Thu 22 Mar 2018


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Today at the stock market

bull/bearU.S. stocks slumped on Thursday as President Donald Trump’s move to impose tariffs on up to $60 billion of Chinese imports drove fears about the impact on the global economy, fueling the biggest percentage declines in Wall Street’s 3 major indexes since they entered correction territory 6 weeks ago. Trump signed a presidential memorandum that will target the Chinese imports only after a consultation period. China will have space to respond, reducing the risk of immediate retaliation from Beijing.

  • The S&P 500 index fell 68.24 points, or 2.52%, to 2,643.69
  • The Dow Jones Industrial Average fell 724.42 points, or 2.93%, to 23,957.89
  • The Nasdaq Composite fell 178.61 points, or 2.43%, to 7,166.68.
  • The CBOE Volatility Index, the most widely followed barometer of expected near-term volatility in the S&P 500, finished up 5.48 points at 23.34, its highest close since 13 Feb 2018.
  • Declining issues outnumbered advancing ones on the NYSE by a 4.51-to-1 ratio; on Nasdaq, a 4.09-to-1 ratio favored decliners.
  • The S&P 500 posted three new 52-week highs and 19 new lows; the Nasdaq Composite recorded 36 new highs and 59 new lows.
  • Volume on U.S. exchanges was 7.77 billion shares, compared to the 7.17 billion average for the full session over the last 20 trading days.

Today’s losses marked the biggest daily percentage drop for each of the major indexes since Feb. 8, when the Dow and S&P confirmed a market correction from their Jan. 26 highs.

Selling was broad, with only the defensive utilities on the plus side, up 0.44 percent, out of 11 major S&P sectors.

But after equities recovered somewhat from earlier lows, selling pressure resumed on Wall Street heading into the close as investors fretted over the potential scale of U.S tariffs and possible impact on global trade.

“There’s too much negative sentiment right now,” said John Carey, portfolio manager at Amundi Pioneer Asset Management in Boston. “It’s possible that it will be rough sledding for a while. I don’t see anything on the horizon that will reassure people that things are just great.”

Major industrials slumped. Plane maker Boeing Co fell 5.2 percent, Caterpillar Inc fell 5.7% and 3M Co fell 4.7%. The three were among the biggest drags on the Dow Jones Industrial Average. The S&P industrials sector plunged 3.28%.

Another decline in shares of Facebook Inc, down 2.7%, continued to weigh on the broader market and the tech sector, the best performing S&P group for this year. The S&P technology index fell 2.69% on fears of greater regulation in the wake of the Facebook data leak. Facebook Chief Executive Mark Zuckerberg said he was open to additional government regulation and happy to testify before the U.S. Congress.

AbbVie Inc tumbled 12.8% after the drugmaker said it would not seek accelerated approval for its experimental lung cancer treatment based on results from a mid-stage study.

U.S. treasury prices gained as investors sought out safe havens. Benchmark 10-year notes last rose 23/32 in price to yield 2.8244%, from 2.907% late on Wednesday. The drop in yields weighed on financial stocks, which were down 3.70%, making them the worst performing of the major sectors.Reuters

Market indices

Market indices
^ S&P500 Index today (mouseover for 12 month view) [Chart: Google Finance]

Index Ticker Today Change 31 Dec 17 YTD
S&P 500 SPX (INX) 2,643.69 -2.52% 2,673.61 -1.12%
DJIA INDU 23,957.89 -2.94% 24,719.22 -3.08%
NASDAQ IXIC 7,166.68 -2.44% 6,903.39 +3.81%

Portfolio Indices

USD and AUD denominated indices over the past 52 weeks (Chart: Bunting)
^ USD and AUD denominated indices over the past 52 weeks Chart: Bunting

Index values

Index Currency Today Change 31 Dec 17 YTD
USD-denominated Index USD 3.172 -1.93% 3.068 +3.43%
Valuation Rate USD/AUD 0.77569 -0.79% 0.78528 -1.23%
AUD-denominated Index AUD 4.092 -1.16% 3.909 +4.69%

Portfolio stock prices

Stock Ticker Today Change 31 Dec 17 YTD
Alphabet A GOOGL $1,053.15 -3.74% $1,053.00 +0.01%
Alphabet C GOOG $1,049.08 -3.84% $1,045.65 +0.32%
Apple AAPL $168.85 -1.42% $169.23 -0.23%
Amazon AMZN $1,544.92 -2.34% $1,169.54 +32.09%
Ebay EBAY $40.58 -2.62% $37.76 +7.46%
Facebook FB $164.89 -2.66% $176.46 -6.56%
PayPal PYPL $78.56 -3.07% $73.61 +6.72%
Twitter TWTR $31.20 -4.68% $24.01 +29.94%
Visa V $119.99 -2.63% $114.02 +5.23%
VMware VMW $122.10 -1.81% $125.32 -2.57%

FX: USD/AUD

USD

DXY movements
^ Bloomberg Dollar Spot Index (DXY) movements today (mouseover for 12 month view) Chart: Bloomberg

The Bloomberg Dollar Spot Index (DXY) rose 0.2%, rebounding from the largest drop since Jan 2018.
The EUR fell 0.2% to USD 1.2318.
The British GBP fell 0.2% to USD 1.4111.
The Japanese JPY rose 0.6% to 105.41 per USD.

