1) March retail sales rebounded with a core gain of 1%, 6 tenths more than expected. Smoothing out the down December, up January, down February and up March, on a dollar basis we’re just above (.2%) where sales totaled in November.
2) Initial jobless claims fell to just 192k, 13k less than expected and down from 197k last week. The 4 week average is now down to 201k. Continuing claims, delayed by a week, fell for a 3rd month and lower by 63k.
3) The April NY manufacturing index rose to 10.1 from 3.7, 2 pts above the estimate and off the lowest since May 2017. The internals though were mixed. The internals however were very mixed. New orders got back the 4.5 pts it lost in March but backlogs fell back below zero again to -.7. Inventories jumped by 8.4 pts. The employment component fell by 2 pts but the average workweek rebounded to 4.3 from the -3.4 print last month. Prices paid and received both receded.
4) The trade deficit in February (yes, dated news) totaled $49.4b, $4b less than expected and down from $51b in January. Exports rose 1.1% m/o/m driven by a spike in aircraft orders (which since changed after Boeing’s issues) while imports were higher by just .2% m/o/m.
5) The MBA said mortgage applications to buy a home rose .9% w/o/w and 7.2% y/o/y.
6) The NAHB home builder sentiment for April rose 1 pt to 63 as expected. It’s the best since October but when it was at 68. The Present condition was up 1 pt but Future Expectations fell by 1 pt. Prospective Buyers Traffic rose 3 pts but remains below 50 at 47. The NAHB said “Builders report solid demand for new single-family homes but they are also grappling with affordability concerns stemming from a chronic shortage of construction workers and buildable lots.”
7) After 3 months in a row of selling, totaling about $100b, foreigners in February returned to market with buying of US notes and bonds on a net basis of $19.9b. China and Japan each bought about $1b after a steady multi yr pace of selling.
8) In China in March, retail sales, industrial production and Q1 GDP all rose more than forecasted. GDP growth though at 6.4% just matches the slowest rate of gain since at least 1992 (and same as Q1 2009) while nominal GDP growth continues to slow. Also, the jobless rate fell one tenth to 5.2% while fixed asset investment improved as expected.
9) The April Australia services PMI got back above 50 at 50.5 from 49.3.
10) Australia said 25.7k jobs were added in March, almost double the estimate of 15k due to a jump in full time. The unemployment rate though did tick up one tenth to 5%.
11) Japan’s manufacturing PMI in April rose .3 pts m/o/m but to still below 50 at 49.5. It’s the 3rd straight month below 50 and Markit said “Japan’s manufacturing sector remained stuck in its rut at the start of Q2, with the factors which have prohibited any growth such as US-Sino relations, growth fears in China and the turn in the global trade cycle, all remaining prominent risks. Export orders dipped at a stronger rate in April, domestic demand for goods was similarly weak and firms cut their stocks and scaled back production.”
12) For the 3 months ended February, the UK added 179k jobs, about in line with the estimate of 181k and the unemployment rate held at 3.9%, the lowest since the 1970’s. Wages ex bonus’ rose 3.4% y/o/y as estimated and above the rate of inflation.
13) Headline CPI in the UK held at 1.9% y/o/y in March, one tenth less than expected and the core rate was up by 1.8%, also unchanged with the prior month and one tenth below the estimate. Input prices at the wholesale level fell more than expected while output charges was up by slightly more than forecasted.
14) Helped by positive real wage growth and online buying and food sales (almost 3/4 of gain), UK retail sales ex fuel oil in March rose 1.2% m/o/m, well better than the forecast of down .3%.
15) The April ZEW index of investor expectations of the German economy improved to +3.1 from -3.6. It’s the first time above zero since March 2018 but was over 60 in early 2014. Notwithstanding the m/o/m gain it’s still very low and ZEW said “The outlook for the German economy in the coming six months thus remains greatly subdued.”
16) There was no revision to the modest March CPI print for the Eurozone. Headline CPI was up 1.4% y/o/y and the core rate was higher by .8% y/o/y.
