1)Initial jobless claims printed a 5 handle for the 2nd straight week at 547k vs 586k last week (revised up by 10k). That was below the estimate of 610k. The 4 week average fell to 566k from 623k. Those filing for PUA was little changed at 133k. Delayed by a week in its reporting, continuing claims fell to 3.67mm from 3.71mm but that was just above the estimate of 3.65mm. Delayed by two weeks, those continuing to receive PUA rose 265k to 7.3mm and those still receiving emergency help rose 447k to 5.6mm. Adding up all those receiving benefits it gets to about 17mm
2)The US Markit April manufacturing and services composite PMI rose to 62.2 from 59.7 with both components higher m/o/m. With services, “Growth was reportedly driven by stronger client demand and the reopening of many businesses amid the easing of restrictions.” With manufacturing, “The uptick in the headline figure was partially linked to an unprecedented deterioration in vendor performance. Capacity issues at suppliers and ongoing port delays reportedly exacerbated supply chain disruptions. Manufacturers signaled a sharp rise in output during April, but many firms stated that production capacity was hampered by an inability to source raw materials and inputs in a timely manner.” This slowed new orders but “backlogs of work rose markedly.”
3)After three weeks in a row of declines, purchase applications bounced back by 5.7% w/o/w. Refi’s, after 6 weeks in a row of contraction, rebounded by 10.4% w/o/w with the help of a 2nd week of decline in the average 30 yr mortgage rate to 3.20%, coincident with the pullback in Treasury yields.
4)New home sales totaled 1.021mm in March, well above the estimate of 885k and up from 846k in February which was revised from 775k. Regionally, the mix was very mixed as a lot of strength came from the south where sales got back to the bubble 2005 peak. As the number of homes for sale didn’t change, months’ supply fell to 3.6 from 4.4 and vs 3.6 in the month prior. As there was a sharp increase in the pace of home sales priced between $200k-400k, the median home price did fall as home sales priced above $500k rose more modestly.
5)Japan’s manufacturing and services composite index for April finally got back above 50 again but all due to manufacturing which rose .6 pts m/o/m while services, because of the covid flare ups, remained at 48.3.
6)Japan said its March CPI rose .3% y/o/y ex food and energy as expected vs .2% in February, one tenth in January, -.4% in December and -.3% in November. Continued covid limitations on the service side of the economy kept a lid on pricing. Price stability.
7)The April Australia manufacturing and services composite index rose to 58.8 from 55.5 with both components higher. Price pressures remain. “Ongoing supply chain disruptions continued to exert upward pressure on inflation. The flash results highlighted the steepest increases in both input costs and selling charges since the inception of the survey.”
8)With its strong presence in autos and semis, South Korea said its exports in the 1st 20 days of April rose 45.4% y/o/y (of course also flattered by easy comps). Semi exports in particular were up by 38% y/o/y.
9)Also reflecting easy comps and the voracious global demand for semiconductors, Taiwan said its export orders in March jumped 33.3% y/o/y, just below the estimate of 35% and after a 49% increase in February.
10)Japan said its March exports rose 16.1% y/o/y, above the estimate of up 11.4%. Gains were led by autos and semi products and easy comps helped as well. Exports to China grew by 37% y/o/y, to the EU by almost 13% and to the US by 5%. Imports were better as well but only slightly with its 5.7% y/o/y increase vs the forecast of up 4.7%.
11)The April Eurozone composite PMI rose .5 pt m/o/m to 53.7 with services back above 50 at 50.3 and manufacturing rising to 63.3. A bounce in France offset a m/o/m decline in Germany. Markit said “Although the service sector continued to be hard hit by lockdown measures, it has returned to growth as companies adjust to life with the virus and prepare for better times ahead.” Manufacturing remains the bright spot and here are the inflation comments from Markit: “The steep rise in demand for raw materials is continuing to lead to unprecedented supply chain delays, which are in turn driving up firms’ costs at the fastest rate for a decade. Consumer price inflation may well rise sharply in coming months as a result, though the extent of the rise will be dependent on the strength of demand and the supply situation, both of which remain highly uncertain at the moment.”
12)The April UK PMI rose to 60 from 56.4 with services rising to 60.1 from 56.3 and manufacturing up to 60.7 from 58.9. Markit said “Companies are reporting a surge in demand for both goods and services as the economy opens up from lockdowns and the encouraging vaccine roll out adds to a brighter outlook.” On inflation, “Prices charged for goods by manufacturers are meanwhile rising at a rate not seen for a decade, linked to higher global prices for many inputs and near record supply shortages. These prices will inevitably feed through to higher inflation as head into the summer, though there’s much uncertainty as to how long the inflationary impact will last. Importantly, supply delays will need to ease markedly from near record levels to help bring price pressures down.”
13)The headline UK CPI rose .3% m/o/m in March after a one tenth gain in February. That though was one tenth less than expected but the core rate was in line.
14)The UK said for the 3 months ended February 73k jobs were lost but that was still better than the estimate of -145k. The unemployment rate ticked down by one tenth to 4.9% and wage growth was above expectations. The March jobless claims figure saw an increase of 10.1k but that is well below the 67.3k print (revised from 86.6k) in February.
15)The Bank of Canada has turned less dovish with an expected cut again in QE and a pull forward to 2022 from 2023 of the possibility of the first rate hike.
16)Russia backs off from the Ukrainian border.
1)March existing home sales totaled 6.01mm, 100k less than expected and down from 6.24mm in February. The problem for the industry remains the lack of inventory as months’ supply were just 2.1 vs 2.0 in February and that is 4 months below the historical average. In turn, the median home price accelerated to 17.2% y/o/y growth with the average price up by 12.4% to record highs. Goosing the ‘median’ and the ‘average’ is the sharp y/o/y increases in the sales of homes priced above $500k. The affordability challenge for the 1st time buyer (easier to handle for those that already own) is why 1st time buyers made up 32% of purchases, no different than a year ago. All cash buyers, which now make up more buy to rent investors, including private equity, pension funds and foreign investors, totaled 23% of purchases vs 22% in February and 19% in the two prior months. The NAR chief economist said “Consumers are facing much higher home prices, rising mortgage rates, and falling affordability, however, buyers are still actively in the market.”
2)French business confidence in April fell by 2 pts to 95 as expected. A further improvement in manufacturing was offset by a drop in services and retail as employment held steady.
3)The April UK CBI industrials order index fell 3 pts to -8, worse than the estimate of +2. Optimism though improved dramatically to +38 from -22 and that was 18 pts better than expected. CBI said that was the “quickest pace since April 1973, while investment intentions saw a strong, broad-based rebound.” Inflation was the caveat as “Cost pressures continue to temper the outlook for the manufacturing sector, however. Average costs growth in the quarter to April accelerated at its quickest pace since April 2011, and costs are expected to grow at a similarly rapid rate next quarter. Meanwhile, average domestic prices in the quarter to April grew at their fastest pace since July 2018 and are expected to accelerate further next quarter.”
4)UK headline PPI in March, both output and input prices, rose more than expected with a .5% m/o/m increase with the former and a 1.3% m/o/m jump for the latter.
5)Germany reported its March PPI which jumped by .9% m/o/m, 3 tenths more than expected and after rising by .7% in February, 1.4% in January and .8% in December.
6)A 43% capital gains tax rate?