1)Initial jobless claims totaled 180k as expected and down 5k from last week. The 4 week average rose to 180k vs 178k. Continuing claims were a touch above the estimate coming in at 1.408mm, just off the lowest in more than 50 years.
2)In March, personal income grew more than expected as did spending and the spending figure will likely result in an upside revision (all else equal) to yesterday’s Q1 GDP print.
3)The first quarter Employment Cost Index, a very good metric of wage/salary/benefit growth, rose 1.4% q/o/q, above the estimate of up 1.1% and after rising by 1% in Q4. Specifically, private sector wages and salaries were up by 1.3% q/o/q and benefits by 1.9%. More helpful for this analysis, private sector wages/salaries grew by 5% y/o/y for the 2nd quarter in a row, the quickest since at least 2001 that I have data on.
4)New home sales in March totaled 763k, about as expected but February was revised up by 63k to 835k and is vs 845k in January and 871k in December. For perspective, the average 30 yr mortgage rate averaged 4.80% in March, 4.15% in February, 3.78% in January and 3.33% in December. Months’ supply did tick up to 6.4 months and that is the most since October. The median home price did jump 21.4% to a new record but is highly influenced by mix month to month. There was an increase in the number of homes sold priced above $500k and a slight drop in those priced below.
5)Core durable goods orders in March rose 1% m/o/m, double the estimate and February was left little changed, down 3 tenths vs the 1st print of down .2%. Versus February, orders rose for all main categories ex nondefense aircraft. Core shipments, plugged into GDP, were under expectations.
6)The April Richmond manufacturing index for April rose 1 pt m/o/m to 14. That was 5 pts above the estimate.
7)While the final April UoM consumer confidence index was revised down by .5 pt, at 65.2 it still is up from 59.4 and vs 62.8 in February and 67.2 in January. Both components rebounded m/o/m while both one year and 5-10 year inflation expectations were unchanged m/o/m at 5.4% and 3.0% respectively. Those expecting higher income to rise from the 1st April print but still is down from March. Employment expectations did rise 3 pts m/o/m. Spending intentions were mixed as they fell for auto’s but were little changed for homes and major appliances. The UoM said “Inflation was seen as the overwhelming problem facing the nation as well as causing eroding living standards among households.”
8)The Eurozone economy did grew a touch in Q1, by .2% q/o/q and 5% y/o/y as expected. This of course really only captures one month of the war but high energy prices throughout the quarter. The German economy grew slightly while in France they saw no growth q/o/q. Italy saw a contraction of .2% as expected. Germany saw growth rise a touch while there was zero q/o/q growth in France and contraction in Italy.
9)Germany’s IFO business confidence index for April rose 1 pt m/o/m to 91.8. That was definitely better than the feared decline to 89. Most of the improvement came from the Expectations component as the Current Assessment was little changed. IFO said simply, “After the initial shock of the Russian attack, the German economy has shown its resilience.”
10)The Swedish Riksbank unexpectedly raised interest rates by 25 bps to .25%, finally getting off zero. Governor Ingves said in his press conference, “Prices are rising now across the board…furniture, cars, coffee, bread. When it comes to monetary policy in the coming years, it’s all about getting the pace of inflation down to somewhere near 2%.”
11)Vietnam said exports jumped 25% y/o/y in April, well better than the estimate of up 16.5%. Imports grew by 15.5%, also above the forecast of up 13.9%.
1)The US economy contracted by 1.4% q/o/q annualized after the up 6.9% print for Q4. The estimate was up 1%. Trade was the main drag, taking off 320 bps. Inventories and government spending also took away from growth. Consumer spending and capital spending was the partial offset. Also reducing GDP relative to the estimate was the higher than expected price deflator. Real final sales, which takes out the influence of inventories, fell .6% and final sales of private domestic purchasers which also takes out trade, was up 3.7% q/o/q annualized.
2)The headline PCE in March rose .9% m/o/m and .3% m/o/m as expected but February was tweaked down by one tenth for each. Versus last year, prices rose 6.6% headline and 5.2% core. Goods prices jumped 10.6% y/o/y while services were higher by 4.5%. Energy prices jumped 34% y/o/y and food prices by 9.2%.
