistance fell to 132k from 152k. Delayed by a week, continuing claims were little changed at 3.73mm vs 3.727mm in the week prior. Delayed by two weeks, those still receiving PUA fell by 501k after rising by 204k in the week before. Continuing emergency claims fell by 475k to the lowest since mid February.
2)The April NY manufacturing index rose to 26.3 from 17.4 and that was above the estimate of 20. Prices paid rose another 10 pts to 74.7, just below the highest since 2008 when oil was near $150 and this is the 2nd highest print on record dating back to 2001. As for the ability of manufacturers to pass this on, prices received rose to a record in this survey. The 6 month business activity outlook rose 3.4 pts m/o/m to 39.8 with most of the components higher, including capital spending plans as well as price pressures and prices received.
3)The Philly manufacturing rose to 50.2 in April from 44.5 and that was about 10 pts better than estimated. The internals were more mixed m/o/m but after sharp jumps in March. Prices paid fell but off the highest level since 1980. Those received rose again and is just below the highest since 1981. The 6 month outlook rose to 66.6 from 59.1 but along with expectations for prices paid rising to 71.5, a 32 year high from 63.4 and those received rising to 63.6 from 46.9, a 37 yr high.
4)Single family housing starts in March rose to 1.238mm vs 1.074mm in February (likely impacted by weather), 1.15mm in January and 1.322mm in December. Multi family also saw a big m/o/m jump to 501k from 383k but is very volatile month to month as it was 490k in January and 348k in December. Combining the two saw starts at 1.739mm vs the estimate of 1.613mm. Single family permits rose to 1.199mm from 1.146mm but that is below the January print of 1.27mm and December at 1.223. Multi family permits totaled 567k from 574k and also is volatile month to month.
5)Retail sales ex auto’s and gasoline were higher by 8.2%, above the forecast of up 6.4% with a 2 tenths upward revision to February. March core retail sales rose 6.9% m/o/m, although that was slightly below the estimate of up 7.2%. Sales ex auto’s and gasoline were higher by 8.2%, above the forecast of up 6.4% with a 2 tenths upward revision to February.
6)The Cass Freight shipments index in March rose 10% y/o/y. “This freight volume improvement is consistent with our optimistic outlook, supported by inventory levels, consumer trends, and the backlog of freight anchored off US ports. Near term supply chain risks remain and, following the Suez Canal blockage, could briefly spread beyond the semiconductor shortages that will affect vehicle production at least through Q2 and perhaps considerably longer.” Higher rates continue, “Strong momentum continued in freight rate trends, with this month nearly off the chart, and we sense an axis adjustment on the way…The freight rates embedded in the two components of the Cass Freight Index accelerated to a 15.8% y/o/y increase in March from a 12.3% y/o/y increase in February…We still expect this trend to press higher near term, as strong freight demand meets shortages of both drivers and trucks.”
7)The April NAHB home builder survey rose 1 pt m/o/m to 83 as expected. The internals were mixed as Present Conditions rose 1 pt m/o/m but Future Expectations fell 2 pts. Prospective Buyers Traffic was up 3 pts m/o/m to 75, the highest since November. The NAHB said “Despite strong buyer traffic, builders continue to face challenges to add much needed housing supply to the market. The supply chain for residential construction is tight, particularly regarding the cost and availability of lumber, appliances, and other building materials.”
8)The NFIB small business optimism index for March bounced to 98.2 from 95.8. It peaked last year post Covid at 104 back in October and was at 104.5 last February. The chief economist of the NFIB said “Main Street is doing better as state and local restrictions are eased, but finding qualified labor is a critical issue for small businesses nationwide. Small business owners are competing with the pandemic and increased unemployment benefits that are keeping some workers out of the labor force. However, owners remain determined to hire workers and grow their business.”
9)China reported Q1 growth of 18.3% y/o/y, about in line with the estimate of 18.5%. Retail sales beat estimates with a 34.2% y/o/y gain vs the forecast of up 28% while IP rose slightly less than expected at 24.5%. Fixed asset investment ytd was about in line. Real estate was also a strong competitor to domestic growth.
10)Chinese exports in March jumped by 30.6% although that was below the estimate of 38%. Imports were higher by 38.1%, well above the forecast of a 24.4% increase. Imports were definitely helped by higher commodity prices.
11)China’s loan data for March remained robust but less so than expected. Aggregate lending totaled 3.34T yuan, below the estimate of 3.7T of which 2.7T was direct bank lending. There was a slowdown in the pace of money supply growth to 9.4% from 10.1% in February and one tenth less than expected. That matches the slowest pace since February 2020 as Chinese authorities have tried to slow down the pace of credit growth.
12)In Singapore, non oil exports jumped 12.1% y/o/y in March, well more than the estimate of up 2.6% led by the exports of electronics, petrochemicals, machinery and pharma.
13)Singapore’s economy grew more than expected in Q1 at a 2% q/o/q rate, above the estimate of 1.7% and after a 3.8% performance in Q4. It was up .2% y/o/y vs the estimate of down .5%.