The yield on 10-year Treasuries fell 6 basis point to 2.82%.
Germany’s 10-year yield fell 6 basis point to 0.53%, declining from the highest in more than a week.
Britain’s 10-year yield fell 9 basis points to 1.44%.
Bloomberg

AUD

AUD movements
^ AUD movements against the USD today (mouseover for 12 month view) Chart: xe.com

Oil and Gas Futures

Futures prices

Prices are as at 15:47 EDT

  • NYMEX West Texas Intermediate (WTI): $64.16/barrel -1.55% Chart
  • ICE (London) Brent North Sea Crude: $68.79/barrel -0.98% Chart
  • NYMEX Natural gas futures: $2.61/MMBTU -0.95% Chart

flag_usa US: US Actions In Relation to Investigation of China

Trump instructed Trade Representative Robert Lighthizer last year to probe allegations that China violates U.S. intellectual property. After seven months of investigation, U.S. officials found strong evidence that China uses foreign-ownership restrictions to compel U.S. companies to transfer technology to Chinese firms, said an official with the U.S. Trade Representative’s office who spoke to reporters Wednesday on condition of anonymity.

The U.S. also suspects Beijing directs firms to invest in the U.S. with the purpose of engineering large-scale transfers of technologies that the Chinese government views as strategic, said the USTR official. The investigation also found strong evidence China supports and conducts cyberattacks on U.S. companies to access trade secrets, according to the official.

American officials have been raising their concerns about China’s IP practices since Bill Clinton was president, and Beijing has repeatedly failed to deliver on promises to reform, said the official, adding the administration is still open to discussing the issue with the government of President Xi Jinping. The official declined to comment on the remedies planned, emphasizing it’s Trump’s decision.Bloomberg

Actions by the United States Related to the Section 301 Investigation of China’s Laws, Policies, Practices, or Actions Related to Technology Transfer, Intellectual Property, and Innovation

On August 14, 2017, I directed the United States Trade Representative (Trade Representative) to determine whether to investigate China’s laws, policies, practices, or actions that may be unreasonable or discriminatory and that may be harming American intellectual property rights, innovation, or technology development. On August 18, 2017, the Trade Representative initiated an investigation under section 301 of the Trade Act of 1974, as amended (the “Act”) (19 U.S.C. 2411).

During its investigation, the Office of the United States Trade Representative (USTR) consulted with appropriate advisory committees and the interagency section 301 Committee. The Trade Representative also requested consultations with the Government of China, under section 303 of the Act (19 U.S.C. 2413). The USTR held a public hearing on October 10, 2017, and two rounds of public written comment periods. The USTR received approximately 70 written submissions from academics, think tanks, law firms, trade associations, and companies.

The Trade Representative has advised me that the investigation supports the following findings:

First, China uses foreign ownership restrictions, including joint venture requirements, equity limitations, and other investment restrictions, to require or pressure technology transfer from U.S. companies to Chinese entities. China also uses administrative review and licensing procedures to require or pressure technology transfer, which, inter alia, undermines the value of U.S. investments and technology and weakens the global competitiveness of U.S. firms.

Second, China imposes substantial restrictions on, and intervenes in, U.S. firms’ investments and activities, including through restrictions on technology licensing terms. These restrictions deprive U.S. technology owners of the ability to bargain and set market-based terms for technology transfer. As a result, U.S. companies seeking to license technologies must do so on terms that unfairly favor Chinese recipients.

Third, China directs and facilitates the systematic investment in, and acquisition of, U.S. companies and assets by Chinese companies to obtain cutting-edge technologies and intellectual property and to generate large-scale technology transfer in industries deemed important by Chinese government industrial plans.

Fourth, China conducts and supports unauthorized intrusions into, and theft from, the computer networks of U.S. companies. These actions provide the Chinese government with unauthorized access to intellectual property, trade secrets, or confidential business information, including technical data, negotiating positions, and sensitive and proprietary internal business communications, and they also support China’s strategic development goals, including its science and technology advancement, military modernization, and economic development.

It is hereby directed as follows:

Section 1. Tariffs. (a) The Trade Representative should take all appropriate action under section 301 of the Act (19 U.S.C. 2411) to address the acts, policies, and practices of China that are unreasonable or discriminatory and that burden or restrict U.S. commerce. The Trade Representative shall consider whether such action should include increased tariffs on goods from China.