3)In March, the US savings rate fell to 6.2% from 6.8% and that is the lowest since December 2013.
4)The Conference Board’s consumer confidence index for April was 107.3, little changed from March’s print of 107.6. The present situation fell slightly while the expectations component was up .5 pt. After jumping to 7.9% in April from 7.1% in March, one yr inflation expectations fell back to 7.5%. This compares with the average of 4.9% since this question started to be asked in 1987. They said, “Looking ahead, inflation and the war in Ukraine will continue to pose downside risks to confidence and may further curb consumer spending this year.”
5)The Apartment List April National Rent Report reflected a .9% m/o/m rent increase and was up by 16.3% y/o/y. 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…On the supply side, our national vacancy index dipped slightly this month, the first time that vacancies have tightened since last August. Our vacancy index currently stands at 4.6%, up from a low of 3.8% last August, but still well below the pre pandemic norm.” The unfortunate bottom line from Apartment List, “Despite a recent cool-down, many American renters are likely to remain burdened throughout 2022 by historically high housing costs.”
6)With another rise to 5.37% in the average 30 yr mortgage rate w/o/w, purchases fell by 7.6% w/o/w and almost 17% y/o/y and refi’s declined by 9% w/o/w and 71% y/o/y. Not surprisingly, the number of ARM’s being taken out is rising as a percent of total loans.
7)Pending home sales in March fell 1.2% m/o/m, about as expected. It is the 5th straight month of declines. The index itself is now at the lowest since May 2020. The NAR said what we all know, “As it stands, the sudden large gains in mortgage rates have reduced the pool of eligible homebuyers, and that has consequently lowered buying activity. The aspiration to purchase a home remains, but the financial capacity has become a major limiting factor.”
8)According to S&P CoreLogic, home prices rose 19.8% y/o/y in February. Phoenix, Tampa and Miami each saw more than 30% gains. DC, Minneapolis and NY saw the slowest pace of gains.
9)The April Chicago manufacturing PMI fell to 56.4 from 62.9. The estimate was 62.
10)The Dallas manufacturing April index fell to 1.1 from 8.7. The forecast was 5.0. The 6 month outlook fell to the weakest since May 2020.
11)In the Richmond manufacturing index, the 6 month outlook for local business conditions went negative, only the 3rd time in this survey’s history it has gone below zero.
12)The KC manufacturing index declined to 25 from 37. The estimate was 35. The 6 month outlook fell 6 pts m/o/m to 34 but is still above the 26 print seen in December.
13)Eurozone CPI in April rose 7.5% y/o/y as expected and unchanged with March. The core rate though accelerated to a 3.5% increase vs 2.9% last month and vs the estimate of up 3.2%.
14)German consumer confidence dropped sharply to -26.5 from -15.7. That is a record low. GFK said “The war in Ukraine and rates of high inflation have dealt a severe blow to consumer sentiment. This means that hopes of a recovery from the easing of pandemic related restrictions have finally been dashed.”
15)French consumer confidence fell to 88 from 90. That’s the weakest since December 2018.
16)The UK CBI April industrial orders index fell to 14 from 26. The estimate was 22. CBI said this occurred “as growth in manufacturing output and new orders slowed and costs and selling prices grew at their fastest paces in over 40 years. Investment intentions weakened notably, but employment growth improved and is expected to pick up further next quarter.”
17)The Japanese PM was the BoJ to achieve its 2% inflation target but also said “The rise in oil prices and general inflation must be prevented at all costs from hindering the recovery of socioeconomic activity from the pandemic.” Kuroda said full speed ahead with money printing at their meeting but said “My stance is basically the same as Finance Minister Suzuki in that recent sudden moves in the currency markets have a negative impact. Today’s decision shouldn’t encourage a weaker yen any more than previous policy has.”
18)As the Reserve Bank of Australia hems and haws as to when to hike rates off their .10% level, Q1 CPI in Australia printed today up 5.1% y/o/y and their trimmed read was higher by 3.7% y/o/y.
19)In Singapore, March CPI did rise 5.4% y/o/y, well more than the estimate of up 4.7%. The core rate accelerated to an increase of 2.9% from 2.2% in February and vs the estimate of up 2.5%.