1)The March ISM services index rose to 63.7 from 55.3 and that was well above the estimate of 59. This is the highest on record dating back to 1997. All 18 industries surveyed saw growth vs 17 in February and 14 in January. The ISM summed up the release by saying “Respondents’ comments indicate that the lifting of covid related restrictions has released pent-up demand for many of their respective companies’ services. Production capacity constraints, material shortages, weather and challenges in logistics and human resources continue to cause supply chain disruption.”
2)We are still 8.5mm people below the number of employed workers in February 2020 but as of February 2021 there were 7.4mm job openings up from 7.1mm in January and 6.75mm in December and now above the 7mm in February 2020 and 7.15mm in January 2020. In fact, this is the most amount of job openings since January 2019. There was an increase in the pace of hiring’s too with the hiring rate ticking up to 4% from 3.8% in the two prior months. It was led by a pick up in hiring in accommodation and food services. Separations rose by 133k but after dropping by 259k in January with about half from those quitting and those getting laid off. The quit rate was unchanged at 2.3% for the 2nd month.
3)China’s private sector service sector PMI index for March gained 2.8 pts m/o/m to 54.3. That was better than the estimate of 52.1. Caixin said “The Covid flare ups that occurred in the fall and the winter have basically died down, and the services sector has quickly recovered with supply and demand expanding. Compared with strong domestic demand, overseas demand is still in need of improvement. The measure for new export business remained in contractionary territory for the 2nd straight month, though the contraction was limited.” Assume much of that overseas softness was out of Europe. With respect to pricing, “Inflationary pressure increased as input costs and output prices remained high. Increases in raw material prices, labor costs and energy prices drove up the measure for input costs for the 9th straight month. Due to the rising costs, the prices charged by service providers remained in expansionary territory for the 8th straight month.”
4)Chinese March CPI reversed the .2% February decline with a .4% increase y/o/y in March, one tenth more than forecasted with the core rate up by .3%. A y/o/y drop in food prices because of very tough comps and falling pork prices kept inflation in check.
5)Taiwan said its March exports jumped by 27.1% y/o/y, more than expectations of up 20% with semis leading the way. Exports to China rose 36% and to the US by 35%. Imports were 27% higher y/o/y vs the estimate of up 16.2%.
6)Japan’s March consumer confidence index rose to 36.1 from 33.9 and that was just above the estimate of 35.5. That is the best since February 2020 when it was at 38.4 and all four of the main components were up m/o/m.
7)Japan’s service PMI for March was revised to 48.3 and that is up 2 pts m/o/m.
8)Australia’s March services index rose 2.1 pts m/o/m to 55.5 after falling by 2.2 pts in February. “Both activity and new business recorded further sharp expansions in March, with firms noting that the continued easing of Covid restrictions had boosted client confidence across much of the services economy.” With respect to prices, “Inflationary pressures remained at Australian private sector firms in March. Input prices increased at a series record pace, surpassing the previous record set in February. Businesses widely commented that rising input prices were the result of higher raw material and wage costs. Increased cost burdens led to private sector businesses raising output charges for the 5th time in as many months in March” said Markit.
9)The March Eurozone services PMI was revised slightly higher to 49.6 from 48.8 where the estimate was for no change. Service PMI’s in Germany and Ireland were above 50 while France, Italy and Spain’s were below. Covid restrictions remain a drag but with the vaccines here “business expectations reached the highest for over three years.” On prices, “operating expenses increased for the 10th successive month in March, with inflation rising to its highest since February 2020. Output charges subsequently increased for the 1st time in over a year, though only slightly.”
10)Germany exports in February were about as forecasted with help from trade with China where exports rose 26% y/o/y.
11)The European Sentix confidence index for April increased to 13.1 from 5.0 and that was twice the estimate. That’s the highest level since August 2018.
1)The March PPI rose 1% m/o/m, double the estimate and the core rate jumped by .7%, more than triple the forecast. Versus last year, producer prices rose 4.2% and by 3.1% ex food and energy. Easy comps for sure but considering the extent of the beat, it is more than just that and m/o/m changes have nothing to do with base effects from last year.
2)Initial jobless claims totaled 744k, 64k more than expected and up from 719k last week. The 4 week average is now 724k from 721k last week. Delayed by a week, continuing claims fell by 60k w/o/w to 3.73mm but that was almost 100k more than anticipated. Delayed by two weeks, those continuing to receive PUA rose 203k to 7.55mm, no lower than those seen in January. Those still receiving emergency unemployment compensation was up by 117k to 5.63mm and not far from the highs. There are almost 17mm people still receiving benefits of some sort. At the end of January it was at 16.4mm.
3)With the 3 bps rise in the average 30 yr mortgage rate to 3.36% after last week’s 3 bps drop, mortgage applications fell w/o/w. Purchases declined by 4.6% w/o/w and down for a 2nd week. While they are still up 51% y/o/y, that is purely an easy comparison thing. Refi’s fell for the 8th week in the past 9, by 5.3% w/o/w and are down 20.4% y/o/y.
4)The US trade deficit in February rose to a record high of $71.1b as exports fell 2.6% m/o/m while imports were down by .7%.
5)China said its PPI rose 4.4% y/o/y in March, up from 1.7% in February and above the estimate of 3.6%.
6)Singapore’s March PMI slipped to 53.5 from 54.9. “The next stage in Singapore’s return to normality is the resumption of tourist activity…Plans currently in place detail the inoculation of the majority of the nation by the end of the year.” Interestingly that Asia nations did a great job of containing Covid but are mostly lagging in rolling out the vaccines. On prices, “Overall input price inflation softened in March but remained historically elevated. Purchase prices rose amid higher freight costs, while an increase in workforce numbers added to wage expenses. Consequently, selling prices rose, as firms sought to pass on part of the burden. That said, the rate of output price inflation was only marginal.”
7)India’s services PMI fell to 54.6 from 55.3. India is now dealing with another Covid flare up but “rates of expansion for output and new business remained strong relative to the survey trend. The elections supported the uptick in demand, but the Covid pandemic and reduced footfall restricted the upturn.” India’s manufacturing PMI slipped 2.1 pts to 55.4.
8)Notwithstanding almost no covid cases, another housing bubble and a full recovery in the number of employed, the RBA ramps up QE.
9)Eurozone PPI in February rose by .5% m/o/m after a 1.7% jump in January. The y/o/y gain was 1.5% after a .4% increase in January.
10)Germany, France and Spain all reported misses with their industrial production figures.
11)If we include the downward revision in January, German factory orders in February were light relative to expectations but still the outperformer in their economy as orders still grew 5.6% y/o/y. The German economy ministry said “In particular, orders in the important automotive and mechanical engineering sectors once again developed positively.”
12) The UK services PMI was revised down by .5 pt to 56.3 but that is still up from 49.5 in February and 39.5 in January as the UK has half their population with at least one shot. Markit said “UK service providers were back in expansion mode in March as confidence in the roadmap for easing lockdown restrictions provided a strong uplift to new orders.” With prices, “There were further signs that strong cost pressures have spilled over from manufacturers to the service economy, especially for imported items. Higher prices paid for raw materials, alongside rising transport costs and utility bills, meant that operating expenses across the service sector increased at the strongest rate since June 2018.”
13)Prince Philip, you lived quite a full life. //www.youtube.com/watch?v=7DOIJn5Xq8U