(b) To advance the purposes of subsection (a) of this section, the Trade Representative shall publish a proposed list of products and any intended tariff increases within 15 days of the date of this memorandum. After a period of notice and comment in accordance with section 304(b) of the Act (19 U.S.C. 2414(b)), and after consultation with appropriate agencies and committees, the Trade Representative shall, as appropriate and consistent with law, publish a final list of products and tariff increases, if any, and implement any such tariffs.

Sec. 2. WTO Dispute Settlement. (a) The Trade Representative shall, as appropriate and consistent with law, pursue dispute settlement in the World Trade Organization (WTO) to address China’s discriminatory licensing practices. Where appropriate and consistent with law, the Trade Representative should pursue this action in cooperation with other WTO members to address China’s unfair trade practices.

(b) Within 60 days of the date of this memorandum, the Trade Representative shall report to me his progress under subsection (a) of this section.

Sec. 3. Investment Restrictions. (a) The Secretary of the Treasury (Secretary), in consultation with other senior executive branch officials the Secretary deems appropriate, shall propose executive branch action, as appropriate and consistent with law, and using any available statutory authority, to address concerns about investment in the United States directed or facilitated by China in industries or technologies deemed important to the United States.

(b) Within 60 days of the date of this memorandum, the Secretary shall report to me his progress under subsection (a) of this section.

Sec. 4. Publication. The Trade Representative is authorized and directed to publish this memorandum in the Federal Register.

DONALD J. TRUMP

White House, “Presidential Memorandum on the Actions by the United States Related to the Section 301 Investigation“, 22 Mar 2018 Memorandum

China’s Response (Translated)

cn_301_20180322

The head of the Ministry of Commerce’s Law and Law Division made a remark on the May 301 survey results.

We have noticed that there have been recent reports that the United States will soon announce the results of its investigation of China 301 and may impose restrictions on China. With regard to the 301 investigation, China has expressed its position on many occasions. We firmly oppose this kind of unilateralism and trade protectionism by the United States. China will never sit back and ignore the legitimate rights and interests. It will certainly take all necessary measures to resolutely defend its legitimate rights and interests.

President Xi Jinping pointed out that economic and trade relations are the “ballast stones” and “propellers” of Sino-U.S. relations. The two countries established diplomatic relations nearly 40 years ago, the scale of trade has increased by 232 times, and the cumulative amount of two-way investment has exceeded US$230 billion. U.S. industry is generally worried about U.S. unilateral action, and 45 U.S. business associations have clearly raised objections.

We hope that the U.S. can understand the essence of the mutual benefit and win-win outcome of Sino-U.S. economic and trade relations, and do not act in ways that harm others.

Ministry of Commerce Press Office, 22 Mar 2018 Document

flag_australia AU: Labour Force. Feb 2018

"Collins St, 5p.m.", John Brack (1955) National Gallery of Victoria

“Collins St, 5p.m.”, John Brack (1955) National Gallery of Victoria

Press Release Extract [au_jobs]

QUICK SUMMARY

Unemployment and Underemployment

The monthly trend unemployment rate remained steady at 5.5 per cent in February 2018, according to latest figures released by the Australian Bureau of Statistics (ABS) today.

“While the unemployment rate remained steady, the underemployment rate decreased by 0.1 percentage points to 8.3 per cent over the quarter, and is now at its lowest point since November 2015,” the Chief Economist for the ABS, Bruce Hockman, said.

Over the past year, the trend underutilisation rate, which includes both unemployment and underemployment, decreased by 0.6 percentage points to 13.8 per cent.

Employment and hours

Monthly trend full-time employment increased for the 16th straight month in February 2018. Full-time employment grew by a further 8,000 persons in February, while part-time employment increased by 12,000 persons, underpinning a total increase in employment of 19,000 persons.

“Full-time employment has now increased by around 293,000 persons over the past year, and makes up the majority of the 400,000 increase in employment,” Mr Hockman said.

Over the past year, trend employment increased by 3.3 per cent, which is above the average year-on-year growth over the past 20 years (1.9 per cent).

The trend monthly hours worked decreased slightly, by 1.4 million hours (0.1 per cent), with the annual figure continuing to show strong growth (2.7 per cent).

The labour force participation rate increased to 65.7 per cent, the highest it has been since December 2010. The female labour force participation also increased, to a further historical high of 60.6 per cent.

States and Territories

Over the past year, the states and territories with the strongest annual growth in trend employment were the ACT (4.7 per cent) Queensland (4.6 per cent) and New South Wales (3.9 per cent).

Seasonally adjusted data

The seasonally adjusted number of persons employed increased by 18,000 in February 2018. The seasonally adjusted unemployment rate increased to 5.6 per cent and the labour force participation rate increased by less than 0.1 percentage points to 65.7 per cent.

