• Skip to main content
  • Skip to primary sidebar
  • Skip to footer

The Boock Report

  • Home
  • Free Content
  • Login
  • Subscribe

May 6, 2022 By Peter Boockvar

Succinct Summation of the Week’s Events – 5/6


Positives

1)Payrolls in April grew by 428k, 58k more than expected but mostly offset by a downward revision to the two prior months of 39k.

2)Continuing claims, delayed by a week in its reporting, fell to 1.38mm from 1.4mm and that is a new 50+ yr low.

3)The Fed meeting was a non event in terms of making new news. As people got way over the skis in thinking 75 bps was on the table as they forget how much dovish blood flows thru this committee, Powell saying no on 75 bps should not have been a surprise.

4)Somewhat dated data and still reflecting a tight labor market where the demand for workers still exceeds supply, the number of job openings totaled 11.55mm and that is a fresh record high. The number of quitters too hit a record high and the quit rate rose to 3%, matching a record high.

5)There was little change in the average 30 yr mortgage rate at 5.36% vs 5.37% in the week prior and we did see a lift in purchase applications by 4.1% w/o/w after the 7.6% drop in the week before. It still is down 11.1% y/o/y. Refi’s were about flat w/o/w and down 71% y/o/y. They sit at the lowest level since January 2019. 

6)The Bank of England hiked rates by 25 bps as expected to 1.00% and said they might start selling bonds off their balance sheet to quicken the pace of QT.

7)The Reserve Bank of India raised its repo rates by 40 bps to 4.4% and its cash reserve rate by 50 bps to 4.5% (which in turn drains liquidity out of the banking system) and the timing was completely unexpected as it was mid meetings. Governor Das said “Inflation must be tamed in order to keep the Indian economy resolute on its course to sustained and inclusive growth.”

8)The RBA increased rates by 25 bps, 10 more than expected and said more is coming.

9)South Korea’s manufacturing PMI rose .9 pts to 52.1. Markit said “A renewed rise in output coincided with a stronger expansion in incoming order inflows in April…yet firms continued to comment that rising prices and supply chain disruption had held back a much stronger recovery.” And this “placed further strain on margins at South Korean manufacturers, as input prices rose at the 3rd fastest rate in the survey history. Firms increasingly passed these increases on to clients through higher output charges, which rose at an unprecedented rate.”

10)As Hong Kong is actually opening up again as it has gotten past its covid flare up, its PMI jumped to 51.7 from 42. Singapore is now about fully open and its held steady at 50.3 from 50.1 in March. India’s services PMI rose to 57.9 from 53.6 and Malaysia’s went to 51.6 from 49.6. Vietnam’s in April held at 51.7 and Indonesia’s rose to 51.9 from 51.3 as both countries also further open up and away from their covid restrictions. 

11)The Eurozone services PMI for April was left unrevised at 57.7 as expected and that is up 2.1 pts m/o/m also on the distance being made from covid. This though came with continued inflation. “Steep price pressures remained apparent in April as input costs rose at the 2nd fastest rate on record. Prices charged for the provision of euro area services rose at the strongest pace on record as firms passed on greater cost burdens to their customers.” Business confidence did soften to the 2nd weakest since November 2020. 

12)The UK manufacturing and services April PMI was revised up from the initial print, though at 58.2 is still below the 60.9 print seen in March.

13)Germany said the number of unemployed fell by 13k in April, about in line with the expectations of down 15k. Their unemployment rate held at 5% as forecasted. The head of the Federal Labor Agency said “The arrival of spring and the easing of coronavirus measures is supporting the labor market’s continued recovery. However, the development is being slowed down by Russia’s war against Ukraine.”


Negatives

1)Within the household April job survey there was a loss of 353k jobs and combined with the decline in the size of the labor force of 363k, thus a similar amount, the unemployment rate held at 3.6% but not for the right reasons. The estimate was 3.5%. The all in U6 unemployment rate ticked up by one tenth to 7%. The participation rate fell two tenths to 62.2% and the employment to population ratio was down one tenth to 60.0%. The participation rate for the important 25-54 yr cohort was 82.4% vs 82.5% last month and vs 83.1% in January 2020. Hours worked held at 34.6 but the estimate was 34.7. Average hourly earnings rose .3% m/o/m after a .5% rise in March. Taken together, it was as expected (April one tenth light, March revised up by one tenth). Versus last year, hourly earnings were up 5.5% after a 5.6% increase in March. Compare that to next week’s expected CPI of about 8%. Combining hours and hourly wages puts average weekly earnings up .3% m/o/m and 4.6% y/o/y vs 4.7% in March and 5.5% in February.