Negatives
1) The Markit US manufacturing and services composite index fell to 52.8 from 54.6, that’s the softest pace of growth since September 2016. Manufacturing held at 52.4 so all of the m/o/m decline came from the services sector (about 80% of the US economy) whose index dropped to 52.9 from 55.3. Markit said “The survey indicates that the manufacturing downturn seen in the first quarter has persisted into April, but growth in the service sector has now also slumped to a two-year low as the malaise showed further signs of spreading beyond the factory sector. The April surveys are consistent with GDP rising at an annualized rate of just under 2%, with the official measure of manufacturing production remaining in decline.” Markit said this level of activity equates to growth of just below 2% according to their models.
2) In the April NY manufacturing index, the Business Activity 6 month outlook dropped sharply to 12.4 from 29.6 in March. That is more than half the 6 month average of 25.9 and is the weakest print since January 2016. The new orders outlook dropped 8.5 pts, backlogs fell to zero and capital spending plans were down by 3 pts to the least in 4 months. Spending on tech was unchanged m/o/m.
3) The April Philadelphia manufacturing index weakened to 8.5 from 13.7 and that was below the estimate of 11. It’s the 2nd lowest print since August 2016. The internals were very mixed as new orders bounced but backlogs fell. Employment got back what it lost in March. Supply constraints have been more than relieved (lead times lengthening), as delivery time went negative. Similar to what the NY survey said, the 6 month Business Activity outlook fell to the lowest level since February 2016. Cap ex plans bounced, getting back most of the 12 pt drop last month.
4) The March US industrial production figure fell .1% m/o/m vs the estimate of up .2%. The manufacturing component saw no change after two months of declines. Particular weakness was in the production of auto’s/parts which dropped 2.5% m/o/m and 4.5% y/o/y as the industry digests too much inventory on dealer lots. Capacity utilization fell to 78.8% from 79%. That is the least since July.
5) The MBA said mortgage applications to refi a mortgage fell 8.2% w/o/w but remain up 26.4% y/o/y.
6) For the first time in two years, the March Architectural Billings Index fell below 50 at 47.8, down 2.5 pts. For those not familiar since I rarely mention it, “The ABI is a leading economic indicator of construction activity in the U.S. and reflects a nine- to 12-month lead time between architecture billings and construction spending nationally, regionally, and by project type.” The ABI said “Many indicators of future work at firms still remain positive, although the pace of growth of design contracts has slowed in recent months.”
7) While business inventories in February rose .3% m/o/m as expected, the inventory to sales ratio held at 1.39, matching the most since November 2016 as we are in the midst of the inventory hangover after the Q4 tariff worry buildup.
8) The Bank of Canada’s quarterly business survey went negative in Q1, the first time in contraction since Q3 2016. “Firms’ expectations for sales remain positive but have softened as several businesses are less optimistic about demand. The main headwinds are a more uncertain outlook in the Western Canadian energy sector, continued weakness in housing-related activity in some regions, and tangible impacts from global trade tensions ” the survey said.
9) Singapore’s non oil domestic exports plunged by 11.7% in March, well worse than the estimate of down 2.2% and the exports of electronics dropped by 27% y/o/y.
10) Japanese exports in March fell 2.4% y/o/y, a touch better than the estimate of down 2.6% but negative for the 4th straight month and imports were weaker than expected.
11) UK jobless claims in March rose by 28.3k, the most since March 2017.
12) The Bank of England said credit card defaults in Q1 in the UK rose to the highest in almost 2 yrs.
13) Within the ZEW report, the Current Situation fell to 5.5 from 11.1. That was 3 pts less than expected and the lowest print since November 2014.
14) The April Eurozone manufacturing and services PMI fell to 51.3 from 51.6, a 3 month low. Markit said “The data add to worries that the economy has failed to rebound with any conviction from one-off factors that dampened activity late last year, and continues to show only very modest growth in the face of headwinds from slower global demand growth and subdued economic sentiment. The surveys indicate that quarterly eurozone GDP growth has slowed to just under 0.2%.” That’s on a q/o/q basis. Specifically, “Manufacturing remained the key area of concern, with output continuing to contract at one of the fastest rates seen over the past six years…The slowdown also showed further signs of engulfing the service sector, where growth cooled again to one of the weakest rates seen since 2016.”
15) In March, EU car registrations fell 3.9% y/o/y, the 7th straight month of y/o/y declines.
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.