NATIONAL ESTIMATES

Trend Estimates

Australia’s trend estimate of employment increased by 19,300 persons in February 2018, with:

  • the number of unemployed persons increasing by 4,300 persons;
  • the unemployment rate remaining steady at 5.5 per cent;
  • the participation rate increasing by 0.1 percentage points to 65.7 per cent; and
  • the employment to population ratio increased by less than 0.1 percentage points to 62.1 per cent.

Over the past year, trend employment increased by 399,500 persons (or 3.3 per cent), which is above the average annual growth rate over the past 20 years of 1.9 per cent. Over the same 12 month period the trend employment to population ratio, which is a measure of how employed the population (aged 15 years and over) is, increased by 1.0 percentage points to 62.1 per cent.

In monthly terms, trend employment increased by 19,300 persons between January and February 2018. This represents an increase of 0.16 per cent, which was in line with the monthly average growth rate over the past 20 years of 0.16 per cent, and the lowest monthly growth rate observed since December 2016.

Trend full-time employment increased by 7,700 persons between January and February 2018, and part-time employment increased by 11,600 persons. Compared to a year ago, there are 293,100 more persons employed full-time and 106,500 more persons employed part time. The part-time share of employment decreased 0.2 percentage points over the past 12 months, from 31.9 per cent to 31.7 per cent.

The trend estimate of monthly hours worked in all jobs decreased by 1.4 million hours (or less than 0.10 per cent) in February 2018, to 1,730.3 million hours. Monthly hours worked increased by 2.7 per cent over the past year, slightly below the increase in employed persons (3.3 per cent). As a result, the average hours worked per employed person decreased slightly to 138.6 hours per month, or around 32.0 hours per week.

The trend unemployment rate remained at 5.5 per cent for the seventh consecutive month in February 2018. The number of unemployed persons increased by 4,300 to 729,500 persons.

The quarterly trend underemployment rate decreased 0.1 percentage points to 8.3 per cent over the quarter to February 2018. Over the past year this rate decreased by 0.4 percentage points, with the number of underemployed decreasing by 18,400 persons. The quarterly underutilisation rate, which is a combined measure of unemployment and underemployment in the labour force, was 13.8 per cent in February 2018, down from 13.9 per cent in November 2017.

The trend participation rate increased by 0.1 percentage points to 65.7 per cent in February 2018, the highest it has been since December 2010. The male participation rate increased to 71.0 per cent whilst the female participation rate increased to a further historical high of 60.6 per cent.

The labour force includes the total number of employed and unemployed persons. Over the past year, the labour force has increased by 389,500 persons (3.0 per cent). This rate of increase is above the rate of increase for the total Civilian Population aged 15 years and over (328,500 persons, or 1.7 per cent).

The trend participation rate for 15-64 year olds, which controls (in part) for the effects of an ageing population, increased by 0.1 percentage points to 78.1 per cent in February 2018. This is the highest rate recorded since the series began in February 1978 and indicates the 15-64 year old population is participating in the labour market at a record high level. The gap between male and female participation rates in this age range is now less than 10 percentage points, at 83.0 and 73.3 per cent, continuing the long term convergence of male and female participation.

The trend participation rate for 15-24 year olds increased by 0.2 percentage points to 67.9 per cent in February 2018. The unemployment rate for this group increased by 0.1 percentage points to 12.7 per cent in February 2018 and decreased by 0.2 percentage points over the year.

The trend series smooths the more volatile seasonally adjusted estimates and provide the best measure of the underlying behaviour of the labour market.

Seasonally Adjusted Estimates

Seasonally adjusted employment increased by 17,500 persons from January to February 2018 (following an increase of 12,500 over the preceding month). The underlying composition of the net change was an increase of 64,900 persons in full-time employment and a 47,400 decrease in part-time employment, which followed similarly sized compositional shifts in January (a 53,200 decrease and a 65,600 increase respectively). Since February 2017, full-time employment has increased by 327,600 persons, while part-time employment has increased by 93,100 persons.

Seasonally adjusted monthly hours worked in all jobs increased by 21.2 million hours (or 1.2 per cent) in February 2018 to 1,734.1 million hours. This follows a decrease of 23.4 million hours (or 1.3 per cent) from December 2017 to January 2018.

The seasonally adjusted employment to population ratio remained steady at 62.0 per cent in February 2018, representing an increase of 1.1 percentage points from the same time last year.

The seasonally adjusted unemployment rate increased by 0.1 percentage points to 5.6 per cent in February 2018. The participation rate increased by less than 0.1 percentage points to 65.7 per cent.

The quarterly seasonally adjusted underemployment rate increased by 0.1 percentage points to 8.4 per cent. The quarterly underutilisation rate increased by 0.1 percentage points to 13.9 per cent.