2)Initial jobless claims rose 20k w/o/w to 200k and that was also 20k more than expected. The 4 week average rose to 188k from 180k.

3)What was most noteworthy in the ADP private sector jobs data was the 120k job loss seen in small businesses, those with less than 49 employees. That’s just the 2nd time since April 2020 we’ve seen that. Medium sized businesses added jobs but just 46k, the 2nd least since January 2021. These businesses can’t get up with the wage gains being paid by bigger companies.

4)The April ISM services index fell to 57.1 from 58.3. The estimate was for a slight increase to 58.5. Prices paid rose another .8 pts to 84.6 and that is a record high dating back to 1997. Of the 18 industries asked, 17 saw growth, the same pace as in March. All 18 saw price increases. The bottom line from ISM was this, “Business activity remains strong; however, high inflation, capacity constraints and logistical challenges are impediments, and the Russia-Ukraine war continues to affect material costs, most notably of fuel and chemicals.”

5)The April ISM manufacturing index fell to 55.4 from 57.1 and below the estimate of 57.6. That is the weakest level since September 2020 when it also printed 55.4. While the headline number was lower, the breadth was better as 17 of 18 industries surveyed saw growth vs 15 in March and 16 in February. ISM said this about the moderation and the catalysts, “with demand registering slower m/o/m growth (likely due to extended lead times and decades high material price increases) and consumption softening (due to labor force constraints). Overseas partners are experiencing covid impacts, creating a near term headwind for the US manufacturing community. 15% of panelists’ general comments expressed concern about their Asian partners’ ability to deliver reliably in the summer months, up from 5% in March.”

6)Unit labor costs rose 7.2% y/o/y in Q1 and that is the fastest pace since Q3 1982. This coincided with productivity in Q1 that fell .6% y/o/y as employee hours were steady but output fell. That matches the weakest print also in 40 years. On a q/o/q annualized basis, productivity was down 7.5%.

7)In a new TransUnion study, they “found that non -prime borrowers have seen the greatest percentage rise in both credit balances and delinquency rates since early 2021 which coincides with the period when inflation has risen significantly.”

8)The April Logistics Managers’ Index fell 6.5 pts m/o/m after hitting an all time high in March. The reason for the decline was the increase in transportation capacity and this led to a slower rise in pricing. They said “Despite the slowdown in transportation, respondents still indicate growth in the sector, just a slower pace than what we’ve seen over the last 18 months. There is much less change in inventory and warehousing metrics as costs continue to grow and capacity remains tight.” They also talked about the influence of the spike in diesel prices. “Diesel is up 43% from the last week of December…This has a significant impact on inflation as diesel fuel is used to move the vast majority of class-8 trucks as well to operate a significant amount of industrial machinery.”

9)Tokyo said its April headline CPI rose 2.5% y/o/y, 2 tenths more than expected and up by 1.9% also ex food. Now the 2% target of the BoJ is just ex food. If we take out both energy and food, prices were up .8% y/o/y, two tenths more than forecasted.

10)April CPI in South Korea was up 4.8% y/o/y, 4 tenths more than expected and up .7% from March. 

11)China’s private sector Caixin April services index fell all the way down to 36.2 from 42. That is the weakest since February 2020 which should be no surprise considering the draconian shutdowns in their largest city. As Chinese business knows this is not forever, “Encouragingly, business confidence improved slightly on the month, with many firms anticipating that activity levels will rise once pandemic related restrictions eased.”