14)Australia, a proxy on Chinese growth and the commodity rally, saw a March job gain of 70.7k, twice the estimate but it was all part time jobs filled while full time saw a contraction. The unemployment rate fell by 2 tenths to 5.6% and the participation rate rose. Australia has recaptured all the lost jobs from Covid
15)The Eurozone March CPI was left unrevised with a headline gain of 1.3% y/o/y and a core rate of up .9%.
16)The February Eurozone industrial production figure fell 1% m/o/m, a bit better relative to the 1.3% expected decline.
17)The UK reported February data for its economy, GDP and IP, and when including prior revisions they were a bit above expectations.
Negatives
1)The preliminary April UoM consumer confidence index rose 1.6 pts m/o/m to 86.5 but below the estimate of 89. It was Current Conditions that led to the increase from March while Expectations were unchanged. Of particular note was the 6 tenths rise in one year inflation expectations to 3.7% and that is the highest since March 2012 even as expectations for gasoline prices fell. Inflation expectations 5-10 yrs out held steady at 2.7% vs 2.8% in March, a 6 yr high, and 2.7% in the two prior months. There was definite improvement in expectations for the labor market and income. Income expectations in particular jumped by 9 pts to the highest since last March. UoM said “When specifically asked about the outlook for unemployment, 50% expected declines in the year ahead, the largest percentage ever recorded in the long history of the surveys.” Spending intentions were mixed. Those that said it’s a good time to buy a car rose 3 pts but those that said it’s a good time to buy a home fell 7 pts to the least since May 2020. High prices are all over this as also those that said it’s a good time to sell a house rose to the most since February 2020.
2)The March CPI rose .6% m/o/m and .3% ex food and energy, both one tenth more than expected. These can’t be explained away by easy comps. The easy comps are y/o/y where the headline increase was 2.6% and the core rate rose by 1.6% from 1.3%. That .6% headline m/o/m increase matches the quickest since 2009. That is NOT base effect. Energy prices rose 5% m/o/m and food by just .1% but with food prices at a 7 yr high. Services inflation ex energy reaccelerated to a .4% m/o/m gain after rising by .2% in February. On the goods side, core prices rose .1% m/o/m and 1.7% y/o/y.
3)The Atlanta Fed’s sticky CPI print for March out yesterday was up 3.5% (one month annualized change). That is up from 2.3% in February, 1.1% in January and 1% in December. The sticky core rate was higher by 3.7% vs 2.5% in February, .9% in January and .6% in December. They define ‘sticky’ as prices that are “slow to change” based on the frequency of their price adjustment.
4)The Cleveland Fed’s trimmed CPI rose .24% m/o/m in March, the quickest pace since July 2020.
5)Import prices in March jumped 1.2% m/o/m, 3 tenths more than expected and after rising by 1.3% in February. Yes the comps are easy but import prices were still up 6.9% y/o/y. Ex petroleum, export prices were up by .9% m/o/m, more than double the forecast of up .4%. They were higher by 4.1% y/o/y. Taking out both fuel and food saw import prices up by .8% m/o/m and 3.8% y/o/y.
6)The NY Fed’s Survey of Consumer Expectations median inflation expectations both one year and 3 year’s out saw a one tenth increase to 3.2% and 3.1% respectively. These “have increased steadily over the past five months and they are now at their highest since mid 2014.” With respect to home prices, “Median year ahead home price change expectations increased .8 percentage points to 4.8% in March, a new series high.” The expectations for the price of gas and rent also both rose “to new series highs at 9.9% and 9.3%, respectively.” Expectations for food prices were unchanged and fell for medical care and the cost of a college education.
7)The average 30 yr mortgage rate fell by 9 bps w/o/w to 3.27% but that wasn’t enough to help mortgage apps. Purchases fell by 1.5%, down for the 3rd straight week but still is up 51% on easy comps. Refi’s fell by 5% and that marks 6 straight weeks of declines. They are also down for the 11th week in the past 13.
8)US industrial production in March rose 1.4% m/o/m, less than the estimate of up 2.5% and February was revised down by 4 tenths. The manufacturing component was key to this miss as it was up below the forecast. Capacity utilization did rise m/o/m but less than estimated.
9)Japan’s February machinery orders fell 8.5% m/o/m, well worse than the estimate of up 2.5%.
10)In Japan March headline PPI rose 1% y/o/y and the m/o/m number was higher by .8%. Going back to 2014 that m/o/m increase was exceeded just once.
11)Thanks to new rounds of shutdowns in parts of Europe, the German ZEW expectations index fell to 70.7 from 76.6 and that was below the estimate of 79. Current conditions though did improve to -48.8 from -61, better than the forecast of -54.1. ZEW said “Fears of a stricter lockdown have led to a decline in expectations for private consumption. Nevertheless, the outlook for exports is better than in the previous month.”
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.