STATE AND TERRITORY ESTIMATES

Trend Estimates

In February 2018, increases in trend employment were observed in all states and territories except for Tasmania where employment remained steady at 246,400. The largest increases were in New South Wales (up 7,300 persons), followed by Queensland (up 4,200 persons) and South Australia (up 2,700 persons).

Similarly, over the past year, increases in employment were also observed in all states and territories except Northern Territory (down 5,000 persons or 3.5 per cent). The largest increases were in New South Wales (up 147,800 persons), Queensland (up 110,000 persons), Victoria (up 77,700 persons) and Western Australia (up 30,600 persons). The highest annual employment growth rates were in the Australian Capital Territory (4.7 per cent) followed by Queensland (4.6 per cent) and New South Wales (3.9 per cent).

Increases in the monthly trend unemployment rate were seen in New South Wales, Queensland, South Australia and the Australian Capital Territory (all 0.1 percentage points). The unemployment rate remained unchanged in Victoria, Western Australia and Tasmania. The Northern Territory experienced a decrease of 0.1 percentage points.

The quarterly trend underemployment rate increased in New South Wales and Tasmania by 0.1 and 0.2 percentage points to 8.1 and 10.8 per cent respectively. The largest decrease was observed in Western Australia (down 0.4 percentage points to 8.8 per cent). The quarterly trend underemployment rate remained unchanged in South Australia and Northern Territory at 9.2 and 4.4 per cent respectively.

The largest increase in the monthly trend participation rate was in South Australia (up 0.2 percentage points), followed by New South Wales, Queensland, Northern Territory and Australian Capital Territory which all recorded 0.1 percentage point increases. Victoria and Western Australia both recorded decreases of 0.1 percentage points whilst Tasmania remained unchanged.

Seasonally Adjusted Estimates

In seasonally adjusted terms, the largest increase in employment was in New South Wales (up 28,400 persons), followed by South Australia (up 7,500). The largest decrease was in Victoria (down 11,300) followed by Western Australia (down 1,300) and Queensland (down 1,000).

The largest increase in the seasonally adjusted unemployment rate was in Tasmania (up 0.7 percentage points) followed by South Australia and Western Australia (both up 0.2 percentage points), and Victoria and Queensland (both up 0.1 percentage points). New South Wales recorded a decrease in the seasonally adjusted unemployment rate of 0.2 percentage points.

The quarterly seasonally adjusted underemployment rate recorded a 0.3 percentage points decrease in Victoria, Western Australia and Queensland to 8.1%, 8.8% and 8.4% respectively. The largest increases were in South Australia and Tasmania which increased by 0.8 and 0.6 percentage points to 9.6% and 10.9% respectively.

The largest increase in the seasonally adjusted participation rate was in South Australia (up 0.7 percentage points) followed by Tasmania (up 0.3 percentage points) and New South Wales (up 0.2 percentage points). Victoria saw a decrease in their seasonally adjusted participation rate (down 0.3 percentage points). Queensland and Western Australia remained unchanged.

Australian Bureau of Statistics, “6202.0 Labour Force. Feb 2018“, 22 Mar 2018 (11:30 AEDT) More

flag_europe EU: Markit Flash Eurozone Composite PMI. Mar 2018

Press Release Extract [eu_pmi]

Key findings:

  • Flash Eurozone PMI Composite Output Index at 55.3 (57.1 in February). 14-month low.
  • Flash Eurozone Services PMI Activity Index at 55.0 (56.2 in February). 5-month low.
  • Flash Eurozone Manufacturing PMI Output Index at 56.1 (59.6 in February). 14-month low.
  • Flash Eurozone Manufacturing PMI at 56.6 (58.6 in February). 8-month low.

eu_pmi_20180322

Eurozone business activity grew at its slowest rate for over a year in March, according to the flash IHS Markit Eurozone PMI. At 55.3, down from 57.1 in February, the headline output index was the lowest since January of last year and signalled a second successive monthly easing in the rate of expansion. January’s PMI had been the highest since June 2006.

The flash data are an early calculation of survey data based on approximately 85% of normal replies received each month.

Output growth moderated in both manufacturing and services, the latter seeing business activity grow at the slowest rate for five months while factory output increased at the weakest pace since January 2017.

Both sectors also saw new order inflows wane, with goods export orders showing the smallest rise since November 2016. Measured overall, inflows of new orders showed the smallest monthly increase seen over the past 14 months.

Employment growth also slowed slightly to a six- month low in March, but the survey nevertheless still registered one of the largest monthly rises seen over the past 17 years.

Firms commonly reported the need to boost staffing levels to raise capacity in line with current and future expected demand.

Strong job gains were again reported in both manufacturing and services, though rates of job creation eased to seven- and six-month lows respectively.