12)Caixin China survey saw its manufacturing component fall to 46 from 48.1. Caixin said “The impact on logistics (from the closures) also spilled over into external demand, with the reading for new export orders hitting its lowest level since May 2020.” There is optimism though among the private sector (one very much exists in China with more than 85% of urban employees working for private companies) as “The gauge for business confidence more or less held steady with the previous month’s reading, though still lower than the long term average. They believed that the covid outbreaks will eventually be brought under control, but some respondents worried that the control measures would last too long.”

13)China’s state sector April PMI reflected their draconian approach to covid but mostly in services not surprisingly as most key factories were kept open (with workers sleeping on site). The state sector focused manufacturing PMI was down 2.1 pts m/o/m to 47.4 and that’s below 50 for a 2nd month but about as expected. The services component plunged to 41.9 from 48.4, well less than the estimate of 46. That’s the weakest since February 2020 when it cratered to 29.6. 

14)Taiwan’s manufacturing PMI slipped to 51.7 from 54.1 as China’s woes spilled over as it impacted both supply and demand. “Notably, manufacturers in Taiwan registered the quickest drop in output for nearly two years amid difficulties sourcing inputs and stagnant inflows of work. The slowdown in client demand was attributed to rising costs and greater hesitancy among customers to place orders amid the tightening of restrictions in mainland China and the Russia-Ukraine was. Notably, foreign sales fell at the quickest rate since mid 2020.”

15)Fabio Panetta, an Executive Board member of the ECB, acknowledged the stagflation Europe is experiencing and why the ECB is screwed as a result (and have contributed to it), “This makes the choices facing the ECB more complicated, as a monetary tightening aimed at containing inflation would end up hampering growth that is already weakening.”

16)March PPI for the Eurozone rose 36.8% y/o/y and 5.3% in March alone from February. Obviously energy is a big piece of this but even taking that out saw wholesale priced climb by 2.1% m/o/m and 13.6% y/o/y.

17)The Eurozone manufacturing PMI was revised up by .2 pts to 55.5 but that is still down 1 pt m/o/m and the lowest print since January 2021. The bottom line, “Companies not only reported that ongoing problems with component shortages were aggravated by the Ukraine war and new lockdowns in China, but that rising prices and growing uncertainty about the economic outlook were also hitting demand. New order growth has likewise slowed sharply so far this year.” Markit said that Germany is “leading the slowdown.” On inflation, “Sharp price rises will meanwhile put further downward pressure on demand. A renewed surge in costs, widely blamed on soaring energy prices and further upward pressure on prices paid for many other inputs amid shortages, led to the steepest rise in producers’ selling prices in at least 20 years of comparable survey history.” 

18)The Eurozone April Economic Confidence index fell to 105 from 106.7 and 3 pts under expectations. The weakness was seen in manufacturing, construction, retail and in consumer confidence. The services sector was little changed.

Filed Under: Free Access, Weekly Summary

Primary Sidebar

Recent

  • July 1, 2023 The Boock Report is now On Substack
  • June 6, 2023 Travel remains strong and the credit crunch is on
  • Subscribe
  • Free Content
  • Login
  • Ask Peter

Categories

  • Central Banks
  • Free Access
  • Latest Data
  • Podcasts
  • Uncategorized
  • Weekly Summary

Footer

Search

Follow Peter

  • Facebook
  • LinkedIn
  • Twitter

Subscribe

About Peter

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.

Read More

Disclaimer - Peter Boockvar is an independent economist and market strategist. The Boock Report is independently produced by Peter Boockvar. Peter Boockvar is also the Chief Investment Officer of Bleakley Financial Group, LLC a Registered Investment Adviser. The Boock Report and Bleakley Financial Group, LLC are separate entities. Content contained in The Boock Report newsletters should not be construed as investment advice offered by Bleakley Financial Group, LLC or Peter Boockvar. This market commentary is for informational purposes only and is not meant to constitute a recommendation of any particular investment, security, portfolio of securities, transaction or investment strategy. The views expressed in this commentary should not be taken as advice to buy, sell or hold any security. To the extent any of the content published as part of this commentary may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. No chart, graph, or other figure provided should be used to determine which securities to buy or sell. Consult your advisor about what is best for you.

Copyright © 2025 · The Boock Report · The Ticker District Network, LLC

  • Login
  • Free Content
  • TERMS OF SERVICE