1)The US Markit manufacturing April PMI index rose .9 pts to 59.7, a 7 month high. Production and new orders led the way. Supplier delivery problems though did rise again. Export orders rose to almost a one year high. Employment was higher. This is what was said on prices, “Inflationary pressures remained marked across the goods producing sector in April. The rate of increase in costs quickened again to the sharpest since last November’s series record amid reports of hikes in fuel, material and transportation prices. Frequent increases in costs resulted in the sharpest rise in output charges on record as firms sought to pass through greater input prices to clients.” Notwithstanding the manufacturing lift, the confidence in upcoming quarters fell to a 6 month low “following greater geopolitical uncertainty and inflation concerns.”
2)Initial jobless claims were little changed w/o/w at 184k vs 186k last week. The estimate was 180k. The 4 week average was 177k vs 173k last week. Continuing claims, reported as of a week before, fell another 58k to a fresh 50+ yr low at 1.417mm.
3)Housing starts in March totaled 1.793mm, 53k more than expected and February was revised up by 19k to 1.788mm. The breakdown was mixed however as single family starts slipped by 21k to 1.2mm which compares with the 6 month average of 1.18mm. Multi family starts continued higher to 593k and that is just below the most since 1986. The story was the same with permits as single family permitting fell to a 3 month low at 1.147mm but back to its 6 month average. Multi family permits rose to 726k from 660k and vs the 6 month average of 669k.
4)Japan and Australia saw their PMI’s higher m/o/m in April.
5)Japan reported its March CPI and it will be the last month that includes the sharp drop in cell phone fees. The core/core rate, ex both food and energy, fell .7% y/o/y as expected. The rate just ex food was up .8%.
6)South Korea said its exports for the 1st 20 days of April rose 16.9% y/o/y while imports were up 25.5%. Pull forward or natural demand?
7)The Eurozone saw its manufacturing PMI slip modestly m/o/m but offset by a rise in services and was better than expected in the aggregate. Markit said “April saw a two speed eurozone economy. Manufacturing came close to stalling due to ongoing supply constraints, rising prices and signs of spending being hit by risk aversion due to the war. However, April saw manufacturers suffer due to a shift in demand from goods to services amid looser pandemic restrictions, most notably via a record surge in spending on activities such as travel and recreation.” On pricing, “Common across both sectors, however, was a further surge in cost pressures, driven by soaring energy and raw material costs, as well as rising wages. Average prices charged for goods and services rose at an unprecedented rate in April as these higher costs were passed on to customers, sending a worrying signal that inflationary pressures continue to build.”
8)Ahead of the French election on Sunday was the French business confidence index for April which fell 1 pt to 106. That though is 1 pt better than expected. Weakness in retail, likely due to the spike in inflation, was offset by a 1 pt increase in manufacturing and 2 pt rise in construction. Services were unchanged while employment was down 1 pt.
1)The US Markit services April PMI index was down 2.6 pts m/o/m to 54.7. Markit said this on services for the decline, “the pace of expansion in new business eased to a 3 month low amid reports of labor and supply shortages and inflation dampening customer willingness to spend.” Positively, “The easing of travel restrictions allowed new export orders to tick higher again, as the rate of growth reached the fastest since data collection began in September 2014.” Employment rose as did backlogs. On the inflation side with services, “cost burdens continued to soar, as the rate of input price inflation accelerated in the service sector to a series record pace. Higher wage and input bills stoked the increase in costs. In response, service providers hiked their selling prices at the steepest rate on record in an effort to pass through greater cost burdens.” Business confidence about the future fell to the lowest since October 2021 due to “concerns regarding inflation and its impact on customer demand.”
2)The April Philly manufacturing index fell to 17.6 from 27.4 and that is below the estimate of 21 but after jumping by 11 pts last month. There was also a decline in the 6 month business outlook to just 8.2 from 22.7 and that is the weakest since December 2008.
3)A now 5.20% average 30 yr mortgage rate according to the MBA for the week ended April 15th, purchase applications to buy a home fell 3% w/o/w and is now down 14% y/o/y. The index is at the lowest level since late February and close to retesting May 2020 lows. Refi’s fell another 7.7% w/o/w and by 68% y/o/y. That’s the 6th straight week of declines and of course not surprisingly. The index is at the lowest since February 2019.
4)The April NAHB home builder sentiment index fell 2 pts m/o/m but as expected to 77, the lowest since September 2021. The present situation fell 2 pts but rose 3 pts for expectations. Of note, Prospective Buyers Traffic fell 6 pts to 60, the slowest since August 2021. The chief economist of the NAHB who said it simply, “The housing market faces an inflection point as an unexpectedly quick rise in interest rates, rising home prices and escalating material costs have significantly decreased housing affordability conditions, particularly in the crucial entry level market.”
5)Existing home sales in March totaled 5.77mm which was as expected but February was revised down by about 100k to 5.93mm. Months’ supply did tick up to 2 months from 1.7 but that is still just 1/3 of what is considered normal. In turn, the median home price was up 15% y/o/y. The 1st time buyer made up 30% of purchases from 29% last month and 27% in the month prior. For those who didn’t need a mortgage, the NAR said “cash sales made up a larger fraction of transactions, climbing to the highest since 2014” with investors, including the institutional kind continue to make their presence felt. All cash buyers totaled 28% of transactions. The NAR said “The housing market is starting to feel the impact of sharply rising mortgage rates and higher inflation taking a hit on purchasing power.”
6)The composite PMI in the UK fell to 57.6 from 60.9 with manufacturing little changed and services falling by 4.3 pts m/o/m. The fall in services seems due to rising inflation. Markit said “High prices and the associated rising cost of living were often cited as a principal cause of lower demand, with covid also continuing to affect many businesses. Brexit and transport delays were seen as having further impeded export sales, while the Ukraine war and Russian sanctions also led to lost overseas trade. Concerns over the worsening inflation picture are meanwhile flamed by another near record leap in firms costs.”
7)There was also a greater than expected decline in UK retail sales in March for the same higher cost of living reasons.
8)Germany said its March PPI rose 30.9% y/o/y and by 4.9% in the month alone.
9)The BoJ is back with unlimited buying of 10 yr JGB’s. It comes down to this for them, further weakness in the yen which will make it even more expensive to import energy and other things along with less buying of US Treasuries or widen the YCC band which will have its own bond market reverberations.
10)China cut its RRR by 25 bps but for what benefit when they keep shutting down parts of the country.