Despite the rise in employment, the survey data also brought further evidence of business growth being hindered by capacity constraints. Backlogs of work rose to a greater extent than February, albeit increasing at a slower pace than seen at the turn of the year, while manufacturing vendor delivery times again lengthened to one of the largest extents over the past 18 years, reflecting widespread supply chain delays amid strong demand for inputs.

Sharply rising input costs meanwhile again led to a historically marked rise in average selling prices for goods and services. Although rates of inflation cooled for a second month in a row, both costs and selling prices continued to rise at some of the fastest rates seen over the past seven years. Higher input costs were linked to rising raw material prices as well as increased wages and salaries.

Finally, expectations of future output growth remained elevated though slipped to a four-month low, down to a three-month low in services and hitting a 15-month nadir in manufacturing.

By country, output growth slowed to a seven-month low in France and an eight-month low in Germany, while the rest of the single currency area as a whole registered the weakest increase for five months.

Comment

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

“While the first quarter average PMI reading remains relatively robust, indicative of GDP rising by 0.7-0.8%, the loss of momentum since the buoyant start to the year has been quite dramatic.

“At least some of the slowing may be ascribed to bad weather in some northern regions and, perhaps more importantly, ‘growing pains’ resulting from the strength of the recent growth spurt. Supply chain delays and raw material shortages were often reported to have stymied production in manufacturing (delays in German supply chains are currently more widespread than at any time in the survey’s 22-year history), and both manufacturing and services sectors also saw activity being curtailed by growing incidences of skill shortages. Backlogs of work continue to rise as a result of these growth constraints.

“However, other factors are clearly at play. The fact that export order book growth has more than halved since the end of last year suggests the stronger euro is taking an increasing toll on export performance. Survey responses also highlighted how political uncertainty also appears to have intensified, dampening demand.

“The data therefore suggest that eurozone growth peaked around the turn of the year and the region is settling into a slower, but still robust pace of expansion. Price pressures have meanwhile also eased slightly, in part linked to cheaper imports arising from the euro’s recent strength, but remain elevated.”

IHS Markit, “Markit Flash Eurozone Composite PMI. Mar 2018“, 22 Mar 2018 More

flag_usa US: Unemployment Insurance Weekly Claims Report

Press Release Extract [us_ui]

In the week ending March 17, the advance figure for seasonally adjusted initial claims was 229,000, an increase of 3,000 from the previous week’s unrevised level of 226,000. The 4-week moving average was 223,750, an increase of 2,250 from the previous week’s unrevised average of 221,500.

Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.

us_ui

The advance seasonally adjusted insured unemployment rate was 1.3 percent for the week ending March 10, unchanged from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending March 10 was 1,828,000, a decrease of 57,000 from the previous week’s revised level. This is the lowest level for insured unemployment since December 29, 1973 when it was 1,805,000. The previous week’s level was revised up 6,000 from 1,879,000 to 1,885,000. The 4-week moving average was 1,880,500, a decrease of 11,750 from the previous week’s revised average. This is the lowest level for this average since January 5, 1974 when it was 1,838,500. The previous week’s average was revised up by 1,500 from 1,890,750 to 1,892,250.

us_ue

Unadjusted Data

The advance number of actual initial claims under state programs, unadjusted, totaled 198,473 in the week ending March 17, a decrease of 6,389 (or -3.1 percent) from the previous week. The seasonal factors had expected a decrease of 8,809 (or -4.3 percent) from the previous week. There were 224,939 initial claims in the comparable week in 2017.

The advance unadjusted insured unemployment rate was 1.5 percent during the week ending March 10, a decrease of 0.1 percentage point from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 2,104,251, a decrease of 89,539 (or -4.1 percent) from the preceding week. The seasonal factors had expected a decrease of 24,501 (or -1.1 percent) from the previous week. A year earlier the rate was 1.6 percent and the volume was 2,282,941.

The total number of people claiming benefits in all programs for the week ending March 3 was 2,228,027, a decrease of 37,934 from the previous week. There were 2,391,551 persons claiming benefits in all programs in the comparable week in 2017.

Extended benefits were payable in Alaska and the Virgin Islands during the week ending March 3.

Initial claims for UI benefits filed by former Federal civilian employees totaled 659 in the week ending March 10, an increase of 23 from the prior week. There were 661 initial claims filed by newly discharged veterans, a decrease of 24 from the preceding week.

There were 12,036 former Federal civilian employees claiming UI benefits for the week ending March 3, an increase of 819 from the previous week. Newly discharged veterans claiming benefits totaled 7,872, a decrease of 469 from the prior week.

The highest insured unemployment rates in the week ending March 3 were in the Virgin Islands (9.7), Alaska (3.8), Puerto Rico (3.0), Connecticut (2.8), New Jersey (2.8), Montana (2.7), Pennsylvania (2.6), Rhode Island (2.6), Massachusetts (2.5), and California (2.4).

The largest increases in initial claims for the week ending March 10 were in California (+1,834), Florida (+923), Kentucky (+781), Puerto Rico (+545), and Georgia (+441), while the largest decreases were in New York (-18,154), Oregon (-1,367), Washington (-1,218), Wisconsin (-684), and Connecticut (-612).

Employment and Training Administration, “Unemployment Insurance Weekly Claims Report“, 22 Mar 2018 (08:30) More

flag_usa State Personal Income. Q4/2017 and 2017

Press Release Extract [us_statperinc]

State personal income increased 3.1 percent on average in 2017, after increasing 2.3 percent in 2016, according to estimates released today by the Bureau of Economic Analysis. In 2017, personal income increased in all states and the District of Columbia except one, North Dakota. The percent change in personal income across all states ranged from 4.8 percent in Washington to -0.3 percent in North Dakota.

us_personalincome_20180322

Earnings. Earnings increased 3.1 percent in 2017 and was the leading contributor to growth in personal income in most states, including the five fastest growing states—Washington, Idaho, Nevada, Utah, and Arizona.

  • Retail trade was the leading contributor to the earnings increase in Washington (5.2 percent). Retail trade earnings increased 15.3 percent in Washington compared with 2.9 percent for the nation.
  • Durable goods manufacturing was the leading contributor to the earnings increase in Idaho (5.3 percent). Durable goods manufacturing increased 9.7 percent in Idaho compared with 2.0 percent for the nation.
  • Construction was the leading contributor to the earnings increase in Nevada (4.3 percent). Construction earnings increased 13.2 percent in Nevada compared with 5.2 percent for the nation.
  • Professional, scientific, and technical services was the leading contributor to the earnings increase in Utah (4.7 percent). Professional, scientific, and technical services earnings increased 7.6 percent in Utah compared with 3.7 percent for the nation.
  • Health care was the leading contributor to the earnings increase in Arizona (4.8 percent). Health care earnings increased 6.4 percent in Arizona compared with 4.1 percent for the nation.

For the nation, earnings increased in 22 of the 24 industries for which BEA prepares estimates. Earnings growth in three industries—health care and social assistance; professional, scientific, and technical services; and construction—were the leading contributors to overall growth in personal income.

Farm earnings decreased 6.6 percent for the nation in 2017. This was the fourth consecutive annual decrease in farm earnings and was the leading contributor to slow earnings growth in Kansas, Nebraska, and South Dakota, and to decreases in earnings in Iowa and North Dakota.

Mining earnings, which for the nation has decreased 35 percent since 2014, decreased 2.7 percent in 2017 and was the leading contributor to a decrease in earnings in Alaska.

Property income (dividends, interest, and rent). Property Income increased 3.3 percent in 2017, after increasing 1.2 percent in 2016. The percent change in property income ranged from 4.4 percent in Washington to 2.4 percent in Kentucky.

Personal current transfer receipts. Transfer receipts increased 3.0 percent for the nation in 2017, after increasing 3.1 percent in 2016. The percent change in transfer receipts ranged from 8.3 percent in Louisiana to -1.1 percent in New Mexico.

Fourth quarter personal income. State personal income increased 1.1 percent on average in the fourth quarter of 2017, after increasing 0.8 percent growth in the third quarter. The percent change in personal income across all states ranged from 1.5 percent in Nevada to 0.2 percent in North Dakota. Earnings increased 1.1 percent nationally, and was the leading contributor to growth in personal income in most states.

Bureau of Economic Analysis, “State Quarterly Personal Income 4th quarter 2017 State Annual Personal Income 2017 (preliminary)“, 22 Mar 2018 (08:30) More

flag_usa US: Markit Flash US Composite PMI. Mar 2018

Press Release Extract [us_pmi]

Key findings:

  • Flash U.S. Composite Output Index at 54.3 (55.8 in February). 2-month low.
  • Flash U.S. Services Business Activity Index at 54.1 (55.9 in February). 2-month low.
  • Flash U.S. Manufacturing PMI at 55.7 (55.3 in February). 36-month high.
  • Flash U.S. Manufacturing Output Index at 55.2 (55.5 in February). 4-month low.

us_composite_pmi_20180322March data revealed another strong increase in private sector output, together with a further solid payroll gain and elevated price pressures.

At 54.3 in March, down from 55.8 in the previous month, the seasonally adjusted IHS Markit Flash U.S. Composite PMI Output Index has remained above the 50.0 no-change threshold for just over two years. The latest upturn in business activity was faster than the average over this period, driven by solid rises in both manufacturing production and service sector output.

There were also positive signals for the near-term growth outlook, with new order volumes expanding at a strong pace and payroll numbers picking up to the greatest extent since May 2015. Moreover, business confidence towards growth prospects over the coming 12 months remained among the highest seen over the past three years.

The latest survey signalled another robust increase in average cost burdens across the private sector economy, with the rate of input price inflation unchanged from February’s 52-month peak. In the manufacturing sector, input price pressures were the greatest for six-and-half years.

A combination of sharply rising operating expenses and resilient demand conditions contributed to another marked increase in average prices charged by private sector companies. March data indicated the second-fastest rate of output charge inflation since September 2014.

The composite index is based on original survey data from the IHS Markit U.S. Services PMI and the IHS Markit U.S. Manufacturing PMI.

IHS Markit U.S. Services PMI™

The seasonally adjusted IHS Markit Flash U.S. Services PMI™ Business Activity Index posted 54.1 in March, down from February’s six-month high of 55.9. Nonetheless, the latest reading was well above the neutral 50.0 value and signalled a further solid expansion of service sector output.

Service providers recorded another robust rise in new business during March, with the rate of expansion holding close to February’s near three- year high. Greater workloads helped to underpin the strongest job creation since September 2015.

March data pointed to a robust rise in average cost burdens, although the rate of inflation was softer than the 32-month peak seen in February. Mirroring the trend for operating expenses, average prices charged by service sector companies increased at a slightly slower rate than in the previous month.

IHS Markit U.S. Manufacturing PMI™

U.S. manufacturers experienced a robust and accelerated improvement in their overall business conditions in March. This was highlighted by the seasonally adjusted IHS Markit Flash U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) rising to 55.7, from 55.3 in February.

The latest reading signalled the strongest upturn in manufacturing operating conditions for exactly three years. Stronger contributions from the employment, inventories and suppliers’ delivery times components helped to lift the headline PMI in March.

Latest data also pointed to robust rises in manufacturing production and new orders, although in both cases the rates of expansion eased since February.
Meanwhile, input buying increased at the fastest pace since September 2014, which a number of survey respondents linked to pre-purchasing and stock building ahead of expected raw material price rises (particularly steel-related items).

Efforts to boost pre-production inventories also led to intense pressure on supply chains. The latest lengthening of lead-times from vendors was the greatest recorded since the snow-related disruptions seen in early-2014.

Manufacturers signalled a steep and accelerated rise in their average cost burdens in March, which was overwhelmingly attributed to rising raw material prices. The overall rate of input cost inflation was the fastest since September 2011.

A number of survey respondents cited higher prices for metals and increased charges by suppliers amid strong demand for raw materials. At the same time, factory gate charges rose at the strongest pace for just over six-and-a-half years in March.

Comment

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

“The flash PMI surveys indicate that the economy likely continued to expand at a robust pace in March, rounding off a solid opening quarter of the year. The surveys are running at a level consistent with annualised first quarter GDP growth approaching 2.5% (though we note that official GDP estimates may once again understate growth in the opening quarter of the year).

“The survey’s employment index is meanwhile at its highest for nearly three years and indicative of another strong payroll rise in the order of 240,000 in March.

“The improved hiring trend reflects buoyant optimism regarding future growth. Companies’ expectations for output in the year ahead remained elevated, dipping slightly in services but surging to a three-year high in manufacturing.

“Inflationary pressures meanwhile remain a key theme of the surveys, especially in manufacturing, reflecting increased raw material prices, notably for metals. The survey found average prices charged for goods and services are rising at one of the strongest rates seen since 2014. Furthermore, with factory costs showing the largest jump for seven years amid growing shortages of key inputs, inflationary pressures appear to be on the rise.”

IHS Markit, “Markit Flash US Composite PMI. Mar 2018“, 22 Mar 2018 (09:45) More

flag_japan Japan update

Nikkei Flash Japan Manufacturing PMI. Mar 2018

Press Release Extract [jp_pmi]

Key points:

  • Flash Japan Manufacturing PMI® declines in March to 53.2, from 54.1 in February.
  • New orders increase, albeit to weakest extent in five months.
  • Job creation eases amid joint-softest pace of output growth since July 2017.

jp_pmi_20180322

Commenting on the Japanese Manufacturing PMI survey data, Joe Hayes, Economist at IHS Markit, which compiles the survey, said:

“The headline PMI declined in March, signalling a weaker improvement in overall business conditions in the manufacturing sector. Output, new order and employment growth rates all slowed, while longer lead times continued to impact supply capacities.

“That said, with new business increasing for an eighteenth straight month, firms raised output prices to a quicker extent, signalling confidence in the demand climate and purchasing power of their clients. Despite two months of weaker headline PMI readings, the 2018 Q1 average still signals a robust operating environment.”

IHS Markit, “Nikkei Flash Japan Manufacturing PMI. Mar 2018“, 22 Mar 2018 More

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